Please note that prior to September 2017, the Stanford King Center on Global Development was known as the Stanford Center for International Development (SCID).
By Emily Miller
During the recent Global Entrepreneurship Summit held at Stanford, the Stanford Center for International Development convened a session on entrepreneurship in China. The event featured Jean Liu, president of Didi Chuxing, a ride sharing company often called “the Uber of China.” She was joined by Feng Deng and Shoucheng Zhang, founders of two China-focused venture capital firms headquartered in Silicon Valley.
Liu said China’s immense market size presents unique opportunities for innovation. China is home to 44 cities with a population over two million. The United States only has four cities that size.
Innovation can stem from applying a creative lens to local issues, Liu says, recalling how four years ago it was an agonizing endeavor to flag down a cab in the rain. Didi Chuxing began as a taxi-hailing service and now provides seven different ride sharing options, allowing users to request luxury cars such as Teslas or even chauffeurs that will come drive your car for you.
Millions of potential customers with diverse preferences make China a tempting market for entrepreneurs. And Didi is reaping the rewards. Fourteen million rides are conducted daily through Didi alone – five times that of the entire U.S. ride-sharing market. And yet car sharing accounts for only 1 percent of urban rides in China, showing the enormous potential for future growth.
Didi’s success is part of a broader trend of flourishing entrepreneurship in China.
Deng explained that China is transitioning from a manufacturing-based economy to a service-based one. Previously centered on producing cheaply made consumer goods, companies are now innovating new ways to meet the demands of richer consumers. Thanks to decades of high growth in China, consumers have more income to spend on higher quality products.
But China still trails behind the rapid pace of innovation found in Silicon Valley. Deng faults China’s education system for failing to teach students how to innovate, instead focusing on traditional rote learning. China has also been unable to attract the same level of global talent as Silicon Valley start-ups.
Recent college graduates in China are starting to choose start-ups over long preferred government or state-owned enterprise jobs. Still, it appears entrepreneurship in China is only in its early stages of development.