Chinese tech firms find opportunity in Silicon Valley

Global Business

Chinese tech firms find opportunity in Silicon Valley

Every day, Bill Shao drives his Tesla to work. From big name companies to his own start-up, he has been working in California’s Silicon Valley for 22 years. But now, he works in research & development for a Chinese company, e-commerce giant Suning. Suning Director of Research Bill Shao said “There is a growing demand for engineers to bring new innovation products back to China.” He believes being able to create products in Silicon Valley, creates unique products for the Chinese market. Ge Yunfei reports.

This hologram prototype is one of the ‘unique things’ Bill is talking about and it has an important role in the unmanned retail stores Suning envisions for the future.

“By adding hologram, we can have an assistant that you can interact with and be able to get information from him or her about anything of the product,” said Shao.

Suning says setting up a Silicon Valley branch offers the company exposure to the most cutting-edge and innovative technology.

“In the headquarters, we have 7000 thousand engineers, but here we only have 40 people, but actually these 40 people are our core innovation engine,” said Tang Jie, general manager for Suning’s U.S., Research and Development center.

Many Chinese companies like Suning, face a challenge of increasing their brand awareness in the U.S. In 2014, a young Chinese woman graduated from Columbia University and saw a market niche. A year later, Pingo Wu founded Red Cube in Silicon Valley, making social-marketing videos for Chinese companies that have global ambitions.

“Only young people can do this,” said Pingo Wu. “It’s about internet marketing and selling. We know where the targeted customers are and what they like. And most importantly, we have dreams and passion, we’re willing to try our best.”

One of Red Cube’s most important functions is to introduce Chinese startups to Silicon Valley, especially the investors here.

“One of our clients is called the One Highlight Piano,” said Red Cube’s head of Video Production John Uribe. “And we did a crowd-funding video for them. And they were able to reach like 180% on their crowd-funding pages.”

In three years’ time, Pongo’s company has grown from 3 people to 75 employees, and moved from a small office to a 750-square-meter work space. From manufacturing to technology, more and more Chinese firms are going into the American market. And they’re craving for a closer relationship with the U.S. customers. And some startups like Red Cube are helping them to do that.

But the outlook is not totally clear. Chinese investment in the U.S. totaled $1.8 billion for the first five months of this year, according to data from the Rhodium Group research firm. That’s a 92% drop compared to the same period in 2017. Though Pingo said her video business is booming faster than ever, she has made some changes. With U.S. President Donald Trump promoting his “Made in America” agenda, Pingo decided to get in on the manufacturing end of business, rather than just promoting the products of others.

“It’s a new type of partnership,” said Wu. “Recently we just invested in a Chinese kitchen-ware company to become their shareholder. Now we’re building a factory in the US to manufacture their products on American soil. So we’re responsible for the whole chain from manufacturing to marketing in the U.S.”

With the escalating trade conflict between China and the US, Pingo’s manufacturing-to-marketing model may find a new win-win solution for small business and workers in both countries.

Steven Gu discusses overseas expansions for Chinese firms

CGTN’s Rachelle Akuffo spoke to Steven Gu, director of U.S.-China Business Advisory Services, about overseas expansions for Chinese firms.