Opportunities & Challenges
China is the second-largest economy globally and is rapidly evolving from being the “world’s factory” to a consumption-driven economy. For foreign businesses, the People’s Republic of China has always been an important – but also a complex and challenging – market. German Accelerator supports startups in exploring China in a safe and sustainable way and helps them ascertain whether or not China is the right choice for their business.
Facts & Figures
in the world
Active internet users,
the largest concentration worldwide
Expected size of China’s middle-class
population by 2022
Unicorns, with several focusing
on automation and AI
Sources: CNBC, Tracxn (2021)
Opportunities & Challenges
for German Startups
Consumer Goods: New sales channels have been emerging for B2C ecommerce companies to capitalize on the huge Chinese market. Whether in food, clothing, luxury goods, or more, “Made in Germany” products are highly valued by Chinese consumers. But seizing these opportunities is challenging, resource-intensive, and sometimes not advisable. German Accelerator supports startups in making the right risk assessment before launching their China activities or, in case of doubt, advises against a China engagement.
Deep Tech: For some startups in areas such as smart manufacturing, automotive, mobility, clean tech, agritech, health tech, and more, the Chinese market can be very tempting. The government and private business are pushing these industries and many foreign companies have benefitted from these dynamics. But it’s vital to develop a thorough IP strategy and do a thorough risk assessment before exploring these opportunities so as not to expose oneself to any unwarranted risk. German Accelerator and its partners help you analyze these risks, benefits, and challenges, and also advise against a China engagement if necessary.
SaaS / Software: The B2B Software-as-a-Service market in China is not yet mature. Many German companies with good B2B SaaS solutions have found productive synergies with the Chinese market. Likewise, companies with B2C apps and mobile solutions sometimes find China to be a lucrative sales market. Still, the competition is fierce for both B2C and B2B digital products in China. During the Market Discovery program, we come alongside your startup to evaluate whether a deep dive into this market makes sense.
Beyond Market: The most important feature of the Chinese market is certainly its enormous size. But many foreign players also have other touchpoints with China. China is a source for supply chain management, industry intelligence, talent and technology sourcing, and more. Especially for production outsourcing, many companies are benefitting from China’s highly integrated supply chains. But these dynamics don’t make sense for all companies. German Accelerator supports startups looking to engage with China safely, and we advise these companies to abort their expansion into China if and when justified.
Main Startup Hubs
Beijing (in the Jing-Jin-Ji region) is home to many companies in the fields of AI, big data, edtech, and fintech. The dense university landscape produces around 200,000 graduates annually, many of whom start their careers in the startup scene. However, as the political center of China, Beijing is also characterized by heavy regulation and therefore does not make sense for every company.
Shanghai (and other cities in the Yangtze River Delta) is home to many Chinese and international corporations in the manufacturing, service, and banking sectors. Foreign B2B startups can expect good customer proximity, but Shanghai has also become very expensive and no longer affordable for many employees in the startup scene.
Shenzhen (and the Pearl River Delta) has become a center for hardware design and production. Shenzhen’s highly integrated supply chains are particularly attractive for start-ups looking for production outsourcing. But working with Chinese actors within the Shenzhen ecosystem is also challenging and requires a clear risk- and cost-benefit assessment.
Programs We Offer for China
The China Essentials workshop enables German companies to tap into and maneuver the complex Chinese market and develop an early idea if an international expansion into the People’s Republic of China is a viable option. This workshop is a prerequisite to the China Market Discovery program.
Market Discovery Program
The China Market Discovery program helps you determine whether or not China is for your business. We support you in developing a tailored, risk-sensitive China strategy on which you can base your subsequent decisions and activities.