My friend asked me a question:
It is stupid to ignore China market for any startup. What is your suggest for startups to enter China market?
My quick answer is: Don’t.
My alternative suggestion is, enter China market by putting your headquarter in China.
I have many successful entrepreneur friends in the Silicon Valley, who don’t have China presence yet (and I suggested them not to do it), and I also know some great American in Shanghai who have amazing business in China. In contrary, I also know many of my local friends who were laid off after working for the Shanghai branch offices for startups in US, or Europe.
Why is that?
Startups are constrained by resources. With resources, I mean in terms of people and money. It is NOT constrained by market size. Either US or China is big enough, way to big for a startup to explore. Concentrate in one market, and setup the model before expansion.
The more important question to ask is, whether you want to start up the company in US, or in China.
Jianshuo, not sure I understand this post. Or if I do, maybe I don’t agree.
1. Agree – startups can’t attack both the US and China market. They have to pick 1 and stick with it
2. Don’t understand – what is “headquarter?” If you mean that a US startup can set up HQ in China and be successful in the US, I definitely disagree for consumer-facing internet businesses. Maybe if you are manufacturing something in China (e.g. clothing, solar panels, telecom equipment) that might make sense.
Companies focusing on the Chinese market should be based in China. Companies focusing on the US market should be based in the US. Only exception is when the company’s supply is based in China, and the customers are based in US/Europe. Setting up HQ near the source of supply can make sense, especially if it is a competitive advantage to control (or better manage) that source.
That’s my opinion.
Elliottng, by saying “Enter China by setting up HQ in China”, I mean that is the only way for a startup to enter China, which means only focus on China market, not US. Of cause it is hard to succeed with HQ in China doing US business.
Elliottng, by saying “Enter China by setting up HQ in China”, I mean that is the only way for a startup to enter China, which means only focus on China market, not US. Of cause it is hard to succeed with HQ in China doing US business
OK, then I guess I agree wholeheartedly with your post!
Either China or US, not both.
Totally. The startup company needs to earn its way to stabilize one place at a time.