Shanghai: The heart of the Chinese Start-Up Valley

Each time Jacqueline travels to the west, her friends ask her to bring back products that do not sell in China (or that are much more expensive in China), upon her return. But Jacqueline has had enough, and she decided to open a startup company that does exactly this: importing products from the west to Chinese customers, and bridging the cultural differences regarding this import. The location of this startup is Shanghai, and not for nothing. The city has become a focal point of Chinese entrepreneurship, mainly due to it is cosmopolitanism in regard to other parts of China.

Jacqueline, for example, has left China with her entire family more than 20 years ago, when they migrated to Copenhagen in Denmark. She maintained her connections with her friends and relatives in China and about a year and a half ago, she moved to Shanghai after finishing her MBA studies in the ‘London School of Economics’. About a year ago, she opened mihaibao.com, her startup company and home to around twenty employees. At this point in time, the company focuses on importing women’s fashion from the west. The company has to bridge gaps of trust and miscommunication, differences in clothes sizes and in the requirements of the two worlds, and it seems that she does this exceptionally, much due to Jacqueline’s experience working with the west.

The desire of many young people in China to renounce its outdated image and become closer to a more western lifestyle pushes them to engage in innovation. Shanghai is the city with the most foreigners and as such enjoys the existence of important institutions of higher education. It is able to use it is advantageous to draw investors, entrepreneurs, and many other opportunities. But the city and it is startup community has a long way to go until it threatens the Silicon Valley – and it should focus much of its attention towards tightening its relations with the international ring, and not just with the Chinese and Asian markets.

More than a few Chinese entrepreneurs – and also western startups – choose to base their businesses in Shanghai, in order to use its advantages on the way to fulfilling their dreams and visions. In a survey done by KMPG accounting firm among 800 managers in the startup field, Shanghai was revealed to be the chosen leading city in the world in the field of technological innovation. The success of technology companies can be felt in every street of the city. In shops and shopping stands people use their mobile phones for payment, and a foreigner asking to pay in the outdated ways (credit card or cash) is looked down upon. The city’s three innovation centers, called SOHO, each contains a few huge buildings with hundreds of companies making huge leaps forward, or at least are in the hopes of being just before their big break.

The Chinese video sharing website, Youku, allows users to search, present and share video content in HD in multiple devices simultaneously. Its offices are set in Shanghai, and the company behind it is run, since 2006, by Victor Koo – a billionaire born to Chinese parents, but whose education and training is mostly from the American universities Stanford and Berkeley. His company was purchased in 2015 by the internet giant ‘Alibaba’.

CTRIP, a provider of touring and traveling services, markets, hotels and flights on its website for the past two decades. Its market value has grown more than 30 times its worth in 2003, when it was first issued and now has more than thirty thousand workers, mainly in Chinese speaking countries. Last November it acquired ‘Skyscanner’, a Scottish company that runs one of the most popular search engines for cheap flights, thus extending its business from China to the entire world.

The University of Fudan located in Shanghai is one of the leading universities in China. It contributes much to the flourishing of the local high tech industry. The university helped create many projects in the field, including Zhangjiang hi-tech park,  Jianyuan center and Wooshi-Fudan research institute.

The university gladly promotes entrepreneurship in Shanghai, but expresses disappointment from the government policy that slows down and even inhibits open and free international cooperation in other regions of China. In a convention titled ‘How innovation in California and Shanghai works’, Dr. Jin Li, vice president of Fudan university, said that “innovation has to be international, and China must be part of the world. There is no such thing as ‘Chinese-style innovation’”. This saying, by such a senior member of the academy in China, is considered to be an overt criticism of the government, even in Shanghai, where the cosmopolitanism is so emphasized, that you could sometimes think you are in London or New York.

The current President of China, Xi Jinping, has made it clear in the past few years that he would like to march his country towards an era of innovation as a growth engine to replace the production engine of cheap consumer products that has been driving China forward for the past decades. “Innovation is always an important power to drive the development of a nation and country”, he said. This declaration is backed up by actions of the local government in Shanghai, creating many innovation centers that support the creativity of entrepreneurs in the city. In Yangpu center, budding startup companies can rent working spaces at cheap prices, while receiving technical and financial guidance and assistance.

Today, 24 million people live in Shanghai alone and as such, it is the most populated city in China. It is also bigger than Israel and more than a few other European countries. For this reason, the local crowd for startup companies is huge even without turning to the rest of China, Asia and the world. Even so, slowly but surely, the city is creating more and more businesses turning outside and allowing Shanghai to seem as a rising power in the world, even compared to the west.