How the ‘Belt & Road Initiative’ Attracts German Startups

Recent media indicators show how prominently Chinese innovation figures into tech’s future. American tech analytics wunderkind, CB Insights, recently sent out a newsletter pegging China as the most likely ‘next Silicon Valley’. So what's China tech magnetism attracting?

In early 2018, Bloomberg ran a compelling article exploring why export-heavy German companies are flourishing in China, saying the total trade between the two nations has ballooned to “$179 billion in 2017, double the U.K.’s level and triple that of France.” With these impressive numbers, it’s worth taking a look at what forces are behind this.

From our perspective in Berlin, there’s a definite uptick in focus on the German-China relationship. As we documented last year, NBT hosted the prestigious China Entrepreneurs Club and our CEO, Harald Zapp, visited China as part of a German-organized economic delegation.

This January, we’ve already seen evidence of the budding international relationship during a local Meetup called Shenzhen Meets Berlin, which brought together hardware enthusiasts in a Berlin makerspace called MotionLab, to share stories of the fast development in China.

The context of these China–Germany relations in part lies with the Belt & Road Initiative, inaugurated by President Xi Jinping to bridge the “infrastructure gap” and accelerate economic collaboration, and growth, across the Asia Pacific area and Europe.

In this piece, we explore the Belt & Road Initiative in light of a related Global Innovation Summit that took place in Chengdu, China (pictured below) – involving German tech entrepreneurship and foreshadowing international collaborations on the horizon.

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A Pioneering Legacy is Reborn

The Belt and Road Initiative is a revival of the former Economic Silk Road, consisting of a number of corridors spanning across Eurasia, Africa, and Pacific– a hugely inspired and pioneering operation.

The revival is now considered to be the largest strategic infrastructure development and investment project to date – where ‘belt’ refers to overland routes for road and rail and ‘road’ refers to the sea routes. A recent example of the initiative’s big results is the $19B bridge connecting Hong Kong – Zhuhai – Macau. It is 55 km long and was completed on February 6th, 2018. Take a look at the engineering feat across China’s Pearl River delta, set to drive economic growth and reduce congestion.

Map of Asia, showing the OBOR initiative Black : The six Belt & Road corridors,  Blue : The Maritime Silk Road; image source.

According to the Chinese government, the vision of this initiative is “to construct a unified large market and make full use of both international and domestic markets, through cultural exchange and integration, to enhance mutual understanding and trust of member nations, ending up in an innovative pattern with capital inflows, talent pool, and technology database.” It parallels the pioneering spirit of the original Silk Road, which emphasized forming trust among cultures.

Establishing trust is an ongoing theme for endeavors among such major international players.

An Innovation Summit Instills Cultural Trust

Trust was indeed a key element of a recent Global Innovation Summit, which took place in Chengdu on December 11, 2018, and was especially intended to bring startups to China.

One of the main goals of the Global Innovation organizers, INAM, Innovation Network for Advanced Materials, alongside their partners (InnoEU, Humboldt Innovation, IAIT & MotionLab), was that this Summit ‘enable startups to find meaningful contacts to potential investors, partners and customers.’ During the second half of the summit, 12 startups were invited to pitch.

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One of the instrumental participants in this Summit was Aravinth Panchadcharam (seen below), Senior Embedded Systems Engineer at NBT and Head of International Partnerships and Advisory Board member at MotionLab Berlin.

Arav

Two of the participating startups included NBT’s ventures in PropTech, METR and in InsurTech/Supply chain, Evertrace.

Positive Impact on German Startups

METR’s CTO Mladen Miljic was struck by the unconditional hospitality of the Chinese hosts during the summit. Over the three days that the startups spent in China, they experienced a warm welcome, all their needs were tended to, and they met many new contacts for their businesses. In particular, Samuel Yin and Andy Sun from IAIT (Institute for Automation and Industrial Technology), Shanghai provided notable support to the startup participants, contributing to the formation of an amiable relationship.

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The trip offered Mladen (above) a chance to present METR’s solution which involves remote monitoring so that building managers can focus on predictive maintenance in residential buildings. Mladen recently reflected back on the Summit: “If the goal was to increase the trust between Germany and China, then this was more than achieved. I would not hesitate for a second to work with our friends in Chengdu."

Mladen_METR

CEO of Evertrace, Darina Onoprienko, (below) presented her platform intended to digitize and streamline processes and provide real-time data, for all the stakeholders in the supply chain, winning 3rd-place prize among the group of 12 from the Summit’s jury. On her return, Darina commented that: “Since 2016, in Chengdu, the capital of Sichuan province, city planners have focused on becoming China’s largest western transport and logistics hub. Thus, building tight connections with local partners there is of strategic importance for any startup in the supply chain space.”

Evertrace-1

The jury awarded Tiago Cunha Reis, CEO and co-Founder of Mater Dynamics, first-prize for his startup’s work on paper-thin batteryless wireless sensors. In his reflection on winning, he posted on Linkedin that “Global Innovation Summit 2018, (is) a conference-like event that brings innovative Europeans startups into dynamic Chinese investors, government entities and startups. The all purpose of this event is to speed up business relationships across Europe and China, either if you are looking for investment, suppliers, clients or maybe all at the same time.”

Darina_Evertrace

Global Heads Up on a 'New WTO'?

The visit concluded with a side trip to a nearby factory in innovation-driven Chengdu, where companies such as Bosch are already successfully working. Keep in mind that Bloomberg piece mentioned above, where Joe Käser, CEO of Siemens says: “If the Western world doesn’t get its act together in how it designs free trade,” China could snub the international system and turn Belt and Road into “the new WTO.” Adding, “We need to be very mindful about what we deal with here.”

In sum, the world should be paying close attention as to what’s brewing in China and how that affects other nations’ innovation strategies. With China’s willingness to accommodate international business and in particular German companies’ eagerness to expand into Asian markets, this exchange is one to watch in 2019.

At NBT, we encourage an international approach to developing solutions for today’s business complexities. Get involved with our cross industry ventures here.

Tom Barbereau, content writer at NBT AG, contributed to research for this article.

Photos courtesy of IAIT.