For those who want to learn about doing business in China, before jumping straight in it is quite important to take a step back and learn from the locals.
However, there is a lot of hype and advertising about doing business in China, and certainly if you search “do business in China” in Google, you might find some articles here and there, which you might sometimes you might find it a bit confusing, as you won’t know whether the information is up to date or accurate.
That is the reason I am conducting a Chinese entrepreneurs interview series; to report the truth and write an authentic story about Chinese entrepreneurs, and the difference between doing business in the East compared to the West.
The interview article will be written in both English and Chinese, so when either Westerners or the Chinese ask about my background, and the differences between East and West, I don’t need to explain all-over again, I can simply send them my blog to read through.
On 27th February, a Saturday morning right after I finished my breakfast, I had a 2 hour interview and chat with a Peter Lee, Co-founder and CEO of an organic food Internet start-up in China. I interviewed Peter via WeChat – It is a long chat, a good chat to get to know Peter for the first time. Hopefully later this year I will see him in person in Beijing again. The interview is conducted in Chinese, my mother language, and then later I will write the article in both English and Chinese. The English article will be published in the Red Digital China blog and my LinkedIn too, while the Chinese version will be published in my Chinese community site, WeChat account and Chinese WeChat groups. Hopefully, I can launch a book in the future with all the interviews I have conducted so far.
After my brief introduction, he said “The start-up and entrepreneurial spirit in China is strong, I think it is stronger than the West.” The Chinese government is encouraging people to make use of the Internet to innovate and be entrepreneurs.
Chinese start-up are popular among the young generation, the Gen X Y Z.
Chinese start-ups are popular amongst the younger generation, the Gen X Y Z.
He said “In Beijing’s Zhongguancun entrepreneurial street, you will see someone who is either an entrepreneur or an investor. The generation is changing, most of the Chinese graduates who I know want to start their own business, instead of helping or working for someone else.”
Here is a bit introduction of his business…
Here is a bit of an introduction to his business…
He and his 7 Chinese partners/shareholders started a Chinese organic food Internet start-up (Chinese brand name 果佳队) in May 2015, and the company is now employing 20 staff. He said his partners/shareholders are mostly his inner circles such as family, relatives, friends, ex-colleague etc, because they are the people that he can trust and can work for long-term.
Peter Lee, co-founder and CEO of 果佳队, an organic food start-up said “Starting your business is hard, you want to partner with a trustworthy, committed, like-minded person that you feel comfortable with, so that both of you can endure all the difficulties and challenging circumstances, no matter how difficult the situation will turn out in the future. It is like you are both feeling comfortable to reveal and express your emotions in a day to day and on-going basis.”
I found what he meant, and it is quite similar to the term brotherhood and emotional bonding in the West. As a native Chinese, it is not surprising to hear that most of the Chinese companies’ businesses are formed by family and people in their inner circles, people want to work with someone that they trust, this remains quite true nowadays as well, which might be a bit different from the West, especially the USA.
May you tell me more about your background?
“When I graduated in 2009, I was working as an engineer. In 2011, I quit my job, and then I joined my father’s shopping mall business. I helped my family business all the way to 2015. I worked all the way up from reception, sales manager, HR manager, director etc. As I want to transform the shopping mall business into a new Internet business model, the shareholders would not agree, so I quit the job and founded my own organic food Internet Start-up Company.”
What inspired you to start your business?
“In the USA, farmers are very rich, but in China, farmers are very poor. In China, there is a lack of industrialization, equipment support etc, since the farmers couldn’t afford to standardize and industrialize their production. So the farming business falls onto several business people.”
I would like to help the Chinese farmers to sell the products directly to consumers without the need of going through layers of people to grasp most of the profit. During my start-up journey, I met some people who inspired me to do better. When me and my business partners visited a farmer in the North East China, we found that the product is very good, but the family is very poor, and that inspired and motivated us to make the world a better place.”
What kind of challenges have you faced?
People – “Being a first-time entrepreneur who stepped into a new field that I had no experience of before. I had gone through the challenges and the whole journey of finding the right partners, identifying good staff etc.”
Direction– “The worst thing is not lacking money, but lacking direction. Lacking direction means no hope. Since we had no prior experience in running an organic food internet business, we faced many challenges and setbacks in finding the right direction of the business proposition etc. But luckily me and my partners went to Alibaba headquarters and received a lot of inspiration and help. After our visit to Alibaba, we decided we needed to do a proper branding for my organic food Internet start-up.
Management – When you manage two to three people, communication is easier. But when it comes to 20-30 people, some issues will occur. When I worked in my family shopping mall business, the management style we used was very traditional with top down hierarchy. When I founded my Internet start-up in China, we tried to use a different management approach, but in the end I found that the traditional management style worked well.
Government – In China, mastering a balanced relationship with the government is very important, especially in our industry.
Finance – Initially, we didn’t know why we need to finance because we have partners and partners contributed money into the business. But later we found that our competitors had raised funding and made rapid expansions, so we found that it was not just the money that was important, but the connection to people, resources, influences, advice, knowledge in the industry etc.
Quality control –Since we are not doing the production of the organic food, it is important to have good quality control.
Price control –Since we are not in charge of the production, it is difficult to control the pricing for products.
And what you have done to overcome the obstacles?
“Being an entrepreneur, I needed to adapt to the ever-changing world and get familiar with the industry that I had no prior experience in at all. So being a quick, good and independent learner is very important, so I read a lot of books to seek answers. I also found talking to other entrepreneurs helped a lot as well.”
Our competitors get the support from venture capitalists and get rapid expansion. Since VC behind can help co-founders to utilize relationships and resources to expand the business. First, the funding company will see if the co-founder is trustworthy, to see if there is a market, and they will see if other people will also invest as well.
For Marketing, we rely on Chinese social media and community a lot, together with Chinese search engine optimization and Chinese video marketing. We found that using Chinese social media and community works well for us.
At the end of 2015, I have three 3 financial institutions, two of them wanted to invest. We are looking for business models, agricultural resources, finance, personal relationships etc.
How do you relieve stress?
I play basketball, and read books.
What advice would you give to those who want to start their business?
- Don’t blindingly quit your job and start a business that you don’t know if you don’t have some basic foundations. Being an entrepreneur and CEO is not easy at all.
- Don’t give up once you have started your business.
- Choosing the right partners is extremely important – I suggest finding partners from your inner circles such as family, friends etc.
- Find the right business direction – It is important to stop dreaming and find the right way to position your business. Be practical, execution is very important.
- Find the right VCs –It is important to know when it is the right time for more investment that’s not only simply raise funding, but also getting the connections and knowledge that the investor has.
- Keep finding the right people – In terms of finding partners, it is important to measure how much the person has given up to join your company, it is either that he had made commitment in investment or the person has given up his stable high-paid job with a big company. I found that the person who had made little sacrifices couldn’t sustain very long in an early start-up process since there is no income yet. In terms of finding the right staff, I think for early start-up, it is important to look for skilful people to get things done. For a big company, it is fine to hire by character and cultural fit since big companies have the time and money to wait and train the person.
- Division of labour – Division of labour is important for start-up businesses, it is very important to assign tasks by ability and interest. What works for us is that we will divide the group with 3 people, the leader tends to be older, followed by one male and one female who are younger.
- This is a mixture of an interview and a good chat, and it is great to get to know like-minded people like Peter.
To learn more about Peter Peter, co-founder and CEO of an organic food Internet start-up in China, visit http://www.txhnys.com/en/
This is a deep and very thorough article that can help you to understand the difference between doing business in China compared to the West, the management style is different, the marketing is different obviously, and the company focuses a lot of using Chinese social media/community, plus Baidu optimization to reach out to Chinese consumers.
What are your thoughts after reading this article? Please leave us comments.
Over the past eight years, Sarah has led and executed successful digital campaigns for a range of international and local companies in China, Hong Kong and internationally, including: Hong Kong Ocean Park, agnes b, Volkswagen, Premium Tax Free – Watches of Switzerland and Damiani. She has worked with property, travel and hospitality, luxury and fashion clients. As a native Chinese speaker fluent in Mandarin, Cantonese and English, Sarah is also a popular Chinese lifestyle, fashion and travel blogger.
During the day, she was working for Red Digital China, during the night, she expands her interest in creating story-telling content, design, drawing etc.