

The China Startup Report - iag
http://slidesha.re/ucUsGq

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trevelyan
An absolutely fantastic presentation, although some of the pages aren't
loading for me. As a non-Chinese startup guy who has lived in China for about
a decade, my only quibbles with the stuff that loaded:

(1) As much as I love Beijing, Shanghai is better for startups that are in
branding or sourcing. Shanghai has a more established local angel and VC
network too, but the investment community is not very sophisticated, and even
with revenues you won't get a decent valuation. Investors feed copycats
because they are cheap to build and the business model is taking them public.

(2) It is not worth raising money in China.

(3) There is no culture of acquisitions and once companies establish a decent
business model, the Chinese government usually intervenes in some regulatory
fashion. This tilts the field in favor of larger companies and organizations
like Baidu or Tencent or Sina, who tend to build-their-own as opposed to
partnering.

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iag
trevelyan - These are some great insights. I'd love to hear more from you. Can
you think of anything else to share with us about China?

~~~
trevelyan
There are a decent number of startup and tech people on HN from China these
days, so I'm not sure I can say anything anyone else can't. If you have any
specific questions or are passing through Beijing feel free to get in touch
though -- contact info is in profile and it's always good to meet HN people
out here. :)

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jhancock
Nailed it!

Here's a few opinions on startups in China from more than 10 years here:

* Its too difficult to raise capital on something that has no IPO potential, so don't try it in Beijing or Shanghai unless your swinging for the fences. If your not, go to a second tier city. I've recently moved to Chengdu to try my hand at a "smaller" city. I'm living next door to TianFu Software Park. If anyone wants to collaborate in Chengdu, get in touch (see my profile).

* Live in China long enough to develop strong bonds with local Chinese you want to be in business with. I would not attempt a startup in China without either a) very deep pockets or b) a local Chinese partner I trust. I'm married to my partner. As most founders will tell you, your co-founder relationship is like a marriage so choose wisely.

* Company structure - Its very complicated and expensive if you start your corp structure outside of China and eat your way inside. If you have a solid local partner, most of these problems go away. You can form a Chinese company, usually with favorable tax incentives, that you directly own no shares in but has a contract for shares and revenue with your desired non-Chinese entity. This may set off alarms for some as a good way to get ripped off down the line, but there are so many ways to get ripped off, this one isn't worth dwelling on...so choose your co-founders carefully.

* Employees - The cultural barrier is high on this one. I'm hoping that by casting a wider net and treating more of my "employees" as "partners", I may have a fighting chance. A key reason employees don't trust stock options is they have zero friends that have been favorable rewarded with them. Most get ripped off. The best way to show your going to share the wealth is to actually do it! My current plan is to have several small projects, some of them immediate revenue generating, and include a core group as partners in all of them so there's a safety net when one project doesn't pan out. We'll see. Its a new adventure.

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iag
Best of luck jhancock! Thanks for the awesome inputs.

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charlesju
Great slides! China is such an interesting opportunity because of how quickly
the landscape is shifting there. The growth rates are astronomical. I
definitely feel that startups in Silicon Valley, and the west in general, are
too narrow-minded. We should be thinking about how we can build global
companies, not companies just for our immediate neighbors.

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mikeleeorg
I find it fascinating that web UI design for the Chinese market appears so
"cluttered" by SV preferences. I've heard multiple times that usability
testing has found this style more effective than the SV style of emphasizing
white space.

Does anyone happen to have any such usability test results they'd be willing
to share? I don't dispute the results at all; I'm just curious about checking
them out. I have a feeling it's more than just "more content on the page is
better for usability," and would love to understand better.

~~~
westiseast
I wouldn't be surprised if this was a genuine East/West difference rather than
A is better than B type situation.

It's hard to explain - there's a Chinese phrase called 're nao' which
literally means 'hot and noisy', but means 'fun' or 'enjoyable'. In the UK we
might value focus, calmness, and purpose on a webpage, whereas lots of Chinese
webpages seem to be designed for this 'hot and noisy' idea of fun. I think the
aesthetic sense here for the majority of people is significantly different
from our own in general, so I don't see why this might be different on the
web.

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lambtron
thanks for the great insights into the chinese entrepreneur landscape.

i am definitely interested in learning more about the details when and how the
government becomes involved in the startup process. the reasons why companies
like google and facebook have been denied entry to china (and why the chinese
government supports its own versions, baidu and renren) are attributed to the
fact that china does not want a US company to have access to the immense trove
of data about its citizens (though other countries are ok with that). it is
interesting to speculate how the internet and mobile startup culture in china
will evolve as the rest of the world continues to innovate also.

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tstyle
I've been working on a startup in Beijing for the past year, and this is a
very accurate account of how things work around here.

What's fascinating to me is that despite all the differences, the type of
entrepreneur that tend to succeed in China is roughly the same as anywhere
else:

"it takes months to incorporate a company, setup VIE structures..." - Yes it's
a huge pain in the ass. But real entrepreneurs don't let this stop them. They
ask around, get advice, and figure out how get it done anyway.

"awesome 3rd developer services are not available..." - True, but they are
also not available to competitors. The good teams figure out what they need
most and build it in house. The lack of these services is actually good for
you, if you have the best developers.

"It's hard for foreign entrepreneurs to fit in and get trust..." The author of
the slides is a "foreigner", but still met up with tons of
entrepreneurs(including myself :) and investors on a relatively short trip,
simply because he is a fun and interesting person.

To succeed in China, you gotta be relentlessly resourceful, good at building
things, and charismatic. Not so different after all, right? : )

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wensheng
There's an error in slide 7, where it lists "other names to know": the Yelp
equivalent in china is dianping.com, not diandian (a tumblr clone). Unlike
others on the list, dianpian is not a copycat, it's started a year earlier
than Yelp.

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iag
Ah... that's a good catch wensheng, I had the two mixed up. I'll correct this
later tonight. Thanks!

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brehardin
From these slides, it looks like there is even more of gap between China's 99%
and 1% than the US.

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PakG1
It's true, and there's always a lot of outrage over the matter on the net.

Here's a funny post about that stuff. :)
[http://www.ministryoftofu.com/2011/09/daughter-of-chinese-
of...](http://www.ministryoftofu.com/2011/09/daughter-of-chinese-official-
bent-on-proving-her-designer-handbags-are-knock-off-to-quash-public-rage/)

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erictyliaw
Great slides!

I wonder what city has 5 Lamborghini sightings per week...

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westiseast
I'm pretty sure in Fuzhou it's just the 1 guy, he just drives around ALL THE
TIME!! To be fair, if I was the only guy with a electric green car that goes
200mph and sounds like thunder.....I'd do the same

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wanalan
great stuff! very accurate account of what's happening here in China :)

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edge17
very interesting to see the sharp contrasts in investing strategies.

