Covestro Taps into China’s Startup Landscape
- Company considers different approaches for startup engagement
- Comprehensive analysis of the vast Chinese startup landscape
- Insights on how to engage in the multi-billion dollar environment
- Next: deciding on right approach
German materials manufacturer Covestro intends to tap into the Chinese startup landscape. For this reason, the company, together with the market research consultants of KAIROS Future, facilitated a comprehensive study of the vast ecosystem that the country has developed over recent years in order to achieve the switch of a manufacturing- to an innovation and service-based society.
Nurtured through government policies, guidance and investments and triggered through entrepreneurial success stories like Alibaba, Tencent and alike, a new ideal of becoming entrepreneurs has emerged among young talented Chinese. What’s more, the ever-better education and environment enables them to pursue these ideas and found their own companies within China. In 2017, over 100 Chinese start-ups were listed in stock markets around the world, and more than 270 companies were in the list of Chinese ‘unicorns’, meaning companies younger than ten years and valued with USD 1 billion or more.
With venture capital assets of over 5 trillion RMB (USD 730 billion), China is now second only to the US when it comes to global venture capital. Covestro wants to take part in this development and looks into ways to cooperate, invest, teach and learn from the start-up environment in China.
“Business models are rapidly developing and changing. Although we have a history of innovation and even invented many of the products we sell today, we can’t rest on our laurels. Entire industries might look different in merely a decade,” said Dr. Michael Schmidt, Head of Innovation Management APAC at Covestro. “Lead innovation times shorten rapidly. So we need to source ideas outside of our own innovation processes to leverage speed, new technologies and new business models. Tapping into the highly dynamic start-up environment in China can be a big chance for companies like us. We look forward to being inspired.”
Comprehensive pool of data taken into consideration
To analyze how best to do this, Covestro, with support from ‘KAIROS Future’, conducted an analysis of the landscape and possible approaches. For this study, dozens of interviews and discussions with internal experts, other corporates, incubators, accelerators, entrepreneurs and academia as well as several workshops on the topic have been conducted. Furthermore Covestro and KAIROS for this study acquired, merged, cleaned and structured data covering 133,500 funding deals, 30,900 companies that have obtained funding and 14,000 investment institutions. The data were used to analyze geographical, sectoral, topical and stakeholder aspects of the Chinese start-up landscape. The overall study also contains knowledge from 900 reports and acedemic articles as well as 4,600 news articles, as well as other information.
“This is one of the most comprehensive studies on the Chinese start-up landscape to date,” said Tomas Larsson, General Manager at KAIROS Future in China. “With this hands-on information, based on extensive data, Covestro can define a clear objective and focus for its approach.”
Overcoming corporate rigidity and risk aversion
In an environment like China, the number of competing businesses in many industries is huge. That also means a huge competitive pressure and forces businesses to scale-up and roll-out new products fast. In such an environment, the start-ups of today can be tomorrow’s giants. Covestro wants to help them in early stages and learn from the agility of the overall system – thereby refreshing its own culture towards a more risk-taking mindset and less rigidity as well. The recently completed analysis of the Chinese start-up landscape is a first step.
About Kairos Future:
Kairos Future is an international consulting and research company that helps companies and business leaders to understand and shape their futures. We provide market and industry research, trend analysis, scenario planning, innovation search, data mining and analytics, capability development, and strategy advice. The company was founded in 1993 and is headquartered in Stockholm.
This press release is available for download HERE.