Linus Chung, Former Tech/Internet VC

Some of my observations on how Chinese internet users differ from US internet users:

Behavior:

* Usage skews more heavily toward instant messaging (IM), entertainment, gaming: Comparing the results of a Chinese (CNNIC) and US internet survey (Pew) will unveil some notable differences. Some of the top usage categories for Chinese internet users are IM (83 percent of Chinese users vs. 46 percent of US users), downloading music (76 percent of Chinese users vs. 37 percent of US users), and playing games (62 percent vs. 36 percent of US users). In contrast, US users tend to use email a lot more (48 percent of Chinese users vs. 91 percent of US users), and tend to use the internet for other productivity reasons more often.
In China, 3 of the 5 largest internet companies by revenue have a large portion of their revenue coming from games (Tencent, Netease, and Shanda), with the other two as search (Baidu) and portal businesses (Sohu). None of the top 5 internet companies in the US are gaming companies (Amazon, Google, eBay, Liberty Interactive, Yahoo). The reason for this difference in usage might largely be explained by demographics (see below).

* Use of mobile Internet more prominent: In China, there are 538 million internet users, but over 1b mobile phone users. Some analysts estimate that the adoption of the internet lags mobile phone adoption by 4-5 years. With this in mind, Chinese users don’t see the mobile phone as something to use to check the internet when they are away from their computer, but many perceive it as their primary device for communications. It’s not surprising then, that mobile internet traffic has grown significantly in the last few years. One of the most popular internet sites Sina Weibo (a Twitter-like product) has seen its mobile share of total traffic go from 40 percent at the beginning of 2011 to over 70 percent.

* Less frequent use of real names on profiles: Chinese users tend to use aliases for their online personas. While this was predominantly the trend in the US over a decade ago (i.e., when AOL Instant Messenger was a dominant internet application), users in the US have become accustomed to using their real names online. Some will argue the reason for the Chinese users’ unwillingness to use real names is that they are afraid of government monitoring. I believe this rationale applies to a small minority. There has recently been talk of new legislation to require users on Chinese internet services to register with their real names. For some services, this has already been the standard practice, and the requirement is to only use real names when registering. Public profiles can still use aliases. I believe for the vast majority of Chinese users, it is a matter of personal preference to use an alias, perhaps a way to express one’s individuality.
There are a number of real name social networks (e.g., Pengyou, RenRen), where the service dictates that the norm is to use one’s real name. However, there are a number of services where users choose to use aliases, and this practice is much more prevalent in China than it is in the US.

Demographics:
* Chinese users tend to skew younger: Chinese internet users tend to skew younger, with the average user age being ~25 in China vs. ~42 in the US. This explains a lot when it comes to propensity to use IM and play games vs. email, and the kinds of services companies offer to cater to this audience.

Preferences:
* Different willingness to pay: An interesting dynamic exists when it comes to what many Chinese are willing to pay for and what they are not willing to pay for. I’m making generalizations here, but many Chinese are willing to pay extra when it’s for goods that can be outwardly displayed (to show off, to explain it crudely). For goods where there is intrinsic value but is not something that is outwardly displayed, there is generally an unwillingness to pay a premium. In this case, people just want the cheapest thing that gets the job done. So on the one hand, the Chinese love spending money on luxury goods (high end handbags, watches, jewelry), but the cheapest brand of home appliances (washing machines, refrigerators, etc.), which serve useful purposes but are hidden in the privacy of the home, are often the best selling.

This phenomenon carries over to the internet. Chinese users are unwilling to pay for software or games, so piracy is a huge issue. Innovative gaming companies overcame this by allowing users to play the games for free, but they would make money by selling virtual items. Chinese users are far more willing to pay for virtual goods that they can use to show off in the digital world (e.g., special clothes for their avatar) or make them better at an online game (e.g., special weapons). The Chinese pioneered the free-to-play plus virtual goods business model that Zynga and others in the US adopted. Another example is music. Chinese users won’t pay for a song. Instead, they’ll find ways to download it for free. Musicians found a way around this by charging for downloadable ringtones or even ringback tones (when you call someone and instead of ringing you hear a song), which Chinese users are happy to pay for because it is something externally displayed to demonstrate uniqueness.

A popular American news aggregation website versus popular Chinese news portal Sina

* Prefer crowded, cluttered sites: People from the West often look at a typical Chinese website and are taken aback by how crowded the site looks. US users tend to prefer cleaner, simpler websites with less clutter. Just compare Amazon to 360buy and Ebay to Taobao. The layouts and structure may be similar but you’ll find that the Chinese version will cram a lot more into a small space. One reason for this is that the Chinese language is a hassle to type on a computer, and Chinese users prefer to have all the links of things they want to find right there on the home page. They can just click on what they want instead of typing into a search bar. This was especially true in the early days of the internet. Over time, I believe users have just become accustomed to a certain look and feel and prefer not to change. Beauty is in the eye of the beholder!

This question originally appeared on Quora. More questions on Business in China:

• What are some interesting things about the internet in China?
• Why do so many Chinese, and people from other developing countries, regard real estate as an investment?
• Why do so many Chinese companies IPO in the US? Does China have a deep public market?

Ashton Lee, Grows China Businesses, @mrashtonlee

Good question, and the answer may differ depending on what you are selling, so I’m going to answer broadly:

• Product - Is it optimized for local tastes? These tastes can also change from region to region, so know who you are marketing to.
• Sales and Distribution – with 1.4 billion people, there is a customer for any product in the world. The challenge is finding the right distribution channels to reach them and knowing how to manage these channels. Traditionally very fragmented, but consolidation and online [sales] have opened the national markets greatly.
• Marketing – [In China] this can be at times lazy. Sometimes, I walk by ads and cringe. Don’t just be a peddler, give people a reason to fall in love with what you are offering. This is changing and is more a legacy of the past when everything was new and you didn’t have to really market very hard – you just had to have the product.
• Organizational Speed – If your organization is slow, you are going to die a fast death. Learn to be fast and react faster to what is happening on the ground, because opportunities in China come in waves. You want to catch it and hold onto it as it’s forming – not only when it comes crashing to the shore.
• Bad Advice - Instead of spending two million dollars on consultants, why not get your product out there and test it out on a small scale. You’ll learn more with real data than with customer surveys (taken by random people at Starbucks). Many foreign businesses get sunk by avoidable bad advice. The market changes so fast here that your six month study is already outdated. A good question to ask potential help is “what have you created and/or sold in China?” If the answer is nada, then turn around and don’t look back.
• All the above can be best dealt with by having the right people on your team. Not just someone who speaks your local language, but people who actually know what they’re doing. Hire as if your life depended on it. It makes a big difference.

This question originally appeared on Quora. More questions on Business in China:

• Why are face to face, in-person meetings, so important when doing business in China?
• Why do so many Chinese, and people from other developing countries, regard real estate as an investment?
• Why do so many Chinese companies IPO in the US? Does China have a deep public market?

Ben Chiang ¶

Ben Chiang, Adventure Capitalist

I’d highlight three major characteristics:

1. Market dominance

Taobao/affiliates have dominated Chinese e-commerce since it began. Taobao is a C2C eBay-like site, T-Mall is a B2C Amazon-like site, and Alipay is a PayPal-like payment service. They have had 70 to 100 percent market share since their inception. Only recently have other sites emerged, such as 360Buy (which has raised well over $1 billion in private capital) in general B2C, as well as vertical or specialized sites focusing on cosmetics/bags/lingerie/kids in direct B2C, flash sales, subscription, or group-buy sales.

2. Delivery expectations

Because of significant investments, mostly by 360Buy and Taobao, Chinese consumers have been trained to expect next-day or even same-day delivery for their e-commerce purchases. Amazon’s CFO recently came out to say they don’t see any way to get to one-day delivery anytime soon [1]. When I think about how Prime/2-day delivery was an inflection point in my own e-commerce buying habits, one-day is even better.

3. They have everything

Seriously. You can find some cool stuff in the long-tail through eBay, Etsy, etc. in the States, but as the majority of the world’s consumer trinkets are made in China, it makes sense that everything you’d want is on there. We recently ordered twenty scratch-n-sniff belts on Taobao for $12, fake Jeremy Lin jerseys for $15 each (rip off!!), then thirty sunglasses for a bachelor party for $15, and finally three inflatable sharks for $7. It makes costume and theme parties that much more fun/easier/cheaper.

Zach Brown ¶

Zach Brown, a Texan in China

1. As Ben mentioned, the express delivery process is one area of difference and probably the most significant of any between the two markets. I work with KuaiDi companies often, and it is firstly awesome, and secondly something that could never exist in the US or most western developed countries. It’s basically cheap labor and strength in numbers drives that industry. Quality is a huge issue though, as the large SF Express and a few smaller others are the only ones not franchised.

2. Consumer preference and product usage varies between US and China (or any other country for that matter), so the product mix and styles you see a brand in US selling may be very different from what that same brand is selling online in China.

3. TMalls B2C Platform has a low cost of entry and huge market reach for businesses, so you can see many foreign brands entering the China market on an e-commerce platform only for their first year or two until they decide to go home or invest more.

4. Security in the US is much further along than China. Whether that is due to actual IT solutions or rather a much smaller number of scam attempts in the US, I am not sure – I would guess both though.

5. Tmall is set up to allow each brand to really differentiate their selling platform. Ebay does not do that as well, and I am not sure there is a comparable platform in the US.

6. Payment terms and payment methods.

Grady Ha ¶

Grady Ha, Marketing and strategy consultant

I’m going to jot down a few quick thoughts, as we actually work very closely in this space. Most of the Chinese eCommerce activity is seen through aggregator sites such as TaoBao, Taobao Mall (T-Mall), 360Buy, etc. Aside from the points already made, keep in mind a few more significant differentiators (and this is comparing via B2C aggregator sites such as Amazon and Ebay and does not touch upon B2B, or backend logistics that may involve warehousing, IT platform integration, etc.)

1. Store and Platforms: TaoBao is essentially a China domestic copy of eBay that serves as an aggregator of C2C (Consumer to Consumer) goods. This is where individuals can set up shops using predesignated shop templates, see who browses (and some other basic tracking analytics), maintain and fulfill orders, and send them out based on local distribution/logistic networks that are only limited by physical proximity of the destination to the warehouse (we’ll get to that later). This is mostly where you will see ‘mom-and-pop’ stores as well as distributors of copied goods.

T-Mall, or Taobao Mall, serves as an aggregator of factory/brand authorized goods that require additional verification and has much more stringent regulations in order to ensure authenticity of goods and enhance trust among consumers. This is where most Chinese consumers will go if they wanted better quality of goods backed by brand authorized distributors.

Major differentiators here include a relatively good search algorithm (although it is lacking in cross-shopping/selling features), goods that are tailored to the Chinese consumer (which includes a wide variety of products and product lines that would contribute to point 3 that Ben made), and what I perceive to be a major integration of social messaging/instant messaging utilizing WanWan/QQ for customer support before/during/after the shopping process.

2. Distribution: Here is where it gets very interesting. I won’t get into the specifics about SKU distribution, or product line decisions and warehousing – but logistics and distribution is a whole different animal as compared to the U.S. In the U.S., essentially both customers and shippers have three major options (USPS, UPS, and Fedex). All of them have varying degrees of shipping speed, tracking, and drop-off/pick-up options. In China, despite recent attempts at standardization and consolidation of logistics, there are still a multitude of companies that operate via motorcycles/courier networks that can deliver with relative speed accuracy. That is to say, you live next to where the product is actually being shipped out.

Despite all the touting about one-day or same day shipping, if you don’t live in a city that has a warehouse where the product is coming out from and where the courier can pick up relatively soon/effortless, you’ll get the product within a few days to a few weeks. I witnessed first hand as the coordination between shipper and logistics company was a cross-calling mess as we tried to ship a product by calling the logistics hub, and the hub called the delivery driver (who physically had to come to the warehouse and pick up the item) – and in the middle of all this it requires coordination by all parties just to have the item shipped outbound. If the warehouse was located farther away from the city, or if you lived in a more remote area, the product will simply take an extraordinary longer period of time to arrive (without an accurate tracking mechanism to boot).

3. Trust: Trust means both trust in the website itself, products, and payment platforms. Recently with Alipay, it’s become much better as consumers load credits onto their Alipay account, which makes Alipay (or other payment platforms) serve as the middle man, and therefore take on some of the inherent risk. Previously, direct transactions by credit card weren’t regulated by industry security standards and simply served to dissuade consumers from shopping online, and requiring a COD option, as handing physical cash (or returning the item directly if the consumer was dissatisfied) felt more secure than sending financial information electronically.

T-mall additionally provided an aggregator of verified distributors that sold goods that consumers can be sure of. Due to the availability of counterfeit goods, Chinese consumers are simply more wary and concerned about if they are really getting what they pay for.

There are a huge amount of counterfeit sites that sell counterfeit goods. Even on T-mall/TaoBao, we are seeing stores set up by unauthorized retailers (which T-Mall subsequently takes down) that erode consumer trust.

More questions on e-Commerce:

• What are the recent trends that are revolutionizing Chinese e-commerce industry?
• Which online grocery website in India is popular?
• What trends are revolutionizing Social E-Commerce?

Thomas Wong, Local Singaporean

I drafted up a few quick diagrams to explain the funding scene in Singapore. It’s not complete, but might be helpful to some. There are three main sources to look into when starting out. Of course I am presuming you are not planning to fund it entirely on your own.

1. Friends and family
2. Private funding
3. Government funding

Friends & Family

I’ve seen mixed advice on this aspect, and I agree that you’d mostly only get one shot at this. But I’ve seen enough businesses that exist on support from supportive family and friends, a famous one would be Sir Richard Branson. It’s great to get started and get you off the ground, but you’d want to get familiar with raising funds from cold contacts/investors as soon as you can.

Private Funding

This is a pretty unmapped territory as there are a plethora of options. There are some networks like BANSEA, which pool together a mix of private investors and government linked ones as a collective of seed investors. There are also MNCs with funds dedicated to identify interesting startups to invest in, [like] Google Ventures, Gree Ventures, Intel capital, and even Singtel’s Innov8.

Recently, the entire Hackathon trend has been ported from the US to Singapore, where people who want to begin on their startup journey can participate in these thirty to ninety day events. They form a team, pick an idea, and patch together a product that they then pitch to investors at the end of the process on “demo day.”

There are private funds and investors, Innosight, DFJ, and some invest considerable amounts even at seed level. I personally know two companies who raised a million dollars from individual investors, without a technology or traction in place when they pitched. Basically, it’s a jungle out there, you’ll need to talk to people, do your own research, and keep your ears on the ground to identify which funds to approach.

A good way if you have the connections, though, is to identify these funds from a higher level on the value chain. If you have friends in finance, fund managers, fund of funds, wealth managers, they might be able to give you a quick take and even introductions to the people running these funds. Most of these guys work with or fund these angel investors, venture capital, or seed investors.

Government Funding

The Singapore government has been working hard to lift entrepreneurial activity here for a while, and they have put in place number of schemes to facilitate that, each focusing on various industries and stages in a company’s growth. I’ll cover three of the more popular ones for fresh startups.

Essentially there are three schemes I’ve come across that a fresh technology startup in Singapore would normally look into.

• There is the ACE program administered by SPRING Singapore; they match about $50,000 to about $21,500 you raise on your own. (Thank you, Brian, for pointing out the original inaccuracy http://www.techinasia.com/startu…)
• There is iJams reloaded, administered by MDA. It has two phases to its funding scheme. MDA works with private or institutional incubators to administer this fund. In the first phase, MDA will match $50,000 to about $10,000 that the founders or the incubator puts up. If the milestones are hit and the startup is eligible for phase two, MDA will match $100,000 to $100,000 raised by the founders or the incubator.
• There is also a scheme under the NRF (National Research Foundation), TIS Technology Incubation Scheme. “NRF would co-invest up to the lower of S$500,000 or 85% of the incubator’s investment in a qualifying company, and grant the incubator the call option to buy over its investment at 1.1x before the second year, and 1.15x between the second and third year.” Check out (NRF reopens TIS, opens floodgate on early-stage tech investments in Singapore) (James Chan, thanks for pointing out my confusion and original inaccuracy http://www.techinasia.com/startu…)
• There seems to also be an NRF ESVF scheme which offers up to $3 million, though I don’t have much details on this scheme (NUS Entrepreneurship Centre)

There are some nuances for each scheme that a founder should be aware of, between schemes and between the bodies that administer these schemes.

Nuances

On top of where to get funds for your startup, each funding scheme has its own set of advantages and intricacies. These are some things to think about when deciding which funding scheme would work for you.

I’ve shared a quick mind map with a few more details of the funding landscape in Singapore. It’s not complete, but is a pretty good guide to founders fresh to the ecosystem. You can view it below.

More questions on Startup Advice and Strategy:

• What are the leading startup trends and ideas of 2012 and 2013?
• What are some good places to connect with entreprenuers in India when starting a startup?
• What are some great “must-watch” videos on Youtube for entrepreneurs?

Joydeep Sen Sarma, engineer

There are a lot of reasons for this. I will try to do this in decreasing order of intractability (and focus mostly on the environment in India):

1. The Indian education system is hostile to outliers. As an example – a teen who just loves to spends all his time programming (and can’t stand anything else like social sciences/arts/literature) can have a very bright future (assuming he has talent) in the US – and has none in India. The system in India will give him/her poor grades, teachers/parents/friends would destroy him emotionally. Forget about doing well – such a person would do very badly in India – and I wouldn’t be surprised if they end up as a wreck.

Just to back this up – in all my years of interacting with multiple adjacent batches of IITians (and alumni of other Indian schools) – there is but one true outlier that I have seen who ever made it through the system.

To state the point a different way, what we consider top Indian talent (grads from IITs etc. – going to top schools or employers in US) is almost systematically biased (because of how they were chosen) to not be tech geniuses of the types that start large iconic tech companies.

2. The Indian technology market – whether it’s consumer or business – is not leading edge. This makes it very difficult for young local entrepreneurs to make a breakthrough. (After all almost all new tech giants emerge from new markets/technology trends.)

This is no less important than the previous point. By the time entrepreneurs in India latch on to something, they are both playing catch up and – even worse – competing with a lot of other people who have caught on as well. The fact that there’s very little about the Indian market that doesn’t make Western tech products (like Facebook/Apple) portable – doesn’t help.

Starting a B2B tech business in India is the hardest. The market for any leading edge business product is almost entirely in the West.

3. Indian venture capital markets are way behind American counterparts in terms of funding risky, pathbreaking ventures. The differences are apparent in valuation, in early focus on cost/revenues and in (predominantly) funding of copycat concepts from the West.

This point is not fundamental, and these things can change. Examples of breathtaking success can change the risk premium for example.

4. Startup and Engineering Culture in India is nowhere close to that in places like Bay Area:

• Engineers don’t remain engineers for long. Very soon they become hands off managers and architects. As a result, expert level hands on engineers – particularly those with both depth and breadth – are much harder to find.
• In my personal experience, intensity at Indian startups is lower. The urgency, the sense of do-or-die, is much lower.
• The few truly great hands-on experts prefer to stick to top employers like Google/Microsoft etc. and are rarely to be found sticking it out in a startup garage.
• Equity compensation is often drastically lower in Indian startups (especially for engineers). There seem to be a raft of reasons for this, but regardless, this makes the previous three points pretty logical. It’s a vicious cycle.
• Mentorship – there’s no Steve Jobs or Peter Thiel here to mentor the local Zuck. The people who made it big in India in tech (on the backs of the consulting industry) are unlikely to be the right mentor for the next Twitter/Facebook/Apple. Less dramatically, the lack of top class engineers who have spent 10+ years programming just means there’s less mentorship for the younger ones [1].

Again this point, overall is not fundamental – these things can all change with time. But these cycles are very hard to break and will take a long long time (if ever) to do so.

Other points – predominantly those related to absence of good governance, poor infrastructure, regulatory hurdles – don’t affect tech businesses as much. But I am sure they affect B&M businesses a lot.

Age is an interesting factor. If young local entrepreneurs have the deck stacked against them, then the ones with potential that remain are the ones that are more experience and education. But as anyone with a kid or two knows – achieving something remarkable (from scratch) after the onset of family life is just an order of magnitude harder.

The silver lining here is that if the reasons are well understood, the solutions can be articulated. What if we have a Super30 program for outstanding young programmers for example? Can we expose such a talent pool to the latest and greatest in technology, including liberal travel to major global tech hubs? What if we can put them in mentor/partnership programs with industry folks who have a solid understanding of the business landscape and with top engineers, both local and abroad. There seems to be potential ways out of where we are, but it won’t just happen by itself.

Aashish Gupta, Founder & CEO Yellowleg.com

It all starts with Maslow’s hierarchy of needs (see below). Wanting to “change the world” is presumably right at the top of that triangle. A human being feels that need only after the needs lower in the triangle are fulfilled.

Now coming to Indian entrepreneurs, given the socio-econonomic backgrounds that the vast majority of our nation comes from, most people get their education and devote their lives to creating a better life for themselves and their families. By the time they feel the need to “change the world” they are probably in their mid-thirties, at least. By contrast, many US entrepreneurs start their journeys sometime during college. That’s a huge headstart – both in terms of amount of time they have to develop their skills and the level of risk they can take at that life-stage.

Even among the few Indians who hail from privileged backgrounds (or work their way into it), the general environment of scarcity dictates that they devote their lives to preserving their wealth and maintaining status quo.

This question originally appeared on Quora. More questions on Startups:

• What are some incubators for start up companies in India?
• How do you launch a startup when you don’t have any technical experience?
• What are the factors that should encourage you to pursue entrepreneurial activities in China?

Arip Tirta, Cofounder of UrbanIndo

In order of importance, I think what the Indonesian technopreneurs need from their investors are: Capital, mentorship, and connections.

Based on my interactions with other technopreneurs in Indonesia, there are several reasons why some founders in Indonesia prefer not to deal with any institutional investors:

• Losing control – This is probably the biggest concern that Indonesian technopreneurs have. They are afraid if they take money from an institutional investor, they will lose control of the company and will need to follow what the investor wants.
• Bootstrapping mentality – Many Indonesians, including me, come from generations of entrepreneurs who founded various companies via bootstrapping. Many founders embrace the self sufficient mentality and don’t feel the need to raise money from outsiders as long as they have a plan to generate positive cash flow for their tech startup quickly.
• Dealing with the unknown – While entrepreneurship has been part of Indonesia for many years, VC investing and technopreneurs are a new phenomenon for many Indonesians. Many Indonesian technopreneurs  are not familiar with VC investing, and there is currently little help that they can get to have a better understanding on VC investing. They are afraid of dealing with the unknown.

Here are couple tips and precautions that I can provide for Indonesian technopreneurs:

• Don’t expect a hostile take-over a la Carl Icahn from an institutional investor. Even though an institutional investor will want to have control on the company, the key management team will continue to have major control of the company as they will be the ones who run it. It’s for the investor’s best interest to have alignment of interests with the management team. Early stage investors spend the big chunk of their due diligence on the management team. Product evolves, [and] so does the business model, but a good management team will go a long way because they will know how to maneuver the company to overcome all the problems that might arise. Any major changes to the company’s goals, business model, exit strategy, and others will be best executed with management’s full support.
• I applaud a bootstrapping mentality as it requires us to be frugal and exercise caution. I do however believe that a bootstrapping mentality is best fitted for traditional non-tech startups as tech startups have more unknown variables that require the founder to take more risks in a fast moving tech world.
• Don’t just focus on the valuation, as the devil is in the details. If you are not familiar with the legal documents, hire a good lawyer. Make sure that you fully understand the documents inside and out to prevent any surprises. Despite what they say, all the terms on the documents are negotiable depending on the company and the VC’s appetite. The VC creates the documents to protect them, you need to expect the documents will be a one sided document in favor of the VC.

More questions on Startups in Indonesia:

• What kinds of new platforms (Websites / Apps) does Indonesia really need now? Why?
• How/where do you find a co-founder to start a startup in Indonesia?
• What are the best city guide mobile apps for Indonesian cities?

Tao Tao, co-founder GetYourGuide

Business:

• Cheap labor. One of the many reasons why Google keeps an office in China is because IT talent is still comparably cheap. But if you listen to stories from Chinese entrepreneurs, it’s incredibly difficult to find and attract those of the entrepreneurial type unless you give out a lot of equity or your name is Kai-Fu Lee. Having a Chinese partner is essential though.
• Large & growing markets, even if you go into niche verticals. Opportunities are especially strong in mobile, more so than internet in general, both given larger and faster mobile penetration and already crowded online markets.

Personal

• The entrepreneurial environment. You’ll often get to meet people who are creating firsts, be it the first whiskey bar in town, the first modern art village, or the first party on an aircraft carrier. Very often, it’s something that already exists in the West, but it’s nice to get to know some people that are shaping the cultural and business landscape of a city and country.
• If you fall in love with the place. As difficult as it is to describe this point, it’s probably the most important reason for anyone to stay in China. As an entrepreneur, you need to be passionate about your product and customers, which is something you can’t do if you don’t like the place to begin with. I can only recount my personal Beijing experience, which was a combination of constantly feeling a little bit out of place yet completely absorbed in the thousands of things going on at the same time. If you live in Beijing, there’s no day or night off. The Economist wrote a great article about being expat in general, and most Beijing expats that I spoke to could identify with the sentiments described there:
  

  To quote the most telling passage “An American child psychologist, Alison Gopnik, when reaching for an analogy to illuminate the world as experienced by a baby, compared it to Paris as experienced for the first time by an adult American: a pageant of novelty, colour, excitement. Reverse the analogy and you see that living in a foreign country can evoke many of the emotions of childhood: novelty, surprise, anxiety, relief, powerlessness, frustration, irresponsibility.

  For entrepreneurs and adventurers, China is one of those rare places with a good mix of exotic estrangement, openness to foreigners, and economic opportunities.

More questions on startups:

• What are some incubators for start up companies in India?
• What are the leading startup trends and ideas of 2012 and 2013?
• What is the best advice for a young, first-time startup CEO?

By Grant Prigge, Founder and CEO of Socrates MD, Inc, a digital health startup based in Shanghai

I have started two companies in China, and my suggestion would be don’t over analyze it.

(1) A good idea is a good idea no matter what country.

(2) Never generalize. Do all Americans like…X? Some like X, others like Y. Identify a need and execute.

(3) Forget guanxi and focus on delivering a quality service to your clients and treating your partners fairly. Paying for quanxi is best left to the suckers and crooks.

(4) In terms of a “preference for local products,” refer to #2. The Apple store in Shanghai is grossing more than the store on 5th ave. GM, Yum, Starbucks, L’Oreal, and virtually every foreign luxury brand is killing it in China. Beyond the major foreign brands, I know many foreign entrepreneurs who have built sizable companies and pioneered new industries in the process – from digital marketing, to wine, to restaurant chains, to hospitals, to pharmaceutical brands, etc.

(5) In terms of government protectionism, it’s real. Steer clear.

(6) In terms of market intuition, a foreigner will always be at a disadvantage in a foreign land. This is a universal fact, particularly in establish industries. However, brains and a certain amount of naivete are the key ingredients when creating new industries.

(7) In terms of repatriating profits, there are legal channels and grey channels. It’s perfectly legal for a wholly-owned foreign enterprise or foreign joint venture to repatriate its annual profit.

(8) Pollution – it’s bad.

(9) Squatters – I have only seen them in Tibet. Yes, they’re bad.

More questions on Startups:

• What are some incubators for start up companies in India?
• What are the leading startup trends and ideas of 2012 and 2013?
• What are the factors that should encourage you to pursue entrepreneurial activities in China?