Recent unfolding events could mean that the Chinese technological centers of Shenzhen and Hangzhou are giving Silicon Valley a hard time in the global market. According to reports, people’s cozy relationship with Silicon Valley is slowly shifting towards the Asian tech regions. This means the centers are giving Silicon Valley a run for its money for the first time in many years.
Over the last seven months, financial technology companies in Asia have raised over $9.6 billion more than double the amount raised by tech companies in North America. According to Accenture, the capital raised from the Asian tech giants is more than twice the amount raised by their North American counterparts during the 2015 fiscal year.
The current shift is mainly due to China’s strict policies that make it difficult for the American technological companies to figure out the world’s second largest economy. Even Uber’s abrupt decision to penetrate the China’s market was met with fierce rivalry from its main competitor Didi Chuxing. The country’s repulsive market for American companies is characterized by an alternate Internet universe marked by dominant homegrown versions of Google, Youtube and Twitter. This has given the tech firms in the country an upper hand in controlling the domestic and African markets with a big margin.
According to tech and financial analysts, the shift has taken a shorter time than was expected. For instance, fintech fundraising in America was 20 times bigger than China in 2010. Six years later, the amount is not more than half. This shift has been characterized by financial declines in a number of tech companies in Silicon Valley.
In addition, most Chinese companies can innovate themselves in the comfort that there is no competition from foreign-based firms. Even those foreign firms who are lucky to make it to the rich market still have difficulties competing fairly with the domestic companies. The companies are also affected by domestic perception and political ideologies. Just a few days ago, we saw Chinese protesters smashing iPhones to oppose the move by Washington to object Beijing’s territorial claims.
Tech firms in China will still continue to enjoy government favor as far as competition against foreign investors is concerned. The current president Xi Jinping is always advocating for a switch from an economic strategy that encourages foreign investment to one that promotes domestic innovations.