China’s Version Of Silicon Valley

China’s version of silicon valley has been emerging with new technology entrepreneurs and VCs. Chinese influenced apps are causing a new generation of Chinese entrepreneurs to develop and innovate applications for China’s market. China isn’t interested in replicating Silicon Valley, rather entrepreneurs are interested in how VC is run, management and the culture.

According to Kantar World Panel, Android’s steady growth in china is mainly coming from cheaper local brands, consumers are seeking for the ultimate value for money device. Almost a quarter of Smartphone sales were made via online channels in 2013Q3. Even though online channels usually offer better price, the ability to test the phone is also a key purchase decision factor for Chinese customers, making it important for manufacturers and leading retail chains to develop effective O2O strategies The report also stated that Android devices offer similar user experience, consumers are more focusing on cost effective devices.

Pay-to-Gain is also a focus for Chinese start-ups. “Since a decade ago, the Chinese freemium model was way more advanced” than in the U.S., said former Google Inc. China head Kaifu Lee in a recent WSJ interview. “In order to build a successful franchise, Chinese companies offered as much free to as many people as possible and let them play freely for a long time.”  Android mobile phone device maker Xiaomi already reached $10 billion in market share.

Google / Sina Weibo

The Baogongzi app for Android is one of the many different Chinese applications available on the Chinese market today.  Because of the government and censorship challenges there is no presence of Google’s Android Market. Supporting the Android App Market is a concern for Google because of government relations. There are many Chinese app stores which are popular with over millions of downloads for the Android market. Stores such as AppChina, Gfan, HiAPK, Tencent’s app store and more are present within the market.

Expectations are that China will grow at a 10 percent rate this FY 2013. Shanghai Composite is up nearly 20 percent since last fourth quarter. Goldman Sachs is bullish this year that China’s outlook will be high. Expectations with domestic investors are still low. Local investors will play a critical role in determining market direction accounting for 80 percent turnover at China's two stock exchanges in Shanghai and Shenzhen. Overall, the Asian economy has been improving quite well.

2013 is optimistic in the fact that it could be the year Chinese stocks rebound. Economic fundamentals are have been improving. A lot of positive outlook is in place for a rebound. Chinese new leadership, talk of reform. But it will take time before we see any significant developments. We have seen that key index recovers indicating the worst could be over for the Chinese economy. The Shanghai index could climb to the 2,400-2,500 range in the first half of 2013, implying an upside of about 8.5 percent to 13 percent.  In these cases slower growth can be more profitable.