1-Page Cheatsheet: Beta China by Hamish McKenzie

Beta China by Hamish McKenzieMore like a half-page cheatsheet since the book is only 65 pages ($1.99 on Amazon). I enjoy Hamish’s writing for PandoDaily – he asks bold questions and provides clear, often contrarian answers.

Also, this is my 100th post. I wish we’d gotten here sooner.

Boilerplate about China’s long history of innovation

The Chinese were the world’s earliest practitioners of chemistry, a study fueled by the Taoist search for the elixir of life. And they were the first people to produce silk, a skill they acquired as early as 1300 BC.

The first people to print paper money? That was the Chinese, too. Around AD 1000, they invented gunpowder, which they used for fireworks.

Chinese technology products are often clones; as a result there are many competitors

“C2C,” meaning “copy to China.” Benjamin Joffe, a China Internet consultant, has cheekily called it “innovation arbitrage.” China is home to thousands of Facebook clones, Twitter clones, Groupon clones, Yelp clones, eBay clones, Amazon clones, Quora clones – pretty much any Internet business you can think of.

At one point, Tudou (a leading YouTube clone) had as many as 500 competitors. “If it was just YouTube, there’s no way it could have survived.”

After cloning, Chinese companies use “micro-innovation” (known as 微创新) to add unique features; this micro-innovation is sometimes copied by the original victims

While it started life as a direct Twitter clone, Sina Weibo grew and mutated until it became more like an amalgam of Twitter and Facebook, allowing comments on each post and having more of an emphasis on pictures.

Another Silicon Valley company, however, doesn’t appear to have been so shy about taking inspiration from Sina Weibo. “When Google+ was launched, I was looking at it, I was like, ‘That’s a copy of Weibo,’” van der Chijs says.

China is known for innovation in technology business models

Tencent was among the world’s first adopters of the free-to-play model, with fellow Chinese companies Giant Interactive, Shanda, and NetEase among the other pioneers. South Korea’s Nexon had been doing it even earlier. Years later, Zynga would adopt the exact same approach

There are innovation challenges from cradle (education) to grave (Confucius)

In present-day China, innovation is neutered by an education system that emphasizes conformity over creativity, a Confucian ideology predicated on hierarchy and obedience, and the low value placed on intellectual property.

The big tech companies – known as BATS for Baidu, Alibaba, Tencent, and Sina – stifle startups

Until recently, their preference was to raid the best talent from startups, copy the most successful products, and move on. They already controlled most of the distribution channels and could quickly push their own versions of products out to their existing user bases, which number in the hundreds of millions.

BATS have an eye on overseas growth with the aim of competing in America

For companies such as UCWeb, Xiaomi, Baidu, and Tencent, it makes sense to get a headstart in emerging markets, particularly in Southeast Asia, where huge numbers of people are coming online through their mobile phones, and where the existing Internet infrastructure is relatively immature. […] Among them, the countries of Indonesia, Thailand, Vietnam, Malaysia, and Singapore have a total of more than 430 million inhabitants, and their economies are rapidly improving.

Tencent is the one Chinese company that is willing to strike out for more distant shores, and it has an eye firmly on the grandest of prizes: America. The idea of conquering the US carries great currency in China, not only because it is a rich market with enormous commercial potential, but also because it represents the ultimate status symbol.

That’s it, folks. Hope you learned something! Got any book or article recommendations?

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