Zhou Wei, Founding Partner CCV: Today may be a new starting point for a big era in the future

Having climbed the peak together with Chinese entrepreneurs, and facing the new situation of de-globalization, the CCV team has always been thinking about how Chinese companies can break through the predicament, and how can the next generation of Chinese entrepreneurs and young people cope with this challenge?

Dickens said that this is the best of times and the worst of times. The drastic changes in the world pattern make every entrepreneur feel lost, but maybe this is a new opportunity. We still have full confidence in entrepreneurs, believing in the creative spirit of Chinese entrepreneurs and China's great advantages.

Therefore, on the last day of 2023, we would like to share with you a message from CCV Partner Zhou Wei for the future:

"Today may be a new starting point for a big era in the future, at this time, whether it is Chinese enterprises or individuals, I think we are finally going to break out of the shell, from the fierce competition in the Great Wall to a globalization 2.0 era, go out, with distribution, In this era of de-globalization, with the many advantages accumulated by China over the past 40 years, and with the wisdom and flexibility of our Chinese, we realize the globalization of the future version 2.0, I think it is the next step in the future, and our entrepreneurs and our young people have great opportunities. ”

At the same time, we will share with you the latest keynote speech of CCV Partner Zhou Wei on "How Chinese Enterprises Can Break Through in the New Situation" of NetEase's "Future Open Class". This keynote speech is the latest thinking and insight of him and the CCV team on the globalization of Chinese enterprises entering the 2.0 era.

Zhou Wei said, "The big theme of Chinese enterprises' breakthrough is [distributed globalization 2.0], focusing on the two vertical directions that it can break through: intelligence and greening. ”

He believes that [Distributed Globalization 2.0] is the best strategy to adapt to the new situation. We need to make full use of China's resources, talents, supply chains, and technologies, and at the same time fully integrate local markets, cultures, and regulations to form a distributed collaboration model and share the advantages of one platform. We believe that this is a very valuable model for going global. When a country has a competitive advantage in the vast majority of the value chain, there are a lot of great companies in that country. China has such conditions in terms of intelligence and greening.

In terms of intelligence, China has accumulated core advantages in application scenarios, product capabilities, global markets, manufacturing supply chains, and competitive environment in the past few decades, which can help Chinese enterprises achieve the integration and innovation of complex products. In terms of greening, China has the most leading advantage in the wave of green technology revolution, which can not only be exerted domestically, but also become our ticket to enter the global supply chain and market. The CCV team also believes that smart technology and green technology are the biggest opportunities for Chinese enterprises and entrepreneurs in the next 10 to 20 years.

The following is an excerpt from the speech:

Today, I would like to share the topic of "How Chinese Enterprises Can Break Through in the New Situation". It mainly talks about the thoughts and stories of globalization entering the 2.0 era.

In fact, in the past few years, we can clearly feel that we are facing a lot of inflection points at home and abroad, and after many things accumulate to a certain extent, it will have a process from quantitative change to qualitative change. In the past, China had a large number of opportunities for the Internet, and there were opportunities for the export of simple industrial products, or light industrial products, but these opportunities have accumulated to a certain extent after a long period of development in the past 20 to 30 years. However, many changes have taken place in the international situation and the form of competition. We used to think that everything was going to be smooth in the future, but as I said in 2017, China is actually at an inflection point similar to Japan's 1970s.

At that inflection point, the entire country of Japan's product manufacturing and high-tech brands mainly served the Japanese market before 1970, but after this inflection point, it flourished and went all over the world, winning a large number of markets very quickly. Most of the Japanese brands we are familiar with today went global at that moment.

So, we think that China has actually reached this inflection point five years ago, or even six years ago, when we could have seen a lot of Chinese brands go global, and we could have gained access to a large number of global markets like Japan. However, due to various changes in the international political situation, we are facing many challenges. Now that globalization has become a situation of de-globalization, how can Chinese enterprises break through the situation under such challenges? How can the next generation of Chinese entrepreneurs and young people face this challenge? This is a very important topic that we need to consider now.

In this situation, we have done a lot of research, and believe that the way for Chinese enterprises to break through under the new situation can be summed up in two directions and one theme. What are the two directions? The first direction we call it intelligence, and the second direction we call it green. One theme is globalization.

First of all, we firmly believe that the big theme of the next era should be the intelligence of all things. Because we are now facing a large number of challenges, whether it is the aging population, the industrial upgrading of traditional industries, and the safety and health of workers. Under these factors, many of our labor-intensive industries in the past, some more dangerous or harsh production sites, must be replaced by intelligent and fully automatic equipment. From another point of view, our current simple manufacturing industry, in fact, continues to transfer to some labor-intensive production bases in Southeast Asia and other countries, we in China can not always do simple manufacturing, must be upgraded to a further era of intelligent products.

In this environment, industrial upgrading can not only rely on training employees, but more importantly, we must use the scientific and technological strength accumulated in the past 20 years to achieve industrial upgrading from an intelligent perspective. So, what advantages have China's rapid development in the past two or three decades accumulated for us?

First, we have accumulated a large number of supply chain advantages in a large number of advanced manufacturing verticals.

Second, we have accumulated a large amount of very comprehensive data and application scenarios in the field of artificial intelligence, especially in commercial application scenarios.

Third, autonomous driving technology has made great strides in China over the past decade, and in many ways we are now at the forefront of the world.

These three technologies, in our eyes, are the three major technologies that are the core of the future intelligence of all things, autonomous driving, artificial intelligence and robotics, the combination of these three should produce the next generation of technology platform for all things intelligence, and we will see a variety of forms of intelligent products.

For example, if you go to an airport, a hospital, a hotel, or a restaurant, you will see a large number of fully automated intelligent devices, including robots, to provide a variety of services. We think that a landmark event, if we can see robots in a hospital environment to help the disabled and the elderly to take a bath, return to bed, and go to the bathroom, without the help of human beings, this will be a landmark event that we think is a major breakthrough in the intelligence of all things.

In the past 20 or 30 years, China has accumulated core advantages in a large number of fields, including application scenarios, product strength, understanding of the global market, advanced manufacturing data and supply chain, including this domestic full competition, which actually brings us some very leading advantages over other countries, and the integration of these advantages will achieve the final integration of a complex product. Therefore, we insist that China's advantage should not be stuck in some local manufacturing, should not continue in some low-end products, but should integrate all our leading technologies to achieve a complex end product.

To put it simply, in the future, we should not compete with Southeast Asia, India or Mexico for these low-end product markets. What we should be doing is to be able to go to the whole world, to be a complex technology product that they can't achieve, a technology product that integrates multiple technologies. And these technological products themselves are not possible for them to achieve, because their countries may only have some of these advanced capabilities, and there is no way to integrate all the ecosystems and realize the ultimate embodiment of a final complex product.

So, the new generation of Chinese entrepreneurs, Chinese entrepreneurs, young people, this is what we should consider. Ten years ago, fifteen years ago, we were thinking about the Internet, the mobile Internet. Today, we believe that intelligence and intelligent technology are the biggest entrepreneurial opportunities that Chinese enterprises and young entrepreneurs should plunge into in the next ten or twenty years.

In the next ten years, I think the second most important direction should be green technology, which is called carbon neutrality or carbon neutrality today.

Fifteen or twenty years ago, my previous fund, KPCB, was one of the first global funds in the world to focus on environmental technology investment, and we have spent a lot of time doing first-generation green technology research and investment. At that time, the problem was that the technology was not mature enough, everyone's concern for the environment had not yet reached a certain level of maturity, and many products needed government subsidies to sell.

I'll give you a simple example, when we looked at solar panels, the conversion efficiency might be less than 10%, but today it's very common to go above 25%, and it's more than 35% in the lab. In this case, the cost of many products is also falling significantly, including the conversion rate of batteries, or its application efficiency is also constantly improving, so that all green technology technologies have entered a mature inflection point.

Over the years, China has accumulated a lot of advantages in green technology, and it is probably the most obvious leader in the world. Especially in many verticals, China has many advantages, and now the global concern for the environment has reached the best time to invest.

With the recent extreme cold weather in Beijing, everyone can feel the changes in the environment very clearly and directly, so now we think it is the best time to pay attention to and invest in green technology. And China has the most leading advantage in the whole wave of green technology revolution, and this advantage should not only be used in China, but also a very clear ticket for us to enter the global supply chain and the global market.

Although we are facing a lot of international geopolitical challenges and many restrictions on Chinese products, when we look at many startups, we also find that they have a lot of smart ways to achieve them, and in such a geopolitical environment, they can still bring their products to the world. Not only in the technical direction, we now also see that many Chinese companies have also come to the forefront of the world in terms of product design and product concept.

Looking at it from a further perspective, Chinese enterprises have not only begun to export on a large scale, but have also gone overseas, setting up local enterprises overseas, forming joint ventures locally, or using other ways to achieve a global layout. In terms of the development direction of green technology, whether it is carbon capture and carbon trading under the theme of carbon neutrality, or even some Fintech in this trading link, or the next step of electric vehicles, batteries, wind energy, solar energy, hydrogen energy, etc., are already on the track of rapid development, and we believe that this is promising. In today's anti-globalization environment, there is actually no way to stop us from moving in the direction of green technology.

So to sum up, I talk about these two vertical directions as a whole: intelligent and green. In fact, it also analyzes what advantages China has accumulated in the era of rapid development in the past 20 or 30 years? When we know what advantages we have accumulated, we should not be arrogant, and if we have what others do not have, then we should give full play to our advantages. And these advantages have given us the irresistible strength to go global, and I feel very confident in the next ten years.

From the perspective of the industry, we believe that intelligence and greening are the general directions that all Chinese enterprises can focus on breaking through in the next decade. So, how can we break through? In the era of de-globalization, how can we further globalize?

First of all, why is it a very appropriate time for Chinese enterprises and individuals to go global in the new situation?

First, in the past 20 to 30 years, Chinese enterprises and entrepreneurs have undergone fierce competition in China, and our new generation of young people have connected with the world's most advanced productive forces in the process of learning Xi and research, which has already had a spillover effect of entrepreneurs, technology and even talents.

Second, let's call it a term that people like to use nowadays, which is called the time capsule effect. Under the fierce competition of Chinese enterprises, in fact, in many aspects, our self-evolution speed is already the fastest in the world. For example, some green energy storage products, China's current home energy storage products, at least in terms of ease of use, have been very leading, and our product iteration is also the fastest. Including the electric vehicle industry, China is also evolving very fast. So, in many ways, we now have the ability to replicate some of China's new innovations such as technologies, business models, and application scenarios to the world.

Third, the production capacity and advanced technology of our enterprise have reached the extent that they are sufficient to enter the global market competition. In the past 40 years, the first stage of Chinese enterprises going global has basically been simple production brought about by cheap labor costs, which is a very difficult era. From 2000 to 2010, China went global with products, manufacturing and supply chains, and there was still no global brand. In the third step, from 2010 to 2020, China's mobile Internet has grown by leaps and bounds, including Shein, including Pinduoduo's subsidiary TEMU, including TikTok, which I call the aftermath of the last mobile Internet era, which shocked the world after the shock in China.

To put it simply, what China is doing now is that it still has an advantage in going abroad. However, if we want to enter a new direction today, that is, the intelligence and greening that I have just talked about, we can no longer look at the Chinese enterprises that have succeeded today, and then do it like that.

Today, the rapid development of Chinese enterprises abroad, their advantages began to accumulate ten years ago, and today we want to accumulate updated advantages for the next ten years, then we must go to the two directions just mentioned. In this environment, we see that there are actually a large number of untapped blue ocean markets around the world, and although we think that some countries may still be poor, there is still a lot of demand and spending power. China has a very mature and ambitious entrepreneur in the world, and we have this wolf culture to allow companies to grow quickly and expand their markets. At the same time, we have the technology, talent, resources, supply chain advantages that we have just described for so many years, all of which combine to allow us to do what our entrepreneurs can spill over today.

In fact, when you go global, you will find that there are a large number of markets, and local entrepreneurs are not able to compete with you. European and American companies, especially some advanced enterprises in the United States, are very persistent, or stubborn, and are unwilling to do any localization of their products. In this case, Chinese entrepreneurs have an advantage.

Second, technology spillover, China now has a lot of technology to go overseas.

Third, the spillover of business models, which began thirty or forty years ago and continues until 2020, is what we still call the era of globalization 1.0. At that time, the globalization of enterprises all over the world was a model, developing products and brands in one country, and eventually establishing sales centers in other countries, possibly establishing some simple assembly and production centers, and then spreading to global sales, which was a centralized globalization. Today, we believe that in the era of de-globalization, we must use our wisdom very intelligently to go global, which we call globalization 2.0, and one of the focuses of 2.0 is called decentralization, or distributed globalization 2.0.

In today's environment, we believe that Chinese enterprises should be globalized, Chinese entrepreneurs should be globalized, and first of all, we can no longer repeat the past way of growing big in China and then selling globally, and there are many obstacles to this path. Now, maybe from the beginning of your company's initial capabilities, you need to build a local team in your future global target market, at least from the local point of view, it is a very local company, and even the name is different from yours, you can have independent financing, independent equity structure, and finally be recognized as a local enterprise.

As an enterprise, you can use all the advantages accumulated in the past as a platform and an ecosystem as much as possible, and share resources with 5, 10, or even 30 independent enterprises in different regions around the world. However, the enterprises in each region are very localized, decentralized, and realize the combination of more local resources. In this way, I think it is possible to help Chinese companies today to avoid the obstacles to China in the situation of de-globalization.

In addition, Chinese entrepreneurs do not necessarily have to start a business in China before going out. We have seen a lot of outstanding entrepreneurs, Chinese entrepreneurs, all over the world, who are actually starting their own businesses directly in the local area. For example, a payment company we invested in Africa was tempered in China, and then went directly to Africa to set up a company, in a region with great differences, using the Chinese model, Chinese experience, to create a local payment company locally.

In Mexico, we have also seen similar companies, and in the past two days, we have also seen that green technology companies, which have been silently doing for many years, have gradually surfaced. Whether it's setting up distribution channels, setting up product production, or providing a service, they're using the Chinese supply chain, but it's a local business. Yesterday, I met with a company in Mexico, 99% of the employees are Mexican, but it was founded by a Chinese entrepreneur and made full use of China's advantages to start a business there, which gave us a lot of inspiration.

In the end, we believe that the future of distributed globalization situation, what does it mean for Chinese enterprises? That is, you have to fully connect with China with resources, talents, supply chains, and technologies, but we can fully integrate with the local area to form a distributed pattern, and everyone shares a platform advantage, which is in today's environment, we think it is undoubtedly a very valuable model to go global.

Our conclusion is that when a country has a competitive advantage in the vast majority of the value chain, there are bound to be a lot of great companies in that country. In the direction of intelligence, we think this will undoubtedly appear.

At the same time, we have many leading advantages in the industrial chain and value chain of green technology. By the same token, when a country has a competitive advantage in most parts of the value chain, there are bound to be a lot of great companies in that country.

Therefore, these two undoubtedly bring us a lot of confidence, coupled with the current globalization strategy, we believe that China's future is still very bright, and Chinese entrepreneurs and individuals can realize a lot of value in the process.