Archive for Entrepreneurship
May 11, 2008 at 2:16 am · Filed under Uncategorized, Knowledge and Experiences, Entrepreneurship & Business, Entrepreneurship, Business Climate
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–
- Lower cost structure (labor, facilities & equipment)
- Huge market, the Chinese love their interactive, instant gratification web apps
- Entrepreneurial spirit, try anything, wild west gold rush mentality
- 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
- 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
- Relatively inefficient, unproductive programmers, engineers
US’s Advantages–
- High quality technical staff
- Proximity to Silicon Valley & VCs
- Proximity to a lot of tech conferences where you can meet VCs, influential bloggers, potential partners
- 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–
- 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.
November 9, 2007 at 11:26 pm · Filed under Uncategorized, Entrepreneurship & Business, Entrepreneurship
For the non-lawyer among us, forming the legal entity for a new business can act as a small roadblock in the early stages. In China, formation can be a much larger roadblock, especially as a foreigner trying to navigate countless ministries, language barriers, develop the necessary guanxi, and just generally figure out how the system works.
Due to this, my idea was to have my business started in China in the name of a local partner who’d be responsible for all government, incorporation, and tax issues while leaving me with execution and operations side of the business. In fact, its much easier for Chinese to start a business (in China) than foreigners. Indeed, Chinese persons only need CNY1 to be able to start a business. Anyway, I thought this was the best plan, but then questions of selling, repatriation of profits, etc started to creep into my mind so I sought additional advice.
A fellow American entrepreneur in China suggested I incorporate a holding company in Hong Kong which would then open a wholly foreign owned subsidiary (WOFE) to operate in Mainland. This allows the HK parent company to be bought and sold without ever touching the subsidiary and therefore having to deal with title transfer in Mainland (apparently a nightmare).
I cross-checked this advice with another Australian entrepreneur in China who said this only works if you have operations in another country. According to her, the Chinese government doesn’t allow this method if you don’t have operations in another country, which I have no intention of having (initially, if ever).
Further research suggests I may not be eligible for a WOFE anyway as I intend to ’sell to the Chinese market,’ well, more accurately provide a service to expats (and some Chinese) within China but I guess that’s still the same. According to that same site, my local partner could act just as I had in mind: “The local partner […] may be a silent partner who was acquired by the foreign firm simply to gain domestic market access.”
A different site suggests that information is outdated and therefore “With China’s entry into the WTO, these conditions were gradually abolished and the WFOE is increasingly being used for service providers such as a variety of consulting and management services, software development and trading as well. […] The advantages of establishing a WFOE include: Capable of converting RMB profits to US dollars for remittance to their parent company outside China.” By comparison to the Chinese who can start a business with CNY1, a WOFE requires registered capital of USD120,500.
Guess its time to consult a lawyer. In the meantime, I welcome anyone’s advice who has had experience with this.
February 10, 2007 at 4:06 am · Filed under Entrepreneurship & Business, Tourism, Entrepreneurship, Business Climate
Check out this report from the UNWTO:
WTO: China Will Become The Largest Travel Destination By 2020
February 5, 2007
The World Tourism Organization says that by 2010 China will exceed Spain and become the world’s second most popular travel country, and by 2020 it will become the largest travel destination in the world.
The Madrid-based organization says that despite the appreciation of RMB value in 2006, China’s inbound tourists increased by 6% in the year and reached 49.6 million.
WTO Secretary-General Francesco Frangialli and Marketing Information and Promotion Department director Johann Kestner both estimate that China will see faster growth and will exceed Spain in the next four years.
Frangialli says that China, which has abundant capacity in tourist reception facilities, will probably surpass France by 2020 and become the most popular travel destination in the world.
WTO statistics show that China’s outbound tourists increased from 20 million in 2003 to 31 million in 2005.
Wow! With so much growth, that means there’s a huge opportunity. And I’m already in China! Especially in China, where the industry is not nearly as developed as in the US or Europe, there are so many issues yet to be worked out, such as service, transportation, language difficulties, the intimidation factor, etc. So now the question is, what is a good business plan to take advantage of that report?
The problem with businesses in the travel/tourism industry is the margin is tiny. People start businesses and work in the travel/tourism industry for the sheer love of travel and helping others to travel. The barriers to entry in this field are quite low, buyers power is high (brand recognition is low), and the threat of substitutes is high. (Porter’s 5 Forces.) These factors combine to keep margins in this industry quite small.
Nonetheless, I, like so many others want to start a business in the travel/tourism industry, particularly related to China. I’m starting to brainstorm and have a couple of ideas, but I welcome any others however wacky they may be. Feel free to offer suggestions or business ideas in the comments below.
January 31, 2007 at 4:53 am · Filed under Entrepreneurship & Business, Tourism, Entrepreneurship, Learning through Foreign Cultures, Traveling
This interview by a China blogger with an—dare I say—expert on Chinese outbound tourism is quite interesting and very informative. Roy Graff’s business concept is brilliant, just wish I’d thought of that. Tourism is fundamentally a good thing and Chinese outbound tourism helps to reduce China’s astronomical trade surplus. And I’m all for speeding up the ADS (Approved Destination Status) procedure, especially so that countries like Canada and the U.S. will benefit. With the recent opening of the Los Angeles VCB office in Beijing, places like LA and Vegas will certainly be among the first American cities to benefit when the U.S. finally obtains ADS. But the question is, are they ready? Can they handle and service that many Chinese tourists? Do they have the cultural sensitivity? Do they have the language skills? Certainly, with large Chinese immigrant communities (particularly in LA) they have the food to satisfy Chinese tourists. But what about the activities they will do and the fact that the majority of Chinese people can’t drive? These are the issues that Roy Graff and his company, Ccontact, help overseas tour companies and destinations work through in their China strategy. How genius is that?
In the interview Roy Graff said he expected the trend in outbound tourism for experienced Chinese travelers to be
More people will choose to stay more time in a single country or go on ‘theme’ tours, such as cultural Europe, sports activities etc.
In this case, I’m going to have to disagree with the expert. I don’t think Chinese tourists are going to choose ‘theme’ tours, unless that theme is shopping. The Chinese usually aren’t interested in culture when they travel overseas, evidenced by the fact they travel in large groups which minimizes interaction with native peoples, they refuse to eat local food, and their favorite activity is shopping. A large part of the appeal for the Chinese to travel overseas is to impress friends and relatives back in China with where they’ve been and bring back designer goods and photos to prove it. Therefore, I expect the more well-traveled Chinese will seek out iconic places like Los Angeles where they can go to Disneyland and Universal Studios or Vegas where they will stay in the MGM Grand and say they’ve rubbed the lion’s foot and gambled in Vegas. And after that, they will look to more exotic destinations like Africa and even Antarctica. Despite the fact the Chinese people shun the sun, they are surprisingly in love with places like Hawaii and the Maldives.
Although Chinese outbound tourism has huge potential and will do a lot to expose the Chinese, one group, or one solo traveler at a time, to the outside world, I have to say I’m more interested in inbound China tourism. Hence, why I have a Shanghai shopping business catering to inbound tourists and work in a local hotel that receives many foreign guests. (Just a clarification: outbound tourism is people of the country being mentioned going abroad for travel; inbound tourism is people of other countries visiting the country in discussion. For example, my family would be China inbound tourists, whereas my colleagues wanting to go to the Maldives are potential outbound Chinese tourists.) This is why I proposed doing research on and working with local governments and the China National Tourism Administration to promote to foreign tourists the appeal of remote inland locations such as the Dragon’s Backbone Rice Terraces in Guangxi or Shangri-la in Yunnan. But alas, my proposal was not accepted; instead, here I am offering Shanghai inbound tourists custom shopping tours as well accommodations at a local boutique hotel.
Yay! Power to tourism! Power to entrepreneurship!
January 25, 2007 at 5:47 am · Filed under Uncategorized, Entrepreneurship & Business, Entrepreneurship
Saturday night, Andrew and I sat at a bar discussing how we could get our picture on the cover of Entrepreneur magazine, ie what either of us could do to become a successful entrepreneur. Not long after this conversation, a few USC alums walked in, including a couple who have started a number of their own businesses. The coincidence of this situation got me thinking about all the entrepreneurs I know in Shanghai. This led me to think that perhaps this wasn’t so much coincidence but rather a very expected situation. If it weren’t for the fact that we are in constant contact with entrepreneurs, we probably wouldn’t have been having the conversation at all, and with how many entrepreneurs we know in Shanghai, it’s not all that surprising that at least 1 would walk in.
Even though we didn’t come up with the next big thing, we do know plenty of entrepreneurs we can call on to ask for advice when we do. As such, I’ve decided to make a list of all the entrepreneurs I know in Shanghai.
Alex Cureton-Griffiths – Shanghai Networking News — www.shanghainn.com
Camille – Fashion Design
Charlie Chen – Swisstar Communications Consulting — www.swisstar-global.com
Chun Xu (USC alum) – Kingsway Investment Advisors Co. Ltd — www.kingsadv.com
Daniel Benefield – One Stop China, Ltd — www.onestopchinasource.com
Dave Whittingham – Consulting
Dilong Zhao – Black Card Life — www.blackcardlife.com
George M. Felbinger – China Golden Source Ltd. — www.chinagoldensource.com
Josh Steinberg – Software/Technology
J. (a USC alum) – Teavalize — www.teavalize.com
Keith Wang – Custom Printing
Kevin Chen– A social networking site for China
Lawrence Liao – WizHouse Consulting — www.wizhouse.com.cn
Marcus Lee – Ewarcus - www.ewarcus.com
Maria Trombly – Source Media — www.SecuritiesIndustry.com
Michael Bulter – an English teaching company — www.uru.net.cn
Paul Kung – Pacrim Martec Company — www.pacrimusa.com
Robert Tagg – Herbert Software Solutions, Inc — www.herbertsoftware.com
Sean Regan (USC alum) – Axis Industrial — www.axisindustrial.com.com
Toffler (USC alum) – Shop My Shanghai — www.ShopMyShanghai.com
Wen-Lee Ying (USC alum) – A wedding consulting and services company
Zhijie Wang (USC alum) – Shanghai Double-PhD Info-Tech Co. Ltd — www.haiguichina.net
If I forgot to mention you and your business in this list, my apologies. Please add your information in the comments section below.
November 30, 2006 at 12:21 am · Filed under Uncategorized, Knowledge and Experiences, Entrepreneurship & Business, Entrepreneurship
As I embark upon starting another business, this time with my friend Rola, it seems time for another entry on entrepreneurship. When I think of entrepreneurship in China or am asked why are you here or asked how long will you be here, I recall a brief quote from The Wall Street Journal. (The WSJ is an excellent publication with many interesting and in-depth articles about China.) The article in the WSJ was read to me a couple of years ago by mom, already knowing my interest in China. The quote, as I remember it, is: “If I were young and fluent in Chinese, I’d go to China and get rich.” This quote inspires and pushes me to look for new opportunities because I AM young, trying to become fluent in Chinese, and just as capable as anyone else. Furthermore, since being in China only 4 months, I’ve likely met more entrepreneurs here than I had previously in my entire life.
Granted, this guy’s quote was referring to China’s boom days of the 1990s, but with annual GDP growth still exceeding 6%, I think it’s still a great time to be in China. Now, perhaps may be even better that the 1990s because there’s slightly more transparency in the government and government regulations regarding businesses, as well as the opening up to foreign competition as a result of China’s WTO accession. Not to mention, Chinese consumers are getting wealthier, with more disposable income, and presumably, there’s also been an increase in B2B spending.
So, when foreigners ask me, how long will you be here, I’m tempted to offer them that quote and respond with ‘as long as I can make money.’ When Chinese people ask me, ‘why are you here?,’ I’m hesitant to offer that quote, lest it sound exploitative and too counter to the ideals of communism. But on the other hand, my native Chinese teacher helped me improve my response to this question from 赚钱 (’make money’) to 赚很多钱 (’make lots of money’), so… 
When discussing this quote and my intention to make money in China, my friend said to me, but can’t you make money back home or anywhere? And I get that response a lot. Well, it’s kind of like the stock market–some are winners, some are losers, and some offer slightly better returns that others. You just need to know how to allocate your time and money wisely, and for me, right now, that’s in China.
September 28, 2006 at 8:54 am · Filed under Uncategorized, Entrepreneurship & Business, Entrepreneurship
Last night I went to a meeting of the Shanghai Entrepreneurs Group (SEG), so thought today I’d write my first post about Entrepreneurship. But first let me comment on that group. It is a rather eclectic group of both entrepreneurs and people interested in entrepreneurship. Although the majority of the fields were something related to the internet there were some diverse industries as well, from agriculture to coffin export. As I predicted, there were only 5 women there (out of ~35people), including myself. And one was there simply for ‘entertainment’ as she put it, so clearly not an entrepreneur. Which makes it less than 5 women attending for the actual entrepreneur group. Not surprising. Fairly good mix of locals and expats, though.
Anyway, on to today’s topic:
My Encounters with Entrepreneurship
Prior to college, I had never even thought of entrepreneurship, didn’t know what an entrepreneur was, wasn’t even aware of the concept. This is a bit strange, though, since my mom had co-founded a construction company when I was in high school and my newly acquired step-father is a serial entrepreneur. But I apparently didn’t put their efforts in beginning those companies together with the term ‘entrepreneur’ and had never really thought of that as an option for myself.
Freshman year at USC I dated a guy who had a concentration in entrepreneurship through the Lloyd Greif Center for Entrepreneurship. During this relationship I started to understand the concept. As he struggled to write a business plan and come up with as accurate as possible financials, I thought this is not for me. (I wasn’t even a business major at this time.) I thought, I definitely won’t take that class, I’m meant to be in the corporate world, not starting my own business, let him have that and deal with the seemingly overwhelming task of writing projected financials.
Then freshman year was over, he graduated, and I moved on to my interests in promoting women’s advancement in business, conducting business in cross-cultural settings, etc. So sophomore passed and I never again thought about it. After my summer in Europe or sometime during my junior year, my mom contemplated retiring from the law firm and questioned whether to start another business. I gave her advice on the aspects of her proposed business that I was familiar with. And we kind of joked well after I graduate we can start a business together. But I still felt so removed from the actual concept of being an entrepreneur that I thought, yea funny, it’ll never happen.
After junior year and my internship in Hong Kong, I returned to USC for my last year. Partly because of my excitement in returning from my exchange program and due to my ever-lasting interest in cross-cultural interaction, I volunteered to be a host for exchange students. And I asked them why they chose to come to USC and many said for the entrepreneurship program. I was surprised. We have an entrepreneurship department? Is it any good? (Well, yes, actually it is. That was the main reason my boyfriend freshman year attended USC). Ok, whatever, still not interested. And they asked me, ‘can you recommend any entrepreneurs I can interview for my class?’ No, I thought, I don’t know any entrepreneurs.
Spring break of senior year I had the choice of 2 different business trips: one to Tokyo or one to Rio de Janeiro. It was a difficult decision, but I chose Rio and that seemingly fun decision could prove to be one of the most pivotal decisions of my life.
The unique thing about the trip to Rio de Janeiro, Brazil is that is was co-sponsored by the USC Entrepreneur Club. I never would have had any interest or any reason to join this club. But since they did much of the planning for the trip and had a professor of entrepreneurship as a chaperone, much of the trip was focused on entrepreneurship. We listened to social entrepreneurs and very successful heads of now some of the world’s largest corporations that started out as mere entrepreneurship ventures a few decades ago. And especially beneficial for me is that I learned about entrepreneurship in a cross-cultural setting. I also found out many of the students in the group had their own (successful) businesses and they were younger than I! Wow! Suddenly entrepreneurship didn’t seem so remote anymore. Finally, it was a concept I understood, and a name attached to a specific concept. And there were people my age doing it successfully. From that standpoint, it was truly an eye-opening experience.
After that trip, I started to look back over my family and my life and wonder why I hadn’t been exposed to this before. Well, actually I have. My uncle is an entrepreneur, my step-father is a serial entrepreneur, and now my mom is a two-time entrepreneur. Some how I just didn’t put their businesses together with the name and the concept and definitely never thought I’d be in their shoes.
About this time I also started exploring the option of moving to Shanghai after graduation, so I started talking to my friend Ian, who had recently moved to Beijing, asking him for advice and whatnot on moving to such a foreign country. And besides giving me great advice he told me he and a partner started their own business in Beijing. I was shocked! Here was another person my age that had started his own business, and in the country I was moving to! Amazing! Slowly, I started to put the pieces together. I could be an entrepreneur and start my own business in Shanghai.
When I look back now, I wonder why I never put all the pieces together. I apparently have a family history of it and therefore have been exposed to it for years. In fact, my mom has become my most important personal and business mentor. Despite all the signs, it was definitely Brazil trip that put it all together for me and made it all clear. So, now when USC business majors ask me for advice, I tell them to take an entrepreneurship class. You just never know how close you may actually be to becoming an entrepreneur and even if you don’t ever become one, you’ll still learn valuable business lessons in that class. Not taking such a class is now my biggest regret from college. I don’t have any formal training in entrepreneurship and I missed the opportunity to be taught by some of the best entrepreneurship professors in the country.
So my advice, look around you. My bet is that you know far more entrepreneurs than you ever imagined. Entrepreneurship is a global reality, without it the world would be a far less efficient place. You, too, just may be destined to be the next Steve Jobs or Bill Gates.
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