Local turbulence drives China tech players abroad - AVCJ Forum

“For example, service companies, when they see their product working in the domestic market, they just extend, maybe to Southeast Asia first,” said Jenny Lee, a managing partner at GGV Capital. "The pace of going global might be different, depending on the sector. But, definitely, I would say it's happening at least one or two years earlier than before."

The trend has become especially visible in the electric vehicle (EV) supply chain, an area in which China is regarded as globally competitive. Mingming Huang, founder of Future Capital, noted that EV manufacturer Li Auto, one of his portfolio companies, set a target of having China account for only 30% of sales when it was founded.

However, US-China tensions have complicated cross-border expansion. Hesai Technology, which develops 3D sensors used in autonomous driving, has targeted a global client base from day one, serving the likes of Silicon Valley-based Cruise, Nuro, and Zoox. It was then sued for patent infringement by Velodyne, a leading US competitor.

James Mi, a founding partner of Lightspeed China Partners, recounted how he helped Hesai contest the action, personally flying to the US to meet intellectual property lawyers. Velodyne eventually dropped the case and reached an agreement with Hesai for global cross-licensing.

Mi referenced Hesai as an example of how investors can support portfolio companies in international markets, and he expects the broad cleantech space - of which EV is part - to be active. “Climate change is not a problem for a single country. We have to fight it as a global initiative. There are more opportunities in this space for start-ups to turn global,” he said.

Mi contrasted cleantech now versus 2000 or 2010. "Things are very, very different. Many of these technologies are getting to the point of commercialization. They are economically affordable, and they don't need government subsidies," he noted.

More than $4.8 billion has been invested in China cleantech and renewables so far in 2021, roughly the same as the previous four years combined. Key targets include CATL, an EV battery manufacturer that serves Tesla, among others.

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