The ChinaAccelerator, a tech-focused US$200m fund, picked Shanghai over Beijing, although typically most IT firms started off in Beijing. Shanghai is more international, says managing director William Bao Bean in the Economist.
Lack of government support is cited as the second-greatest challenge to entrepreneurs globally but it is not an issue in Shanghai. In fact, 85% of the city’s entrepreneurs deem their government “very or somewhat effective,” by far the highest figure globally. “It’s pretty simple,” says William Bao Bean, Partner at SOSV and managing director of Chinaccelerator, a global venture capital firm and China based accelerator. “In China, government support is local and a way to build a tax base.” He considers Shanghai to be among the most aggressive in Asia. No wonder: in April 2016 the local government announced new regulations that will cover up to RMB6m of venture capital losses in case of a bad investment
Although growth has slowed, China is still booming by international standards with GDP increasing at about 6.7% in the first quarter of 2016 and Shanghai offering some advantages compared to other cities in the country. “It is more international than Beijing,” says Mr Bean. For this reason, many companies opt to place their marketing and sales departments in the city and foreign brands often establish their headquarters here. Beijing is home to the majority of R&D initiatives and large domestic players, such as Baidu, Tencent and Alibaba, which means the ecosystem is just stronger there overall. “The reason we chose Shanghai,” says Mr Bean, who runs a tech-focused US$200m fund, “is that it is the most international city in China, both in terms of the level of English spoken but also because our focus is to help Chinese companies go global.”
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