Ebook: How to launch your startup in China

This is extracted from our Market Expansion ebook, which gives tips on expanding into many Asian countries. Scroll to the bottom to download it.

---

I don’t need to rattle off any numbers – all running, inevitably, into the billions – to convince you how massive China’s tech market is right now. It’s well developed and very visibly massive.

It’s so large that it can seem intimidating to any budding entrepreneur or established startup wanting to enter the market. Plus China has so many decades-old web giants and fast-rising, well-funded startups that it may seem like there’s not a single unfilled niche left in the market. But there are still some – if you look hard enough.

So, once you’ve done your homework and found a startup idea that could reach a willing audience among Chinese consumers or enterprises, here are some ways you can bust a move.

Accelerators

For new startups headed by foreign entrepreneurs, the most obvious starting point is Shanghai’s Chinaccelerator.

Its biannual program runs for three months. If you’re accepted, you can expect to move to Shanghai for about six months for the duration of the course and for further mentoring and possible early corporate partnerships to get your business off the ground. Graduate startups have to give up six percent of equity and then get a US$30,000 investment via convertible note with the terms based on the startup’s next round of funding.

Visas

Unlike South Korea, China has no “startup visa” option. So the visa situation for a foreign entrepreneur can be tricky to navigate.

Shlomo Freund, who runs a startup in Beijing, observes that newcomers have to find “creative” ways to hang around. Some might wing it on a student or short-stay business visa. Later, an entrepreneur might make use of relaxing rules on opening a new business in China so that one’s own startup can apply for a proper work visa for the founders.

Location and co-working spaces

While Beijing is the tech hub, it’s not the only option. Shanghai is preferable for lots of reasons: much cleaner air, a milder winter, and a more cosmopolitan feel. It also makes more sense for finance-related startups. Shenzhen, way down in the humid south, is a better bet for hardware startups as they can be close to manufacturers.

Alibaba’s hometown, Hangzhou, is a growing hub for ecommerce startups. It’s also a remarkably beautiful mid-sized city where overheads will be lower than in Beijing or Shanghai.

But Beijing is the choice if your startup needs to network with the maximum number of VCs and buddy up to the many tech giants based there.

Major challenges

The dark arts of guanxi

Early funding

Wait wait… is Hong Kong better for me?