Shanghai: Let’s get down to Business
The stunning Pudong skyline paints the future of what Shanghai could be — a sense of limitless opportunity. With an unending ebb of robustness and vitality emanating throughout the city, Shanghai is the city that does not even sit down.
Shanghai is shaping up to be an innovation hub with the potential to rival Silicon Valley. With Shanghai’s dizzying statistics and the government’s efforts to facilitate a thriving startup scene, investors and entrepreneurs are salivating at a Disneyland for startups where anything and everything is possible. Its booming start-up ecosystem has positioned Shanghai to be a land of endless opportunities, as long as you are willing to hustle hard. Nonetheless, amidst the captivating allure of Shanghai, does it really provide ‘a sky of endless opportunities’? Or is this simply an illusive dream?
The 1.3 billion Chinese market represents a horizon of endless possibilities and for foreigners who wish to enter the Chinese market, Shanghai is a great place to start. International, cosmopolitan and diverse — assimilating into Shanghai should not be much of a problem.
In Shanghai, things are done quickly, making it an attractive environment for startups to thrive. Based on an article from Tech In Asia, things move in Shanghai at breakneck speed:
“If a New York minute is a Hong Kong second, then a Hong Kong second is a Shanghai millisecond”
That speaks volumes about the velocity the city is moving at. It provides many opportunities for hungry entrepreneurs. It gives entrepreneurs room for trial and error and to experiment with new ideas. This trait of Shanghai has created a conducive environment for entrepreneurs to let their ideas take flight. Shanghai has thus become a testing bed for many international entrepreneurs and an entry point for them to access the Greater China region and the rest of Asia.
With the meteoric rise of startups and innovation in Shanghai, co-working spaces, hackathons and accelerators have been becoming increasingly important. An ecosystem that supports the growth of startups is coming together. The rapid proliferation of innovation has led to a flourishing ecosystem, allowing for even more innovative breakthroughs to come forth. Foreign investments are pouring into the city and Shanghai is seen as the prototype where modern innovations come to life. This has led to an economic spillover onto the surrounding areas such as Hangzhou, Nanjing, and Suzhou. Collectively, the Yangtze River Delta has risen to be a main driving force in China’s economy. The Yangtze River Delta has risen in increasing importance as companies like Alibaba move their headquarters to Hangzhou, signaling the strategic importance this area has in China’s burgeoning innovation economy. All these trends point to a thriving startup environment, creating a near-fantasy condition where opportunities are for the picking if you are driven enough.
That being said, doing business in Shanghai is not a bed of roses. Despite the endless opportunities available and its cosmopolitan image, Shanghai is situated in a market that is very much localized and detached from international dynamics. The Chinese market has very specific conditions and preferences. You will have to revolve your business model on the behaviors and attitudes of the Chinese. If you start your business here in Shanghai, it does not equate to being able to replicate it in other parts of the world as your business model will specifically work only in the Chinese context. In addition, it is incredibly difficult for foreign startups to reach the level of Alibaba or Tencent due to their influences and knowledge of the Chinese psyche. While foreign startups can begin here, it is of utmost importance that they know the Chinese market well, and understand that the Chinese market is not like the other markets in the world. It is a unique market with its own set of challenges and circumstances.
Furthermore, in an environment with weak IP rights, ideas can be easily duplicated and scaled up in a matter of weeks. If you think your idea is original, someone probably has thought of it and they might have more experiences and resources than you to execute it or they are already half-way through the execution. Shanghai is an environment that hinges on the concept of survival of the fittest. For some of the larger companies that want to drive away smaller competitors, it is a matter of who has the most money to burn to outlast one another. This is a tough battle for international startups to fight due to the limited amount of resources.
Ultimately, Shanghai is what you make out of it. It is a city that guarantees you innumerable prospects. However, never mistake it as an easy ride — it won’t be. While it will not be an easy journey, I can assure you that you are in for an exciting adventure.
