360° Coverage : China's startups hope for boom after Alibaba IPO

2 Updates

China's startups hope for boom after Alibaba IPO

Jun 11 2014, 8:12am CDT | by

BEIJING (AP) — Nils Pihl has spent 18 months building what he calls cutting-edge software to crunch "really big data sets." But instead of going to Silicon Valley, the 27-year-old...

Filed under: news

 
 
 

19 weeks ago

China's startups hope for boom after Alibaba IPO

Jun 11 2014, 8:12am CDT | by

BEIJING (AP) — Nils Pihl has spent 18 months building what he calls cutting-edge software to crunch "really big data sets." But instead of going to Silicon Valley, the 27-year-old Swede and his four colleagues have been working on his invention from a small apartment overlooking smoggy northwest Beijing.

In typical startup fashion, they've raised hundreds of thousands of dollars after countless pitch meetings and were racing to prepare their product for launch. Their investors are in Beijing as well as the U.S.

China might seem an odd choice for young tech entrepreneurs. Instead of innovation and risk taking, the country is more associated with state domination of the economy, rampant intellectual property theft and heavy duty government censorship of social media.

Perceptions, however, are changing. The high profile success of Jack Ma's e-commerce company Alibaba, which is planning a giant initial public offering in the U.S. this year, has drawn attention to how the former startup outmaneuvered eBay in China to become the world's biggest online bazaar. More recently, use of smartphones and the mobile Internet has grown explosively, creating new opportunities for e-commerce and other tech ventures.

"We find this to be like the best incubator you could get," Pihl said in his building's courtyard, where children chased each other and couples took twilight strolls. "We don't consider ourselves a Chinese startup. We're a Valley startup hanging out in Beijing to keep our costs low."

Alibaba and a handful of other online ventures are the most visible examples of companies that began with a startup ethos and thrived despite bumps along the way. Perhaps the biggest challenge for startups came three years ago when several Chinese companies were caught in accounting scandals and forced off U.S. stock exchanges.

Such problems pushed Chinese regulators to halt all IPOs in China, another blow to the startup scene since going public is a common way for ambitious companies to raise additional funds after being nurtured by venture capital and other early investors.

Regulators lifted the ban earlier this year, making way for 11 IPOs in the first three months of 2014, just one short of the number in the U.S. during that time, according to accounting firm PwC. Analysts were expecting as many as 400 Chinese IPOs this year, but confusing new regulations issued by the government have again held back offerings.

Still, Chinese companies such as No. 2 e-commerce site JD.com have listed in the U.S. this year, and entrepreneurs and investors in China are expecting a flood of investment.

"If Alibaba goes public at say $150 billion to $180 billion and they continue to grow at 30 percent a year, in five years this could be the largest company in the world" by market capitalization, said Richard Hsu, managing director of Intel Capital China at a recent startup forum in Beijing. "And if the largest market cap in the world is now a Chinese company involved in e-commerce, how much attention is the rest of China going to get?"

Budding Chinese firms of all types raised more than $1 billion in venture capital in the first quarter, a 35 percent jump over the same period last year, according to Dow Jones VentureSource. That was far short of the nearly $10 billion raised in the U.S. during the same period, but enough to rank China ahead of Europe in venture capital.

Behind the numbers are China's vast market of more than a billion people and the eagerness of Chinese consumers to adopt innovations such as shopping via smartphone and the latest social media. Chinese firm iResearch forecasts mobile phone games alone to bring in $11 billion a year in revenue in 2017, triple the current amount.

"There's definitely a critical mass of talent that has been nurtured in the past 15 years by the mobile phone and the Internet," said Alan Guo, CEO of Chinese e-commerce company LightInTheBox, which went public on the New York Stock Exchange in June 2013. "We have a new generation of Chinese who are global."

Other draws for startups include the country's lower salaries. According to the online job site Glassdoor, average pay offered in software engineer job postings in Beijing was a quarter that for similar positions in San Francisco.

The Beijing city government also tries to support the fledgling industry by giving Chinese and foreign tech companies a 15 percent break on income taxes.

For some foreigners, those factors and an abundance of venture capital cash outweighed the country's negatives such as air pollution in many cities and the hard-to-learn language.

Entrepreneurs such as Substantial Games co-founder Pin Wang have built their companies here even if they don't plan on selling their products in the country.

Born in China but raised in Canada, Wang moved to Beijing five years ago and started his company in a small office, where he and his mostly foreign staff fine-tuned their tablet-based game, Ember Conflict, with a $320,000 investment from Shanghai-based investors.

"There was a stigma around doing a startup in China around three to five years ago for sure," the 28-year-old said. Getting a job at Google was considered more prestigious but "now Chinese are saying: Oh, I can see why, it's a chance to get rich."

Marketing 360 CEO Terry Ding said he made that leap and mounted a 20-person, all-Chinese team with some $1 million in investment to build a software platform for marketing companies.

Still, the Chinese startup world still has a lot of growing up to do, said Ding.

He expects to sell his company for $6 million at most, a humble sum by Silicon Valley standards, because Chinese and global markets still undervalue business support services such as his, especially those designed in Chinese that require translation to sell overseas.

"The Chinese aren't ready to support this kind of innovation — software, behind the scenes," Ding said. "But it will definitely change."

"I think people will start to trust that China's development and its startup companies can make some remarkable things happen."

 
Update
2

7 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of 20,0 ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

7 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the doubl ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/31" rel="author">Associated Press</a>
The Associated Press (AP) is one of the largest and most trusted sources of independent newsgathering, supplying a steady stream of news to its members, international subscribers and commercial customers.

 

blog comments powered by Disqus

Latest stories

Twitter declares war on passwords
San Francisco, Oct 24 (IANS/EFE) Twitter formally declared war on passwords during a developers' conference in San Francisco, unveiling a new system that allows users to log-in to mobile apps with a phone number.
 
 
Ebola not to upset Africa's overall growth: IMF
Harare, Oct 23 (IANS) The Ebola outbreak in West Africa, which has claimed 4,500 lives, will have minimum impact on continent's overall growth, a top International Monetary Fund (IMF) official said Thursday.
 
 
Second MERS case reported in Qatar
Doha, Oct 23 (IANS) A 43-year-old man in Qatar has tested positive for Middle East Respiratory Syndrome (MERS) in the second confirmed case of the deadly virus in 10 days, media reported Thursday.
 
 
OPEC daily basket price falls again
Vienna, Oct 23 (IANS/WAM) The basket of 12 crude oils of the Organization of Petroleum Exporting Countries (OPEC) closed at $81.94 a barrel Wednesday compared to $82.09 Tuesday, the OPEC Secretariat said.
 
 
 

Latest from the Network

Second MERS case reported in Qatar
Doha, Oct 23 (IANS) A 43-year-old man in Qatar has tested positive for Middle East Respiratory Syndrome (MERS) in the second confirmed case of the deadly virus in 10 days, media reported Thursday. The patient had...
Read more on Business Balla
 
Two people die in Pakistan bomb blast
Islamabad, Oct 23 (IANS) At least two people were killed and 12 others injured in an explosion that took place in Pakistan's Balochistan province Thursday, media reported. The bomb was planted on a motorcycle, Dawn...
Read more on Politics Balla
 
Trott extends contract with Warwickshire till 2017
London, Oct 23 (IANS) England batsman Jonathan Trott, whose mental issues led to his abrupt departure from last winter's Ashes tour, has confirmed his successful comeback to competitive cricket by signing a new three-...
Read more on Sport Balla
 
Srikanth, Kashyap big movers in BWF rankings
Kuala Lumpur, Oct 23 (IANS) Indian men shuttlers Kidambi Srikanth and Parupalli Kashyap jumped seven places each in the latest Badminton World Federation (BWF) rankings released Thursday while Olympic bronze medallist...
Read more on Sport Balla
 
Alvin Stardust dead
London, Oct 23 (IANS) English singer Alvin Stardust died after a short illness. He was 72. Stardust's manager confirmed the news about his demise Thursday, reports mirror.co.uk. He was recently diagnosed with...
Read more on Celebrity Balla
 
Indian man reunited with family after 40 years
Dubai, Oct 23 (IANS) An Indian man, who had disappeared from his hometown in Kerala nearly 40 years ago, has been found by his family at a hospital in Dubai in the UAE, a newspaper report said. Now in his 60s, Abdulla...
Read more on Politics Balla
 
Srikanth, Kashyap, Saina rise in world rankings
Kala Lumpur, Oct 23 (IANS) Indian men shuttlers Kidambi Srikanth and Parupalli Kashyap jumped seven places each in the latest released Badminton World Federation (BWF) rankings Thursday while Olympic bronze medallist...
Read more on Sport Balla
 
Flintoff signs for Big Bash side Brisbane Heat
Brisbane, Oct 23 (IANS) Former England captain and all-rounder Andrew Flintoff, who retired from international cricket in 2009, Wednesday confirmed that he will play for Brisbane Heat in the Big Bash League (BBL) this...
Read more on Sport Balla
 
OPEC daily basket price falls again
Vienna, Oct 23 (IANS/WAM) The basket of 12 crude oils of the Organization of Petroleum Exporting Countries (OPEC) closed at $81.94 a barrel Wednesday compared to $82.09 Tuesday, the OPEC Secretariat said. The new OPEC...
Read more on Business Balla
 
Lopez to sign multi-million dollar deal?
Los Angeles, Oct 23 (IANS) Singer-actress Jennifer Lopez is reportedly in the final stages of securing a multi-million dollar deal to perform in Las Vegas. The 45-year-old is being offered $350,000 per show at The...
Read more on Celebrity Balla