Niklas Zennstrom, founder of the globally popular VOIP service Skype, is setting his sights on what may prove his toughest challenge yet â channeling funds into innovative Chinese start-ups with hopes of bringing them to the international stage.
The Swedish entrepreneur believes that China is a well-functioning market for tech startups. âThere is lots of capital and talent. It is a fast-growing market, and there are markets for public offerings.âÂ He is actually particularly interested in games, which makes perfect sense as China has a rapidly growing game development community that is starting to develop for overseas markets. With an Internet user base of more than 457 million, the biggest in the world, itâs hard to ignore the potential of the Chinese market.
There are however a lot of challenges to face. The local market is very competitive, which is mostly because local players understand local culture and preferences better than foreigners, and can adapt their operations faster to suit user demand. True enough, every global Internet giant that hoped to conquer the worldâs largest Internet market has failed while local counterparts continue to triumph. Baidu still dominates search, Tencentâs QQ instant messaging, Alibabaâs Taobao online auction. Top that off with the Great Firewall of China blocking popular social networking sites that allowed for local counterparts such asÂ Renren, Weibo, and Youku to flourish.
What China is lacking is originality, Zennstrom told Asia Times. The most popular Internet giants in China are actually modeled after US counterparts Google, Twitter, Facebook and the like. However, what the Chinese lack in innovation, they make up for in execution.Â The Skype founder prefers start-ups with âbig ideas and game changing strategiesâ. Despite this, Zennstrom understands that the country is rising quickly and believes that now is a good time to hunt for innovative start-ups. He particularly admires Chinaâs risk-taking culture, believing that it is a key ingredient in success.
Interestingly, Penn Olson points out that China couldnât be a global power by being an imitator and the worldâs factory. We are optimistic, however, because China was ranked fourth in terms of global patent applications last year, which may be a good sign for the country. Itâs not by any means a âSilicon Valleyâ just yet, but donât be surprised if one day it is.