By Clay Chandler
December 9, 2017

Life returned to almost-normal in downtown Guangzhou this morning following the Friday conclusion of the Fortune Global Forum. Delegates dashed for the airport. Security checkpoints were dismantled. There were actual pedestrians on the sidewalks.

I can’t improve on Alan’s excellent daily dispatches from the Forum. But a personal highlight came on Day Two, during a panel introducing founders of five startups chosen as winners of Fortune‘s first-ever China Innovation Awards.

The companies had been culled from a pool of nearly a hundred nominees. From that group, Fortune editors selected three winners in five categories: e-commerce and financial technology; healthcare; mobility and green tech; artificial intelligence; education, media and entertainment. After a full day of Shark Tank-style pitches, delegates to Brainstorm Tech International voted to choose a single winner in each category.

It fell to me to introduce winners to the Forum. At the last-minute, members of the programming team and I made a whimsical decision: rather than asking winners to rehash pitches for their companies, why not invite them to talk about themselves? What is it like to be an entrepreneur in modern China? What obstacles did they face? What drove them?

The conversation that followed was a revelation—by turns, funny, surprising and inspiring. Nearly everyone had a story about how friends, family, teachers or professional colleagues had tried to discourage them from taking the risk of striking out on their own. One founder complained about the travails of recruiting; hours are grueling at Chinese startups and, to hear him tell it, prospective hires fear signing with a new venture will doom their prospects for marriage. Another spoke of how difficult it had been to convince his wife that he should quit his U.S.-based job with a prominent multinational and return to China to launch his own business.

Even so, few reported difficulty securing funding, and none had any regrets. All agreed that, in China, opportunities for entrepreneurs are legion.

The optimism of that session was tempered by references in conversations during the Forum and Brainstorm Tech about the expanding power of China’s two Internet giants, Alibaba Group and Tencent Holdings. Over the course of the week, we heard from a host of Chinese “unicorns” that have accepted funding from at least one—and in some cases both—of the tech titans. Among them: Ele.me, a food delivery service; Mobike and Ofo, bike-sharing ventures; Mobvoi, a maker of A.I.-enabled devices; and Baozun, which provides e-commerce services for merchants.

In today’s Wall Street Journal tech writer Li Yuan argues China’s tech behemoths “use their deep pockets to swallow startups and guard against potential disruptors.” In China, she contends, new ventures have become mere “pawns” in the expanding proxy war between Alibaba and Tencent, which are less interested in the profitability of the ventures themselves than they are in using acquisitions to gain control of customer data. Alibaba’s Jack Ma and Tencent’s Pony Ma both spoke at the Forum. Jack papered over their rivalry but Pony compared Alibaba to a greedy landlord apt to raise the rent whenever he felt like it.

In an essay in Barrons, former Google China head Kai-Fu Lee and McKinsey Global Institute director Jonathan Woetzel suggest Alibaba and Tencent are engaged in a high-stakes digital land grab. Lee and Woetzel stress the connection between amassing data and mastering AI: “As Chinese firms become more technically capable, the country’s market advantage is turning into a data advantage—critical to support the development of AI,” they write.

In a separate report released this month, Lee and Eurasia Group’s Paul Triolo suggest the AI rivalry to watch isn’t between Tencent and Alibaba but between China and the U.S. Lee and Triolo argue the U.S. and China are locked in a “two-way race for AI dominance” sure to make technology a “key source of trade friction between the two countries” in years to come. China, the report notes, “has put the full power of the state behind its drive for AI dominance.” Lee and Triolo fret that the fact that China has more Internet users than the U.S. and Europe combined “could give China an unassailable lead in amassing the huge data sets that lie at the heart of AI innovation.”

I don’t know about that. I do know, though, that I was impressed by the quiet confidence of Chao Xiaojuan, founder of BZN, whom Fortune selected as this year’s China Innovator of the Year. BZN, founded in 2015, describes itself as an Internet platform that provides “one-stop shopping” for corporate insurance. Chao was the only woman among the 15 finalists but said she did not feel that her gender had hindered her ability to launch a new company and never doubted that her venture would succeed.

Enjoy the weekend!

Clay Chandler
@claychandler
clay.chandler@timeinc.com

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