Author(s): Steffan Iwan & Irman Abdić
In order to foster the international relations among young entrepreneurs from China and Germany, the UnternehmerTUM and the Tsinghua xLab organized the TIE^2 program (referred to later as simply “TIE”). In the middle of May, 14 entrepreneurial minded students from Germany flew to Beijing for ten days in order to work on their ideas with Chinese students. The Chinese students in turn will have the pleasure to enjoy Munich for ten days in October and develop their ideas and products for the German market.
The label “Made in Germany” was introduced by the British government to mark fake German products back in 1887. Going fast forward 100 years, today “Made in Germany” stands for high quality products that sell like hotcakes anywhere in the world. Is there a similar pattern for “Made in China” label? Two CDTM students decided to find that out via TIE program. Irman and Steffen, who participated in the program wrote down some of their personal experiences during their 10 days in Beijing.
Irman Abdić about “The Chinese Business Culture”
It was our sixth or seventh day in Beijing and most of the TIE fellows had a hard time waking up early in the morning after a long street-karaoke night. I ran to the xLab’s office so as to not miss our second panel discussion with some of the top Chinese VCs, xLab director and industry partners that were supposed to share their views on doing business in China. The session started shortly after I sat down and thanks to the crowd behind me who was whispering (louder than the clique of old ladies on a bus ride from Hönigschmidplatz to Laimer Platz), “this is the VC that sits on 60B fund…”, my energy level went up quickly and killed the morning drowsiness in a second.
Here are the three key learnings from the panel discussion and beyond:
1. China has its own business culture that originates from the ancient times, and was active way earlier than any publicly known discovery of America or Silicon Valley buzzwords.
When someone asked “Why do you think startup culture came to China only 10-15 years ago the ?”, it went quiet for a short time and Feng Li, co-founder of the Summit View Capital took over the initiative to answer the question. Normally he would be sitting while answering questions, but at this point he stood up. In next couple of minutes he taught us that the Chinese startup culture has existed for centuries and only American startup culture is becoming a bit more popular in last few years. One question that Feng Li asked us (and the reader can ask himself) was “Why do you think that the VC capital (American way) is better than borrowing the money from your family/friends and bootstrapping (Chinese way)?”.
2. When it comes to the business, Chinese people are direct.
In case you ever visit Confucius Institute in Munich to learn more about Chinese culture, you will learn about Chinese people being shy and never giving a clear “no”. That’s exactly the reason why the majority of TIE fellows were bit confused after meeting Chinese businessmen who were quite the opposite and very direct. They even appeared harsh at some points.
3. Personal relationship first, then business.
There is a strong correlation between success factor in closing your first deal and the number of lunches/dinners you have together with your potential partners. We had one 3 hour long initial meeting, 4 lunches/dinners and a lots of “We chat” conversations to close our first deal in China. Getting partners on board felt more like socializing and having fun than doing the business.
My recommendation for doing the business in China would be to focus on relationship first and to be frank with your expectations. If someone likes you, he will pay for your dinner, but you have to return the invitation for another lunch/dinner to show the appreciation. When passing your business card, do it with both hands. Using We Chat, you can reach almost anyone and do almost anything. In my view, the speed of the life in Beijing and the organized chaos cannot be compared with any European city, be fast but patient.
Steffen Iwan about “My view of the Future of the Entrepreneurial Landscape in China”
To be honest, I was blown away by the entrepreneurial speed and power, which the xLab showed to us. I was always aware that China is working on polishing that “Made in China” tag, to move away from the reputation of the cheap manufacturing hub of the world. However I had no idea about how far they are already in the process of being an innovative country. Therefore I would like to share my three main reasons, why I believe that everyone who claims to be a globally minded entrepreneur should have a closer look onto China:
1. The Five Year plan of the Chinese Government: “Everyone is an entrepreneur, creativity of the masses“
In the current Five Year Plan (2016-2020) of the Chinese Government, there are two points, which should make every Entrepreneur pay attention. One Focus area is “Innovation” and another one is “Opening Up (to more international co operations)”. It basically means that within the next 5 years the government will more or less serve money on the silver platter to young innovative companies in order to fulfill that plan.
2. The Chinese Millennials’ Spirit – Get rich or die trying
When we had a panel discussion at the German Embassy, there was one quote of a German Businessman, who had been been living in China for 20 years, which stuck with me: “The German Government is better at Socialism than the Chinese”. After that quote I asked a couple of our Chinese students what their biggest goal in life was and almost every single one answered: “ Having a successful company and making money”.
Coming from one of the most renowned Universities of the country, these students will be the leaders of a generation, in which the founder of Alibaba, Jack Ma, is already treated like a rock star. Therefore I believe that the entrepreneurship culture will thrive not only from government support, but also from the internal motivation of the millennial generation. If you want to have a proof of the entrepreneurial culture, take a look at this article about Innoway, the “Silicon Valley Street” of Beijing.
3. The Western Understanding of the Young Generations:
From what I have seen, to start your own business in China one thing is inevitable: having a Chinese partner. It is not necessarily only the language barrier, but also the business culture, which cannot be easily understood by foreigners.
To find a right business partner, who can speak decent English and understands the Western as well as the Chinese culture was quite hard a couple of years ago. However, from what I have seen working with the students from Tsinghua x-Lab, in our Generation of Millennials, there are plenty of young talented Chinese Entrepreneurs, who can speak perfectly good English and mostly understand the way we Europeans work. Therefore finding a Chinese business partner, who also wants to work with you, should be not a big problem anymore.
If you consider the speed and the work ethics, which the Chinese have shown over the last 20 years, in my opinion it is only a matter of time, until China will get over its image of a cheap manufacturing hub of the world, and rise to have globally renowned brands with innovative products. Combine that with the three points I mentioned above, I believe that every entrepreneur in his/her twenties should at least think about going to China, instead of heading straight to the Valley!
So if you think you have China figured out, think again. Even Apple is strugglign with it and we now have a short glimpse on why is it so. Perhaps the best way to figure it out is to visit China. Again. And Again.