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E-COMMERCE: Startup in China
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alt We have met hundreds of entrepreneurs in China and found the top five reasons that motivate them to start their own business - rather than working for other people. 

The main reasons cited were:
 
Freedom: They enjoy the feeling of controlling rather than being controlled. Having their own business allows them to develop ideas and to choose smart people to work with. 

Financial return:
With the salary paid by employers, they can easily afford a house and car, but they want something bigger than that. Achieving greater financial independence is the key to having personal freedom.

Challenge:
There are some people who are born to be risk takers and an office routine bores them very quickly.

Family Tradition:
Coming from an entrepreneurial family teaches them that to be an entrepreneur is an easy way to change their personal life. The spirit of aiming high in their family inspires them, especially during periods of struggle. 

Improvement:
Some of them have sensed the inefficiency in current businesses. With their experience and smart minds they can change the situation easily. 

To be or not to be, being an entrepreneur is the lifestyle everyone can choose. Being a successful entrepreneur requires motivation and also the necessary entrepreneurial skills. If you decided to startup you have to get to know what the exact situation is.
 

How is their survival environment in China now?

In the early period of 2012, Tech 163 interviewed 103 representative teams all around China, whose companies or projects were in the start up stage. The report (Tech 163, “A Survival Guide for Entrepreneurs in China”) can be viewed as the true situation of startups in China.

Firstly: Policy
When a business enters into a certain market, they will encounter constraints from regulatory authorities. They are not allowed to begin without the relevant licenses and permission, especially for websites, forums, games, books, videos and so on. Even if these areas only account for a small proportion of the business, you have to either apply for a license or to be recorded. It is an easy way for the government to regulate companies. However, there are still risks involved in some of the new policies being introduced, so entrepreneurs  need to keep an eye on policy changes. 

According to the survey, only 34.95% of companies received policy support from the government in taxes, place support and funding support. How long will the procedures take if  the legal requirements to complete a license are followed? 54.37% spent 3 months, 16.5% spent 3 to 6 months, 8.74% spent 6 to 12 months and the rest haven’t completed the process.

Secondly: Funding
Nearly 67% of entrepreneurs started their businesses with their own money, while 24.3% used the money from angel investors or VC. 74.8% needed to raise money recently while 25.2% did not. 25.2% have started to make money while 74.8% have not. Amongst all of the samples, 44.66% of entrepreneurs have not acquired any investment, 26.21% acquired angel round, 18.45% acquired series A, 7.7% acquired series B, and 2.91% acquired series C. 

The report quoted Naval Ravikant, a Silicon Valley entrepreneur and Angel Investor. He said “The average valuations of young companies have dropped recently from 5 million to 3 million, from 8 million to 6 million earlier this year.” Apparently, the valuation drops, and Chinese venture markets may be infected with this trend, which will have a bad influence on the startup's finance and lead to the low survival rates of these companies.

Thirdly: Industry and Competition Environment
The question entrepreneurs will often be asked is how will they deal with the competition from BAT (Baidu, Alibaba and Tencent)? The answers are various, but most entrepreneurs are optimistic; the situation is quite stable. More than half of the interviewees admit that the big companies have not gone into the field they are in, or they do not need to worry about whether the big company will be involved in it. On the other hand, many startups can earn huge rewards due to the opening of big companies. About 30% of interviewees said their products are based on the open platform from those big companies such as Sina microblog, QQ Zone and so on.  

Even though the Chinese market is bloody, 83% of companies still choose to target local users while 17% are focusing on mobile Apps trying to get access to foreign markets. About 40% of companies have faced malicious competition from competitors; both in Chinese and foreign markets.

Fourthly: Operation
Internet companies usually get income through 5 streams: 1) sales product or service directly, 27.2%; 2) advertisement, 20.4%; 3) commission, 19.4%; 4) additional service, 20.4%; 5) others 12.6%. The biggest problems they have to face are lack of talent and in 78% of companies, labour costs. Fund raising is the second biggest problem.

More than half of the interviewees admitted that their product has referred to the existing model in China or abroad, 23.3% are facing the problems of piracy.
In conclusion, startups face pressures from all areas, and undoubtedly they will meet even fiercer competitors later on. But there are still some people who want to change the world and they want to do something different.
 

altKey elements of starting up in China

Making things in an impulsive manner and having the drive of intuition are useful attributes to push oneself out of his or her comfort zone. They are a necessary condition for what is later needed in order to start up in China - a brain.

There are several aspects that an entrepreneur coming to China should take into consideration:

1. Getting to know your product perfectly. 
Perfectly understanding the product or service so you are able to make a perfect sales pitch at any moment. What’s more, you should be capable of communicating it to others. Making conversations around the table about a product is not a good idea, and a typical situation is receiving a phone call the day after a dinner with your Chinese counterparts. 

2. Make sure you know what your product/service contributes to the Chinese market. 
This means you should conduct a deep study of the Chinese market and find out the core competitive advantages. Foreigners are often so convinced that they have a killer product or service that they just try to sell it at any cost and they do not listen to what the Chinese have to tell them. Chinese people tend not to disappoint the people in front of them so you may believe they are buying in to your proposal. 

3. Doing it sooner than later
As a secondary market, China is tempting for many foreign entrepreneurs. If you are ever going to face a Chinese company in our niche market, it’s better to start it earlier. Ideally, it is better to come to China when the products and processes are mature enough to scale up in a very robust way. That means normally that China should not be your secondary market.

4. Using key resources to implement a solid strategy.
In order to move forward in the Chinese market you have to invest and make it into what you want it to be. If you make that effort and come to China it is worth preparing well, having a good agenda and carrying out proper follow up effort. 

5. Grow a personal appreciation for China. 
When serving your customers it is much more difficult to do so if you cannot feel some kind of appreciation for them (and the things they love, including their country). Therefore, if someone hates many things about China it will be difficult to successfully do business here.
 
Have you decided to start up in China? It will definitely be a wonderful and worthwhile venture. Hope you have a nice journey!
 

By DaD Asia
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