What a difference five years make.
Just half a decade ago, mobile payments didn’t exist in China. Today, the same amount of money (about $4 trillion annually) is transacted through cell phones as is via traditional credit cards. Within the same time period, bike-sharing services have also gone from non-existent to bringing more than 15 million bicycles to China’s streets.
Economic growth and the sheer size of the market in the most populous country on Earth are certainly key drivers of the rapid-pace adoption of these innovations. But, surprisingly enough, so is the Chinese regulatory landscape—at least according to a trio of panelists who spoke at a Fortune event on innovation in China, which took place in San Francisco Thursday evening.
“The Chinese government is good at turning a blind eye when innovation starts, and then dealing with it later,” Ying Wang, managing director of Fosun Kinzon Capital, told the audience, which included a delegation from Guangzhou, China led by the city’s vice mayor, Cai Chaolin. “It gives [entrepreneurs] the opportunity to thrive.”
The knock on China’s tech sector, up until recently, has been that it’s more of a follower than an innovator. But Wang and the other panelists insisted that the country is actually fertile ground for those who want to make bets on bold, new ideas. (Already, one out of three “unicorns” —startups valued at $1 billion or more—are China-based.)
“There are more entrepreneurs in China than on the face of the planet,” said Jonathan Woetzel, senior partner of business consulting firm McKinsey & Company and director of McKinsey Global Institute. “It is a regulatory environment that’s supportive of entrepreneurs.”
Wang, the Fosun investor, gave an example of how the regulatory landscape can be helpful to startups, saying that online insurance companies in the United States must get licensed state by state, while in China all they need is one license that allows them to operate everywhere.
Hans Tung, another panelist and a managing partner of investment firm GGV Capital, concurred and gave an example of another sector: “Alipay [a Chinese mobile payment platform] was conducting business for three years before any regulation.”
While China may turn a blind eye to its own entrepreneurs—at least when they start their companies—it certainly doesn’t to foreign founders. And cracking the Chinese market hasn’t gotten any easier, whether it’s a five-person startup or Google, which has struggled to gain significant traction.
This and many other timely topics will be explored at the upcoming Fortune Global Forum, which will take place in Guangzhou from Dec. 6-8, immediately after Brainstorm Tech International, to be held Dec. 5-6, also in the megacity of Guangzhou.