Bootstrapping a Career in China

The aspiration, frustration, and future of an entrepreneur in the People’s Republic.


Photography by Erin Sanders

It is a bright autumn morning in Shanghai, but Kevin Cang hasn’t yet noticed. The 27-year-old entrepreneur is merely following the overwhelming rush-hour flow of commuters. Cang quickens his step as he enters the subway station for Line 1, the city’s first and the busiest route, and, ignoring the newspaper giveaway that’s attracted a small crowd on the platform, he pulls out his mobile phone. As he boards the train, he updates his agenda using My Life Organized, a handy application that helps him remember tasks in lieu of a real assistant. Unlike other passengers, who mindlessly watch the in-train commercials or read newspapers or play PSP, Cang gazes at his to-do list and frowns a little, realizing that he has seven clients to contact and a deal to close in the next eight hours. He tunes out all of the chattering and page flipping — in fact, the overpopulated train car appears completely still — until he arrives at his destination, puts away his mobile phone, steps off the train, and returns to the constrained chaos of Shanghai’s streets.

Cang graduated from a top university in China four years ago. After working three months for PricewaterhouseCoopers, he left to start Looker, a career training and consulting services company, with several partners his own age. Over the past three years, Cang has received funding from an angel investor, argued with partners who subsequently quit, shifted his product portfolio, and merged with another, similar small business. He and the founder of that business are now partners and the only full-time employees of their company, which pulls in 1 million RMB (about US$150,000) in annual revenue — and a profit.

Cang isn’t unique. After seeing big-name multinational companies downsize significantly, one after another, young professionals are realizing that the “Iron Rice Bowl” has disappeared since China opened its doors to the West in the 1980s. Then the economic tsunami of 2008 made the nation’s economy even shakier. Recent college grads are asking, “Why should we work so hard, day in and day out, to pursue non-existent job security? If we have to gamble on success, why not spend our precious youth doing something that we can control and that has a chance to grow into a lifetime business?” Good questions. Their answer, increasingly, is to start their own businesses.

The government is providing more and more entrepreneurial opportunities to the six million students who graduate from college in China every year, partly to ease employment tension across the nation. In 2005, Shanghai city officials set up a special fund for technology projects initiated by local university students. Four years later, in early 2009, China’s central government announced a preferential policy that allows graduates to register a company with ”zero” capital up front; whatever money they pledged to fund their start-up may be paid within two years after the company is established. Passionate youngsters applaud the new policy and have shown great zeal of taking advantage of the opportunity. In the past year, Hangzhou, the capital city of Zhejiang province, reported 1,075 university graduate-launched companies, including 81 zero-capital start-ups, as the first generation of grassroots entrepreneurs began their quests for prosperity.

A Game of Resources

Some Chinese entrepreneurs prefer to use their own investment capital to get their operations off the ground. “It’s a game of resources,” Cang explains. “Investors own the money, but we entrepreneurs make real-life decisions. It works well if both parties are on the same track; otherwise, the conflict can go wild.” Cang, who had an unpleasant experience dealing with several initial investors in the early phase of his start-up, eventually bought all of his company’s shares back. “We’ve already passed the break-even point. The business model I’ve built up in the past two years can provide us a healthy cash flow. I neither need nor want an investor at this time.”

In addition to college grads, a group known as the “Rich Second Generation,” has emerged. These 20-something professionals are either children of high-level government officials with strong local connections, or kids born to wealthy first-generation entrepreneurs. Their deep pockets generally make them less concerned about finding initial investments and evaluating risks than others — and more focused on experimenting with ideas that interest them. Money, of course, isn’t the only resource that entrepreneurs need. Customers, partners, and social networks can help take a business to the next level and give it a competitive edge. In China, people tend to rely mostly on their personal networks to reach out for help. This explains why a few entrepreneurs say they’d rather wait to start businesses until they’re in their 30s and 40s, after they’ve accumulated contacts and experience. Younger people seem willing to take greater risks.

Beyond connections, entrepreneurs need exposure. The mass media have become a popular vehicle for grabbing the attention of powerful decision-makers and exposing work to a broader audience. Inspired by the popular U.S. reality show The Apprentice, many Chinese TV stations have set up various stages on which entrepreneurs can shine. The first was the popular and controversial Winner (2007), from Dragon TV in Shanghai. A dozen contestants had to pass rounds of business challenges in random team format before one person seized the final 1 million RMB (US$150,000). Although the show was criticized for not being very realistic, soon after it aired more business-focused programs appeared.

Young entrepreneurs now actively turn to these programs to evangelize their ideas in the public eye. For example, Win in China, hosted by the influential, state-run television channel CCTV, has achieved popularity among entrepreneurs and audiences alike, because every participant has an equal chance to hear business leaders’ advice and present his or her project to heavy-weight judges, such as Ma Yun, CEO of China’s biggest consumer-to-consumer Web site, Taobao.com, and the B2B trade portal, Alibaba.com.

Meanwhile, Dr. Kaifu Lee, a technology veteran who transformed Google from a wacky foreign word into a familiar name among Chinese Internet users, in September 2009 made an unexpected announcement that he had left Google China to launch an idea incubator called Innovation Works. The new company, according to its official Web site, is “a business creation platform focused on establishing the next wave of Chinese high-technology companies,” rather than a venture capital firm. However, Innovation Works is supported by more than US$100 million from an elite team of investors, including Legend Holdings and Steve Chen, co-founder of YouTube. Dr. Lee’s decision — and his timing — provided instant fuel for China’s entrepreneurial fire.

The Digital Generation

Technology does seem, after all, to be the future. Although the success of early pioneers in the late 20th century undoubtedly influences current dream chasers in China, times have changed. Tools have changed. Opportunity has drifted away from raw materials and manufacturing — and toward the digital world.

The majority of today’s Chinese entrepreneurs grew up in the Internet boom as well-educated only children. Computers and the Web, not to mention mobile devices (from touch-screen handsets to lightweight netbooks), are second nature to them. A friend of mine who runs a family business of ceramic bathroom products recently switched to HTC Hero, a touch-based Android phone, for the ease of using embedded Google services on-the-go. Likewise, Cang uses his mobile phone daily to check email and keep up with his contacts.

Besides being familiar with all kinds of new gadgets, this generation of entrepreneurs has a natural curiosity about software and online services. They were raised in an era of Internet heroes. They want the latest scoop from that magical Silicon Valley across the Pacific Ocean. To them, life is digital, from information search to bank transactions, whereas the older generation still holds doubt about the universality and security of the Matrix-ed world.

Thanks to technology, these young entrepreneurs put convenience, time-efficiency, and productivity before routines and procedures. Taobao.com is the best example of this. The Web site provides a trade portal for individual sellers and buyers. More and more consumers, especially those between the ages of 20 and 40, are shunning brick-and-mortar stores and spending in cyberspace as the variety of products available increases. This big trend supports thousands of Taobao shops, most of which have no physical retail presence.

Interestingly, many Taobao shop owners run the business virtually from start to end: They purchase inventory from manufacturers or wholesalers via an online B2B trade platform and miscellaneous packaging materials from another Taobao seller; they open virtual stores on Taobao and talk to potential buyers via Taobao messenger; when a deal is made, they receive money instantaneously via online banking systems and send out the order via a third-party delivery company. These shop owners are most concerned about the virtual store display and how to make their products pop out quickly as buyers browse the site to compare goods and services. In the first half of 2009, the trade revenue on Taobao amounted to 80.9 billion RMB (US$11.5 billion), and the population of its registered users reached 145 million.

Emerging Behaviors

The behaviors of Chinese entrepreneurs are changing not only around new devices and e-commerce, but also around the concept of collaboration. Cang relies heavily on the Web-based tools offered by Zoho.com. “I benefit a lot from online real-time collaboration,” he says. “We are a two-person company, but we have a broader network of student agents across various universities in Shanghai. With the multiuser online document application, we can work simultaneously with our agents on project plans and customer reports. It’s very efficient and flexible.”

This new generation of entrepreneurs is savvy about leveraging the Internet to market their ideas as well. As users of popular social networks themselves, young entrepreneurs intuitively make best use of these online communities. While large, well-known consumer brands have just started to spend big money on research and planning in the social media arena, many small business owners have actively grown their exposure in the white-hot space. In the case of Cang, he has his company page on Xiaonei, a China-version of Facebook, and has been messaging the activity updates on Fanfou, a China-version of Twitter, for almost two years. Additionally, as cloud computing services offered by Alibaba and others step into a mature and reliable business model, more remote collaboration and Web-based businesses will emerge rapidly in a digitalized China.

Work is Life, Life is Work

Amid all of these 21st-century trends, Chinese entrepreneurs share one key trait with their predecessors: a penchant for hard work. No matter how many resources and tools a Chinese entrepreneur has, to become very successful, he or she usually has to go through an intense period of struggling to figure out the right business model and build a sustainable organization. To achieve that — and even after achieving that — an entrepreneur rarely stops to relax. Instead, he or she goes for the next goal.

Cang’s daily schedule awed me. He gets up before 8 a.m. and works until after 9 p.m. Once he’s home, he usually spends another hour on miscellaneous work, such as making PowerPoint presentations, because his office hours are too precious to spend creating slide shows. He says he needs to put the time when his customers are in “active mode” to better use. In Cang’s calendar, there are seven Mondays in a week. Since he works for himself, he doesn’t care to make Saturday more self-entertaining than any other day. He enjoys every workday; if he has any personal things to deal with, he usually doesn’t wait for nights or weekends. To Cang, life is flexible, and he’s in total control of it.

Entrepreneurs exhibit different attributes through the phases of their start-up businesses. At the onset, they tend to devote everything to their big ideas, ambitiously and energetically. As the business gets on track and enters the development phase, entrepreneurs usually need to turn to solving upcoming problems, based on their experiences. Once they’ve succeeded, veterans take on the high-level responsibility of growing the business strategically and mentoring new talent.

Cang categorizes Chinese entrepreneurs into two types. One is the adventurer who moves fast and likes taking risks. This kind of entrepreneur is good at taking action but not great at sticking to one idea. The other type is the workaholic who has great breadth yet little depth in his or her skill sets. He or she is likely to know several industries and be able to work on different functions, but is hardly an expert on anything. The common ground between the two is a strong belief in their ideas. Perseverance can make an average idea excel, but giving up halfway never makes a good idea happen.

Eyeing the fortune and glory ahead, an entrepreneur must shoulder the lifetime responsibilities and be aware of risks throughout the journey. In the context of China’s rising entrepreneurs, I want to adapt the words of Spiderman as, “With great economic power comes great responsibility.”

Emma Zhu is a strategist at frog design’s Shanghai studio.
www.frogdesign.com

Work – Life

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