Zhou Wei, Genesis Partner Capital: Intelligent globalization is the best opportunity for Chinese entrepreneurs

BEIJING, July 10, 2024 /PRNewswire/ -- Recently, in a live broadcast, Zhou Wei, founding managing partner of Genesis Partners Capital, pointed out that the two directions of intelligence and globalization are the best opportunities for Chinese entrepreneurs and will bring new opportunities to entrepreneurs. At the same time, he also stressed that the past "loss for scale" model is no longer applicable, and now entrepreneurs must pay attention to profit and survival, and need to pay more attention to the core competitiveness and technological innovation of products.

At the same time, in the case of the reversal of globalization due to various reasons, Zhou Wei put forward the idea of "globalization 2.0": the key for Chinese entrepreneurs and enterprises to find a smart way to achieve globalization 2.0 is to give up empirical thinking and familiar paths, consider the distributed global layout from the first day of entrepreneurship, realize global localization, find local partners, share the advantages of the ecological platform brought by China, and realize a new model of being treated as a local enterprise.

Key takeaways:

1. Intelligence is the future trend, whether it is electric vehicles, industrial robots or service robots, in the face of an aging population and labor shortages, Chinese enterprises need to reduce costs and increase efficiency through robotics.
2. There are opportunities for Chinese brands to go global, for example in areas such as electric vehicles and fully unmanned intelligent logistics systems. In the future, products that dominate the international market may have more and more Chinese logos and Chinese trademarks.
3. China has a complete manufacturing ecological environment that combines multiple types of software and hardware, which is an incomparable advantage for other countries. This ecosystem enables China to create high-tech end products on the global market.
4. The development of AI technology, especially in the To B sector, will bring huge opportunities for Chinese companies. Providing AI solutions and being deeply tied to customers' workflows can revolutionize their operations and cost structures, making Chinese companies stand out in this wave of AI.
5. The past "loss for scale" model is no longer applicable, and now entrepreneurs must pay attention to profitability and survival, and need to pay more attention to the core competitiveness and technological innovation of products.
6. The startup landscape is constantly changing, and entrepreneurs must be agile and adapt their strategies to new market conditions. Entrepreneurs should have a clear understanding of their strengths and weaknesses and should not blindly pursue unrealistic goals. When making decisions, you should ignore small probability events and don't be misled by the very few success stories.

The following is a transcript of the conversation:

Li Zhigang: How do you see the current changes in China's startup environment?

Zhou Wei: First of all, changes in the international situation have led to a serious reduction in the sources of funds, especially the US dollar. Over the past 20 years, China's large venture capital companies have mainly relied on US dollar funds to support them, especially those that require long-term investment. Secondly, the direction of domestic entrepreneurship has also shifted to hard technology, which is a clear direction change. From the perspective of entrepreneurs, there are two directions to choose: one is to go to hard technology, which will receive great support from RMB funds; The second is to go global, use China's resources, and expand China's soft power at the same time. Entrepreneurs should make good use of China's resources to innovate products and application scenarios, rather than repeating low-quality and low-cost products. Even if it is a domestic substitution, it must have international competitiveness, otherwise it can only compete in the domestic market.

Li Zhigang: Compared with the entrepreneurs of five or ten years ago, what are the changes that entrepreneurs need most from behind the scenes?

Zhou Wei: Today's era has passed. The past model of "loss for scale" is no longer applicable, and now entrepreneurs must pay attention to profitability and survival, and need to pay more attention to the core competitiveness and technological innovation of products, rather than relying only on the power of capital to occupy the market. Entrepreneurs need to have a clear understanding of their strengths and weaknesses and should not blindly pursue unrealistic goals. When making decisions, you should ignore small probability events and don't be misled by the very few success stories. At the same time, the startup environment is constantly changing, and entrepreneurs must be flexible and adapt their strategies to new market conditions.

Li Zhigang: I am very optimistic about globalization based on China's local advantages. Mr. Zhou's key investment direction is intelligence, and the other direction is globalization, what do you think of these two directions?

Zhou Wei: First of all, we see this general trend, the general trend is intelligence, we define the future is the era of intelligent everything, from electric vehicles to industrial robots to service robots. After China enters the aging era, it is facing a population problem, and the only solution is to use robots to better serve people. From the enterprise side, the use of robots to reduce costs and increase efficiency is an important element, a large number of low-end manufacturing will inevitably be transferred from China to Southeast Asian countries, we will retain a more high-end, more sophisticated manufacturing, and this kind of manufacturing industry will be less and less dependent on people.

Many people will also ask us that robots, automatic machines, and AI have replaced humans, what should people do? In fact, it is not that people will not have jobs if they replace people with these automatic machinery, but that with the improvement of a large number of living conditions in China, many jobs in specific environments will inevitably be replaced by humans, and high-end jobs need more support from precision machinery in addition to people.

At the same time, Chinese brands have the opportunity to go global, and we have seen electric vehicles, in fact, the fully unmanned logistics system companies we have invested in are now advancing very fast in the Middle East and Southeast Asia.

In the 90s, we saw automechanical robots in science fiction cartoons and movies, and in future science fiction, they were all marked in Japanese, because everyone thought that Japan should be the country that contributed these products to the world in the future. After the year 2000, you will see a lot of Korean, and at that time people thought that Korea was the most promising, and then you saw a lot of Chinese. I believe that the greatest probability in the future is that in various places you go to a foreign airport, all the automatic operation of this special vehicle, service robots, service robots in the hospital should be a large number of Chinese logos, Chinese trademarks, this is what we think is a big vision.

Li Zhigang: Can you talk about the advantages of China's intelligence and globalization in combination with your investment case?

Zhou Wei: After more than 30 years of rapid development in China, and some industries must be relocated, we need to consider what entrepreneurs do is the most promising. We have found that the biggest advantage that China has accumulated over the past 40 years is that a complete multi-category, software-hardware and integrated manufacturing ecosystem can create high-tech end products. You can't imagine Malaysia or Indonesia suddenly having such an ecological environment systematically.

The fully unmanned and intelligent logistics system company we have invested in includes dozens of robots and corresponding management software systems. These require a very complex combination of various technologies.

We are not too worried about the local outflow of the industry, you can make it our external production and processing base. There may be people who will invest in some components and components, but we are more interested in who has the ability to make the final product.

Competition in China is fierce, and the result is that every entrepreneur is trying very hard to serve customers better before others provide better services. This awareness of forcing oneself to iterate keeps giving everyone a strong ability to define how the product meets the needs of users.

Combined with China's accumulated advantages in technology and production, combined with entrepreneurs' strong product definition and iteration capabilities, China has the opportunity to gain a large market share in the world.

Li Zhigang: For Chinese entrepreneurs, what opportunities do you think intelligence and globalization will bring to them?

Zhou Wei: From the entire global intelligent products, there are too many product types, and we really have the ability to commercialize most of the products, very effective operation, in 10 years, I think the only one with the ability is China. First of all, we insist that it is unrealistic to achieve the intelligence of a large number of products without relying on China's entire supply chain and complete technology ecosystem.

We think that in many industries it might be a bit like in the world of mobile phones and electric vehicles, and there will be a global leader like Apple and Tesla in the United States, because we have to admit that United States is still ahead of the curve in innovation. But like I said, they're going to have a company that might be the best in the world, but the companies from number two to number ten might all be from China, so you're going to see a lot of industries that are going to be like that.

Another possibility, what will emerge in some industries? Like DJI, like BYD, like Ningde Battery, the world's No. 1 company is a Chinese company, followed by a string of all Chinese companies, from the second to the tenth, this is another pattern.

Therefore, in this pattern, Chinese entrepreneurs want to go global. First of all, we must make full use of China's advantages. I also often meet some young Chinese entrepreneurs overseas, and even many ABCs may not speak Chinese, I still tell them, if you want to start a business, you should still think about how you can make good use of the opportunities of your Chinese ethnic group, rather than abandon it.

Li Zhigang: When you say that Chinese enterprises are going global, are they all industries or intelligent industries?

Zhou Wei: I think the next step for Chinese companies should be that most industries should strive to go global. Because the competition in all walks of life in China is already very fierce, but on the other hand, it is also a unique advantage of Chinese enterprises: China's competition is so fierce, and the result is that every entrepreneur is very hard to serve my customers better before others provide better services, and I provide more and better services. This ability to force oneself to iterate constantly allows everyone to have a strong ability to meet the needs of users and even subconscious of the product. So combined into the first part, we have accumulated the advantages of various technologies and production over so many years. The second combination is the very strong ability and awareness of product definition and the ability to iterate of our entrepreneurs, and the combination of these two, I think we should have a great opportunity to gain a large market share when we go global.

How did the dark universe of "The Three-Body Problem" come about? It's because there's no other universe for you to expand, right? So you can only turn into a dark forest state on the inside. Now we are not in this situation, although there is some international friction now, but Chinese companies even consume, you see like milk tea, now the whole world is, United States milk tea shops are also very many, right? Consumption has also basically gone out. For example, some Chinese brands, such as the sports brand Anta, are also selling well overseas, so I think this is an opportunity that all walks of life may have, but for us, we are most concerned about technology companies, and the most concerned are technology companies, and some companies related to green carbon peaking and carbon neutrality, which is the direction we pay more attention to, and this is also the direction of our efforts.

Li Zhigang: In the face of competition in the international market, what advice do you have for Chinese entrepreneurs?

Zhou Wei: In the international market, entrepreneurs must have an international vision and competitiveness. Even if it is a domestic substitution, it must have international competitiveness, otherwise it can only compete in the domestic market. To gain a foothold in the international market, it is necessary to have a significant competitive advantage in technology and products. We can't just rely on low prices to compete, but we have to compete with international competitors in technology, quality and brand. China has a strong manufacturing capacity for technology products, and entrepreneurs should make full use of these advantages to innovate high-tech products and create globally competitive brands. At the same time, the uncertainty of the international situation requires entrepreneurs to have a stronger risk awareness and response ability, and be good at finding opportunities in changes.

Li Zhigang: In the current complex international situation, how do entrepreneurs deal with challenges?

Zhou Wei: Changes in the international situation have put forward higher requirements for entrepreneurs. First of all, entrepreneurs need to have strong adaptability and flexibility, and be able to quickly adjust their strategies to respond to changes in the external environment. Second, entrepreneurs should make full use of China's resources and advantages to make breakthroughs in technological innovation and product development. At the same time, in the competition with the international market, we must pay attention to win-win cooperation, and we must not aim at "killing the other party", otherwise we will also be damaged. In the end, entrepreneurs should have a long-term vision, not only looking at immediate interests, but also strategic planning and layout. Entrepreneurship is not only a business act, but also a commitment to social responsibility, and sustainability and social value should be considered in the development process.

Li Zhigang: What do you think is the biggest advantage of Chinese companies in the future competition?

Zhou Wei: The biggest advantage of Chinese companies in the future competition lies in manufacturing capacity and supply chain integrity. China has the most complete manufacturing industry chain in the world, which gives us a significant advantage in product manufacturing and supply chain management. Entrepreneurs should make full use of these advantages to innovate products and application scenarios, and improve the added value and technical content of products. At the same time, China's huge market size is also a huge advantage, which can provide enterprises with sufficient market demand and growth space. On the basis of our existing advantages, we need to continuously improve our technology and innovation capabilities to create globally competitive products and brands. In addition, the Chinese government has also given great support in terms of policy support and infrastructure construction, which has created a good environment for the development of enterprises.

Li Zhigang: How do you view the current development of AI technology, and in what scenarios are Chinese companies likely to commercialize AI?

Wei Zhou: Generative AI is the least important part of its value chain because it can generate entertainment content. When I saw it, I realized that autonomous driving was about to break through. Tesla insists on using visual self-driving technology, and the reason why it has not made a big breakthrough before is that it cannot imitate the human brain for reasoning and judgment. The emergence of SORA proves that it has the ability to reason, which means that autonomous driving technology can do it to think like a human.

As far as Chinese entrepreneurs are concerned, there is no doubt that China will have its own big model. Nowadays, commercial applications are mainly focused on the direction of TOC, and there are more content creations. My point of view is that the production of images and videos will become the standard in the future, and no one can make a super company with this technology.

Who can really make a big company in this wave of AI? I think it's still the direction of TO B. Providing AI solutions that are deeply integrated into the customer's workflow can revolutionize its operations and cost structure. Therefore, we tend to look at AI companies that are deeply integrated with the industry, and startups with unique data.