context: After several years of ‘mass entrepreneurship and innovation’, investment deals for start-ups fell for five consecutive years while a capital winter kicked in in late 2018. The state is still offering support to emerging industries as part of the secure supply chain drive, while investors mostly focus on safe bets (i.e. more promising firms), state-endorsed sectors (i.e. integrated circuits) and COVID-driven opportunities (online education and healthcare).

China will be the most important location where innovation flourishes, claims Lu Qi 陆奇 MiraclePlus and Y Combinator China founder, who addressed a seminar on entrepreneurship opportunities and identifies

  • long-term trends accelerated under COVID-19 and the evolving global environment
    • digitisation
    • life sciences
    • sustainable development and new energy
    • the West’s decline and the East’s rise
  • major structures through which the world grows
    • science and technology
      • government supports scientist-driven research in research universities and national labs
      • big enterprises focusing on applied R&D and mission-driven research enterprises
      • digitisation drives conventional research fields forward
    • market environment and sustainable development
      • no longer consider the environment as free real estate
      • digitisation as a major trend in the business environment
    • open source environment
    • venture capital
  • advantages China has
    • innovation environment
      • solid foundation of talent, capital, technology and market
      • mature environment for commercialising technology
        • a vibrant start-up scene
      • urban environments conducive to innovation, like Shenzhen
    • technology as the core driver
      • 5 to 10 years before the domestic environment matures
    • structural macroeconomic reasons
      • consumption upgrading
      • further urbanisation over the next decade
      • population increase
      • diverse population structure
    • domestic and international environment
      • new infrastructure
      • innovation shift from the West to the East
      • transferable model between China and developing countries in Southeast Asia and Latin America

Technology development is always linked to market demand, says Lu, with mission-driven research start-ups like DeepMind and OpenAI emerging to address those issues. He advises offering help to entrepreneurs as they identify product/market matches and navigate issues during enterprises’ early grow stages.