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As an entrepreneurial project that Hefei both "recruited" and "invested in", Hefei, the "gambling city", once again made the right bet.

Recently, I visited a young entrepreneur, Mr. H, in Hefei and talked about his story of returning to Hefei from Shenzhen to start a business.

Mr. H is from Anhui Province and went to college in Hefei. While studying, he kept trying to start his own business.

In 2011, Mr. H joined a listed company in Hefei and participated in the incubation of an entrepreneurial project within the company. After the successful listing, he achieved financial freedom.

However, he did not choose to rest on his laurels after becoming financially independent. Instead, he went south to Shenzhen to start a second business. In three and a half years, Mr. H led the Shenzhen company to grow from a company of more than 30 people to a well-known enterprise in the industry with more than 400 people and a valuation of nearly 3 billion yuan.

Thanks to the active attraction of the Hefei government, in 2019, Mr. H chose to return to Hefei to start a business for the third time.

However, he did not simply copy or directly relocate the company in Shenzhen. Instead, he started a new company in Hefei, whose core technology is digital imaging technology in the health field.

The project will be put into production in 2021. It currently has three factories in Hefei and a R&D team of more than 100 people. Mr. H said that annual revenue has doubled in the past three years, with market share in overseas markets rising rapidly.

So far, the company has successfully completed rounds A, A+ and B of financing. Due to its original or disruptive technology and difficult-to-copy business model, the company was selected into the list of "China's Top 500 Hidden Unicorns" only two and a half years after its establishment. The company's current valuation is roughly in the top 20 of this list.

After a morning of communication, I would like to share with you some of my thoughts and experiences.

About Hefei’s city brand.

Mr. H said that when he went to Shenzhen 10 years ago (2014), locals generally had no clear concept of Hefei. But after 10 years, everyone has a new look at this emerging city of Hefei.

Ten years ago, there was no atmosphere of scientific and technological innovation in Hefei. USTC was only engaged in scientific and technological research and development on campus, and there was not much awareness of the transformation of scientific and technological achievements.

But now, "Korikoe" has become Hefei's unique urban temperament and label.

Only with achievements can one have status, and only with substance can one have face. Entering the Internet age, many cities are trying every means to pursue network traffic and exposure, but in fact, they are more of self-praise and over-packaging and beautification. In an era where everyone is a self-media, they cannot withstand the real test of the market, and naturally it is difficult to convert network "traffic" into "retention" for economic development.

The reason why Hefei has such a high level of attention and reputation now is inseparable from its rapid growth in the past decade or so, and also inseparable from its unique and highly recognizable development model. If you cultivate your inner strength well, you will shine brightly.

About industrial investment in Hefei.

As a famous "venture capital city", the Hefei government is now very efficient in making decisions on industrial investments.

In Mr. H's project, the three-level industrial funds of the province, city and district all invested money soon after the project was launched. The district's municipal investment company directly invested funds, and the funds were all in place at one time (I specifically asked about this because many investments promised by local governments are only on paper, or are invested bit by bit like squeezing toothpaste).

These investments by the Hefei government are only financial investments and will not interfere with the daily operations of the companies.

Hefei is a beneficiary of the "government venture capital model". After decades of exploration, the concept of government industrial investment has become clearer, the model has become more mature, and the process has become smoother.

Everyone only knows that Hefei has successfully invested in a few large and well-known cases, but in fact there are many small and beautiful venture capitals that are also successful. Because industrial investment has benefited a lot, the governments of Hefei have become more bold in investing, further consolidating and accumulating this experience and advantages, and finally forming the Hefei model of government venture capital.

About the differences between Hefei and Shenzhen.

Mr. H admitted that Shenzhen is market-driven and Hefei is government-driven.

Hefei's advantage is that the government is actively promoting some things, helping entrepreneurs to meet some needs and promoting horizontal cooperation. Shenzhen has a small government and a big market.

Of course, this is related to the different development foundations and environments of the two places.

Shenzhen’s early development was due to foreign investment, which brought in a large amount of capital, technology, talent, innovative ideas, etc., so Shenzhen’s development has thus formed a “market-oriented” path dependence.

As an inland region and a late-developing city, Hefei has gained "positive feedback" in the introduction and support of industries by actively exerting the subjective initiative of the government, thus forming a "government venture capital" model.

It is normal to form different development models based on different resource endowments. At the same time, all regions are learning from each other. Now all regions are "rolling up". Shenzhen is also actively playing the role of the government's "visible hand" to attract external and cultivate the "20+8" industrial clusters internally. Similarly, Hefei is also actively playing the role of the market's "invisible hand". The industrial layout and investment orientation all respect the market rules and keep up with the market trend.

About current business.

Mr. H's business originated in China, but they are also actively going overseas. In the process of going overseas, they found that the profit margin of products in the "Belt and Road" countries is much higher than that in China, and the domestic market is still too competitive.

Their current overseas expansion is carried out in two ways. One is conventional trade, which involves overseas sales through agents; the other is cooperative factory establishment, where overseas partners provide land and factory buildings, and they provide technology, transport parts and components, and assemble finished products in overseas factories.

Mr. H predicts that within three to five years, their company's overseas market share will exceed 50%.

According to Mr. H's observations when conducting business overseas, many countries along the Belt and Road Initiative are learning China's model of promoting economic development and attracting investment, which can be said to be directly copying China's homework.

About local government's investment promotion.

During this exchange, I paid special attention to the issue of local government attracting investment.

Mr. H’s hometown is not Hefei, but he studied and worked in Hefei, and settled down in Hefei, becoming a new Hefei citizen. After his successful business in Shenzhen, the Hefei government invited him back to invest in business.

I asked Mr. H if the government of his hometown had come to attract him. Mr. H said that after returning to Hefei, his hometown did come several times, so he also built a factory in the county town of his hometown.

In recent years, the investment promotion efforts of governments across the country have become more and more competitive and more and more similar. In the battle for stock resources, the local sentiment is a natural and inseparable emotional card, so local governments are actively trying to attract entrepreneurs who have successfully started businesses abroad to return to their hometowns to invest and start businesses.

But nostalgia is only a stepping stone to attraction. Whether they can achieve mutual success depends on the compatibility of both parties.Therefore, attracting investment is actually a process of both internal and external development. It requires not only tapping into resources and attracting external investment, but also creating a better business environment and industrial supporting facilities to ensure that the attracted enterprises can stay and grow.

No.5878 Original first article | Author Sifangjun

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