China, the country with many given titles like the fastest growing economy, the world’s manufacturing hub, the world’s largest economy by nominal GDP and purchasing power parity, its hard to not know about China.
I’m sure you’ve heard about China’s involvement with the push for clean energy and turning the tide for making a change for climate change. China announced last year that they would be investing at least $360 billion renewable energy by 2030.
That’s a pretty bold pledge considering that China is the world’s biggest polluter and consume more coal than anyone else, with reasons of course, as they are the ‘manufacturing hub’ of the world. Hence, it is definitely great to hear that they are pledging to make a change for climate change.
And they are pushing hard, they are at the centre of a global energy change, all thanks to technology and the (slow) lowing cost of renewables. I mean, according to Vox, they’ve made solar panels cheaper, and now they are doing that with electric buses.
Just recently, China transformed all the buses in Shenzhen to run by electric. Building the world’s largest electric bus fleet, which is mighty impressive in my opinion.
So what does all this say about us, the startup community?
Apart from the obvious hint that China is a massive market with massive dollar bills to invest in your startup, they are producing a new wave of scent right now.
The smell of opportunity for clean energy or renewable energy startups.
Even with massive opportunities and potential, expanding towards China can be daunting, with concerns about cultural difference in business, work and societal differences. However, with the right mentor or guide, this bridge can be built.
Australia China SME Association (ACSME) just announced last month that they are leading an innovation mission to China in July to help Australian entrepreneurs access Chinese seed funding and support. The mission will comprise Australian entrepreneurs seeking to secure start-up funding to launch new ideas, products and services.
Founder and President of the Australia China SME Association, David Thomas, said the mission would connect Australian entrepreneurs with these Chinese investors to assist the entrepreneurs to secure the funding and support they need to commercialise their ideas for the international marketplace.
“Unfortunately, Australia is a limited market. Many entrepreneurs struggle to find the funds and investment they need to get startups off the ground in Australia. As a result, many good ideas fall by the wayside and are never commercialised. What many people don’t realise is that because we now live in a global market space, we should be looking for start-up funding in other countries, not just our own.
“Chinese investors, like investors elsewhere across the world, are keen to invest in businesses which offer solutions to growing social issues such as pollution management, recycling, clean energy and healthcare,” he said.
China’s major challenges such as pollution, clean energy, healthcare, education and food security are well known and, as a result, sectors of particular interest to Chinese investors include:
- Healthcare, including medical, pharmaceuticals, diagnostics, etc.
- Clean, green and sustainable energy,
- Waste management,
- Anti-pollution technology (water, air, soil)
- Food processing technology and other innovations
We caught up with David to get his insights on how and why should we think about expanding to China.
Why is China an ideal place for Australian startup to consider venturing over?
China has the money and the market. They have the funds, resources and commitment to invest in innovative ideas from overseas and commercialise them for a market of over one billion people, including a fast-growing middle class (currently 300m) and a large ‘premium’ market of millionaires and billionaires. Chinese companies like Alibaba, Tencent, Huawei and ZTE have demonstrated the power of developing innovative ideas and rolling them out quickly to achieve scale and leverage in such a large marketplace. Now its the turn of foreign companies, including Australian entrepreneurs, to raise funds and commercialise their ideas in China.
What are the advantages you can see that Australian startups will get from expanding to China?
Australia is well known in China for our clean, green and secure environment which provides great opportunities for Australian startups in some of the areas of most interest to China, including healthcare, clean energy, food, education, tourism and environmental protection. Our advantage is that our local market is well regulated and organised, providing great confidence to Chinese investors and consumers who often have to grapple with “fake” products and ideas in their own market and from some other countries.
How can startups prepare themselves before expanding into Asia? Regarding funding or cultural understanding and market validation.
Preparation is key, especially in researching the market, preparing bilingual marketing collateral and understanding about differences in culture, language and the way business gets done. I have written extensively on these topics in two ebooks Three Cups of Tea and Eight Critical Steps.
Why are Australian startups struggling to find investments to launch them into the global market?
There are many reasons for this, some cultural, some historical and some as a result of a lack of vision and policy from Government. Despite our $1 trillion superannuation industry, Australian startups find it very hard to raise money to fund their good ideas, and even harder to take them globally, as investors, including the banks, generally look for low-risk investments in the domestic market. As a result, many great ideas flounder in the Australian market, never get funded and never get taken overseas.
Take the opportunity
So there you have it, China, your next step to make it big and make a dent in the climate change issue.
To make this even more exciting, ASCME is looking for a maximum of 10 companies to be selected to join the August 2018 mission to Guang Zhou, China, and each will be fully assessed, vetted and pre-qualified by our Chinese partners to ensure everyone has a high chance of success.
Registration of interest is open now till 30th of June, so grab this opportunity while available.
Image via ABC News: Brant Cumming.