Reflections from a Week in China

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About a month ago, Neil Irwin, an economics reporter for the New York Times, argued China is facing an inevitable reversion-to-the-mean moment, that the Chinese economy is destined to slow dramatically. I’m not an economics reporter, but in my role at GGV Capital, a venture capital firm that makes investments in the US and in China, where we’ve had a local presence for over a decade, I see the world and China with a slightly different lens.

As I do 6–8 times per year, I went to China a few weeks ago to spend time with my China-based partners, check in with some GGV portfolio companies, and meet up with several other founders, execs and investors operating in China. On this trip, I visited Shanghai, Beijing, and Hangzhuo, the home of Alibaba. This was my 38th trip to China since I joined GGV nine years ago, and every time I visit, I learn something new. During my visit, I couldn’t help but scratch my head in re-reading Irwin’s NYT piece — he and I seem to have visited different parts of China.

There are China “disbelievers” like Irwin, but I believe they only see half of the picture. I’d like to share the other half of the picture, the perspective I see in China:

1] Westerners misunderstand and underestimate China. It’s easy to comb data and write articles, but it’s hard to visit China 38 times. When I read an article by a China “disbeliever,” I wonder how many times they’ve visited the country and, moreover, how many of those trips took them out of Shanghai and Beijing. When I go to China, I see an incredible work ethic and a talent pool which is growing rapidly (including high-quality, experienced founders and executives). Specifically, the Chinese ecosystem now has big winners like Alibaba, Tencent, Baidu and Xiaomi, among others, from which an experienced and well trained set of entrepreneurs is emerging. These big internet players, while certainly competitive with many startups, can also provide ecosystem support. This is all a groundswell in China right now, and it’s not going away.

2] The new Chinese economy vs the old one. Perhaps Irwin and other China disbelievers view the country’s prospects through the “old economy” lens, a lens which thinks of China’s economy as driven by exports, five year plans, heavy infrastructure investment, state-owned enterprises, and the like. While some of that is certainly true, there’s a new economy in China, too, and it cannot be discounted. The new Chinese economy is one that is leveraging new platforms like mobile phones, tablets, hardware products, and logistics to deliver entirely new experiences in a manner that is particular to the Chinese environment, which just happens to be the largest national market in the world. Just as “software is eating the world” in the US, so too is it disrupting industries in China — consider retail, for instance, which is one of the strongest new sectors in China given the base provided by Alibaba,, VIPShops, and more. After this 38th trip, I don’t have any worries about the future Chinese growth story. In fact, there’s a great chance for native Chinese companies to enter and expand in emerging markets such as India, as well as in the US, as we are just starting to see with apps like WeChat.

3] Relative growth rates, challenges and opportunities. A common concern among China observers relates to the growth rate of the economy. China has experienced hyper-growth to date. So, what if it slows to 5% from 7%? Yes, the high growth can’t and won’t last forever, but that’s part of maturing. In the U.S., our growth rate is closer to 2%. So, any slight downturn in China can be adjusted to but the economy overall can still be huge in absolute terms, if not bigger as the base has increased from previous growth. The truth is that we can’t predict how this new economy of technology, entrepreneurship, and new markets will affect China, but I spend my time and energy confident in the belief that there are many more good times ahead. In mobile alone, China is simply a huge end market.


At GGV, we’re working to identify and help great entrepreneurs succeed. We invest a considerable amount of time, resources, energy, and frequent flier miles to make sure we have world class investment professionals, research capabilities, and networks to help our founding and executive teams in the companies we’ve backed to meet any challenge they may face. For me and my GGV partners in the US and in China, everything is about helping the founders we are privileged to back. We are optimistic, and we have invested not only our money, but our limited partners’ funds there, too. We are “believers.” And, while “disbelievers” do exist, it will make the future successes created by the next generation of Chinese entrepreneurs taste that much sweeter.

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