Is China lagging on innovation or a force of change? For investor William Bao Bean the answer is positive, especially on mobile. In the Rensselaer in China he explains why mobile and innovation are a golden opportunity.
William Bao Bean:
China has some unique characteristics. It is a developing market. In some sense, it’s a very rich market but in some sense very poor. Their experience with technology is different than that in the US, where most of the people grew up with a PC first then a smart phone. But here in China, the majority of the market has never used a PC or email.
So one area I focused on was mobile. But the mobile market in China was horrible. No one was doing any investment in the mobile market until the end of 2010. The reason was because that the telecom operators in China were trying to control distribution of software and services. It was a very closed market. It was true in most of the markets around the world but especially true in China. If you can’t get your services paid for, you won’t make money.
But the power of mobile and the power of innovation to move around obstacles finally won out. On a global basis, the folks that tried to control things have lost out or are losing out. And innovative companies, like Apple and Google, are creating a new environment and a new ecosystem. This is one of the biggest investment trends in the last year and a half. I was lucky because I’d been investing in mobile pretty heavily for the last 5 years. And because there was not a lot investment in the sector until more than a year ago, there aren’t too many people familiar with the traditional mobile market. You’ve got a lot of people moving from the Internet space but sometimes the assumptions you use to make an Internet product doesn’t always hold true in mobile. So I got a really good opportunity.
In China, the Internet is dominated by really big players, like Tencent and Baidu. They always tend to offer every product. But these guys don’t have a clue about mobile. Because of the difficulty operating in the previous tough regulatory environment, they had basically pulled out of mobile and they were right to do that. But when mobile came back, they didn’t have a sense of how to deliver good mobile product and that created an opening for startups.
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