Five reasons why foreign entrepreneurs start a business in China
Editor’s Note: In an interview with China Daily website, Dr. Mark Greeven, Associate Professor at the Innovation, Entrepreneurship and Strategy Department of Zhejiang University, School of Management, discussed advantages and challenges faced by foreign companies exploring the Chinese market. He suggests foreign entrepreneurs need to better understand Chinese customers and strengthen connection with various stakeholders and local community.
You’ve done fruitful work on innovation and entrepreneurship, how do you rate the environment for innovation and entrepreneurship in China compared to other countries?
Dr. Mark Greeven[Photo provided to chinadaily.com.cn]
I think it is very good. Firstly, the support of the Chinese government is rather extensive, from incubators to subsidies, and a lot of supportive measures to facilitate entrepreneurship and innovation. However, there is much more that makes China a great place for entrepreneurs, including foreign entrepreneurs.
Secondly, the wide availability of money in the market, especially venture capital and private equity. In particular, Chinese private risk capital has started to mature and professionalize in the last five years.
Thirdly, the Chinese (consumer) market is large and growing. This means that entrepreneurs have possibilities to scale their business. It is a very particular advantage that the Chinese market has; business has room to grow more than in many other countries.
Fourthly, the policy and regulation is still changing and upgrading, which may mean new opportunities. Industries like internet finance, digital health and cross border e-commerce, are not fully regulated yet. So it is a good living laboratory for entrepreneurs to try out their business ideas. At the same time, when businesses grow up and industries mature, a better regulated environment in terms of consistency and clarity is desired.
Lastly, China’s environment for entrepreneurship is quite facilitative of building business ecosystems and external partnerships with stakeholders. . It is relatively easy for entrepreneurs to find other partners, resources and investors; especially in cities like Shanghai, Beijing, Shenzhen and Hangzhou.
In your view, what are the key factors in a foreigner successfully starting a business in China and how can the obstacles be tackled?
I do research on foreign entrepreneurs in Shanghai, and also mentor in an incubator to help foreign entrepreneurs to start and grow business in China. I think the first key obstacle for them is to understand Chinese customers, to understand what they really want.
The second obstacle is to understand their local competitors; they usually underestimate the competition brought by Chinese companies.
The third obstacle is to understand the regulations, the inconsistency and changes of policy. For foreign entrepreneurs, it may take longer to get used to it, while at the start, it may bring challenges especially in certain industries.
The fourth obstacle is connecting to local Chinese entrepreneurs and other stakeholders in the ecosystem. They often stick to their own foreign community. If they could try to interact more with the local community of Chinese entrepreneurs, they can probably better understand local Chinese customers, competitors and regulations.
