China’s Unicorns Are Coming

Tech firms in China aren’t ready to reinvent existing industries on their own, but they’re closing the gap with the U.S., thanks to a stronger work ethic and a greater desire for success.

That’s the view of Kai-Fu Lee, a Taiwan native and former head of China operations for Microsoft Research and Google.

Few people have straddled the tech worlds of China and Silicon Valley as much as Mr. Lee. He studied and worked in software engineering in the U.S. from 1973 to 1998 before moving to Beijing, from where he now oversees a $500 million tech-investment fund called Innovation Works. It has backed 160 companies in China and 22 in the U.S., under the name Idea Bulb Ventures.

In China, his top investment is Meitu, now worth about $2 billion, which owns an Instagram-like app in China. Mr. Lee also invested in China-based Android app store Wandoujia, run by a former Google China engineer, that’s now worth close to $1 billion, he says. His U.S. investments are in connected devices, online education and developer tools—areas where foreign firms have a better chance to make it in the China market.

For years, Mr. Lee, has enjoyed near-celebrity status in China, including during a recent bout with lymphoma that sidelined him for a year and a half before he returned in February. He says his cancer is in remission and he’s feeling fine.

During his current trip to Silicon Valley and the East Coast, where he’s raising more money, the 53-year-old Mr. Lee sat down with The Information to discuss China tech’s up-and-comers and the key differences between the U.S. and China tech sectors; and to defend his government from allegations that it acts against Western companies trying to operate in the country.