New wave of digital entrepreneurs rises in China
Technology change-makers innovate across industry boundaries
The time when tech unicorns, digital disruptors and celebrity entrepreneurs came exclusively from Silicon Valley is long gone.
A new generation Chinese entrepreneurs is quickly gaining strength. These new change-makers are digital natives, disrupting the world of industry incumbents, creating hero-entrepreneur identities and relentlessly pursuing growth.
Cheng Wei's Didi Chuxing car-hailing service is younger than Uber but has three times the daily orders of its U.S. rival. Zhang Yiming's Jinri Toutiao has become China's largest news service, besting traditional media and internet giants within just five years of its launch. Zhang Xuhao founded food delivery service Ele.me from his university dorm room. After multibillion-dollar investments, it has grown into China's largest online marketplace for food delivery and is taking in 5 million orders a day.
China is seeing this new generation of entrepreneurs coming of age. Zhang, who was born in 1985, comes from a well-off Shanghai family of businessmen. This background encouraged him to take risks and seek financial independence at an early age.
While pursuing a degree in architectural engineering at Shanghai Jiaotong University, he often studied and made late-night food orders with a fellow gamer named Kang Jia. Finding paper-based menus and phone ordering unsatisfactory and lacking in choice, they set up Ele.me in 2009.
The co-founders started out by collecting menus from small restaurants around their university campus for classmates to view online. The company now boasts a presence in over 700 cities, serving food from 300,000 restaurants.
Ele.me guarantees it can find customers any type of food near their location, even $2 dumplings from the street corner, and deliver it to their home. Small restaurants have appreciated the widening of their reach and sales channels. Larger restaurants and chain stores soon followed them onto Ele.me once the advantages of its localized search, logistics fleet and large user base became clear. The two students had created a $4.5 billion disruptive business in the food delivery and catering industry.
Three years after Zhang and Kang established Ele.me, another change-maker emerged. Zhang Yiming, born in 1983, came from an ordinary family in Fujian Province. After receiving a software engineering degree from Nankai University in the city of Tianjin, he co-founded three ventures and had a short stint at Microsoft.
In 2012, Zhang founded Toutiao, which uses artificial intelligence to provide mobile customized news recommendations. By analyzing online social behavior and profiling each user, the service develops news interest maps. Zhang's biggest competitor is Tencent News, a service from Tencent Holdings, China's highest valued company.
By the end of 2016, Toutiao had accumulated 700 million users and an estimated valuation of $10 billion. Local media have reported the company raised a further $1 billion in April. Its success in shaking up the traditional media landscape in China does not come from early adopters in the country's biggest cities. Some 90% of its users come from elsewhere in the country and they are largely under 30 years old.
Cheng Wei, born in 1983, has had a rather different career. Born in a small city in Jiangxi Province, he studied administration management at the Beijing University of Chemical Technology. His only corporate job was at Alibaba Group Holding, where he spent eight years before founding Didi Taxi.
Inspired by the success of Alibaba in the internet sector, Cheng had been continuously looking for opportunities in the digital enterprise sphere. Not unlike Uber founder Travis Kalanick, the story goes that Cheng waited in the cold Beijing rain for a ride one too many times, leading to the idea of a mobile taxi hailing application.
Didi Taxi is a location-based car-service matching platform, which was originally for taxis but later incorporated private car services as well. The company grew at breakneck speed and today claims to handle 20 million orders per day and have 15 million drivers in 400 cities. After merging with competitor Kuaidi Taxi in 2015 and acquiring Uber China in 2016, Didi's market share reached 90% and its valuation of $35 billion made it a "super unicorn." Not bad for a venture founded just five years ago.
The new generation of Chinese entrepreneurs are true change-makers. Their mindset is different from first wave predecessors such as Haier's Zhang Ruimin, Lenovo's Liu Chuanzhi and Huawei Technologies' Ren Zhengfei.
The new entrepreneurs have embraced and exploited digital technologies to rethink product offerings in traditional industries. Not afraid of and perhaps unaware of the complexities and legacy of traditional industries, these young change-makers have been innovating across industry boundaries. Armed with novel business models, they have disrupted traditional industries including catering, transport, finance, media and health care.
These entrepreneurs have also altered the rules of the competitive game to displace incumbents. Their services reach previously unreached markets at low cost to users.
Moreover, this new generation of entrepreneurs is not only digital savvy but also showcases strong public identities and excellent marketing capabilities. They are not afraid of the spotlight, unlike older entrepreneurs like Ren who are known for their modesty and low profile.
Significantly, these new entrepreneurs have showcased a super growth mindset, with users always coming first and profits later. Driven by venture capital investment, their business models focus on growth and expanding China's booming consumer market. The future of China is in their hands.
Mark Greeven is associate professor for innovation, entrepreneurship and strategy in Zhejiang University's School of Management.