How can Europe forge its own creative high-tech ecosystem?

Many an expert has asked the question why it is the case that Europe today has not been successful in establishing its own distinct and globally impactful, hi-tech industry. Comparing the amount of unicorns, or companies with a valuation of over a billion dollars, between the United States, which currently stands at over 1000 unicorns according to some estimates, with European unicorns, which estimates report to be around 130 as of 2024, is very telling. Numbers aside, the impact test is also evidently in favor of the American high-tech industry, with a focus on Silicon Valley. Looking at the tech that powers our everyday lives will return a long list of companies we are all familiar with by name, from Apple to Microsoft to Google, while almost no European unicorn would be noted by most people off the cuff.

There are some that have attributed this discrepancy, if you will, to what can only be described as the American passion for risk taking which stands in stark contrast with European “conservativism”. Since its founding in 1776, the United States has been depicted as a place which encourages people to move against the grain, take risks and pursue their passions. Some would call it a manifestation of the American dream. Europe, or the “Old Continent”, has been known for upholding conventional norms, and not pushing ideas or ventures too far outside of what is traditionally acceptable. This restrictive thinking limits creativity and encourages conformity.

Nowhere can this be seen more interestingly than in the technology industry, which is powering the green transition, namely the battery technology necessary for harnessing energy from renewables which are used to power everything from homes to cities. Europe has been noticeably lagging, with most innovation coming out of both the United States (see Tesla) and interestingly China. However, in the case of Beijing, rather than a culture which encourages creativity which can be attributed to Chinese leadership in the battery space, it has been government support and incentives, and specifically public-private partnerships of sorts that have been pushing the development of Chinese technology, some would say, in a way that even surpasses Western innovation.

In renewable and specifically battery storage space, this month saw Chinese engineers, announcing the development of a battery which holds double the capacity of any battery that Western companies have come up with to date. More broadly, Chinese companies are among the biggest in the world in this space, among which Hithium Energy Co, CATL, and BYD (known for electric vehicles) can be counted. Recognizing the immense potential from these industries, the Chinese government has been a strong supporter of such critical industries, and has made extensive investments in and provided support for domestic led innovation. Hithium for example, is known to have received tremendous investment from the Chinese government, allowing it to grow to become among the top five most prominent battery producers in the world. Recently, solvency issues have been reported at Hithium, who among other things, lost one of its biggest clients in the United States, Powin Energy, which went bankrupt. Company financials indicate government subsidies in the value of 414 million CNY, which exceeded its net income, highlighting the importance of Chinese government investment for an industry that can have high R&D costs and significant overhead before profitability.

Unfortunately, instead of embracing Chinese innovation, Western governments have often tried to stifle it, through regulations and extensive limitations placed on importing Chinese tech. However, Europe, which is physically and metaphorically stationed on the border of West and East can serve as a bridge. Recently, policy changes in the United States have already seen European actors forging new relationships and creating new trade cooperation in previously under discussed geographies. Chinese companies have been doing the same. Recent news was made public of a licensing arrangement between Hithium and India’s largest company, Reliance Industries, a collaboration which will reportedly see Chinese technology exported to India, with manufacturing taking place there for the first time. Similar opportunities were reported between Chinese companies and European actors which will be producing Chinese technology on European soil for the first time. The importance of this cannot be understated.

If Europe could overcome its traditional aversion to thinking outside the box, following their American cousins in this respect, and embrace their potential position as a bridge between West and East, the opportunities for development which the still nascent European industry may see, are tremendous. Recent global policy winds have created unique opportunities for headway in this regard. The tides of global trade are once again changing and this time, Europe should ensure its own industry is standing at the helm of the ship.

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