Become an Entrepreneur in China

If you are looking for your next big opportunity, starting a business in China could be a viable option.  During this period of slow growth and global uncertainty many individuals and business owners are looking for expansion opportunities outside of their native country.  One popular destination for such opportunity seekers right now is China.  The reasons range from lower labor costs to what some consider less expensive regulations and taxes.  Many believe that China has a more business-friendly environment than exists in many countries, even in the United States

              

The Land of Opportunity

Research conducted for my new book Business Success Today indicated that many entrepreneurs feel that China is a market they can grow in.  They typically believe that, despite a current slowdown, China is still the biggest growth story in the world.  There has been a huge growth in disposable income, and Chinese consumers are ready to spend.  All of the entrepreneurs I interviewed were optimistic about the outlook for the next five years.  .

Another indication of the growth in China is the number of foreigners that are getting jobs in China.  According to the National Bureau of Statistics, last year there were over 200,000 work permits issued to foreigners that enabled them to obtain jobs in China.  Many of these jobs are related to teaching English to Chinese students, but there are also many foreigners who are obtaining professional jobs in China.  I interviewed people in both categories.

 

As I traveled around China last year I interviewed many small businesses that were achieving outstanding success.  From huge cities like Shanghai to smaller cities like Wuhan, I discovered business success stories all over China.  Several of these successful businesses had been started by expatriates. Two examples included in my book Business Success Today are The XuGuang Fruits and Vegetables Professional Cooperative and The Shanghai La Vie Hotel.

Three years ago Mr. and Mrs. Liu moved to Shanghai, China to start a strawberry business.  They purchased a seven acre plot of land (42 Chinese mu) in a rural northwestern suburb of Shanghai.  They built their home and office on this land as well as a small state-of-the-art strawberry farm.  Because they were planning to sell a large amount of strawberries they made arrangements to use an additional 46 acres (278 mu) of land located just south of their home base farm.  In only three years this farm has become a major supplier of strawberries to the major bakeries in Shanghai.

The Shanghai La Vie Hotel is also owned by entrepreneurs who are expatriates.  It is part of a larger business that includes four office buildings, the hotel and a series of restaurants.  The business employs a total of 142 people.  The hotel itself has 76 rooms.  Most of the revenue from the Shanghai La Vie Hotel comes from its restaurants.  In less than two years, the Shanghai La Vie Hotel has been able to build a very successful business by focusing on fulfilling the dining needs of Chinese government officials.

The Entrepreneur in China

Being an entrepreneur in China is different than being one in many other countries.

The book Business Success Today compares the strategies that helped small business succeed in China to those that worked in America, Taiwan and Europe. As demonstrated in the book, starting a new small business in the United States is relatively easy compared to many other markets around the world.  Starting a business in China, for example, can be extremely difficult unless the entrepreneur has been able to establish the appropriate relationships (Guanxi).  Nevertheless, the rewards for owning a small business in China are many.

The term “Guanxi” is frequently used in China to describe business relationships.  Guanxi is generally the key to being a successful entrepreneur in China.  The decision to do, or continue doing business, with you is often based on the other party’s personal view of you rather than the numbers in a business case.  This can make it hard for Westerners to get in contact with appropriate business contacts, unless they represent a very large company that everyone wants to do business with.

The entrepreneurs interviewed for the book Business Success Today all felt that the establishment of Guanxi with the appropriate people was a critical step in the formation of their successful businesses in China. Both the XuGuang Fruits and Vegetables Professional Cooperative and The Shanghai La Vie Hotel had spent a considerable amount of time cultivating their network of contacts.

Key to success

A total of 20 businesses were interviewed for the book Business Success Today.  In each case I asked the entrepreneur what he or she felt were the keys to his or her success.  The entrepreneurs in China typically felt that one of the most important keys to their success was finding the right niche in a timely industry.

The strawberry farm in Shanghai is a good example of effective market timing.  One of the reasons Mr. and Mrs. Liu were successful is because the number of shops and restaurants selling bakery goods has increased dramatically in Shanghai over the past few years.   In driving around Shanghai, for example, one will notice the large number of new Starbucks coffee shops all over town.  They were successful because they sell strawberries to bakeries that supply strawberry pastries to many of these Starbucks.

In China, finding a timely industry can also be important from the standpoint of gaining government permits.  Because China’s government is so tightly affiliated with its businesses, knowing what the government wants can be of great benefit.  One suggestion offered by people interviewed for my book was to check out the five-year plan that the Chinese government publishes, which details what types of businesses they are looking for.

Need to Speak Chinese

If you are planning to start a business in China you should spend some time studying Mandarin.  Several foreign entrepreneurs were identified during the research for my book Business Success Today who had started businesses in China without being able to speak Chinese.  They had hired trusted managers who were able to help them hire employees and deal with the other details of forming and running a business.  This, however, was not typically the case.  Normally foreign entrepreneurs arrive with some ability to speak Chinese and then pick up more while they are living in China.

Conclusion

It is possible to become an entrepreneur in China and this could be a viable option for the right individual.  Many people believe that China is currently the biggest growth story in the world because there has been such a huge growth in disposable income among Chinese consumers.  The key is to have patience and pay attention to relationship building and picking a timely industry

 

About Stamford Marketing Group

The Stamford Marketing Group regularly interviews small business owners to identify trends and to determine their attitudes toward new and existing products.  Winslow “Bud” Johnson is president of the Stamford Marketing Group and the author of the book Business Success Today.  This book outlines how 20 businesses from China, Taiwan, Europe and the United States are achieving outstanding success even in difficult times.

See www.stamfordmarketinggroup.com.

 

Tags: Asian Entrepreneurs, Book Business Success Today, Opportunities in China