

Chinese Startups: How they differ from US - ulugbek
http://venturebeat.com/2010/04/27/5-insights-about-chinese-startups-from-former-google-china-president-kai-fu-lee/

======
rgrieselhuber
Nice to see someone addressing the problem of early stage companies in China.
As I was reading through the differences in China vs. the US, I was struck by
the similarities to Japan as well. People are much more risk-adverse here and
having a startup, to put it mildly, is not usually a source of pride, at least
until you have serious funding. This also makes it difficult for B2B startups
to gain traction.

A friend of mine told me that Japanese companies look for the following in
vendors: 1. have they IPO'd? if not then, are they 2. funded by a big VC? and,
failing that, have they at least 3. won some award?

It all comes back to a lack of desire to reward innovation despite its obvious
risks and wanting to play it safe by requiring external validation.

This can be good, in a way, because it forces entrepreneurs who still decide
to operate in this environment figure out the needs of what we in the US would
call the "late-majority" on the technology adoption curve (which is also
usually about half of the largest part of any given addressable market).

I'm guessing (though only guessing) that some of these things are also true in
China. Perhaps it's very different in B2C.

~~~
ulugbek
I am not familiar with B2B, but I had the impression that the B2C companies in
the area of technology and manufacturing have been mostly founded by high-net
worth individuals, and scalability has been a function of enlisting the help
of provincial leaders and state-owned banks.

------
DrewHintz
> It’s like Y Combinator

....

> a $115 million fund in order to create five successful Chinese startups a
> year

The funding levels imply it is less like YC and more like a standard VC. With
those numbers -- even assuming 50% overhead, and five years of five startups
each -- that's over $2 million per startup. YC starts at $17k to $20k per
startup.

~~~
megaduck
$2 million is an _astounding_ amount of money in China. You can get engineers
for $10-15K a year, and designers, sales, and marketing people for a lot less.
Equipment can be a little more expensive than the U.S., but office space is
dramatically cheaper, as is virtually everything else.

I imagine that the high level of funding is to impress the hell out of
potential partners and new recruits. For a variety of reasons, many people in
China will shy away from a new and risky business. In order to get employees
and partners on board, you need to give the impression that you are large, in
charge, and not going anywhere.

~~~
gommm
The problem is that from my experience trying to hire here, it's extremely
difficult to find good engineers.... Cheap engineers are dime a dozen, but
quite a few I've interviewed can't even do the fizzbuzz test.

And of those that could most were needed a lot of hand holding to do any basic
tasks (and some of those were people with 3 years experience, I can't imagine
how they could have provided any value to the company they were working for)

------
sushi
I'd like to say that all these points are valid for India as well particularly
the 3rd point about Failure not being an option. I started an ecommerce
startup (bad decision) with a friend of mine (again bad decision) whose
parents were keep pressuring him to pursue "MBA" instead of doing business.
Parents in these societies have lot of say in the future of their children and
thus are very apprehensive about risky career options.

------
arihant
Venture Beat should try visiting the links they publish in their articles.

Kai-Fu Lee's Innovation Works is www.innovation-works.com not
www.innovationworks.org

