From Copy-to-China to Copy-from-China

By Chance Jiang, Senior Partner, Solutions Architect | Bull Run Consulting Co.; Global Operations

China’s startup ecosystem has seen exponential growth over the last decade or so, producing innovative and successful companies that have attracted attention from around the world. With a population of over 1.4 billion, it is home to some of the world’s largest online markets, making it a prime destination for startups looking to grow and expand their businesses.

Copy-to-China

One of the notable features of the country’s startup ecosystem is the number of companies that have successfully copied or borrowed business ideas from others. This trend is known as “copy to China” or “Shanzhai,” which translates to “mountain fortress” in Mandarin. It refers to the practice of copying or imitating successful products or services from other countries, and then adapting them to the local market.

According to Connie Chan, a partner at Andreessen Horowitz, the “Shanzhai” phenomenon is not unique to China. In her article, “Why China Can Copy Great Products and Get Away With It,” she explains that copying is a natural part of the innovation process, and it has been happening in Silicon Valley for years. However, what makes China’s approach different is that it’s done on a much larger scale and with more speed.

Chan also points out that the country’s unique market dynamics contribute to the success of “Shanzhai.” For example, its large population and fragmented market mean that there is a significant demand for a wide range of products and services. Startups can quickly iterate and test their products in this market, making it easier to find a product-market fit.

Another factor contributing to the success of its startup ecosystem is the government’s support for innovation and entrepreneurship. The government has launched various initiatives, such as the “Made in China 2025” plan and the “Internet Plus” policy, to support the growth of startups and encourage innovation in various sectors.

Furthermore, its thriving e-commerce and social media platforms provide startups with access to a vast and engaged audience. Platforms such as Alibaba’s Taobao, Tencent’s WeChat, and Douyin (TikTok) have become essential marketing channels for startups looking to reach customers.

China’s startup ecosystem has seen significant growth in recent years, producing innovative and successful companies. While the “Shanzhai” phenomenon may raise questions about intellectual property and ethics, it’s an essential part of the country’s approach to innovation and entrepreneurship. By borrowing and adapting successful business ideas, startups can quickly test their products and find success in China’s vast and fragmented market.

Copy-from-China

Connie Chan has written extensively about the Chinese startup ecosystem and the lessons that can be learned from it. Based on her insights, here are the top 5 reasons why Chinese startups offer examples for startups and companies of other countries to learn from:

1. Mobile-first: China’s tech ecosystem is mobile-first, with the vast majority of consumers accessing the internet and conducting transactions on their smartphones. This has led to a proliferation of mobile-first startups in areas such as mobile payments, social media, and e-commerce. Startups and companies in other countries can learn from its mobile-first approach and develop products and services that are optimized for mobile devices.
2. Rapid experimentation: Chinese startups are known for their rapid experimentation and willingness to pivot quickly based on user feedback. This agility has enabled many of their startups to iterate quickly and scale rapidly, leading to some of the world’s most successful tech companies. Startups and companies in other countries can learn from this approach and adopt a culture of rapid experimentation and iteration.
3. Focus on user acquisition and retention: The country’s highly competitive tech ecosystem has led to a focus on user acquisition and retention. Their startups are experts at acquiring and retaining users through a variety of tactics, including viral marketing, gamification, and incentives. Startups and companies in other countries can learn from these tactics and develop strategies for acquiring and retaining users in their own markets.
4. Emphasis on local context: Chinese startups are highly attuned to the local context, including cultural norms, regulatory environments, and market conditions. This has enabled them to develop products and services that are tailored to the needs of local consumers. Startups and companies in other countries can learn from this emphasis on local context and develop products and services that are customized for their own markets.
5. Strong entrepreneurial ecosystem: It has a strong entrepreneurial ecosystem that supports startups and provides access to capital, talent, and resources. This ecosystem includes government support, venture capital firms, incubators, and accelerators. Startups and companies in other countries can learn from this ecosystem and work to develop similar support networks in their own markets.

In summary, China’s mobile-first approach, rapid experimentation, focus on user acquisition and retention, emphasis on local context, and strong entrepreneurial ecosystem offer valuable lessons for startups and companies in other countries to learn from.

Key Takeaways

Late 2022, as the Covid19 pandemic is officially claimed over in China, we’ve seen a new surge of tech entrepreneurs visiting China for sourcing or re-building business partnerships. At Bull Run Consulting Co., we’re helping friends, new or old, to reconnect to strategic resources in China. We’re particularly well-positioned to tap into the Greater Bay Area (GBA) for China’s tech talents, entrepreneurial communities, and supply chains in general.

Email or book a call with us, for whatever you want, and see how we can help turbo charge your business.

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Photo by Lee Starry