entrepreneurship in china · 2021. 1. 8. · entrepreneurship in the international community nu...
TRANSCRIPT
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Entrepreneurship in China:
Stimulus for Discussion
Jim Cook
Globatech Inc.
Sponsored by : The Kauffman Foundation
http://www.kauffman.org/
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Entrepreneurship in the International CommunityNU School of Technological Entrepreneurship
Slide 2 of 14November 19, 2008
Can America Do Better?
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Entrepreneurship in the International CommunityNU School of Technological Entrepreneurship
Slide 3 of 14November 19, 2008
Contents
➢Qualifying for the China Challenge
➢Chinese Society/Culture Basics
➢China’s “Chinese Characteristics”
➢Meet the People, Generation by Generation
➢Opportunity Segmentation of China
➢Sourcing/Selling Opportunity Templates
➢ “On the Ground Nitty-Gritty” Tips
➢OK, let’s open up China (to discussion)!
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Entrepreneurship in the International CommunityNU School of Technological Entrepreneurship
Slide 4 of 14November 19, 2008
Yes, America can do Better!
➢ How’s our chances (as Americans) in China?
Decision must come from deep inside you, not infatuation
Get a native partner who has bonded to you and your goals
Understand, respect , and exploit the cultural differences
Be ready to substitute “trust” for contracts and recourse
Use “Chinese Characteristics” to build competitive advantage
Flow with the government policies and serve ignored markets
Be prepared for setbacks, delays, and disappointments
➢ Getting Started
Sourcing or selling, you must understand your market
Acquaint yourself with the legal/administrative landscape
Raise value adding investment capital, not just cash
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Entrepreneurship in the International CommunityNU School of Technological Entrepreneurship
Slide 5 of 14November 19, 2008
Chinese Society/Culture Basics
➢ Every Chinese difference has an implicit advantage potential
➢ It’s an empirical, not theoretical, society (toss aside tedious projections)
➢ Politics trumps economics, so read policy signals and shifts
➢ Social instability will not be tolerated at any price (e.g., 1989)
➢ Business is relationship activated, not contract activated
➢ Communication is not what it seems, it’s richer than that
➢ If you’re not an “insider,” what you receive is show
➢ Image is important; Face is crucial; Ignoring this is fatal
➢ Generational differences are marked with opportunity indicators
➢ Your intellectual property (IP) is only as safe as you make it
➢ The regulatory environment has its own “Chinese Characteristics”
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Entrepreneurship in the International CommunityNU School of Technological Entrepreneurship
Slide 6 of 14November 19, 2008
“Chinese Characteristics”
➢ Central policies pick favorites; currently it’s the Emerging West (and “green”)
➢ Land, buildings, capital, accommodation, and taxes are cheap for policy favorites
➢ State Owned Enterprises (SOEs) are a 1/3 of GDP (and all have a “Party Secretary”)
➢ Infrastructure (e.g., power, plastics, steel) is world class and usually economical
➢ Technological universities are a hub of connections and can be used as such
➢ Today, there’s a surplus of college graduates; China isn’t yet a Symbol Economy
➢ China doubled Japan’s economic miracle and could land a family on Mars first
➢ Returning Chinese (who have succeeded in the West) are welcome (“turtles”)
➢ Chinese institutions and SOEs don’t find, direct, nor motivate talent well
➢ Productivity figures are sometimes shockingly low, often despite very hard workers
➢ Trust through “guanxi” does the work of contracts, credibility, and character
➢ Chinese save over 30% of their gross salary and have large reserves as a result
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Entrepreneurship in the International CommunityNU School of Technological Entrepreneurship
Slide 7 of 14November 19, 2008
Generational Demographics
DOB Age Defining Event Consequence + Characteristics - Characteristic
1948- 60
50
Cultural
Revolution
No/low university
education
Ethical, pragmatic Unsophisticated
1959- 49
39
Open Door
Policy
Experienced
struggle
Tough, hard
working
Not international
1970- 38
28
Spectacular
Rise of China
Expects automatic
success
Educated, bi-
lingual, global
Cocky
1981- 27
17
One Child
Policy
Spoiled, focus of
family pressure
Career focused,
globally astute
Weak social
skills
1992-
2002
16
6
2008 Olympics Electronics/Media/
Material addicted
Wide open to the
whole world
Overwhelmed (by
expectations)
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Entrepreneurship in the International CommunityNU School of Technological Entrepreneurship
Slide 8 of 14November 19, 2008
Opportunity Benefits Summary
➢ Gov’t favorite #1: Emerging West (Sichuan, ChongQing, NE, …)
➢ Gov’t favorite #2: “Green” power, conservation, substitution
➢ Ignored markets: 2nd tier of over 100 cities > 1 million people
➢ Sell to the SOE’s (e.g., training – ISO, Deming, Finance, Law …)
➢ Manage “trust” for speed and risk-capital benefits
➢ Use “trust” instead of plans, projections, and contracts
➢ Make universities a connections hub (copy Obama)
➢ Tap the frustrated unemployed, talented, college graduates
➢ Convert the enormous savings into something very secure
➢ Alleviate the pressures or shortcomings of the Generations
➢ Sell future success to the kids, each has 4 parents to buy/pay
➢ Sell productivity enhancements that increase employment
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Entrepreneurship in the International CommunityNU School of Technological Entrepreneurship
Slide 9 of 14November 19, 2008
China - Five Distinct Opportunity Segments
➢ Affluent Coastal regions: e.g., JiangSu, Fujian, GuangDong, …
➢ Second Tier Cities: e.g., LuoYang, WeiFeng, ZiGong, …
➢ Emerging “Western” provinces: e.g., SiChuan, ChongQing, Jilin, HLJ, …
➢ Undeveloped provinces: e.g., GuiZhou, YuNan, GanSu, …
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Entrepreneurship in the International CommunityNU School of Technological Entrepreneurship
Slide 10 of 14November 19, 2008
China Sourcing Template
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Entrepreneurship in the International CommunityNU School of Technological Entrepreneurship
Slide 11 of 14November 19, 2008
China Selling Template
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Entrepreneurship in the International CommunityNU School of Technological Entrepreneurship
Slide 12 of 14November 19, 2008
Sourcing/Selling Summary
➢ Emerging West for skill intensive production and selling infrastructure and second
wave of upscaling (repeat of Affluent coastals of the past twenty years)
➢ 2nd Tier Cities for labor intensive sourcing and selling American product
access/franchises (below the Western radar)
➢ Gov’t favors: Emerging West (central gov’t), green technology (central gov’t), and
centers of excellence (local) [Note: this “West” includes North East and Central China, too]
You can count on:
➢ High receptivity to locating in government industrial/technology parks
➢ Every consumer having a cell phone, credit card, and access to the internet
➢ Typically, college graduates having had over 8 years of English schooling
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Entrepreneurship in the International CommunityNU School of Technological Entrepreneurship
Slide 13 of 14November 19, 2008
“On the Ground Nitty-Gritty” Tips
➢ Commerce is conducted by “trust”; 30% down/70% on delivery T/T
➢ Checks never, I’ve only see Wire Transfers, Credit cards, and Cash used
➢ Employment law requires insurance (Retirement, Unemployment, Hospital, Maternity,
Work injury, and Union dues) costing employers 40% and employees 10%
➢ Employers must pay severance of a month’s salary for each year served
➢ Customs is a mixed bag with some egregious gouging and delaying
➢ Contracts should be rare, bi-lingual, and specifying remedy by arbitration
➢ Corporate Structure Options: Cooperative Joint Venture (Chinese Partner +
$1,000 fees), Wholly Foreign-Owned Enterprise (minimum of $15,000 + $5,000 fees)
➢ Registration can require proof of suitability, resume, business summary,
references/agent, by-laws, directors, translated into Chinese (see:
http://www.jljgroup.com/index.php?id=75&lang=en#section2
➢ IP protection suggestions: log access to databases, withhold key process
parameters, design “black boxes” in, disburse suppliers and key people,
imbed logo holograms and the like into products, and assemble offshore
http://www.jljgroup.com/index.php?id=75&lang=en#section2
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Entrepreneurship in the International CommunityNU School of Technological Entrepreneurship
Slide 14 of 14November 19, 2008
Finally China’s Open (for discussion)!
➢Questions and Comments
➢Thank you, again.
On the Internet (roughly 460 KB) at:
http://globatech.com/eic.pdf
http://cha4mot.com/eic.pdf
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Entrepreneurship in the International CommunityNU School of Technological Entrepreneurship
Slide 15 of 14November 19, 2008
Jim Cook’s Journeys
➢ President, CEO of NASDAQ Listed Company (Software Tools) and on the board of two publicly held and numerous private companies, all high technology
➢ President, CEO of Exxon-Mobil financed venture (Electronics)
➢ President, CEO of Globatech, Inc. in Beijing (Japanese financial portal)
➢ Vice President (Technology) Computervision, Fortune 500 Company (CAD/CAM)
➢ Taught MBAs at UCSD (Economics of Mfg.), Worcester Polytechnic Institute (Advanced Mfg.) and U. of Melbourne (Entrepreneuring)
➢ Lectured on management at: MIT, NU, People’s University, and Chinese Academy of Sciences; BS math RPI, graduate math MIT, on CCTV news with Jiang Ze Min
➢ Consulted on management to: DuPont, Motorola, Bell Labs, D & B, …
➢ Interviewed 6 times on FNN (now, CNBC Financial) about High Tech investing.