What Are Some of the Challenges of Running a Startup in China?

9:53 am on Nov 9, 2012

The question “What Are Some Concerns of Operating a Startup in China?” originally appeared on Quora. The following answer was put forth by Grant Prigge, founder and CEO of Socrates MD Inc.


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.

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  • Donald

    Good read and links. Happy to see TIA working with Quora on delivering good content.

  • Jian

    “Never generalize. Do all Americans like…X? Some like X, others like Y. Identify a need and execute.”

    We could generalized web habits, time when people log on to weibo most often, or where are most of your users. So generalization could be a good thing depending on the situation.

    Pollution is bad >>> Absolutely in Beijing.

  • Guanxi

    Guanxi is still important no matter what. Not just in China but in all business environment. it’s who u know now what u know as most people say.

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