Silicon Dragon Spotlights Top 10 Tech and Venture Trends In 2020

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It’s been more than 10 years since Silicon Dragon predicted that China could win the tech race. While once considered a ludicrous idea, this concept has been proven to be a trend to watch as China’s economy has unfolded from manufacturing to services and tech. The following key trends spotlight a number of sub-themes within that broader picture. Here’s our predictive list for 2020.

1. China technology innovation and new business models will continue to gain momentum in many important tech sectors such as artificial intelligence, facial recognition, robotics, the Internet of Things, biotech and mobile communications. China will push the pedal on advancing these technologies, aiming to be a global powerhouse of our tech future and innovating faster than the U.S.

2. A “Splinternet” of the global tech economy will form as the U.S.-China tech cold war heightens. These two competing superpowers will dominate the tech world but each will develop their own standards for new technologies such as fifth generation telecom, which will roll out faster in China than in the U.S.

3.  Venture capital will be impacted by this U.S.-China split, and will flow into separate camps – one for China and one for Silicon Valley. Cross-border investments will fade after years of collaboration and cooperation. Startups in both markets that depended on cross-country investments will face a cash crunch as former sources of funding dry up.

4. In China, a core group of venture firms will make the most of the downward cycle of investment and will selectively back a next generation of companies at lower valuations. Startups will chase capital, the reverse of a few years ago. Lower investment valuations in promising Chinese startups will make for good returns on key venture funds, and ultimately lead to an upturn in the VC cycle within a few years.

5. China’s tech titans known as the BAT – the equivalent of the U.S. FAANGs – will spread their power by entering into entirely new economic sectors and buying up newcomer rivals both within China and abroad. Chinese tech titans will do battle over new turf in an attempt to own it all.

6. As more digital business models take off in China, expect these businesses to be copied or improvised for the rest of the world. Look for the Chinese e-commerce startup Pinduoduo to be copied in the U.S. and other ideas to inspire entrepreneurs.

7. Greater regulatory scrutiny of Chinese tech brands in the U.S. will result as more customers begin to use China technologies such as 15-second video app Tik-Tok, drone maker DJI, and electric vehicle maker BYD. Look for more consumer awareness of products and services originated from China, and a possible backlash to made-in-China brands.

8. Expect fewer Chinese tech companies to enter the U.S. market and stay closer to home by introducing their brands and investing in nearby Southeast Asian markets.

9. Shut off from U.S. markets, China R&D will increasingly turn to Israeli brainpower and knowhow for gaining an advantage in frontier technologies. Israel will continue to welcome Chinese capital into their startups and venture funds.

10. How the U.S. and China conduct business with each other will be more clearly defined and the uncertainty over what cross-border investment flows will be permitted by Washington, DC will begin to fade. On a note of optimism, new paths of innovations and investment flows could be created that would benefit both markets instead of dampen innovations.