How ‘China’s MIT’ Tsinghua University drives the country’s tech ambitions 

Wang Haili was facing the dire prospect of shutting down his semiconductor business when he reached out to a mentor at Tsinghua University, where he read his PhD in computer science and technology.

A group of alumni invested 5 million yuan (US$780,000) in his start-up “without hesitation”, which allowed him to continue to pursue research and development, according to Li Zhu, head of the 3,000-member Tsinghua Alumni TMT Association. “I don’t think he need worry about a shortage of capital with the support of alumni.”

Li, an angel investor, set up the group in 2011 so that Tsinghua alumni in the technology, media and telecommunications industries can get together and network. Such connections have helped establish the university as an influential kingmaker in the country’s technology industry.

“Entrepreneurs have to take advantage of guanxi (relationships in English), and Tsinghua alumni are more likely to help each other [compared with other universities], I think, ” Li said in a recent interview at Tsinghua University in Beijing. “Some funding deals were done directly within the association because it’s a very good place to connect entrepreneurs and investors.”

Founded in 1911, Tsinghua University is located in the northwestern suburbs of Beijing and named after the former royal garden on which it is sited. The university was tasked to train engineers in 1952 and is still most famous for its engineering and sciences programme. Many members of the Chinese Academy of Sciences and Chinese Academy of Engineering – the two state-level institutes devoted to spearheading science and technology research, are Tsinghua alumni or faculty.

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Among China’s universities, Tsinghua produced the most number of start-up founders – 192 in the past three years ending 2017 – according to data compiled by IT Juzi, a research firm focused on the technology industry. Cross-town rival Peking University was not far behind at 183, with the next three universities, Shanghai Jiao Tong University, Zhejiang University and Fudan University, located in the southern Yangtze River Delta area that is home to companies such as Alibaba Group Holding, parent company of the South China Morning Post. 

Private-sector tech entrepreneurs who hail from Tsinghua include Wang Xing, the founder and chief executive of Meituan Dianping, the on-demand services giant; Su Hua, chief executive of Kuaishou, the short-video streaming company; Zhou Guang, co-founder and chief scientist of autonomous driving start-up Roadstar.ai; and Lou Tiancheng, co-founder and chief technology officer of Pony.ai. 

Tsinghua University also holds regular talks by alumni from different fields to share their experiences and also provide mentoring to the current crop of undergraduates. 

But perhaps its biggest influence in the technology industry is Tsinghua Holdings, which was set up as an in-house asset management company for the university’s subsidiaries and has since become a full-fledged venture capital firm backing investments in areas spanning mobile internet, cloud computing to nuclear energy, waste water treatment and medical services.

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Its investments include Shanghai-listed semiconductor and security inspection equipment maker Tsinghua Tongfang. It also operates the country’s first start-up cluster in Beijing, and stands behind the China Integrated Circuit Industry Investment Fund, a national fund to aid semiconductor companies. 

Tsinghua Holdings also has funds to support innovation and entrepreneurial education. A separate alumni-backed fund for start-ups, Tsinghua Capital, raised 30 million yuan in its first fundraising round in 2014 to back start-ups founded by undergraduates and alumni.

“The fund has had an everlasting impact on how Tsinghua trains talent,” said Chen Jining, who was president of the university at the time and now serves as mayor of Beijing. “Amid changes, I believe there will be more influential entrepreneur talents, like a Steve Jobs from Tsinghua.”

The role that China’s universities play in producing hi-tech talent is taking on even more importance as the country embarks on a quest to gain broad parity in technology with the US and leadership in certain areas, such as artificial intelligence and robotics.

Under President Xi Jinping, China has put the development of advanced technologies, such as big data and artificial intelligence (AI), at the centre of a national drive to reform the economy. China’s State Council has laid out goals to build a domestic AI industry worth nearly US$150 billion in the next few years, and to make the country an “innovation centre for AI” by 2030.

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Still, China trails the US in every driver of AI development, namely hardware, research and algorithm and the commercialisation of the industry, according to a study by Oxford University. The biggest obstacle is likely to be the production of hardware like semiconductors, the study found.

China is also suffering from a serious shortage of qualified people to staff its ambitions to become a leader in AI. There is a global AI talent pool of about 300,000 people while the actual needs by industry number in the millions, according to a Tencent Research Institute report. Competition for the top tier of talent is the most intense, as there are fewer than 1,000 people who are considered capable of steering the direction of AI research and development, according to the report.

The influence of university alumni is well-documented. In Britain, Oxford and Cambridge produce the bulk of the country’s political elite, while in the US, Harvard and Wharton produce business leaders from the world over. In technology, it is Stanford University, with its proximity to Silicon Valley, that has been the incubator for tech luminaries from Bill Hewlett and Dave Packard to Google’s Larry Page and Sergey Brin, as well as to former Yahoo chief executive Marissa Mayer.

Stanford topped a list of colleges that produced the most founders of billion-dollar start-ups, according to research by Sage, an accounting software firm. Stanford and the Massachusetts Institute of Technology also rank among the top universities that produce the most employees working in the technology industry, according to HiringSolved.

Still, a strong alumni network does not guarantee success and aspiring start-up founders still have to earn their spurs.

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“No one will give you money support just because you graduated from Tsinghua University,” said David Yang, who graduated from Tsinghua in 2010 with a degree in mathematical sciences. He set up online education company DeBai Education three years ago. 

“To tell the truth, the network is not that useful at the very early stage of my business. It is only when you make your business big that investors have interest to talk with you,” Yang said. 

There is also more to starting and running a business than just the name on the plaque on the wall. 

Tsinghua graduates generally prefer to keep a low profile, and compared to their peers at Stanford, are not as entrepreneurial, said Li, the alumni group president.

In China, there is still a traditional view that “working for the government or big companies is the best choice for a career path and Tsinghua graduates always have a lot of such offers, while superstars in US universities start their own companies”, Li said. “Influenced by the entrepreneurial atmosphere, graduates in the US, especially in Silicon Valley, are always willing to try their own business during their university life.”