The 1.3 billion people country, China, has received a lot of attention from the business world in the last three decades and they certainly deserve it. China has managed an amazing track record in economical development, maintaining about 10% growth every year. In the internet business sector alone, the country has 316 millions of active internet users and the industry is projected to grow even more as internet penetration rate (in 2009) is at a whopping 17.4%. It is to no surprise, therefore, many foreign businesses and entrepreneurs lay their eyes in this “gold mine” of the 21^st century. However, only a few have survived in the China.

The sharing with Liu Delle, the Chief Financial Officer of Youku, the popular video sharing site in China, gave me an insight to the challenges found in Chinese business environment and some tips for budding entrepreneurs who would like to set up their business in China.

Various Skills which will help

“To survive in China a business must have three skills: the hard, soft and black skills.” shared Mr Liu.

The hard skills refer to good product development skills and the company’s ability to adapt and react fast to competitions. This is important because the competition in China is fierce. Local companies typically have employees who are willing to work over 12 hours a day to continuously create better products. Therefore, the reality is a company must always be vigilant and responsive.

The soft skills refer to the company’s ability to be flexible to comply with government’s law and regulations and the ability to build “guan xi”- relationship with government officials. In China, to follow this set of rules is necessary in ensuring the continuity of the business. A number of foreign companies (such as twitter ) have failed to survive in China due to the lack of this skill.

The black skills refer to the company’s ability to leverage on “guan xi” to defend against unfair treatment from competitors or to use it to better position the company in competition.

Practical tips

Mr Liu also shared some practical tips for foreign entrepreneurs on how to do business in China:

• Manage your goal (Step by step) . Focus on achieving small goals rather than setting too big of a goal to achieve.
• Be open to new ideas and listen to local employees to better understand China’s internet market. Though some of the method might be unconventional, you will be surprised by how effective they are in reaching your customers.
• Get a local partner. Guan Xi is an important part and parcel of business in China. Therefore it is good to have a local partner who would be able to handle this for the company.

China is a big market. It promises a big return for those who know how to play the game and big trouble for the ignorants. The information has helped me to understand China Internet business better. I hope it is useful for you too.

Tags: China, internet business

This entry was posted on Saturday, December 12th, 2009 at 1:13 pm and is filed under Beijing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.