In Search of a Chinese Silicon Valley

Click image to magnify founder Morgan Su hopes to grow his product search site into a global hit.

Click image to magnify

Zhongguancun's giant electronics markets add to the neighborhood's high-tech atmosphere.

Click image to magnify

Tian Fei, a programmer in Beijing, says Chinese managers' focus on the bottom line is stifling homegrown innovation.

Morgan Su, the founder and CEO of a young Internet search outfit called, is sitting in the dark, plugging away at his keyboard late on a Friday afternoon. The darkness lends the room a quiet calm, but one gets the impression it’s either the cost-cutting decision of a lean, young technology operation, or, as an old tech startup romantic might tell it, maybe Su had arrived that morning too eager for coding to dally with something so trivial as light.

A tall vertical crack in Su’s office wall, and a worn dry-erase board covered in layers of old Chinese marker scribbles, add to the no-frills feel. A modest cubicle farm takes up the rest of Makepolo’s office space, where about 20 young men are engaged like Su, sitting in the dark with their heads bowed, their eyes reflecting their computers’ cold blue glow.

“Right now I’m funding the company myself,” Su says in Chinese. Even with the lights off, keeping the two-year-old company afloat is no small feat, given Makepolo’s location in the 13th floor of a gleaming office tower in the heart of Beijing’s Zhongguancun neighborhood.

Su says he's working on securing outside capital to help Makepolo grow. "I’ve made one deal already,” he says, pausing before he grins and adds, “But I want more.” Su is confident he can make his site a global online destination, and move into a more extravagant business complex like the ones being built around him.

If there is a Silicon Valley to be found in China, Zhongguancun is it. Surrounded by Tsingshua University and other top Chinese schools, the area ranks as the city's No. 1 electronics bazaar, where all of Beijing comes to haggle over the price of a new Lenovo. Glass-walled monuments to China’s tech culture spring up taller and shinier here each year. Sun, Microsoft and Google's office towers share a single city block.

Even in the broad sweep of Chinese history, reaching back ten years to the boomtown days of Web startups—when two guys could go to work in a garage in the morning and walk out millionaires that night—is like recalling a past dynasty. Like many other industries, though, online business is growing quickly in China, powered by the nation's steady economic momentum. Until recently, most venture funding behind Chinese tech startups came from Taiwan, Hong Kong and the United States, Su says, and tended to favor Western-educated entrepreneurs.

Today, though, there’s less of a line between Chinese and outside investment, and projects like Makepolo, founded by the Quanzhou-born Su, are increasingly common. (Pronounced with a Chinese accent, the company’s name recalls Marco Polo, whose landing in Quanzhou opened a new global market.) Makepolo is a search engine designed to help small businesses quickly find specific supplies and stock items from online retailers. By focusing on the online needs of a narrow group of users, Su is counting on the fact that just a sliver of the Chinese market can mean serious business—30 million small businesses in China alone, he says.

With 137 million Internet users in 2007, China ranks second behind only the United States, and that won’t be the case for long. Tens of millions of Chinese are drawn online each year, and by 2009, the Pew Internet and American Life Project predicts the world’s largest nation will also be home to 210 million Internet users—more than any other country.

American and European Internet companies have historically had limited success breaking into China, thanks mostly to language barriers, tight state control, and broad differences in how Chinese and Westerners prefer to use the Web. Chinese page design favors a text-heavy look, influenced by the BBS message boards still popular here, that would be dizzying to American readers accustomed to Web 2.0-style minimalism.

In 2004 and 2005, when YouTube and Facebook were remaking the Web for American users, what blossomed in China were so-called C2C, or “Copy to China” sites—clones of Internet staples like eBay, Google, and more than a few versions of YouTube. If the basic concept behind the site lacked innovative flair, success with the C2C model nonetheless took a unique sort of creativity: tweaking page design and site architecture to appeal to the Chinese palate, and feeding content to the hungry mass of Chinese Internet users. Often, C2C also meant pre-screening posts to the site, to stay in the government censors' good graces.

Frank Yu, a Beijing-based technology consultant, says that like Northern California, Zhongguancun has the right mix of people, what he calls an “ecosystem” of developers, marketers and investors in the tech business. “Everywhere the startups, and even the V.C.’s, are all connected by one degree of separation,” says Yu, who runs a Facebook group aimed at Zhongguancun tech entrepreneurs. In the trendy terms of innovation and social networking theory, Yu calls himself a “connector.”

The corporate logos in Zhongguancun all would look right at home in Mountain View, Calif., but any claims to carry the torch as the next Silicon Valley must begin with a tradition of innovation, an area where China has yet to make a global splash.

Tian Fei, a young programmer in Beijing, says the differences between California and Chinese office culture is key to understanding the disparities between Western and Chinese start-ups. “A lot of people in Chinese companies have creative ideas, but because of the company environment, we have no time to realize our goals,” says Fei, who left his job at a YouTube clone called DreamWindows over differences with the management style. Fei says he’s frustrated watching Chinese tech startups focus solely on proven models while spending a minimum on research.

The yin-yang contrast between the Chinese workplace and the looser culture of tech startups is blurring as foreign talent and funding continue to pour into Zhongguancun. It’s anyone’s guess, though, whether real innovation can spring from the result. Even as global investment pays the rent in lush new corporate complexes, the neighborhood’s potential as a true leader in Web innovation may rely, most of all, on the scattered dark rooms where young programmers keep working late on a Friday night.

China's Silicon Valley

Pat, very impressive! Keep it up.

Great story

Great story, Pat! Your descriptions in the first paragraph took me to that office. :o)

Limited resources create innovation…not an abundance.

Innovation already exists in China and has for many centuries. In the context of how it is described here, it will only be a matter of time, when all the C2C (copy to China) is plucked and no longer low-hanging fruit, before it comes in exponential curves. However, the Silicon Valley of China may not be in Beijing or any first tier city but rather in a place where hunger and passion drive the products of imagination not bound to the quick money and enticements of building to sell or building to ipo...but rather building to last. It's going to be fun to partake and fun to watch.