On Entrepreneurship in China

In these last years, I have met countless entrepreneurs start their projects in China, ranging from Consulting, Law, Bags, Shoes, Fruit, Wine, Real Estate, Education, Sports, Platforms, Architecture, Sustainability to Journalism and a dozen more. Some of them have succeeded enormously and some have failed terribly. What can we learn from both groups?

This 2020, my Chinese and Western friends completely reinvented themselves due to COVID, some saw a business opportunity and some were invited to leave their jobs. During a jazz concert, I discussed with a Consul General and the CEO of an Aircraft Engineering Company about how China will overcome this economic challenge through the creation of new businesses, here's my 10 insights about being an Entrepreneur in China:

1. New generation of entrepreneurs: those born in the 90's and even in the 2000 will dictate the future of consumers' preferences and trends. They are simultaneously the next driving force and also the next business creators. Millennials combine the youth, creativity, innovation and ambition with the skills that the previous generation lack: education, MBAs, Technology, Global mindset and Overseas experience. A typical profile can be the top student from a prestigious University in China who worked in Silicon Valley or Wall Street and came back as 海归 to build a project. This will lead to a new ecosystem of disrupting businesses that is already influencing the whole world.

2. Timing and speed: China's fast pace society still amazes everyone, 计划赶不上变化, plans cannot keep up with changes. It is arguably the most innovative country right now, apps, platforms, skyscrapers, technology and ideas grow like sprouts, you blink, it's there. Idea, action, implementation. You have to get it done not only fast, but also in the right moment. An accurate example can be the companies that turned into masks factories in February versus those in April. Only two months difference. "Precision beats power and timing beats speed" -Conor McGregor

3. New Management Style: China has been importing from the West not only expertise, knowledge and technology, but also management skills. Traditionally a highly hierarchical, imposing and authoritarian style, now many enterprises combine both approaches to get things done and keep the talents in their teams. For Foreign investors, it is key to understand the cross cultural differences in communication, and find out what the team, the suppliers and the clients expect from them. “Adapt what is useful, reject what is useless, and add what is specifically your own.” -Bruce Lee.

4. Women entrepreneurship: while traditionally staying at home, the new generation sees a rise in women taking the lead and starting their own business more than ever, specifically a 25% against a 18% in Europe, according to the IE Business School Study. Women represent almost half of the working force and now they occupy Executive Positions, bringing new ideas and oxygen to a traditionally men's field. Women's role in Business World is more and more important, as we can see from the Public speaking events, Talks, Conferences and Coaching sessions.

5. "Help me get rich": compare "Merry Christmas" with "恭喜发财". In New Year's Eve our best wishes mean "Hope you get rich". If you would like to succeed in the Chinese market, it not about describing the taste, color, texture and history of your product, it is about how much your client can sell it for and what is their margin. Some investors still try to educate China on doing things their own way, but if you want to sell, you will have to adapt 入乡随俗. It is not only about buying expensive gifts, drinking with officials, keeping the face 面子, getting family involved in strengthening the relationship, singing in a KTV, learning to say NO without ever saying NO, help them make money with you.

6. From Opportunistic to Sustainable approach: over the last 40 years, due to many factors, market gaps, economic changes and opening up policies, China's traditional entrepreneurs took advantage of the Golden Era and became rich with that one idea. Now the new generation is aware that profit is not everything, it is also about making it sustainable over time. In an extremely competitive market, the business model is key to avoid being soon replaced. The profile of millionaires is not that uneducated farmer who made a fortune selling X, it can be a highly educated 20 year old selling rockets on live streaming platforms or designing an app that improves the consumer's purchasing experience.

7. Risk Aversion: regardless of succeeding or failing, these brave architects of their own lives dared to dive into an unknown ocean of uncertainty. It's not that Chinese are less risk averse, we have to be constantly thinking of ways to make a living and covering Healthcare, Education, Retirement, Housing, Marriage and so on. The entrepreneurial mindset is not a subject we study in a Business School, it's a lifestyle, especially in Wenzhou, Zhejiang, where becoming a businessman is a must, not an option. We have been educated to see jobs as a toll to shift from employee to boss.

8. Partnerships are key: some people with successful experience in their own countries have the confidence to build a business in China believing they need no help. You will need a professional partner in each field, suppliers, distributors, lawyers, accountants, strategy, business developers and so on. It does not have to be the most expensive ones, but the most appropriate ones at that stage. Asia's business culture is highly trust-based, more than ever, family, friends and business contacts are key, especially at the beginning of a new project when you require every bit of resource, which makes it even more challenging for foreigners.

9. Government: many Foreign investors and entrepreneurs often overlook the local institutions, assuming they will only be affected once they reach a certain size and influence. However, without good relationships with them, there is no way to make your company grow. Comply with their requirements, create employment, bring value and they will be an ally. Once you are under their focus for misbehavior, it will be an uphill.

10. First impression: "you'll never have a second chance to make a first impression", 第一印象, while it is important to keep fixed costs low at the beginning, in China there is one thing not negotiable: "looks". In Western culture, having a high quality service and product might be enough, however in China, if you arrive in a taxi or cheap car, your office is not in city center or your team is small, chances of getting access to finance, favors and contacts will be reduced drastically. You can disagree with this concept of image, but this will open doors. Show stability, long history, success, knowledge of China and potential, otherwise you are out.