China tips for small businesses
More small New Zealand companies should set up shop in China, but they must do it in a targeted and permanent way, says the boss of a start-up that is winning success in Shanghai.
Jacob Creech has endured entire afternoons spent perfectly stamping forms at the bank or painstakingly filling out paper cheques using formal Chinese characters, just to pay the rent for his Chinese office.
But he has also seen his company Boost Agile win contracts from Paymark's Shanghai and Singapore offices and business from growing Australian company Juwai.com, which helps Chinese people buy property overseas.
A well-timed gift of lanolin hand cream and New Zealand honey means the woman at the bank now helps him prefill his forms to save him time when he gets there.
Boost Agile helps companies develop software projects better and within budget. Creech jokes that he could have avoided the Novopay debacle had the Government had the foresight to hire him.
Before setting up a Chinese office three years ago he and his colleagues carefully weighed up the merits of opening an office in Australia versus China and settled on the lesser-trodden path. "If you think about the opportunity in Australia the competitive intensity is quite high. There's a couple of dozen companies doing the kind of work we do. When we looked at China at that stage there were four companies doing the kind of consulting we do in a much, much bigger market. The market is less developed but the growth potential is huge."
Boost Agile, whose New Zealand branch is Boost New Media, mined Creech's Chinese contacts and found an agent in Shanghai who for a few thousand dollars could help with chores such as opening a bank account and arranging a business licence.
Their agent was cheaper than the ones recommended by New Zealand Trade and Enterprise. "We are a pretty bootstraps startup and their ones were aimed more at the Fonterras of the world," Creech said.
The business made contacts by setting up a technology user group and took pro bono contracts for Chinese start-ups until they had some case studies.
Creech lived in China for three years before his current venture. It took him a year and a half to learn conversational Mandarin, and three years to be fluent.
He said he knew he had made it when he had an in-depth discussion with his landlord about comparing car insurance policies.
Creech shared three tips for start-ups thinking of entering China:
- Commit: Don't be afraid of China but if you make the decision to do it, really do it. "I've seen a lot of business use a fly-in fly-out model and it doesn't show very much commitment to the Chinese market. We've focussed on developing long term relationships with people."
- Focus: "It's an immense market. You can't say 'Hey I'm going take on China'. To be successful you need to focus. We have focussed on Shanghai to get started or else we will spread ourselves too thin."
- Talk: You don't have to speak fluent Chinese but make an effort to learn the basics. "Even having a few sentences helps and understanding bit of the local customs." The Chinese have a long, proud history and it helps if you can show you understand that, Creech said.