This week, we took you successively to Brazil, Russia, and India. the “C” of the BRICS countries is China, and we’ll see today how Picooc is a startup to follow as it’s both successful, funded, and very Chinese. But let’s go back for a moment to a broader review of China as an emerging market for technology ventures.
China and the BRICS countries: first among its peers
As we celebrate in this month of July 2014 the 6th BRICS summit, it is clearer that China is the dominant country of the group. As the International Business Times states, “China is the world’s second-largest economy and has a larger GDP than the other four BRICS combined. It is, for example, 17 times larger than South Africa, the smallest member, which joined at China’s behest in 2010. And, in the years since O’Neill lumped China with the others, this gap has widened even more: China accounted for 40 percent of all global growth in the five years following the collapse of Lehman Brothers in 2008. China looms so large that it is the largest trading partner of the other four members, but none of the four even rank in China’s top five.”
During the summit, the BRICS agreed to create an emerging market pendant to the World Bank, called the New Development Bank. It will foster infrastructure and development projects for developing countries. Being based in Shanghai, with China making a bigger contribution to its funds and its reserve, it is pretty clear who will held the helm.
In terms of internal growth, China’s stats are simply amazing. If you remember our focus on India, we saw that the middle-class had grown from 50m in 2007 to 250m today, with forecasts of 600m by 2030. In China, it’s probably even more brutal, fast, and big. As of 2000, just 4% of Chinese households could be considered middle-class, and it was already 68% in 2012. By 2025, 75% of China should be in the middle-class. But there’s more: Chinese consumers will also be in their vast majority upper-middle-class consumers, with a potential spending power not comparable to any of the other BRICS (McKinsey).
Of course, there will be a lot of challenges along the road, from environmental and political pressure to a demographic forecast all but positive. Still, let’s enjoy this amazing moment : )
China’s startup scene today
Our of 1.3 billion Chinese today, 84 percent of have cell phones and half have mobile Internet access. These connected users are among the most active for e-commerce, social networks and online gaming. Overall, internet users in China spend an average 25h per week online, and there are about 300m registered e-commerce shoppers as well. You can find more stats on We are Social’s report.
There’s a lot of services to provide to these over-connected consumers, and China tech scene has being developing a lot of hackerspaces, accelerators and incubators to grow startups. A few ones you could check out to better understand the ecosystem are Chinaccelerator, HAXL8R8, and in a country as wide as China, cities also begin to differentiate themselves. Shenzhen, on the southern ‘border’ with Hong-Kong, is now reputed for its hardware startups scene.
The ecosystem is now reaching another stage with giant e-commerce platform Alibaba poised to be one of the biggest IPO in the world by September. We can expect a lot of the new millionaires of the group will continue to foster the startup scene through funding and mentoring.
Picooc, the internet of things made in China
In this fast-moving and huge scene, we chose to talk about Picooc, a startup in the internet of things field. Picooc recently got a $21m round of funding from local investors (TechinAsia). Hardware is still done cheaper – and now better – in China, and trends show that beyond mobile, social and e-commerce platforms, China could lead the way globally for connected objects.
According to GSMA, an association of telecom operators and manufacturers, China accounts for an already astounding 25% of the “m2m” market, for machine to machine and the internet of things. The Chinese government is also expected to support strongly this trend with $600bn of investment and infrastructure by 2020.
Picooc is offering a simple product: a smart body scale. The latest model, called Latin, allows anyone to track health data. It comes with a dedicated smartphone app which allows its users to record, analyse and compare with friends their weight, and important metrics like body fat, body mass index, body water, and muscle mass. The app makes it a fitness-tracking experience that complements wearable tech gadgets.
In a way, Picooc is a truly Chinese startup:
- First because it’s an obvious copycat of other smart scales released earlier, such as Withing’s one or Fitbit’s Aria. There’s nothing wrong with copycats, they rather show the complexity for incumbents to go to emerging markets.
- Then, Picooc is aggressive on the price, with $72 per unit, its competitors are twice or three times more expensive. Pricing counts in China, even though one could also play with higher prices for branding purposes (see Apple).
- Last but not least, Picooc is an interesting product of the China startup ecosystem. Two of its recent funders include JD.Com, China’s biggest online mall, and Tencent, the social media giant which owns WeChat, the world’s leading messaging platform. Interestingly, you can buy Picooc online through both brands’ e-stores.
All in all, Picooc’s story is both a good excuse to share a few insights and data on China as a technology hub, and we hope you enjoyed meeting with yet another BRICS and how these key markets of the emerging world run their own startup ecosystems, with already convincing success stories.
More startups from the BRICS!
Tomorrow, we’ll see how South Africa, the smallest and most recent “bric of the BRICS” is faring. Hint: pretty well, thanks, and the startup we chose to discuss is as discrete as active in the payment & remittance space.
You can find back our BRICS startups series here, with amazing stories from Brazil, Russia, India, China and South Africa