The Six Entrepreneurs You Meet in ChinaSarah Lacy
Editor's note: This is the first of a two-part Valley Girl series on entrepreneurs in China. The first three of six types of businessmen are featured below. Before my first trip to China earlier this year, a well-known Silicon Valley venture capitalist told me I should go to Japan or Singapore instead. "Chinese people aren't entrepreneurial," he said. "They don't create things. They're just good at ripping them off." I won't embarrass him by using his name here, but I'm glad I didn't take his advice. I've spent five weeks on two trips to China this year, meeting with entrepreneurs in Shanghai, Beijing, Shenzhen, and Hong Kong. These startup founders are as scrappy and willing to take risks as their peers anywhere, at times even surpassing the people who flocked to Silicon Valley in the late 1990s. Conditions for new companies in China are hardly ideal. The modernity of the big cities is not yet widespread. Regulation is still a moving target. But there's still enough progress and wealth created by new businesses to give entrepreneurs hope. Given China's size and geographic, demographic, and economic diversity, I can't possibly give a one-size-fits-all description of the typical Chinese entrepreneur. But for those who believe the country doesn't do entrepreneurship well, here's a rundown of the six types of entrepreneurs you'll meet in China (with apologies, of course, to Mitch Albom, author of the best-selling The Five People You Meet in Heaven). The Opportunist. And that's not necessarily a bad thing. Sure, there are plenty of poseur-opportunists who flock to China (from the U.S. primarily, but also from Europe) but know or care little about the place. They may not even have great ideas for a company; they just want in on the action. The good news is that poseurs get weeded out fast. Most Westerners who move to China leave within the first year, I'm told. Locals put the percentage as high as 90%. But opportunists also take the form of talented, ambitious thrill-seekers who can thrive in China. Take Richard Robinson, the New England-born co-founder of Kooky Panda, a company that taps local developer talent to create social games for cell phones. Robinson is formerly vice-president for sales and marketing at Renren.com, a dot-com-era company that went public on the Hong Kong stock exchange in 2000, only to get acquired at a lower price by a local company in 2001. Robinson also founded a mobile gaming company called MiG that was acquired by Glu Mobile (GLUU) in 2007. Robinson—who backpacked around the world for years and wound up in China via the Trans-Siberian Railway—is now a lifer. He's got a Chinese wife and in-laws and two kids who he says are "made in China." He even wears cufflinks bearing the Chinese flag. Successful as he's been, Robinson entertains no illusions of creating the next great Web or mobile company that dominates the domestic market. "That's not the game I'm going to win," he says. Instead, Kooky Panda uses high-quality, low-cost game design talent in China to build content for much of the Western world. The Expat Who Wins Big. Yes, "big" is a relative term, but when it comes to the Web, the expat name mentioned most often is that of Fritz Demopoulos. A Los Angeles native, Demopoulos moved to China in the late 1990s as an employee of News Corp. (NWS). He later left the company to start Shawei.com, a sports portal he sold to Tom.com in 2000 for about $20 million. He went on to co-found Qunar.com, an online travel company comparable to Kayak.com in the U.S. Demopoulos has a down-to-earth demeanor and dresses like he's in Silicon Valley, with glasses and floppy bangs that never quite stay off his face. But he's also got a fighting streak. Five-year-old Qunar is locked in a legal tussle with Ctrip, the Chinese equivalent of Expedia.com (EXPE). Ctrip alleges that Qunar unlawfully gathers and posts information from its own pages. Consultants advising Westerners who hope to do business in China warn of guanxi, the deep-seated relationships that can make it hard for outsiders to break in. But in a display of the same bravado that built Silicon Valley, Demopoulos waves off talk of guanxi, says he doesn't speak Chinese well, and adopts a build-it-first, ask-questions-later outlook when it comes to getting a company off the ground. The "Copycat." The view in Silicon Valley is that some Chinese companies rip off their product ideas. Some even get a seemingly unfair leg up in cases where the government blocks U.S. sites in China. Twitter and Facebook aren't available in China, a boon for Facebook clone Xiaonei and a new Twitter-like service launched by China's largest portal, Sina.com (SINA). (A lot of homegrown Twitter clones have been blocked, too.) While they may crib product ideas, Chinese startups are blazing their own business model trail. Think of the contrast between eBay (EBAY) and Alibaba.com's Taobao. In China, eBay's stumbles are legendary, and Taobao has come in and owned the online consumer auction market. Nearly 50% of Chinese people online are Taobao customers, according to the company and Chinese Internet statistics. Taobao inked deals with several courier services so bidders without credit cards can pay for goods via cash-on-delivery. That's helped Taobao penetrate second- and third-tier cities in a way few e-commerce sites have. Scratch the surface and you see the same innovation with Web 2.0 "rip-offs" of Facebook, Twitter, and even Match.com. And, as many companies have learned during the downturn, business model matters as much as product.
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