The DeepSeek Shock: Why Asian Startups Are Outpacing the Competition

I’m sitting in one of Shanghai’s 10,000 cafés with a German startup investor visiting China for the first time. For 90 minutes straight, he fires off questions about everything from AI to infrastructure.

Next to us, an elderly woman with curlers in her hair and a poodle in her lap asks her phone: “DeepSeek, how can I make dog treats at home?”

(Despite the outdated “Chinese people eat dogs” stereotype still floating around, China’s pet industry tells a different story: It's booming. As of 2024, the Chinese pet market is estimated at over ¥270 billion ($37 billion).

A few months ago, I’d never heard of DeepSeek. Now, everyone—from Chinese pet owners to German tech journalists—is talking about it. How did this happen? I ask the investor. His answer is revealing.

AI is becoming increasingly important in everyday life

Why Asia Is the New Innovation Engine

While Europe has a legacy of innovation, it's increasingly weighed down by:

• High cloud computing costs

• Stricter regulations

• A relatively cautious VC culture

Meanwhile, Asia—particularly China, Singapore, and India—is rapidly becoming the go-to launchpad for tech startups thanks to:

• Lower operational costs (engineering salaries 30–50% cheaper than Silicon Valley, cloud computing at a fraction of Western prices)

• Government turbo-boosting (tax incentives, R&D grants, state-backed compute infrastructure)

• Massive, tech-hungry markets (China alone has over 1 billion mobile internet users)

Case in Point: AI startups in Europe struggle with high cloud bills and talent shortages, while Asian counterparts like DeepSeek leverage cost-efficient engineering talent and infrastructure.

Asian companies such as DeepSeek utilise cost-effective technical talent and infrastructure

💡 DEEPSEEK: Asia’s AI Cost-Efficiency Powerhouse

DeepSeek isn’t just another AI startup—it’s proof of Asia’s operational edge. Here’s why:

✅ 1/10th the Training Costs

Thanks to subsidized cloud infrastructure and algorithmic optimizations, DeepSeek trains models for a fraction of what OpenAI or Anthropic spend.

✅ Talent Arbitrage

A senior AI engineer in China earns ¥80K–¥120K/year vs. 200K–200K–350K in Silicon Valley. Yet, China now produces 50% more STEM grads annually than the U.S.

✅ Backed by Giants

Strategic alliances with firms like Alibaba, Tencent, and government compute initiatives provide DeepSeek the fuel to move fast.

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🚀 Why This Matters for Entrepreneurs

1.     Bootstrapping is Possible – Lower burn rates mean Asian startups survive longer without constant fundraising.

2.     Faster Experimentation – Cheap computing allows rapid iteration (critical in AI).

3.     Global Talent Pool – Remote teams in Asia offer high skill at lower costs.

My suggestion to European leaders:

With Asian startups like DeepSeek proving that cost efficiency + speed = dominance, Europe must:

• Streamline regulations for AI and deep tech.

• Increase funding for computing and R&D.

• Encourage a risk-taking culture among founders and investors.

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The next decade of tech leadership will be decided by who builds the fastest and cheapest. Right now, Asia is winning.