
12,000 startups are being created every day in China [video] - da02
https://www.youtube.com/watch?v=QexL6F-W4Ss
======
ericjang
Fascinating documentary, thanks for sharing! If I understand the business
model correctly, isn't the 融道网 (Roadoor.com) 9.00% guaranteed principal +
interest mentioned in the documentary considered a Ponzi scheme in the US? How
much of the return on capital is from RoI from investment into companies
(exits, dividends, organic growth) vs. just increased AuM from (老百姓)
investors?

Edit: just realized that businesses requesting loans to 融道网 are screened prior
to being made available to public investors, so the deal flow appears to be
capped by available business opportunities.

~~~
smaddox
Yeah, just like mortgage lending prior to 2008 was "capped" by the
availability of quality debtors.

------
dvcc
So I had some doubts about the numbers at first, but a rough quick calculation
12,000 / (1.3 billion (people) * .5 (age 25-54)) ≈ 0.002% of the available
population a day creating a startup (1 in every 50,000) which does not seem
too far-fetched, but still seems a bit high to be honest.

~~~
kitschshrine
it's a lie, much like the government's made up 7% gdp growth.

"China's liaoning province admitted that it inflated GDP figures from 2011 to
2014"

[https://qz.com/887709/chinas-liaoning-province-admitted-
that...](https://qz.com/887709/chinas-liaoning-province-admitted-that-it-
inflated-gdp-figures-from-2011-to-2014/)

~~~
golergka
Now, this I have been wondering for a long time. Chinese authorities,
especially on a local level, aren't exactly known for their honesty and high
moral standards. At the same time, they have a lot of incentives to over-
report one particular metric: population.

So, when people are talking about 1,5 billion Chinese - have these figures
have been independently confirmed, or just taken straight from the government?

~~~
TheSpiceIsLife
Genuinely curious, what are the incentives to over report population?

~~~
golergka
Doesn't it determine budget distribution from the central authorities?

------
ausjke
my friend went there and opened one a few years ago. it's relatively easy to
open one I was told

but it's super painful to close that, even though it's a small startup and
financially clean, still do not know how he could ever close that, many
procedures, paperwork, financial check everything he could not supply as a
small player,etc. it's just impossible to close i guess.

basically it looks to me that it's a easy-in-hard-out process.

~~~
kitschshrine
Why would any foreigner want to start a company in a country that

\- requires you to give up 50% to a local partner

\- blocks internet access to foreign websites (thus foreign customers)

\- can take away your business/assets/customers without trials

\- treats foreigners as a mere entity to steal technology and clients from?

~~~
bobjordan
As an American that has 100% ownership in two China legal enterprises, not
sure where some items in your bullet list are coming from. Yes, there are
unique difficulties. No, communist hard-liners are not setting over my
shoulder plotting to take my business without a trial.

~~~
eritansa
It seems a lot of people still have this old idea about China. The 51% Chinese
ownership requirement hasn't been a thing for almost 20 years.

~~~
idra
That's only if your company is a Wholly Foreign-Owned Enterprise (WFOE), which
come with its own special set of deliberately roadblocks which are not there
if a Chinese partner is involved.

------
kitschshrine
And yet just today...

"China’s sprawling Internet censorship regime is harming the country’s
economic and scientific progress, a senior official has said in a rare public
rebuke of long-standing Chinese Communist Party (CCP) policy."

[http://www.taipeitimes.com/News/front/archives/2017/03/05/20...](http://www.taipeitimes.com/News/front/archives/2017/03/05/2003666158)

So they're creating alot of startups that probably are just copycats of what's
existing. Not surprising considering China really isn't known for innovations.

~~~
da02
It's most likely a jumping off point. One way to learn painting in the past
was to copy paintings made by masters. So as the economy develops and more
people can afford to take risks, innovations should be more common (unless
govt intervention prevents it). Japan was viewed upon as a land of where cheap
imitations were made.

~~~
kitschshrine
They've been saying that since the Chinese economy opened up in the 80s,
really opened up in the 90s, really really opened up in the 2000s. so far,
nothing in 35 years. Japan had so much innovations in way less time. meanwhile
China's economy is crashing down, and no more free FDI to fuel any further
progress

~~~
Gabriel_h
I have a few anecdotal examples of innovations or ways in which China is
'ahead':

Bike-sharing startups like MoBike: Use their app to find the nearest bike to
you, scan a QR code to unlock it, and pay $0.15 for one hour. You can then
ride and leave it _anywhere_. Admittedly, this is only possible due to v. high
urban density (China has ten cities with populations greater than London and
similar urban densities).

I can order a lot from the same app/interface: takeaway, cinema tickets,
hotels, flights, KTV, etc. I find this more convenient than UK. Mobile payment
penetration here is very high here too. Almost everyone pays for almost
everything with WeChat.

Andrew Ng argues that AI progress in China is underreported due to the
language barrier. I suspect this insight applies more generally to all the
innovations happening here.

*[https://www.theatlantic.com/technology/archive/2017/02/china...](https://www.theatlantic.com/technology/archive/2017/02/china-artificial-intelligence/516615/)

~~~
gentro
The amount of information available to westerners about the Chinese economy is
pretty pitiful. Here in the U.S. there's like four or five talking points that
echo around the media about the Chinese economy and those are the only tidbits
people bring up.

I've seen a few NHK documentaries about China. Kudos to them for chasing down
interesting angles.

------
mrweasel
China really has to do something to create their "own" companies. If they do
nothing and the rest of the world decide to move manufacturing, either home or
elsewhere, China will go back to be a poor 3rd. world country.

No one will be keeping their business in China due to not being able to get
the same quality else where, or because the Chinese is such nice people to do
business with. So it makes sense to fund and encourage new businesses so China
can start to produce their own product, and not just be a big factory (and
copy machine).

~~~
idra
China has never stopped being a poor third world country.

------
omarchowdhury
Here's an example of one of these startups:
[https://www.aiadvertising.org/](https://www.aiadvertising.org/)

~~~
zhte415
Is this a parody? It is far better done than most China serious companies with
similar delusions.

~~~
omarchowdhury
I saw it listed on AngelList today.

~~~
zhte415
Wow. This is Time Cube level stuff.

And knowing China FinTech, as currently working in it, they could well believe
themselves.

\--

A broadcast message to investors: There is no China magic. There is little
innovation. There is a lot of following buzzwords. There is a lot of
iteration, however. Follow the companies that iterate, even on old-tech like
mainframe. They're where value happens.

~~~
idra
Extremely accurate and valuable comment, thank you. Your "broadcast message"
explains the situation very concisely.

------
DragonTurbino
It will be interesting to see how this will evolve and what impact will have
it on US in long term.

------
pcurve
Definitely skip the first 20 minutes or so. It's not just funding VR and
what's obviously bubble areas.

Many investment companies are also making small loans to traditional
industries like metals, farm, and fisheries. Fascinating stuff.

------
cscurmudgeon
Not all businesses are "startups", the way the word is used in the West.

~~~
OJFord
'Startup' comes from 'start[ing] up a business' \- so 'startups are being
created' doesn't strictly speaking make sense, or at least calling them
'startups' isn't adding anything not provided by 'created'.

You're right that the word is increasingly used to refer to SMEs that have
been around years, are stable, etc. - just because it carries weight as a
buzzword. But in the context of newly created businesses, that's exactly in-
line with proper/original meaning.

(A better title might have been '12,000 new startups in China every day', or
equally '12,000 businesses created in China every day'.)

~~~
webmaven
You have it backwards. The term "startup" today commonly refers to what used
to be called a "high-growth startup". The fact that new businesses such as
SMEs that are not intended as high-growth ventures are using the term is a
reversion to the original meaning.

It is no bad thing to have to start using the "high-growth" qualifier again.

~~~
OJFord
I'm sorry, I don't see where we disagree... What do I have 'backwards'?

I said SMEs that 'have been around years, are stable etc.' is a misuse - not
newly created businesses (high growth or not).

~~~
webmaven
Ah, I read too much into that bit. My apologies.

------
sametmax
Again i feel like everybody is using the word start up to replace the word
business.

------
myprasanna
I feel like these people have no clue what they are investing in. Is it just
me? :)

