Startup Grind Chengdu and Paris had a chance to invite David Baverez for a web talk, where we discussed how Europe and China complement each other.
David is a seasoned investor with extensive experience in Europe and Asia. Based in Hong Kong, in his free time from investing and helping start-ups develop, he writes about China and Europe.
Why did David relocate to Hong Kong and focused on China in the last years?
David relocated to HK after the 2008 financial crisis. He was driven by 2 bets:
- China would become way more important than it was anticipated then.
- Europe could hugely benefit from collaboration with China. However, Europeans need to truly understand China and its people. Back then, David realised he didn’t know about this country, as much as he wanted.
Why is a synergy between China and Europe possible?
The world is truly globalised and interconnected. Current disruptions perfectly manifest how lack of collaboration and trade is bad for everyone.
For Europe, China has been and still is the major and unparalleled source of economic growth. The EU is growing very slowly, but has many successful strong companies. If these European companies want growth – they need to be in China.
China, although it seems self-sufficient, has problems: the looming debt and restrictions on accessing US technology. Europe can help China with both.
Europe can help China in increasing productivity (of workforce and logistics) to better serve its debt.
As for technology, Europe is able to replace the US, which is fencing off China. It can do that both in hardware and software (especially B2b).
China is arguably the leader when it comes to mobile and Big Data. Europe, on the other hand, is great at using smart data. The next decade will bring a tech-driven transformation of many sectors. The two powers can benefit from combining their approaches.
Fundraising during COVID-19. Tips
There is no “one suits all” strategy. Every investor is unique. If the investor thinks like David they are searching for 2 criteria:
- The management team has to be exceptional. The people that you would 100% want to work for you and that 100% would not agree to work for you, because they have a great vision. This applies for all times – calm and turbulent.
- Perfect timing. The question is not “Why?”, but “Why now?”. The answer has to be: “because now or soon the existing value chain is going to break” The start-up has to be there exactly when the change is about to happen. (Now, the timing is great for Edutech and communication.)
– Cultural difference: Europeans and Chinese 中欧文化差异
The Chinese are very optimistic and daring entrepreneurs. They are looking for opportunities and trying to grasp all of them. Europeans are cautious, they look at risks and downsides. Both can teach each other a lot.
– Will there be a shift away from China as companies want to diversify their supply chain? 跨国公司是否有可能为了扩大供应链的选择，提高抗风险能力，而选择撤离中国？
That is what politicians say. Never trust politicians. It is easy to say that you want to shift the whole supply chain, it is immensely difficult to change it. China has mastered manufacturing and the world knows it. After the crisis, China will have to assure the world that disruptions will never happen again.
– Who should Europe join in the competition between China and the US. 在中美竞争中，欧洲应该选哪边？
No-one. Europe needs to work with both. It needs to be strong enough to stand up for its right to cooperate with both powers. If it doesn’t, Europe will be “Yemenised” – harshly taxed by the US and lose technologically to China.
Europe needs China and China needs Europe – that was the main theme of the event. We would like to thank David for joining us on the 22nd of April, and cheer up everyone who didn’t have an opportunity to tune in. There are more web events coming in May. Feel free to check out David Baverez LinkedIn page, where he shares his texts.