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Where Should You Base Your Startup In China? Five Expat Entrepreneurs Weigh In
China can be a great place to do business. But setting up shop in the world’s largest consumer tech market can be a lot more difficult than it sounds.
From the southern manufacturing cities of Shenzhen and Guangzhou, to the finance hub of Shanghai and the culture capital of Beijing, there are many great cities in China, each with a unique offering. However with great cities comes great rivalries, and it’s no different in the world of entrepreneurship where startup founders vie to build a solid base of operations.
While Beijing has previously been dubbed the centre of startup culture in China, new waves of investment have seen semi-gentrified southern cities develop burgeoning innovation hubs closer to manufacturers. At the same time, Shanghai’s foreigner-friendly atmosphere has made it an attractive proposition for the growing number of startups doing market entry. We asked five entrepreneurs to share their experiences in China’s various startup hubs.
Matt Conger of SeekPanda
“Beijing Welcomes You” is a go-to karaoke song for most foreigners in China. When it comes to foreign entrepreneurs, I’d say this song’s title is 70% accurate.
We founded SeekPanda, an O2O network of on-demand translators and interpreters, in Beijing because the city naturally attracts both sides of our network: business travelers and high-end language professionals. We evaluate our “pandas” with in-person meetings. No other city can match Beijing as a magnet for the talent we recruit.
Beijing has a startup culture resembling Silicon Valley, with Garage Cafe acting as the type of nexus for VCs, entrepreneurs, developers in the same way that Coupa Cafe does in Palo Alto.
There’s also a very high concentration of VCs, and an incredibly high concentration of universities. On top of this, several government-run programs supporting foreign and domestic entrepreneurs are based in the capital.
Beijing as a startup hub is somewhat inefficient. The community is split, not by the traditional English / Chinese language barrier, but by distance. Zhongguancun and the East Third Ring Road are two centers of gravity for startups that are quite far apart.
A rule of thumb, B2C startups should be in Zhongguancun, and B2B along the East Third Ring Road. Here’s hoping new co-working spaces like the Manning space in Liangmaqiao help overcome this gap and can make “Beijing Welcomes You” 100% accurate.
Guan Wang of Amanda
Guan Wang, the co-founder and CEO of Amanda was born in China but moved to Sweden at the age of 10. In 2011 he went back to his roots in China, and settled down in Shanghai.
“As China transforms itself into a leader in the global economy at such a rapid pace, I saw the opportunity to create a platform where people from around the world can learn Chinese and get plugged in to the dynamic, complex, and modern culture in China today.”
“As an important mark of the first step of our journey, we recently released the first version of the Amanda app on iOS, and have received quite a lot positive user feedback. The app lets users learn Mandarin through trending stories in Chinese social media.”
“Our product targets a global audience, and Shanghai is an international hub where you can find target users, foreign talents, and potential partners across all industries. We are also located very close to universities, which makes it convenient to recruit fresh grads.”
Shanghai is a very charming and livable city, definitely the most western style offering on the mainland. This means attracting foreign talent is comparatively easy.
As far as the mainland goes, Shanghai has the highest cost of living in China, including both residential and office space. While the city’s foreign focus is attractive, the industry is still very focused on finance and retail, not tech
Mike Michelini of Unchained Apps
“My name is Michael Michelini is the VP of Business Development at Unchained Apps Ltd. They have produced a series of mobile apps, including Chinese learning (WCC Dictionary), to task management (TaskLabels) and social media (Social Agent).”
“We chose Shenzhen as we are right on the Hong Kong – Shenzhen border, some of our team is based in Hong Kong, while others are in Shenzhen. We get to maximize both sides of the border with access to China’s large talent pool as well as the network of business development contacts in Hong Kong.”
As a manufacturing city undergoing rapid gentrification, Shenzhen still has a relatively low cost of operations and living for the time being. The big draw of Shenzhen is its dual proximity to manufacturing hubs, consumer electronics markets and factories as well as Hong Kong, a hotspot for innovation. There are also lots of young entrepreneurs, both Chinese and Western, not to mention warm weather.
While the city is still developing, costs are rapidly rising. There is also enormous competition for developers in the region, with giants like Tencent and Lenovo scrabbling to grab them up as quickly as they can.
Matt Vegh of Cloud Time
Matt Vegh is the quintessential old China hand, but more specifically, ‘the’ old Chengdu hand, which no one else gets to say. Fifteen years of boots on the ground in China’s most dynamic interior city will confirm that.
Everyone from Chengdu city governmental agencies, multiple municipalities and the provincial governments rely on Matt to help create strategic framework models across the full spectrum of the industry. He also penned the 12 step Eden report; an internal white paper for the internationalization of Chengdu, all of which has been implemented.
His startup CloudTime is a stealth-mode global messaging platform, streaming video, gaming and multi-language, real-time, in-stream chat message translation in over 90 bi-directional language pairs. It is now utilizing patent pending micro-chip based technology that will change the mobile advertising world and propel the company on its way to being the very foundation of the IoT on a global scale.
“The essence of Chengdu is ‘confluence.’ The city blends so many important factors together and does it so well, that it is hard to imagine a more suitable location for an entrepreneur. Urban and rural integration, tradition with modernity, business with leisure, industry with the environment and the list goes on.”
“Blend these things with centers of excellence in education, with UESTC, SWUFE and Sichuan University, among others, churning out a highly educated supply of recruits, especially in the IT sector, to fill what is – as far as I am concerned – the most ambitious, well-laid-out, and business-friendly technology zone in China. Finally, add to that, Chengdu and Sichuan as the center of the arts, both historically and in modern times.”
Chengdu boasts excellent transportation systems and infrastructure, with both public and private auto use very convenient. The living is much more affordable than eastern centers, resulting in lower HR costs without sacrificing any quality. The lifestyle is also very well developed in the inland city, including unsurpassed natural scenic areas within an hour’s drive.
Despite being a very large city with a well developed manufacturing and distribution presence, Chengdu suffers from its general ‘under-the-radar’ perception, and can present a steep learning curve for foreign investors unfamiliar with the city. Chengdu also has a lack of established tech savvy regional equity pools. In terms of lifestyle, the only big downside in the humidity and gloomy weather given that the city is surrounded by mountains.
Nick Ramil of Enter China
Nick Ramil is the co-founder of Enter China. Enter China is the leading community for entrepreneurs who want to manufacture products in China. We help entrepreneurs around the globe develop, validate, create and launch their products.
“We chose Guangzhou as it’s the capital and epicenter of the manufacturing province – Guangdong. Guangzhou is the center of global trade in China, and hosts the largest trade fairs and the immediate access to manufacturers is unbeatable.”
As both a manufacturing city and a trade and commerce hub, Guangzhou is a very attractive option for startups looking to enter China. Like Shenzhen it has an advantageous proximity to Hong Kong, as well as a burgeoning expat community focussed on trade.
Unlike Shanghai and Beijing, Guangzhou is not a Mandarin focussed city, with most people talking in cantonese, this poses some barriers. The pollution and extreme weather also make it a bit less attractive for long-term residence.
Author Bio: Michael Park is the CEO and cofounder of LipSync, an on-demand translation startup based in Hong Kong.