The following is an article we wrote for Shanghai’s Settling Magazine about our experiences launching ETP in China. It was published in October 2011 and covered three pages of their ‘City Business Focus’ section.

Into the Unknown – Finding Our Feet in Beijing

Starting a new business anywhere is tough. Having the idea and motivation to get started is a big step, but as anyone who has attempted it will tell you, it takes time, persistence, stress and often luck. Starting a small business in China takes something else entirely.

Settling Magazine - Into the Unknown - Page 1

Settling Magazine - Into the Unknown - Page 1

On Our Own

Coming from Ireland – though hardly a ‘nanny state’ – it’s fair to say I was coddled as I took my first steps into the world of business. Particularly during the boom years – before the Celtic Tiger became known as the Celtic Kitten – there were excellent tax incentives for small business owners and banks were ready and willing (perhaps overenthusiastically in hindsight) to offer loans to entrepreneurs. Today, fabulous organizations such as Enterprise Ireland still exist, helping young businesses network and develop trade and commerce.

I’m not sure what lessons learned in Ireland could have prepared me for trying to launch a business in Beijing. Certainly as a foreigner in this great city, there is no available support, no obvious guidelines and no clear information about setting up your business. You really have to dive in, head first and blindfolded, and figure out each problem as it hits you in the face.

Registering my business as a sole-trader back in Dublin in 2003 was a relatively painless experience. I visited two desks, one bank and within a couple of days I had a trading license, a VAT number and a checkbook with my company name on it. While setting up a limited company is a slightly more daunting task, there are still clear guidelines and steps to be taken. It’s paint by numbers.

Setting up a China WFOE (wholly foreign owned enterprise) with my business partner Dave White of Britain – another wonderful nanny state– was a grueling, nerve-wracking, arduous process that felt more like a 6-month game of poker than it did a calculated business decision. Like most start-ups we began humbly, with limited funds at our disposal. Aside from legal counsel for some of our setup issues, we did not have a glut of paid advisors at our beck and call. We had a blank canvas in front of us.

Guanxi

Trying to keep your finger on the pulse of the ever-changing rules of tax, accountancy, and government regulation as a foreigner is near impossible. Chasing that particular dragon required the application of “guanxi” (networking) and we were regularly forced to draw on the local knowledge of a decade worth of colleagues, friends and business associates to get the job done. And perhaps that is the point: one can’t just arrive fresh off the boat and set up a company in China. We had to keep reminding ourselves that if it were easy, everyone would do it.

Settling Magazine - Into the Unknown - Page 2

Settling Magazine - Into the Unknown - Page 2

Believing in the old adage “from the mess comes success”, the difficulties we faced when first doing business here became the corner stone of the business model for our sourcing and export business, Enter the Panda. We set ourselves the task of championing the needs of foreign SMEs looking to do business with China. Along the winding roads of Chinese trade, we encountered many casualties among small foreign businesses. Through learning about their problems and helping them fix them, we together grew.

We found so many similarities in the tales of woe from these small businesses who had attempted to ‘go it alone’. So many had to learn the hard way, as we once did, about the vast gulf in business practice, negotiation and ways of thinking that exists between the east and the west. One Chinese proverb touches on the danger of venturing into business with anyone of vastly disparate mindset and goals: “tong chuang yi meng”. In English “same bed, different dreams”.

Local Knowledge

There’s no quick fix for local knowledge. You can be told about ‘face’, research Chinese bartering techniques, or even read The Art of War by Sun Tzu. But honestly, three straight days shopping in Beijing’s Silk Market would probably be a better education. Levity aside, in our office we still regularly compare dealing with factories and suppliers with bartering for cheap clothing and pearls. The roots of Chinese business mentality run deep from the tycoon to the street vendor.

Certainly, there is a wealth of opportunity in Beijing, as I’m sure there is in other cities in China, for those with the golden combination of local knowledge and western business mentality. Any company that can offer legitimate, trusted support to SMEs as they take their first, tentative steps in the China market will very soon find itself with an abundance of very grateful, long-standing clientele. Though our focus is primarily on trade, there are many other areas where a reliable guide would prove useful in this city.

People tend to forget, though somewhat new to the world stage, Chinese business culture has been developing and evolving for centuries relatively undisturbed by the West. In a country where a “town” is half a million people, and where the capital city contains Ireland’s population four times over, it’s no surprise there is often a sense of every man, woman and child for themselves. This stems from a unique spirit in Chinese culture, that no matter how it plays out, who wins or loses, it is all “part of the game” of business. Survival of the fittest: Darwin would be proud.

Settling Magazine - Into the Unknown - Page 3

Settling Magazine - Into the Unknown - Page 3

Beijing

Beijing is a progressive city, but in many ways holds strong and proud to traditions. That being said, while there are certainly some cultural rules that are followed in business here, there are a lot more do’s than don’ts. What may be perceived as poor form or underhanded tactics to you or I, is often considered the logical and automatic maneuver by a local. This is to say that being the first or even being the best service available is not always what counts in China. Your “baby” will quickly find itself analyzed and copied a hundred times over if it is seen to be a profitable business model. The trick here is to adapt and grow, but what will mainly set you apart in the eyes of your customers will be you.

It is with that in mind and with that temperament that you have to approach business in this city. You need a thick skin if you want to survive, both financially and psychologically, on the battlefield of local commerce. An SME, start-up or freelancer is fresh meat. Whether you come out the other end lean or as scrap is entirely your own responsibility.

The upside of the difficulty in launching an SME here lies in the trials you face. It’s tough. But if you survive it, it in turn makes you and your business stronger. As for me, Dave and the Panda, we’re still here, growing and learning. Whether or not the lessons learned in this land over the past five years would prove valuable to me back in the arms of the ‘Irish Nanny’ remains to be seen, but would she even recognize me if I returned?

Enter the Panda Ltd. (tm)

By Shane O’Neill for Settling Magazine


For more information on Enter the Panda, please visit the website www.enterthepanda.com, or email, info@
enterthepanda.com

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