WHICH INDUSTRY?

Got a great idea for a hot product to launch in China? Before you cash in your hard-earned savings and transform your apartment into a factory, TheLINK has done some research to help improve your odds. We checked in with CEIBS professors specializing in entrepreneurship to ask which industries, products and services offer the best potential for entrepreneurs.

Professor of Management Practice Amy Shuen, who now splits her teaching time between CEIBS and Berkeley, first advises China-based would-be entrepreneurs to pay attention to the booming Web 2.0 movement. “There is going to be huge growth in many of the 'Web 2.0’ areas, especially among China’s young urban professionals,” she says. Shuen is now finalizing a China edition of her upcoming book on the Web 2.0 phemonenon. The book predicts the impact of the “next wave” of internet technology worldwide, and in China.

Among her findings, Shuen says companies based in China, as elsewhere, stand to win big by using emerging technology to accurately track and meet consumer demands. Web 2.0 technology focuses on the ability to record user behavior (web-viewing patterns and click-streams, for example), then customize advertising campaigns. This ability will likely prove extremely useful in China, a market in which consumer preferences change particularly quickly.

China’s enormous mobile phone using population - now largest in the world - also offers vast, lucrative opportunities. Shuen points out that Google made its money by attracting users and advertisers to its efficient key-word searches via the laptop. “Whoever collapses this ability to the cel phone and makes it available for users will be the next Google for China,” she says. “The whole game right now is to try to use open and volunteered information from users to provide them with a more relevant experience.” Already, handsets are being used to track user habits such as calling patterns (ordering lunch from the same delivery service for example) or even shopping habits (repeated trips to the neighborhood drycleaner or coffee shop). Companies that can access and "mine” such data, then cater directly to consumer preferences, will succeed.

"Search engines have shown there is a great deal of local marketing savvy that entrepreneurs will be moving onto the web,” says Shuen. The next step, in China and worldwide, will be to develop the platforms to “monetize” that data.

Agreeing that China will be “more tech driven” in the near future, CEIBS Entrepreneurship Professor Ge Dingkun says this sector will benefit from the combination of increased government support for value-added tech services plus growing domestic expertise in the field.

Taking a broader view of the landscape for startups, Prof. Ge says the entire services sector in China is promising now. He points out that the U.S. now operates a US$600 billion services sector which supplies the nation with 65 percent of its GDP. By contrast, China’s services sector supplied just 38.7 percent of GDP in the first quarter of 2007. As China continues with its economic development, the potential for growth in services is vast.

Government-promoted industries are another good bet, Ge says. “The Chinese government is spending tons of money on clean technology - energy saving, pollutant reduction programs - as well as on high tech sectors, especially biotech and nanotech,” he says.

Two other trends to track: China’s shift toward an aging population - 24 percent of Shanghai residents are over 65 years of age - and China’s trend toward urbanization. By 2015, more than half of Chinese citizens will live in cities, creating vast opportunities to meet a new set of demands. Says Ge: “I predict more and more catering to urbanites.”

Finally, CEIBS Marketing Professor Per Jenster advises would-be business launchers to adopt the right mindset. He quotes the famous Rothschild statement that “Great fortunes are not made when the violins are playing in the concert halls. Great fortunes are made when the bullets are raging outside the cities.” The meaning, Jenster explains, is this: "Change is a great source of entrepreneurial energy. In China, there are some industries that are experiencing a lot of change right now. Whenever you have dramatic changes, this creates great entrepreneurial opportunities.”