Page 24 - How China Is Winning the Tech Race

China rises, Chao claims, it will cut into the commanding 90 percent global
share of U.S. technological advances in the Internet, personal computers, and
cell phones. “It will only be 10 to 20 years before China sees the likes of Gates
or Jobs,” he says.

The next new thing

No wonder top-tier Valley venture capitalists such as Sequoia Capital and
Kleiner Perkins Caufield & Byers are racking up frequent-flier miles to China
to sniff out the next Google, Skype, or Hotmail. Just a few years ago those
titans rarely drove beyond a 30-mile radius from their homes in Atherton,
Hillsborough, and Woodside in San Mateo County, California.
Friends and family members used to be the only source of cash for start-
up businesses. Today Chinese entrepreneurs pick venture firms that offer the
best financial terms and the most connections. The lobbies of the Four
Seasons Hotel in Shanghai and the Grand Hyatt in Beijing are popular
meeting points for negotiating deals. So are regular networking parties at
trendy spots such as the Museum of Contemporary Art in People’s Park. They
remind me of the freewheeling party scene in Silicon Valley in the late 1990s.
But even though some expect China’s bubble to burst soon, China’s tech
economy is here to stay. Venture capital still accounts for a comparatively tiny
17
portion of the overall Chinese economy, and the boom is expected to keep
going for another 20 to 30 years.
The wide-open opportunities in China have little in common with the ill-
fated joint ventures made by pioneer investors in the People’s Republic of
China some 15 years earlier. Many experienced China investors, such as Ta-
lin Hsu of the private equity firm H&Q Asia Pacific, were tripped up by cor-
ruption and fraud and barely earned a renminbi, the Chinese currency, from
their initial investments. Today venture capital is hip. Hsu’s son Mark, who
works for his dad, hangs out with Brazilian models and was, until he got
married, labeled Shanghai’s most eligible bachelor. A reality TV show about
entrepreneurship, Win in China, airs on state-owned China Central Television
and is modeled on The Apprentice. Entrepreneurs pitch their business ideas
before a panel of judges from China’s corporate elite, and the winners get
prize money up to $1.3 million for their start-ups. The money is put up by the

xx SILICON DRAGON