Dataconomy attended the “Evolution of Chinese Startup Ecosystem” session at the recent Takeoff Tokyo event, featuring insightful discussions by Mike Xu, Co-President of Fosun Capital, Yuchen Song, Founder and President of S-Tron, and Hongyuan Hu. The speakers explored the distinctive characteristics, challenges, and opportunities shaping the startup ecosystems in China and Japan, emphasizing potential synergies through collaboration.
Japan’s unique startup dynamics
Mike Xu outlined three defining features of the Japanese startup landscape. Firstly, he highlighted that, unlike China—where consumer markets strongly inspire innovation—Japanese startups often draw their inspirations from established corporations due to Japan’s aging and smaller population. Innovations like hydrogen technology, which require substantial investment and robust corporate supply chains, typify this corporate-driven innovation.
Xu further emphasized the distinct Japanese spirit of artisanship, where entrepreneurs meticulously pursue perfection in product development. While commendable, this perfectionism could slow down the agility essential to startups. Xu advised Japanese startups to strike a balance between meticulousness and rapid execution, urging closer dialogues between Chinese and Japanese entrepreneurs to blend strengths from both approaches.
External perceptions and realities
Hongyuan Hu shared his first impressions of Japan’s innovation ecosystem, noting its visibility primarily through global technology giants like Softbank, Toyota, Hitachi, and Sony. This limited external visibility of emerging startups contrasts sharply with China’s ecosystem, where startups enjoy significant prominence and visibility. Hu expressed curiosity about why such dynamics exist and looked forward to exploring these insights deeper through dialogue.
Is Japan startup-friendly?
Addressing a provocative question on whether Japan’s environment is genuinely conducive for startups amid powerful corporate influences, Mike Xu responded optimistically. He described the Japanese ecosystem as evolving, becoming increasingly open to global collaboration. He stressed that international venture capitalists could positively influence local entrepreneurs, guiding them towards embracing international practices and open-source business synergies.
Xu also noted that geopolitical shifts have made Japan a preferred destination for Chinese companies seeking globalization opportunities, supply chain expansion, and R&D collaboration. This increased interaction could significantly boost openness and innovation within Japan’s startup scene.
Opportunities for cross-border collaboration
Yuchen Song, representing S-Tron, highlighted Japan’s attractiveness as a market for AI-driven autonomous solutions due to its aging workforce and high labor costs. However, Song emphasized the critical need for local partnerships to successfully enter the Japanese market, reflecting a broader strategic trend of international startups carefully navigating market entry through strategic collaborations.
Strategic choices on hydrogen vs. electric vehicles
The panel discussed differences in strategic approaches between hydrogen technology and electric vehicles (EV). Song stressed market-driven decisions, noting that while both hydrogen and battery-powered solutions offer viable paths, customer preference and local resource availability ultimately dictate adoption. He cited China’s governmental policy favoring battery EVs due to abundant natural resources, contrasting this with Japan’s stronger investment in hydrogen technology, driven by its resource availability and corporate influence.
Xu echoed this sentiment, explaining that both hydrogen and EV technologies could coexist, each finding its niche depending on the geographical and industrial contexts. In China, while EV has established dominance, hydrogen solutions are being explored actively for specific applications like electric Vertical Take-Off and Landing (eVTOL) vehicles, illustrating strategic diversification.
Advice for cross-border expansion
In concluding the session, Xu advised startups from both Japan and China to deeply understand local market dynamics and consumer behaviors when entering foreign markets. Fosun Capital is actively developing cross-border incubators and accelerators aimed at providing first-hand market insights and facilitating interactions between Japanese and Chinese entrepreneurs.
Song further recommended leveraging collaborative business ventures as bridges for expansion. Rather than merely targeting bilateral market entry, he proposed combining strengths to jointly capture opportunities in Southeast Asia, Africa, and the Middle East.
The panelists concluded optimistically, reflecting on recent governmental cooperation agreements between China and Japan, underscoring a promising future of strengthened innovation and entrepreneurial collaboration between the two nations.
