We’ve devoted a lot of time in the last few years encouraging people to start their own business in China and advising them how to run startups. And sure, there is a lot of fame and fortune to be found in building your own business. The truth is, you will be close to the edge more times than you can count and there is a good chance you will fail. And failing with your own business is never pretty, no matter how much people reiterate the many lessons learned through failure.
So read these five points carefully. If building your own business in China is something that you still want to do after reading them, then, by all means, go ahead. We will love to help you along the way. If, however, this articles discourages you greatly you may want to reconsider. Building a business in China is not for the faint of heart. And there are enough alternatives out there.
1. You thought running a business in your home country was too hard so you came to China because there are so many opportunities here.
It’s true, there are countless opportunities for new businesses in China. Maybe more than in any other country right now because of the rapid increase in household income, a rapidly growing middle-class that’s hungry to consume and lots of venture capital. Still, running a business in China is hard. Even if you speak Chinese fluently, you will face certain disadvantages as a foreign passport holder. You don’t need to have a lot of business experience, running a business in China but be prepared for challenging years ahead. Which brings me to my next point:
2. You want to get rich quickly and exit your business
Starting a business in China is no way to get rich quickly unless you execute extremely well AND get lucky. Most budding entrepreneurs expect their own business to either go boom or bust. In truth, it may well be the middle-way. Of course, there is a very good chance you will fail quickly, i.e. within the first two years. But even if you don’t there is a good chance you will experience gradual, steady growth. Which is a great thing, don’t get me wrong. But it won’t make you rich.
If you’re super talented and smart and want to get rich you should probably get a job in finance or as a consultant, chances are much better you will get rich along the way.
3. You are too stressed in your job and are looking for more flexibility
I’ve heard somewhere that as an entrepreneur you are really flexible with your time: you will be able to work any 24 hours of the day you want! Especially in the first few years of building a business, you will have to work hard.
Bureaucracy in China is a huge pain and unless you have huge savings you will have to do things yourself or with little help. You have to figure all this out yourself, WHILE growing a business, hiring employees and somehow making money in the process. The first couple of years of building a business in China chances are you will be struggling, often. There may be exceptions but if you’re looking for a way to work less than you currently are, starting a business in China probably won’t be it.
4. You have successfully built a company in your home country and feel building it in China can’t be much different
Ok, if you’re reading this blog chances are you will already know that running your business in China doesn’t work like it does back in your home country so you probably won’t make that mistake. It’s baffling how many naïve entrepreneurs we meet wanting to clone their business concept in China and expect to be successful with it.
Even stock listed companies like Rocket Internet got burned trying to emulate their food delivery business in China without paying attention to the huge differences in consumer habits. And wasted around 60 Million US$.
So if you already have entrepreneurial experience in your home country that’s a huge asset. Just make sure you don’t let it get to your head. There are huge differences in consumption patterns and regulations here and you are well advised to understand them or hire someone who does before starting a business in China.
5. You want to start a business in China on your own
This doesn’t mean you can’t start a business in China on your own but you will need a whole lot of help from people who have done it before. Here at ChinaEntrepreneur.net we always like to preach about the importance of building a network in China. But we really can’t stress this enough, you need help when you’re starting out.
So network up and find mentors. The good thing, it’s super easy to find mentors in China because the group of foreign entrepreneurs is still small. And the more experienced guys understand your struggles. Network horizontally and meet peers who are struggling with many of the same issues you are. Go to entrepreneur meetups like the Lean Startup Meetings in Beijing, the Shanghai Entrepreneur Group and many others. If you can’t find any entrepreneur groups in your city this is a great opportunity for you to provide value and start your own group. It may be as simple as getting a handful of people together in a WeChat group.
And finally network down because no matter how little you know there is always someone who can use your help and experience. Do this and you will build a network of fellow entrepreneurs and friends in no time.
You can do this!
Look, starting a company from nothing and growing it into a thriving business is an indescribable experience. For Johannes and myself, this was the right decision and we wouldn’t want it any other way (even though I still catch myself sometimes longing for a cushy desk job. I normally snap out of it pretty quickly, though!). We don’t want to discourage anyone from starting a business in China, in fact, we encourage you to explore the great opportunities you have here. But there are a lot of risks and downsides involved as well. Once you’re prepared and you know what you are getting yourself into, your chances of success are going to be much higher.
What are your experiences with running a business in China?
Leave us a comment and let us know if you disagree with this list or you have any questions!