Is China coming for Europe?

Is China coming for Europe?

A couple days ago, @jason tweeted about China vs. the US, and a Twitter battle ensued. Here's what a brief extract of his ideas:

"Founders, we're up against Jack Ma (& China) enforcing a 72-hour work week ... but I will tell you that you need a plan to fight heads up against Chinese companies – which will be going head-to-head with every startup created in the next decade... What's at stake isn't just money, it's democracy vs. communism."

Let's leave the ridiculous "If China wins the startup war, we will all be leaving under communism" proposal and focus on something else.

Is China coming for the West? And a followup: should European tech care about China?

The "China" Scale

Some indisputable facts about China:

  • The country operates at an immense scale (a result of having a 1.5b population)
  • Everyday technology is way more advanced than in the West, from transport to payments.
  • Once China sets its eyes on something, it throws every resource it has at it, mainly government spending.

The China AI craze is just one example of how they operate: pick a possible future, build a 5-year plan around it, and invest in it.

At first, this seems scary. If a maniac with money and a different Ethics playbook puts a target on your back, I'd worry as well.

But my initial thesis is that tech startups shouldn’t worry about China. There is no target on anyone's back (at least for now).

1.5 billion people is more than enough

Most US startups don't care about expanding to Europe until they reach market saturation (think Uber).

The same goes for China.

If your total addressable market is 1.5b people, you don't need to expand. You have enough room to grow right in your backyard, particularly when growth is slowing in the Mainland.

There are dozens of huge Chinese companies you haven't heard about because they operate only in China and have zero plans to expand (think Baidu and Google but for Twitter and other cos.)

If you ever come to China, you'll realize that they don't give a f*ck about foreigners.

No one speaks English. Most vendors (even exporters who deal exclusively with foreign customers) only do business via WeChat. You can't check-in to a flight unless you are Chinese.

Many places don't take credit cards, only WePay (which you can only get if you have a Chinese bank account). You can only book trains if you are Chinese, or via a travel agency.

China doesn't want the world, they just want a piece of it

China doesn’t want the world. They know their limitations. They know that there's enough room to grow at home and that the culture gap between them and the West is too wide.

That said, they do want a piece of the pie. Instead of going full Napoleon on the rest of the world, they are slowly partnering with everyone and their mothers (startups, big tech companies, telcos), and becoming a hard to extricate piece of the puzzle. Like a tumor, but with cash.

A great example is Huawei silently partnering with every telco possible, or Uber buying Didi Chuxing for a percentage of their company

Should European tech care about China?

For us, that's the real question: Should European tech companies care about having a China-shaped target in their backs?

I think European tech has bigger fish to fry before worrying about China: internet regulation, salaries, options, and funding to name a few.

So tech in Europe is safe for now (except if you are in hardware, then you are in trouble because they will enable your competitors). But you should look for signs of intent because once China wants something, they’ll build a 5-year plan around it and go for it.

If you want to worry about something, I'd worry about India. They have a fantastic English level, world-class education, they look up to the West, the culture change isn’t as extreme, and they have a huge drive to grow and innovate.

Don't agree? I'd love to change my mind, so let me know.