The Stockholm School of Entrepreneurship hosted an event today ambitiously titled, “Good Morning 2019,” that plays on their 10 year anniversary by investigating what the world will be like in the next 10. Arctic Startup readers will be most interested in the presentation by Li Gong, CEO of Mozilla in China. Dr. Gong started his presentation by saying that he lives a bi-coastal life, splitting time between Beijing and Palo Alto. Then he said he had some stories to tell, that he hoped wouldn’t be too scary. Unfortunately, since his presentation was titled “How The Chinese Compete,” some trembling and teeth rattling was bound to occur. He continued by mentioning the fact that 13% of the world market for mobile phones is held by so-called Chinese, “grey market” companies. That would make it the 3rd largest handset maker that you’ve never heard off. But that isn’t news. Everyone knows about low price competition from China. What isn’t so well known is the way Chinese companies innovate. Mobile phones with 2 SIM cards for example, an idea laughed at in Espoo and Lund, but wildly popular in China. Even the example of the “myPhone,” with all the form factor of iPhone, for 700RMB (≈$100). But don’t be scared he said, Western companies still have a lot of advantages.
Branding for instance, and access to capital. So for the moment, when Huwaei steals $2.9 billion in work from Nokia Siemens, you shouldn’t worry. What should make you worry isn’t what Chinese companies are doing, it’s how they’re doing it. How they’re doing it, is by having so many companies being run by founders, instead of hired “professional” CEOs. How they’re doing it, is by chasing margins, not blue ocean technology frontiers. As Dr. Gong said, “Venture Capitalists hate ‘copy cat’ technology, Chinese companies don’t care.” So, not only are Chinese companies winning on cost, they are also winning on speed, and out innovating Western companies in their own markets. All the while rejecting Western developed products in China, from companies that want to sell to the Chinese things that were mades for Swedes (or Danes, or Finns).
So, sleep well tonight. But in the morning, start worrying.