You’re planning your next internet company, you intend to reach out to a broad audience-the whole world, so where do you base it-West Coast of the US, Europe, or China? (This is by no means a comprehensive analysis of this topic.) These are a few thoughts I have on the relative advantages of each location, based on what I know about the SNS (social networking) for language learning industry, including my Shanghai-based employer.

Advantages of China–

1. Lower cost structure (labor, facilities & equipment)
2. Huge market, the Chinese love their interactive, instant gratification web apps
3. Entrepreneurial spirit, try anything, wild west gold rush mentality
4. VCs (Venture Capitalists) may be looking more at China’s internet players because China now has the most internet users in the world, and China’s internet players have more solid histories of revenue flow than Western internet players
5. Western students will intern for free just to say they’ve worked/interned in China, ‘the hot new place to be’

China’s distinct Disadvantage

1. Relatively inefficient, unproductive programmers, engineers

US’s Advantages–

1. High quality technical staff
2. Proximity to Silicon Valley & VCs
3. Proximity to a lot of tech conferences where you can meet VCs, influential bloggers, potential partners
4. Ample opportunity to get your message out because of proximity to influential tech related media

Europe has similar advantages as the US, but not on the scale they exist in the US. There are some tech conferences in Europe, there are VCs in Europe, but the media coverage for tech stuff is relatively limited in Europe.

America’s & Europe’s distinct Disadvantage–

1. High costs of labor, office space, infrastructure, etc

In conclusion, Europe seems to offer the fewest benefits. Not surprising, the cost differential makes China a very attractive place to base your start up. The US is the best for getting very influential and widely seen English-language media coverage.

Perhaps the optimal solution is to have the marketing/PR person (or firm) in/near Silicon Valley, the technical team, led by a capable Western project manager, based in China, and the executive going back and forth.

If you thoughts on aspects I’ve overlooked or other ideas, please post them in the comments section below.