China is not blessed with the long history of free enterprise that the US has enjoyed. It has only been “open for business” since the 1980s, soon after Deng Xiaoping instigated the reforms that would lead to China’s transformation into a market economy. It does not yet have the developed informational, educational, or, institutional structures of support for entrepreneurship that are enjoyed in the Western world. But a new generation is pumping fuel into the tank of change.

Today’s young leaders grew up with little knowledge of the devastating effects of the Cultural Revolution, which tore the country asunder and suppressed creativity for a full generation. Those difficult times are rarely talked about by a people intent on moving forward. The young people of China today have never known a Communist Party that wasn’t overtly capitalist. They know only a world in which to be Chinese is to be proud, to be rich is to be glamorous, and to be alive is to be hopeful for better times ahead. In their time, China has risen to the top of the Olympic medal tables, the front of the news, and close to the peak of the global economic order.

It has taken decades, but China’s business roots are now firmly in the ground, even in the high-tech sector. Tencent and Alibaba have proven it is possible to grow a huge homegrown Internet company with international significance. Lei Jun has shown that you don’t need a Western education to be a business superstar, and that Chinese can take on even a giant like Apple with a straight face. And a new generation of Internet companies, from 360buy, whose latest funding round valued the company at more than $7 billion, to UCWeb, which dominates the mobile browser market and now has 1,000 employees, are proving that it’s possible to scale from scratch.

Now, another new-generation Internet company is giving Chinese companies hope for success in the US stock market. When YY.com went public on Nasdaq in November 2012, it was the first Chinese company to list in the US in eight months. The year had not been a happy one for YY’s compatriots on Nasdaq. E-commerce companies Mecox Lane, DangDang, and VIPshop had registered depressing returns on Nasdaq, and video sites Youku and Tudou, before their merger, had been equally disappointing. A series of accounting scandals — of which Sina-Forest, which is under investigation in Canada and has filed for bankruptcy protection, was among the most prominent examples — damaged trust in Chinese companies among US investors.

Then Facebook’s disappointing IPO in May put the chill on the tech sector in general. As a result, digital advertising platform company AdChina delayed going public. Group-buying site Lashou did the same, even as it too was accused of murky accounting practices, and 360buy, which had been unusually talkative with the international press in early 2012 and was widely rumored to be making an IPO play, started insisting that it had never thought about going public until 2013 at the earliest. It still hasn’t filed to go public.

It was in this setting, even as the conventional wisdom suggested that the US IPO route for Chinese Internet companies was all but blocked, that YY decided to go public anyway. Not only did the IPO go smoothly, but it was also a success. After just over a week, YY’s stock price had climbed from an opening of $10.50 per share to more than $14. As of December 2013, it’s touching $50.

YY is just the sort of innovative Chinese company that gets overlooked and under-appreciated by the US. But that’s kind of understandable — it has been overlooked and under-appreciated in China, too. In fact, when I visited YY’s headquarters in the southern Chinese city of Guangzhou in July 2012, chief financial officer Eric He said that one of the motivating factors for going public was to lift the company’s profile. It’s difficult to attract top talent in China unless you have an established reputation and a well-known name. Many Chinese parents want their kids to work only for prestigious companies that offer status and security.

YY’s headquarters has a comfortable university campus-like feel, with the company and its 1,000 employees spread over five storeys of an old printer’s building. The building’s interior is all exposed bricks, floor-to-ceiling windows, doorway arches, giant potted plants, and chill-out zones. In the lobby, an orange wooden sculpture twists and builds on itself in a motionless fury, a tornado that symbolizes the company’s torrid ascent.

Unlike many other Chinese companies, there is no American analogy for YY. It is not “China’s Twitter” or “China’s Google” — faulty as even those labels can be — which might be why many Westerners haven’t paid much attention to it. The company resists the shorthand description that would otherwise make YY easy to understand. It’s not even a hybrid of existing American Internet companies. Instead, it is own type of engagement phenomenon, part social network, part portal, part platform.

YY is most popular for its live interactive streaming of audio and video. Members create their own “channels” on the site, from which they manage and host shows or discussions. In one channel, for example, someone might be teaching English to an audience of listeners who pay for the privilege with virtual currency. In another, an aspiring singer might be singing karaoke to listeners who reward her performance with virtual flowers, which can later be cashed in for real money. Some singers are making tens of thousands of dollars a month that way. One of the most unexpected uses: a community of pig farmers who use the technology to discuss methods to improve their trade.

And here’s an indication of just how devoted this community is: There are more than 11 million channels on YY, each one able to support more than 100,000 users at one time. In December 2011, the site hit a peak of 8.45 million concurrent users. The technology required to handle that load is intimidating. Its nearest analogues in the US are the WebEx conferencing software, Google Hangouts, and Airtime, none of which have been able to strike on YY’s magic for attracting, and hosting, a mass audience that comes online at the same time. Google Hangouts, for instance, only accommodates up to 10 people per chat. Part of YY’s achievement has to be attributed to its founder, David Li, who saw the potential for the streaming technology and transformed the company from a straight gaming portal in 2008 to what it is today.

Li is emblematic of the sort of entrepreneur who would have been hard to come by in the first wave of the Chinese Internet. A gamer geek, 38-year-old Li hails from a small coal-mining town in the central province of Shaanxi, where his highly educated parents had been sent during the Cultural Revolution as part of Mao Tse-tung’s plan to redistribute human resources across the country. Li’s dad is an architect, and his mom an electrical engineer.

Li graduated from Beijing Renmin University with a degree in philosophy and went to work as a newspaper reporter, first for China Daily and then for China Youth Daily. At both papers, he was assigned to the tech beat and so ended up interviewing some of the most prominent figures in the industry, including Lei Jun, then at Kingsoft, and William Ding, the founder of NetEase. Li earned a reputation for his critical reporting and won the respect of the influential folks he interviewed. Lei, for one, is now a YY investor and sits on the company’s board. He has had a fairly hands-on role in shaping the company and influencing Li’s thinking. If ever there were an internship for innovation in China, then, Li had it.

Gripped by this inspiration for entrepreneurship, Li decided to leave journalism in order to start his own company. He figured he could do it just as well as the entrepreneurs he had been interviewing, and potentially for cheaper. So in 2000, he and a photographer friend set up a company, CFP.cn, that would sell stock photography online using a similar model to that of Getty Images. Li stayed with the company only three years, however, before leaving it to his co-founder. Today, it averages more than $63 million in annual revenue.

Continuing his innovation internship, Li went on to join gaming giant NetEase so he could learn how a large company operates. He took up the chief editor role for its news portal, which at that point was third in the market, far behind the leader, Sina. By repositioning the portal for a grassroots readership that was interested in lifestyle news, Li managed to improve the portal’s traffic enough to bring it within striking distance of Sina. To take it to the next level, he proposed to CEO Ding that NetEase split the portal off as a separate business unit. But for Ding, the portal wasn’t the focus. He was more interested in the lucrative games division, which brought in the lion’s share of NetEase’s revenue.

And so, in 2005, Li, who was in his early 30s, left to start a gaming news portal called Duowan, which would eventually become YY. At first, Duowan only covered World of Warcraft, but on the strength of that one game alone, it became the number one gaming portal in the country.

In 2008, Li realized that Warcraft players needed voice software to be able to better communicate and coordinate their game play. He added the technology to the site, but soon found that he had to keep adding servers to handle the traffic load. YY recruited Tony Zhao, a former WebEx developer to devise a system to reroute traffic to different servers in times of exceptionally high traffic. And so YY begun its ascent.

Today, Li says YY’s mission is to build a platform for engagement. While Facebook wants to make the world more open and connected, Li wants YY to spark something in people’s minds. Ultimately, all the smartest Internet companies will prioritize engagement, he told me. “We and Facebook will go in the same direction in the future,” he said. “Each Internet company will provide kinds of services very similar to us: voice, video, and real-time communications.”

If Facebook does end up prioritizing engagement by facilitating massive simultaneous interaction around streaming media, remember who was there first.

Not far from YY’s Guangzhou headquarters sits UCWeb, another innovative new-generation Chinese Internet company that has not been talked about much by the US media, even at is has quietly opened a Silicon Valley office. UCWeb is the maker of UCBrowser, the leading mobile browser in China. Because the company formed in 2004, it designed its browser for an era of feature phones — the ones with tiny screens and hard buttons.

At the time, mobile Internet connections were slow in China (reliable 3G is still lacking in many parts of the country), so UCWeb built a cloud-powered architecture for its browser that helped speed up page-load times. Rather than rely on the devices’ internal power to load Web pages, UCWeb carried much of the load on its own servers. Seven years later, Amazon released its Silk browser for the Kindle Fire with a similar cloud-powered approach that was hailed by the US tech press as an impressive technological advance.

UCWeb has carried its early-mover advantage in China into the smartphone era, where by some accounts it holds over 50 percent of the market share (according to both Frost & Sullivan and StatCounter), with Tencent’s QQ Browser as its nearest rival. Between China and India — where it claims close to 30 percent share of the market — UC claims 400 million users. The company has nearly 1,200 employees, with offices in Guangzhou, Beijing, Wuhan, and Chengdu. About 80 percent of that staff is dedicated to research and development, and they’re all focused on building a better browser. In its Guangzhou office, the company hangs framed copies of its patents on the walls. I counted 22 such patents.

Proof of UCWeb’s indigenous innovation is to be found in its product. While US mobile browsers — of which Apple’s Safari and Google’s Chrome are the most prevalent — favor singular focus and a clean user experience, UCWeb has reimagined the browser as a kind of de facto operating system. The home screen is dedicated to a grid of thumbnail pictures that link to a user’s favorite sites. Also on that screen, a user can pull down a “curtain” that contains a list of links to other top sites. Swiping to the left brings up an RSS reader that provides a quick way to scan news headlines, and the browser is integrated with Evernote to allow users to save notes and Web clippings.

YY and UCWeb are the trailblazers in a new generation of Internet innovators in China. Far from being copycats — even copycats who later innovate, such as Tencent and Sina — they instead take the lead on product development and in imagining how people can use the Internet to reach their potential. They are headed up by highly educated, experienced, confident, and visionary leaders who believe in China’s ability to lead the world.

It is important, however, not to get carried away. YY and UCWeb are exceptional cases in a culture of entrepreneurship that is still just getting to its feet. Just as it took Silicon Valley decades to get to the roaring late 1990s, China’s ecosystem — if it’s going to be lasting and stable — will be built on waves that make progress a little bit at a time. While there are many promising signs that the country is entering a new era of innovation and developing the startup ecosystem needed to support it, many of the country’s eager entrepreneurs are too intent on turning a quick buck, inspired as they are by tales of Facebook fortunes and Instagram billionaires. Attracted to opportunities in the fast-growing and rapidly developing Chinese economy, many such entrepreneurs sacrifice the long view in the interests of getting rich quick. That’s why when trends strike, they strike hard — which is pretty much the explanation for the existence of, at one point, thousands of Groupon clones. Too few Chinese entrepreneurs realize the importance of building a company with a long-term vision for sustained success.

However, in this phase of the Chinese Internet, the process of innovation and iteration has been accelerated by the new mobile era, which has wiped the slate clean and given China an opportunity to develop new services and apps in parallel with the Western world. UCWeb’s CEO, Yongfu Yu, says that the US dominated the first 15 years of Internet development because it was centered on the desktop computer, a device that for many years was not widespread in China.

Part of the reason Internet gaming has become so popular in China is that there are Internet cafes and gaming centers set up for that express purpose. These can attract young people by the hundreds because, unlike in the US, people haven’t traditionally had computers at home. Because of that advantage, American Internet companies have had a more established platform for innovation and a sophisticated consumer market to develop for. That’s one of the reasons why many American business models have been copied all over the world. And that lack of sophistication, Yu says, is the main reason we haven’t yet seen global Internet companies from China — or anywhere else for that matter.

But mobile is a different story. The era of mobile Internet only got started when the iPhone was released in 2007, Yu points out. “With that short history, we don’t think the US is the only mobile Internet global leader,” he says. “The mobile Internet industry started in Asia much earlier than it started in the US, so we see some unique business models and products emerging from Asia,” says Yu. He points to Japan’s Gree gaming network and Tencent’s Weixin mobile messaging app as examples, and notes the early adoption of SMS in China and Japan.

Yu has such confidence in UCWeb’s technology that he is leading the company on a global expansion, starting with developing markets, but eventually taking on the US. The company sees its iPad browser as a potential way into the US market. In late 2012, it opened an office in Santa Clara, California. By the end of the year, there were only three people in the office, but it plans to expand the headcount to 10 by 2014.

UCWeb isn’t the only Chinese mobile browser company trying to make a global impact. Beijing’s MoboTap, maker of Dolphin, got $10 million in Series A funding from Sequoia Capital and has an office in San Francisco. It likes to call itself both a Chinese and an American company. The truth is, however, that the bulk of its team is in Beijing, and that’s where the company started. When I visited its offices there, I found a place that looked a lot like what you might expect from a Silicon Valley startup, with walls painted in the company color — bright green — a ping-pong table, and a loft for quiet space and daytime naps. The company has 100 staff working in three offices, its third being in Wuhan.

The Dolphin browser is built for the smartphone era and allows users to browse the Web by voice and gestures. To get to Google.com through the browser, for instance, you can just tap a button and then draw a “G” with your finger. Yan Yu and Yu Wong, two engineers at the company, told me that the voice- and gesture-based browsing are useful in Beijing’s cold winters, when pointer fingers are usually tucked away in gloves.

The engineers showed off several of the browser’s most innovative functions, including its slide-away left-hand sidebar — a strikingly similar version of which was later implemented by Path and Facebook — and a corresponding sidebar on the right-hand side that lists browser extensions, contributed by Dolphin’s developer community. You can use an extension to save a Web page to PDF, for example, or push downloads straight to Dropbox, a cloud storage service. It was the first mobile browser in the world to offer extensions.

Yongzhi Yang, MoboTap’s founder and CEO, is another example of the new generation of Chinese entrepreneurs. He grew up in a poor village in which only 5 percent of kids ever go to college. Luckily, he was one of them, and while there he fell in love with software. Inspired by the success of Yahoo founder Jerry Yang, the young engineer decided he too could change the world. With a group of friends, he entered Microsoft’s student software competition, the “Imagine Cup,” and managed to win. The team got to meet Bill Gates, and the lot of them ended up at Microsoft. They spent a great deal of time in Seattle. That same team has stuck together and now forms the core of MoboTap.

Like UCWeb’s Yu, Yang and Dolphin believe mobile is changing the world. The first time the Internet changed the world, it happened on the desktop and was driven by American companies. At the time, the likes of UCWeb, YY, and Dolphin — indigenous innovators — didn’t exist. Here we are, though, a decade and a half later, with a different story. This time, a new generation of Chinese entrepreneurs are starting from zero at the same time as their counterparts in the US. Even as entrepreneurs scramble to keep up with the rapid pace of development and sometimes resort to copying, the age of mobile has leveled the playing field.

For the Internet in China, as in the rest of the world, the age of mobile is an exciting time. Certainly, the young enterprise society faces many challenges ahead: a struggle to surmount money-induced myopia, a battle to overcome the copy-first mindset, and an education process for an immature market still getting used to high-tech consumerism. But the top performers in a new wave of Internet companies are proving just as interesting as their US counterparts, just as daring as the Baidus, Alibabas, and Tencents that came before them, and just as determined to develop products that change the world. It doesn’t matter what stake you have in the tech industry, China in 2014 and beyond is a must-watch.

This is Chapter 4 of “Beta China: Dawn of an Innovation Generation,” a PandoDaily publication. Buy the ebook.

Read the final chapter: “Into China’s tech future”. Or, all chapters.