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How China can encourage start-ups
By Ni Tao |
December 31, 2011, Saturday
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Editor's note:
This is the third and final part of Ni Tao's interview with Saul Singer, co-author of "Start-Up Nation: The Story of Israel's Economic Miracle."
Q: China is still at a low stage of innovation that is often synonymous with producing knockoffs. But it has announced plans to be truly innovative. What does it take for China to make that shift happen?
A: Some people might think that China has been doing knockoffs and it can only do knockoffs. I don't believe that. The entrepreneurs that decide to copy Western companies can decide not to copy.
A Chinese blogger named Lu Gang told me that many Chinese companies want to do something that's not a knockoff, but they feel the only way they will get the capital is to do knockoffs.
I think your entrepreneurs are ready. They want to and are capable of doing better things. One thing that's very important in Israel's experience is that in the mid-1990s, there were few successful start-ups. The most common example is ICQ. In 1996, a few 20-something young people invented an Internet chat program, and they sold it to AOL for US$407 million.
Before the deal they had millions of subscribers but zero revenues. Then they sold the company and this was a huge thing. Everybody started to think if these guys can do this, I can do this. So if you have a few success stories in China, it's going to make a huge difference. People will say China doesn't have to copy, and their attitude will shift appreciably toward what China can make.
Q: To what extent do you think Israeli experience can be replicated in China?
A: There are many things that can be learned from Israeli experience but every culture and country is different. So it's not a matter of trying to copy some of the things that made Israel successful.
From the cultural point of view, there are different routes to innovation. The tendency is not to think how China can do as Israel has done. It's a better way to think sometimes how China can work with Israel, because Israel has helped a lot of American companies to be innovative. Israel can help Chinese companies.
There are already some developments. I'm not supposed to mention its name, but recently a big Chinese tech company bought a company in Israel. Another case is ChemChina. It bought an Israeli company called Makhteshim Agan. And this is interesting because I don't think they bought Israeli companies for the technology. It's more for global innovation.
The second Israeli company was operating in a hundred countries around the world. Acquiring Israeli companies is an easy way for Chinese companies to become global.
Another way to help innovation in China quickly is simply for Israelis and Chinese to do start-ups together.
I have this idea of creating a place in Israel where Chinese start-ups and those from other countries come for a few months, work like an international incubator, and then go back and create start-ups for their own market.
Q: China and Israel have signed some deals in technological cooperation. How bright is their future?
A: That's another model I should mention: joint research and development (Joint R&D). Jiangsu Province and Israel signed an agreement in 2008 and that's been going for some time. There's another agreement almost ready to be signed with Chongqing Municipality.
There are other agreements as well between Israeli government and parts of China. Joint R&D works like this: the Chinese government funds research for Chinese companies, the Israeli government funds research for Israeli companies. And they do R&D together on something that will be joint business. That's the model. The specific focuses of the signed agreements cover a number of fields, including biotech, clean energy, ICT and emerging industries.
This is the third and final part of Ni Tao's interview with Saul Singer, co-author of "Start-Up Nation: The Story of Israel's Economic Miracle."
Q: China is still at a low stage of innovation that is often synonymous with producing knockoffs. But it has announced plans to be truly innovative. What does it take for China to make that shift happen?
A: Some people might think that China has been doing knockoffs and it can only do knockoffs. I don't believe that. The entrepreneurs that decide to copy Western companies can decide not to copy.
A Chinese blogger named Lu Gang told me that many Chinese companies want to do something that's not a knockoff, but they feel the only way they will get the capital is to do knockoffs.
I think your entrepreneurs are ready. They want to and are capable of doing better things. One thing that's very important in Israel's experience is that in the mid-1990s, there were few successful start-ups. The most common example is ICQ. In 1996, a few 20-something young people invented an Internet chat program, and they sold it to AOL for US$407 million.
Before the deal they had millions of subscribers but zero revenues. Then they sold the company and this was a huge thing. Everybody started to think if these guys can do this, I can do this. So if you have a few success stories in China, it's going to make a huge difference. People will say China doesn't have to copy, and their attitude will shift appreciably toward what China can make.
Q: To what extent do you think Israeli experience can be replicated in China?
A: There are many things that can be learned from Israeli experience but every culture and country is different. So it's not a matter of trying to copy some of the things that made Israel successful.
From the cultural point of view, there are different routes to innovation. The tendency is not to think how China can do as Israel has done. It's a better way to think sometimes how China can work with Israel, because Israel has helped a lot of American companies to be innovative. Israel can help Chinese companies.
There are already some developments. I'm not supposed to mention its name, but recently a big Chinese tech company bought a company in Israel. Another case is ChemChina. It bought an Israeli company called Makhteshim Agan. And this is interesting because I don't think they bought Israeli companies for the technology. It's more for global innovation.
The second Israeli company was operating in a hundred countries around the world. Acquiring Israeli companies is an easy way for Chinese companies to become global.
Another way to help innovation in China quickly is simply for Israelis and Chinese to do start-ups together.
I have this idea of creating a place in Israel where Chinese start-ups and those from other countries come for a few months, work like an international incubator, and then go back and create start-ups for their own market.
Q: China and Israel have signed some deals in technological cooperation. How bright is their future?
A: That's another model I should mention: joint research and development (Joint R&D). Jiangsu Province and Israel signed an agreement in 2008 and that's been going for some time. There's another agreement almost ready to be signed with Chongqing Municipality.
There are other agreements as well between Israeli government and parts of China. Joint R&D works like this: the Chinese government funds research for Chinese companies, the Israeli government funds research for Israeli companies. And they do R&D together on something that will be joint business. That's the model. The specific focuses of the signed agreements cover a number of fields, including biotech, clean energy, ICT and emerging industries.
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