Evolving from passive learners into innovators

SAN FRANCISCO - Chinese entrepreneurs are becoming innovation leaders rather than learners, a leading venture capital investor said.

Kai-Fu Lee, chairman and chief executive officer of Sinovation Ventures, a leading provider of venture capital in China, told Xinhua News Agency in a recent interview that in general Chinese entrepreneurs have gone through three phrases.

In the first phrase, Chinese entrepreneurs mainly follow the footsteps of other tech or market leaders, said Lee, who used to work for top tech companies including Apple, Microsoft and Google.

"This is a good way of learning as long as it risks no disputes on intellectual property rights," said Lee, who founded Sinovation Ventures in 2009 to invest mainly in Chinese startups.

The second phrase is a mini-innovation process, in which products and services are made possible through absorbing different ideas and improving them as commodities or services, Lee said.

In the third stage, Chinese entrepreneurs have begun to take the lead globally in innovation in certain areas, such as mobile payment and short video applications, he noted.

Lee said that when he shared innovation stories with some people in Silicon Valley, they would simply shrug them off, arguing that similar stories exist in the United States. In general, Chinese startups are more willing to learn from their US counterparts, said the veteran investor.

"Chinese startups had two teachers as they were learning what happened in both China and the US, while most American startups just turned inward and stuck to the US alone, thus having only one teacher," said Lee.

The competition of internet businesses has entered a new stage in which the pace of disruptive innovations has slowed and a new trend of online-offline integration is becoming more apparent.

Since the founding of Sinovation Ventures, Lee has invested in more than 300 startups and observed the differences between Chinese and US venture capital providers.

While there is no stark difference in the amount of investment funds, the way they operate differs.

The US venture capital companies, he said, are better at spotting top technologies and helping start-ups make profits, a strategy that he describes as "a combination of PhD and MBA".

The Chinese venture capital companies tend to be more pragmatic, taking different strategies based on the different potential of the startups, varying from helping them grow into unicorns or offering to buy them out, Lee said.

There is still much room for China to improve in terms of creativity and innovation, Lee said, a lack of which hampers the birth of great companies powerful enough to change the world.

Therefore, he said, China needs to further reform its innovation system, especially by solving the problems in the education system.

"Chinese universities focus more on the number of academic papers than cooperation with industries. But if China wants to emerge as a technology powerhouse in the world, it needs to tackle that challenge," Lee added.

Xinhua

(China Daily 11/15/2018 page17)