Beijing’s Great Leap Forward

Wednesday, July 10, 2013

China’s political, financial, and cultural capital has been on a startup tear in recent years. In 2011, Chinese venture capital firms invested $13 billion, half as much as their U.S. counterparts—30 percent of it in Beijing. (The total investment dipped sharply in 2012 in the face of a national economic slowdown.) Beijing hosts rare concentrations of wealth and 68 institutions of higher learning, including China’s best computer science departments. Like New York, it’s a magnet for ambitious young people. And like Washington, DC, it’s the center of the national government. Being close to government offices can be helpful in managing media businesses that must pass muster with government censors (see “China’s Internet Paradox”). And Beijing produces what few other places can—giant, fast-growing tech companies, like Baidu (now worth $31 billion) and smartphone maker Xiaomi, which sold $2 billion in handsets last year.

Among the city’s more than 20 million residents, few have played a bigger role in Beijing’s transformation from backwater to startup factory than Kai-Fu Lee. As the founder of Microsoft Research Asia and Google China, the U.S.-educated computer scientist not only became one of China’s first tech celebrities but personally trained a generation of engineers whose business ventures have turned Beijing into a dynamic technology center. More recently, Lee founded Innovation Works, a Beijing-based incubator and venture capital firm dedicated to nurturing Chinese startups.

Beijing now is not just competent in software and gadgets. It has its own brands that are bound to lead in their own directions. It’s not inconceivable that one day Beijing will sit on top of the innovation pyramid alongside Silicon Valley, each producing global companies and creating new industries. “I’ve seen startup clusters all over the world,” says Steve Blank, an entrepreneur and business school professor who recently returned from a visit to China. “But Beijing blew me way. They’ve built an ecosystem on a scale that puts Boston or Seattle to shame. Beijing compressed 30 years of startup learning into five years.”

Lee, who is 51, isn’t from Beijing originally. He was born in Taiwan and moved with his family to the U.S. in 1973. As a PhD candidate at Carnegie Mellon University, in Pittsburgh, he was struck by the yawning technological gap between the U.S. and China. While he wrote, tested, and debugged his code at a computer terminal, a classmate from the People’s Republic executed those tasks on paper. “That opened my eyes about the backwardness of Chinese computing in general, not to mention innovation,” Lee says. The student “turned out to be a good programmer even though he did it on paper.” People in China, he felt, needed leadership and technical resources to surmount their impoverished environment.

Source: MIT Technology Review (link opens in a new window)

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