China, the last few decades, has been seen as the factory of the world. Low quality and counterfeit are almost a synonym of the “Made in China” label. But today things are shifting and entrepreneurs are starting to see China in a new light. Is there big future opportunity are there? Should I just go? In this article, we will delve into a some very important things to consider before going.
Never think it will be easy
All study agrees that most startups fail. Facebook and Google are impressive, but they are the brightest exceptions to the rule. And going into an unknown environment, especially one notoriously difficult for foreigners like China won’t do much to improve the average success rate.
Does that mean you shouldn’t go? Certainly not. But it must reinforce your belief that the key to your success lies in your strength. Focus on what you are good at, and adapt the formula to target China.
China is not an efficient country, especially for new foreign companies.
Do not forget, in China, nothing is easy but everything is possible.
Don’t go in without a proper guide or partner
The Middle Kingdom is an unknown land to you. You need someone who will help you navigate through. It doesn’t guarantee smooth sailing, but it will help you avoid many pitfalls along the way. The guide must be a local company or partner. And by locals. I mean mainland Chinese. In the West we are often confused about the notion, aren’t Taiwanese or Hong-Kong people good enough?
The answer is NO. They might have the skills (but so do you, hopefully), but they do not have the connection or the culture. It would be like hiring a Canadian executive because he is Canadian he must be an expert of the United-States market. Exceptions exist but it usually does not make sense.
Your partner will fill your need for connection (also known as Guanxi) in the country. You will have to choose wisely as trust shouldn’t be given too easily in China. A trusted partner will be a good foundation to kick-start your plans.
Even Uber , THE startup just made the decision merge with Didi in China, and before they got premium partners as Baidu, or SAIC. more information WSJ
Learn Mandarin, try to understand China, before judging
There was a time where even an average level Mandarin was a great thing to have. Today proficiency is more and more required for management positions. The barrier to entry is higher and cross-cultural skills are necessary to have any chance to keep key talent and employees (more on that in the next point).
The Chinese have notoriously bad English. And while the situation is improving fast on that particular shortcoming, it is still very much an issue that needs to be addressed in Startups. You don’t want to pass by some amazingly talented people because of the language barrier.
Founder of Nakesi always explains to his foreign friends, China is a difficult country, take your time to observe, do not be patient meet your partners and analyze how your partners and potential customers react. That is how Chinese experienced Businessmen word, they meet each other and try to understand each other before doing any business. Only when the 2 parties know each other and are reliable can they start any collaboration.
Moreover, relationship (Guanxi) is key in China. You’ll want to develop those relationships. And here again, is a task that could prove daunting if you don’t speak the language. Moreover, depending on what product or service your startup provide you’ll gain greater control and understanding by being able to read Chinese as well. Don’t label this step as unnecessary or overkill. Understanding Chinese culture will give you better performance online.
Bring your knowledge from your country and adapt !
China’s job market and working practices differ from ours big time. There is a very big turnover, the Chinese change jobs quickly for better salary elsewhere. Also, the most talented employees still prefer big companies over startups. Moreover, power within the company is very high, which leaves no place for creativity.
But all isn’t lost. The culture difference doesn’t automatically imply that the custom is loved. It just “is” like that. New generations Y and Z never lived in a world without America’s soft power influencing behaviors. They crave a more open and flexible work environment. They are often curious and willing to learn, and do not hesitate to go overboard to that end.
Empowering employees, making them understand and be part of the company process is key. Transparency too as Chinese companies usually never are. Localize your knowledge and relationships.
Every company has to adapt (more or less) their business model in China
Foreign branding Yes… but with Chinese pragmatism
LaoWai means foreigners, outsider in Chinese. You are “other”. You will never be Chinese, therefore do not try to be. Embrace that fact and use it to your advantage and focus on markets and applications where this is considered a quality.
For instance, it does not make sense for a westerner to go after market where his identity won’t be a plus. While for many things the Chinese trust foreign brands more when it comes to quality.
Most of the Chinese population are super connected, spend a lot of time online, your business has to have an online connexion. Think e-Commerce before a traditional shop, invest in online communication before traditional media (TV, Press… ) , and go mobile, Chinese people use their mobile a lot.
Startups always are a high-risk high-reward kind of enterprise. And as we see China has its own set of challenges that will make things more difficult. It does NOT mean that as an entrepreneur you shouldn’t go, far from it. But it is not an “easy Eldorado”. You must go step-by-step, take more time to get accustomed to your new environment and avoid traps. But if you succeed it is a market where potentially 700 million netizens await.