From choosing the business licence category, to picking a partner and getting your customers to pay you, this book gives you tips on everything you need to know to become a successful businessperson in China. The subjects are well categorised, the information is succinctly put with a concise conclusion at the end of every chapter and there are enough and more real life stories that keep it from becoming one more boring ready reckoner. In fact, it’s the experiences of the 40 entrepreneurs, seven of them women, who generously shared hard-earned lessons, that make this book a fun read even for those who may never want to set up shop in China. For those who do, there can’t be a better way to start. As the authors point out, China is a vast and vibrant but maddeningly confusing business environment and although the situation is far better than it was when the early birds set out to make their fortunes, one still needs a lot of hand-holding to survive. And so, they have combined rigorous academic research with accounts of day-to-day situations, relying more on expatriates who dirtied their hands than on executives who had the backing of multinational corporations and a lot of money to blow up.
The good news is that although regulations in China may be stricter now, they are also clearer and more transparently applied. According to Professor Ge Dingkun, the environment for entrepreneurs is ‘more welcoming’ than California’s Silicon Valley. Dingkun, who worked, studied and taught in the valley before returning home to China, points out that there’s far more demand in a high growth economy and if one modifies existing products even slightly, somebody will buy them. In developed markets, on the other hand, entrepreneurs must work much harder to attract consumers. Also, many of China’s state-owned enterprises are not efficient and customers don’t get what they’re looking for. Equally important, Dingkun says the government is looking to support start-ups, especially in high value-add fields like R&D and biotech, for which licences and approvals come through in a matter of weeks. The one big challenge can be finding seed money because, although venture capital is pouring in, it finds its way more into firms that are up and running. But if one can sort out the funding, this is a good time to be in the world’s fastest growing economy because soon the entry barriers will be much higher.
However, it’s not easy to negotiate the Chinese environment; the legislation is far from consistent and you could get strangled in red-tape. When Oto Petroski sought to open a broad-based trading company, he was initially led to believe he could. “The first time you go to the registration office, they offer you Coca Cola and answer every question with ‘dou-ke-yi’, literally ‘all can do’.” He later realised that dou-ke-yi was better translated as “all is possible.” And only gradually did Petroski discover that “[t]here are many restrictions that one doesn’t know about when you announce that you want to register a company. When you first arrive the officials say: ‘China has joined the WTO and the market is open’. Only later do they show you how it really works.” One big obstacle is that licences can have a very narrow definition: if you are registered as a coffee bar you need a special approval to sell tea and another one for sandwiches, and if you want to make coffee with mineral water, you have a problem. Even more alarming, business people have faced restrictions on sales volumes. “If you do much business, you are competition, you are trouble and they restrict you,” says one interviewee.
Location can matter greatly in China because business terms offered to entrepreneurs can vary widely across the country. In general, the larger and more commercial the city, the more transparent and consistent the treatment from the government. Interviewees also suggest a component of Chinese employees, saying it’s crucial to success because of their ‘insider’ knowledge. Most entrepreneurs commend the Chinese on their diligence and ambition. But some are also frustrated because the Chinese work better as individuals than in teams. They’re also reluctant to ask questions and don’t take too much initiative.
As for corruption, Juan Martinez advises new companies to try and avoid paying kickbacks; once you start, he says, it can be a slippery slope with no guarantee that the payouts will bring results. “Some people still try to use the lack of clarity in the rules to lay their hands on some extra money.”
CHINA ENTREPRENEUR
VOICES OF EXPERIENCE FROM 40 INTERNATIONAL BUSINESS PIONEERS
Juan Antonio Fernandez and Laurie Underwood
John wiley and sons (Asia) pte/ 328 Pages