Startup Monthly in China by Vadim Slavin

This past week Startup Monthly visited China. The purpose was both business and professional curiosity. What is the entrepreneurial climate like in China? What drives innovation? What are the barriers preventing ideas from US and China competing on the same market? But most importantly are the concepts of Startup Monthly and lean startup totally foreign to Chinese entrepreneurs? 

The answers were both surprising and revealing. First of all, Chinese economic boom is apparent. Not everywhere, not  for everyone but the cities of Shanghai and Hangzhou reflect the wealth, stability and advancements the Chinese economic boom afforded them. Their relative separation from the Communist stronghold in Beijing is apparent. 

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Perhaps the best example of where the modern capitalist China meets utopian communism is the small village of Huaxi. It is as magical as you read about it - a village of a few thousands with a $1.5B (yes that's a B) skyscraper which dwarfs any Las Vegas establishment in blatant flaunting of wealth. 

The other example of flourishing economy is a city of Hangzhou. Within an hour by train (not necessarily by car) it has been dubbed the Silicon Valley of China. This is where the biggest Chinese Internet companies were founded and are now attracting young technical talent. The number of porsches and bentleys on the streets there reiterate the importance of the area to the entrepreneurship boom of modern China. 

Speaking with my chinese colleagues, I discovered that many of the apps and online services I have come to rely on have their Chinese counterparts. Are they better? Are they even comparable even though they are in the same app store? The answer is not important. What is important is that Chinese audience have similar needs and interests to the audience serviced by western language-based apps. This in part was brought about by the deeper market penetration of technology (China was bested only by Russia in the recent increase of Internet users, up by 25% from 2009 to 2010) and the rising levels of disposable income. 

How Chinese customers satisfy these needs and interests greatly depends on the Chinese government which requires any foreign internet portal servicing Chinese audience to have physical servers inside china. Not everyone is happy to comply because this requirement means susceptibility to control and influence. Youtube, facebook, Twitter are notable services being blocked. And yet anyone hardly cares. For you see, these giants of online traffic have their counterparts in china. The language adaptation could probably explain partial success but would this be enough to overcome existing services which are slowly migrating to chinese localization? Perhaps we will never know. 

The government plays another important role in the startup ecosystem. Whether it is directly or indirectly supporting young entrepreneurs, having government blessing is well... a blessing. A friendly government official with ties in your industry can get you far in exchange for 'dirty wine'. Being a foreigner in this strange land I hesitated to pry further but the picture was clear from so many different sources.

China is a unique place with its own idiosyncratic approach to running business and controlling economic growth. It is a place of many opportunities but not for everyone. It takes careful understanding of the forces shaping the economic climate in order to become a player. However, there is a way if there is a will.