At the end of May, I spent a week and a half traveling to Hong Kong, Beijing and Shanghai with a group of MBA students on our annual trip to explore the entrepreneurial environment in China and host our China Business Model Competition. The China I saw this year looked and felt different than it has in years past — much more attractive for entrepreneurs. And much more ready to welcome them.
I am not naïve to China’s complex history and current social issues, but there were notable nuances since our last visit 18 months ago. The China we introduced to our students appeared more open, more honest, more approachable and ready to move forward. The people we met with — from factory owners to tour guides — were more forthcoming about China’s various challenges, such as pollution, access to credit and lack of creativity, and more enthusiastic about potential opportunities, such as the changes to regulations, including the “One Child” policy, transition to a consumer and services economy, and innovations in health care and clean energy.
At the trip’s onset, we challenged our students to focus on similarities and opportunities, as much as the obvious differences. Throughout the trip, our Chinese contacts reiterated the opportunities for creative, experienced entrepreneurs who understand how to tackle hard problems. A market of 1.2 billion people can’t be ignored, but they clearly lack the type of sales, marketing and other company building expertise to penetrate the market with new products.
What may be an oversaturated market here for a particular product or service can be a huge opportunity in China’s still developing economy. The sky is the limit as far as growth opportunities. The entrepreneurial community in the D.C. region already has existing ties to China through the mayor’s office and other organizations. You just need the right mentality and the will to tackle the market:
Change your perception. China is changing so quickly — it’s not all cheap labor in sweatshop factories. Even in the manufacturing facilities we visited, skilled employees were spending their workdays on computers. The perception that China is only manufacturing the world’s products and copying the rest of the world’s innovations is no longer the rule (now, of course, you must also learn to differentiate between a knockoff and an authentic knockoff, but that also applies to the streets of New York City). For example, our visit to the Zhongguancun Science Park, the Silicon Valley of Beijing, showcased innovations in 3D printing, electronics, green energy and health care, but highlighted the country’s need for talent to take these complex technologies to market.
Go there. China is ripe for entrepreneurs, but you won’t understand this until you see it in person. Most of us know this, but most see China as too far out of our comfort zone. Our students took the plunge — the more they experienced cities, experimented with food and transportation and spoke to potential customers, the more comfortable they were about exploring their business ideas. In fact, one of our teams is currently recruiting our tour guide to be employee No. 2 in their new start-up.
Find the right partner. To effectively operate in China, you absolutely have to have a Chinese partner on the ground. The Chinese government has established several science parks like the one we visited, and many of these parks have links to entrepreneurship organizations in the U.S. We connected with the park we visited through Washington’s 1776 business incubator and ties through the D.C. mayor’s office. By leveraging this relationship, it only took a couple of e-mails to connect to the right people who volunteered to host our entire delegation. Consider exploring your college or university’s alumni network chapter in China to connect with potential partners and contacts.
Learn how business is done. Like in any culture, doing business is China has its own set of rules and customs. Learn the way people conduct businesses in China, and conform to those customs. (Oh, and be prepared for squatty potties.)
Bring your problem-solver skills. If you are a serial entrepreneur, and you’ve done this a couple of times, they are desperate for you. Chinese universities are grooming engineers and scientists, but not nearly enough entrepreneurs. Americans bring the creative problem-solving and critical thinking skills that many Chinese simply haven’t been taught. They have a thirst for talent and our human capital is in high demand.
As we see in the news each day, China’s winds of change blow in both directions. Although the path forward is not clear, it is there. There is a window of opportunity for entrepreneurs willing to invest the time to understand the culture, business practices, and customer demands. Even if you don’t book a ticket, think of a way to connect with China in some way beyond your local restaurant.
Elana Fine is the managing director of the Dingman Center for Entrepreneurship at the University of Maryland’s Robert H. Smith School of Business.