Thursday, July 6, 2017

Start-ups Get the Hang of Opportunities in China

By Associate Professor of International Business & Strategy Shameen Prashantham

Just an hour away from Shanghai by fast train is Hangzhou. Arguably the most entrepreneurial city in China, it is home to Alibaba, one of the most globally visible Chinese companies. The capital city of Zhejiang province boasts a vibrant start-up ecosystem of lesser known young companies, whose founders hope to emulate the success of Jack Ma, Alibaba’s founder.

Falafel Games is one such aspiring start-up. The company, which creates games for mobile devices, is an unknown entity to most western and Chinese audiences but has enjoyed much success in the Middle East. That is because Vince Ghossoub, its Lebanese founder and chief executive, set up a Chinese company to address what he saw as an opportunity to provide high-quality Arabic content to game-lovers.

Another young international entrepreneur in China is Julia Zotter, whose eponymous family chocolate business in Bergl, Austria, offers a range of unconventional flavours, such as bacon bits, pink coconut and fish marshmallow, saffron and pistachios, among its more than 400 chocolate products.

In 2014, Ms Zotter, the eldest child of Zotter’s founder, Josef, led the family business’ foray into China and oversaw the establishment of the Zotter Chocolate Theatre in Shanghai, which allows Chinese customers who have not grown up with chocolate to taste the confectionery and create their own flavour combinations.

Mr Ghossoub and Ms Zotter are examples of a small but noticeable breed of international entrepreneurs who have made China their home. Mr Ghossoub moved to Shanghai to do an MBA at Ceibs (China Europe International Business School) almost a decade ago, while Ms Zotter spent time in China as a high school student and developed a fascination for the country. Both became proficient Chinese speakers and they are using their connections back home and the advantages offered by the Chinese economy to create value in unique ways.

Their stories represent a relatively unorthodox, but not untrodden, path for ambitious young people seeking a business education.

Here are my three tips for making it as an international entrepreneur in China.

First, find a soft landing. China — even Shanghai, its most expat-friendly city — can be intimidating. Entry into China is smoother if there is a bit of hand-holding at the start, whether that be studying at a globally oriented business school like Ceibs, taking a summer programme tailored to internationals or joining an accelerator emphasising cross-border opportunities. This period will provide first-hand insight into the local situation.

Second, build bridges. Even after spending some time in China, most international entrepreneurs I know have chosen not to go it alone. In some cases, co-ethnic ties help to identify a good local partner. Ms Zotter partnered with a business run by a fellow Austrian, along with an ex-colleague who was from Shanghai. In other cases, technical skills are the main consideration. Mr Ghossoub worked closely with a game development team in Hangzhou, which then became part of his new venture.

Third, select meaningful opportunities. As an international entrepreneur in China, you must be able to either tap a local advantage, such as gaming skills, for a market you know well, or bring to that market a unique offering, such as unconventional chocolate.

Being an international entrepreneur is not for the faint-hearted but it is potentially a very rewarding adventure. If you try it out and it does not work, at least you would have learnt something.

This column was first published by the Financial Times.

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