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Virtual Reality Made in China: How 200 Startups Are Preparing for the Explosively Growing Billion-Dollar VR and AR Market

Chen Liang

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Virtual reality and augmented reality are considered IoT market sectors with tremendous growth potential. However, mainstream products and applications are lacking so far. It’s precisely this gap between wish and reality that the Chinese tech industry wants to fill. More than 200 startups are preparing to conquer the global virtual reality market with cool innovations.

 

 

Merely 100 million virtual reality devices were distributed worldwide last year – not much compared to the 1.5 billion smartphones sold. Still, the virtual reality (VR) and augmented reality (AR) market is considered one of the hottest bets in the Consumer IoT market. The current range of hardware options is fairly straightforward: Facebook, HTC, Samsung and Sony divide the market for headsets among themselves. Smaller suppliers and startups hardly play a role.

 

The VR Market Is Predicted to Reach 120 Billion Dollars in Sales by 2020

 

But if things go according to plan for the Chinese tech industry, this is likely to change soon. The People’s Republic wants to play a part in the global VR and AR market and is positioning its economy accordingly. In our last blog post, we already touched on the momentum with which young startups and established brands are advancing tech innovations. By 2020, the VR market is expected to grow to a sales volume of 120 billion US dollars – a sector that’s simply too attractive to leave in the hands of American, Korean and Taiwanese competitors.

 

As with the smartphone sector, China is likely to benefit from the rapidly growing tech affinity of its own population. Customers virtually scramble to get ahold of the latest VR gadgets like in hardly any other country. The online giants Alibaba, Baidu and Tencent are driving demand through better and more exciting VR applications. At the same time, the companies are investing in VR startups rather than directly competing with the domestic hardware industry. After all, Huawei, Lenovo and Xiaomi also have stakes in the VR market, and a direct exchange of blows could do the market more harm than good, so the reasoning of the Internet giants. 

 

200 Startups Are Working on VR Innovations Made in China

 

It’s a plan that could work. Bloomberg recently released some breathtaking figures: The Chinese VR market is expected to grow by a factor of 36 by 2020 and then reach a sales volume of 8.5 billion dollars. More than 200 startups are now working on VR innovations made in China. Even the Chinese government knows what’s at stake and has already identified practicable market sectors. According to China’s Ministry of Industry and Information Technology, video and game applications are the first step towards a mainstream VR market. Corresponding state programs to promote innovation and growth are underway.

 

But not just China’s Internet giants and government are helping set Chinese suppliers up for success. The global venture capital fund 500 Startups, for example, has also recognized the potential of the Chinese tech industry and directly invested in several VR startups. The goal is to help Chinese suppliers enter the US market, says 500 Startups Partner Edith Yeung.

 

Innovation, Not Imitation, Is Dominating the Startup Agenda

 

Those who believe that established VR companies, such as Facebook with Oculus Rift or HTC with the Vive headset, are a benchmark for the Chinese startup community will quickly discover otherwise: China’s VR specialists go one step further and strive for genuine innovations that enable them to take on a pioneering role in the global VR market. Dlodlo is one such company. With Dlodlo V1, the startup is offering one of the world’s first VR products that resembles a normal pair of glasses and has little to do with the chunky headsets of the competition.

 

Another user-oriented approach is being pursued by Pico. While the appearance of the company’s VR headset is somewhat reminiscent of known products, Pico’s device has been slimmed down impressively. Redundant hardware components have been trimmed away, giving Pico the claim of offering one of the world’s lightest VR headsets. It remains to be seen how established competitors will respond to China’s latest VR innovations. What’s clear is that the days when Chinese companies imitated innovations are over. The rapidly growing IoT market is the new playing field on which China intends to make global tech history.

 

Summary: Within three years, more than 8 billion dollars in sales are expected in the Chinese VR market alone. Strong demand in its own country is benefitting China’s tech industry. Because customers are constantly looking for new features and designs, the pace of innovation is speeding up. This could turn the VR market into an important springboard for China’s tech suppliers to enter the global market for Consumer IoT devices. Which Chinese VR companies are among your favorites? Contact us today and don’t forget to follow B2X on LinkedIn!

 

Chen Liang is Manager Global Accounts at B2X.

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