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Why you'd be foolish to ignore China

For the right business, China presents an opportunity that can’t be ignored, writes SCOTT HAUGHTON of Envestors

China may have once been considered an impenetrable market, but many businesses from across the world are now aiming to expand into the world’s second-largest economy, which is experiencing unprecedented growth in spending power.

Some still assume that the Chinese market is difficult to enter, but while it would be foolish to ignore the challenges of cultural attitudes and government roadblocks, new sectors and opportunities are opening up in China every day. Increasingly, companies are finding it easier to raise investment through grants or equity, outsource manufacturing and establish joint ventures to sell products and services. Technology is growing rapidly in China and many opportunities for businesses looking to expand into the region are on offer, with cleantech, biotech and medtech being in high demand.

Biotech company ANCON Technologies saw the opportunities early on, and they worked with Envestors to find investors, strategic partners and distributors through an array of startup competitions and roadshows.

Using biomarkers, ANCON has created artificial intelligence and machine learning application technologies that have the capability to identify the patterns of volatile organic compounds: they can detect trace amounts of compounds such as explosives, narcotics or other chemicals. There are three aspects of its technology applications: air-pollution detection, anti-terrorism and more recently COVID fast testing.

Currently their ground-breaking AI and machine learning is part of a system to screen and diagnose COVID-19 through a non-invasive breath test.

“There are many VOCs, or what we call volatile organic compounds in your breath so each of your health conditions has a signature or a combination of VOCs, which we call biomarkers. Our research shows there are over 400 diseases that already have their own unique biomarkers. And it's definitely an easier detection tool for the patient since it’s non-invasive,” explains Bing Tian, Director of Far East Development for ANCON Technologies.

They see China as both a rollout market and an invaluable partner in completing their research on how biomarkers can be used to detect COVID and a number of other diseases.

Taking part in startup competitions in China

In 2017, ANCON joined the Envestors’ China programme, which included participation in exploratory road trips in China and inclusion in several technology competitions in the biggest cities in China. 

The same year, ANCON took part in the Envestors One Belt, One Roadshow, putting them in front of crucial strategic investors. These included listed corporates, leading venture capital firms and government backed technology transfer investment organisations. ANCON won the China-UK Innovation and Entrepreneurship Competition, held in Chengdu, an event that brought 3,000 projects and 70,000 participants in front of 450 experts.

The Envestors-ANCON collaboration has been going strong since then. In 2020, ANCON was a semifinalist in the Global Internet Competition “Straight to Wuzhen.” The World Internet Conference is hosted annually by the Cyberspace Administration of China and Zhejiang Provincial People’s Government.

Taking part in the 2020 contest has opened a lot of doors for the company. They’ve been able to meet potential partners and secure introductions to local players.

“I think that this competition is really exciting. There are 30 plus judges and they're all professional. They ask you really good questions and they actually give you suggestions, if you are thinking of expanding into China. They’re really supportive through the whole procedure.

“The biggest help you can get from participating in competitions in China is getting the right introductions. Whatever your product is, you’ll get a chance to be introduced to local experts to help you set up in China,” says Bing Tian.

Securing partners in China

ANCON is developing a real-time diagnosis device which uses Artificial Intelligence and Machine Learning to instantly identify signs of viruses and diseases. Before the pandemic, the company was working on rolling out its technology to detect lung cancer.

Exposure to strategic partners has already secured ANCON a local distribution partner in China. Due to the need for rollout in a large market, the partnership could be vital to the company’s work on COVID detection.

“Before COVID-19, our main target was lung cancer. When the pandemic hit, the first thing we did was try to get a biomarker profile of this new disease. That requires, first of all, that we collect as much data as possible and then have our AI build up the profile as quickly as possible.

We could potentially target over 400 diseases. For each one we need get the correct amount of data. China's always your first target because it has the biggest population and, as the health care system in China is getting better and better, it’s getting easier to track specific patients’ data,“ Bing Tian notes.

Overcoming governmental challenges

Transparency of government procedure is one of the main concerns for companies looking to expand to China. However, the country is aiming to attract foreign startups through a number of government-funded programs.

Achieving success in China is no easy endeavour, but the potential rewards for UK companies accepting the challenge are huge, particularly if they deal in technology that will be of benefit to the advancement of China. These companies should be seeking a partner with experience in successfully securing strategic Chinese investment and M&A partners.

Municipalities like Shanghai and Guangzhou are competing with each other to create opportunities for foreign companies, and Bing Tian says, “What I see is really just the amount of opportunities there. And you can see how the local government is willing to get foreign tech companies like us involved. They’re offering grants, funds and tax relief.”  

China may have a reputation for being impregnable, but for the right companies, with the right assistance, China’s Great Wall of opportunity is scalable.   

ABOUT THE AUTHOR

Scott Haughton is from Envestors. Envestors’ digital investment platform brings together entrepreneurs and investors across geographies, communities and sectors – creating the single marketplace for early-stage investment in the UK.

Envestors partners with accelerators, incubators and angel networks to provide a white-label platform empowering them to promote deals, engage investors and connect to other networks.

Founded in 2004, Envestors has helped more than 200 high growth businesses raise more than £100m through its own private investment club.

http://www.birminghambiz.co.uk

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