How to Start Your Business in China

Jiangtao Yu, Ph.D.

Why do we want to go back?

• Family, friends… and food?• Natural & social bonding;• Glass-ceiling in US;• Government policies;• Technology development;• Business opportunities.

The reality• Taking care of family? – Parents: Pollution and poor health-care

system;–Husband and wife: Separation;– Kids: Completely different child

education system;

• Delicious food?– Yeah, but not safe…

• Business opportunities?– Great opportunities, no glass ceiling,

but very complicated.

Who can go back with higher success rate?

• Internet and… pretty ladies???

The only sustainable reason for returnees is:

We still have dream…

• Getting to know China– Technology

development trend– Government policies–Market opportunities– Find a local person you

can trust and team up

• Be well prepared–Mentally, physically– Financially– Technologically

How to start your business in China?

The three essences of success

• Timing• Location• Connections

Getting started: Timing your project

• You need a 5-year plan;

• Start preparation NOW, make a few steps move, don’t wait until window is closed;

• Go back to China when you feel relatively confident, don’t jump into the “pond” without thinking.

Seed money

• From US– SBR;– Family & Friends;– Angel, Venture Capital;

• From China– Angel, VCs;– Government support;– Industry investors.

Find a location

• Where economy is relatively developed– Yangtze Delta Region is probably your

top choice;

• Where you feel comfortable and trustworthy– Can be or around your hometown; or

shop around, keep communicating until you finalize your decision;

• Where you have platform support to lower cost– Especially important for Biomedical

start-ups.

Build up connections

• Connections are not simply teamwork; it’s a NET-work…– Focus on your strength

(mostly technology) but know how to deal with people;

– Team up with some marketing /sales gurus or build up firewall;

– Know politics and… watch CCTV news!

Other resources

• Pay attention to policy trend– 1000-plan (state,

province, local city, high-tech park);

– Government support;

– Government grants;

– Innovation funds for small business;

Reverse culture shock• Under-developed

healthcare/education system• Dealing with complicated

government system• Sitting in meetings with no

sense• Training “job-hoppers”• Spending a lot of time on

dinner table with hard liquor• Karaoke and got drunk…

Do you think you still have time for R&D?

浙江清华长三角研究院• Yangtze Delta Region Institute of

Tsinghua University, Zhejiang– Located in Jiaxing City, Zhejiang (right in

the middle of Shanghai and Hangzhou)– Four research directions: Biomedical,

Environmental, IT, and Advanced manufacturing

– Four innovation centers: Silicon Valley, Ningbo, Hangzhou, Taizhou

What do we do?• To recruit overseas talents and facilitate

them to overcome the reverse culture shock – “Talent-Inn”;

• To incubate early projects, help them find right location and local partners and negotiate better funding terms from government/VCs /industry investors – “International Incubator”;

• To provide seed money for early projects from overseas – “Zhejiang Haihe Venture Investment Management Co., Ltd.”;

• To outsource high-tech projects from China to US.

Case study 1

• An internet storage start-up company– Incubated 1.5 years;– Got 10M RMB government funding

(with terms) and 10M RMB VC investment by the end of last year;

– Early investment valued up more than 10 times.

Case study 2

• An internet service provider start-up company– Recruited CEO/CTO for the company;–Helped the company to negotiate terms

with local government to build up the largest data center in the Yangtze Delta Region;

–Net Income 7.7M RMB last year, ~30M RMB this year

– Investment valued up 12 times by year end.

Case Study 3

• A medical device start-up company– Incubated 0.5 year;– Signed term sheet with 20M RMB

investment;– Investment valued up ~100 times if

deal is executed…– But…project is on-hold now.

Case Study 4

• A mobile image search start-up company– Incubated 1 year;– Got 2M RMB government funding 1

year ago;– In talk with VCs and signed term sheet

with 2M $ investment;– Investment valued up ~5 times.

For whom interested in “International Incubator”

• Please contact – Jiangtao Yu, 408-881-2706 (US Cell),

158-0573-7618 (China Cell), jiangtao.yu@gmail.com;