Right network, partners key to startup survival in China

SINGAPORE--The tech startup environment in China is far more difficult than Silicon Valley, and if foreign entrepreneurs want any shot at success, having the right partners and network connections will be necessary.

They also need to spend enough time in the country to understand how things are run, advised Marc van der Chijs, the Dutch Web entrepreneur who co-founded Chinese video site, Tudou.

"China is like a jungle without a lot of laws [in terms of] business ethics. It is survival of the fittest," van der Chijs told ZDNet Asia in an interview, as he elaborated on the intense competition. "People really fight [and] there's no cooperation between companies."

The Dutchman, who is based in Shanghai and has lived in China for over a decade, was in Singapore as a panel speaker at the inaugural Demo Asia held here this week. Demo, which originated in the United States in 1991, acts as a launchpad for tech startups to pitch ideas and products, as well as network with business partners, venture capitalists and angel investors. Similar events have been held in China and Brazil.

van der Chijs observed that the difference in the competitive spirits of Silicon Valley and Chinese is cultural. In the U.S., it is more a "team sports", he described, noting that entrepreneurs there help each other out as they believe more heads are better than one.

In China, however, they do not think that more people equals better results. Having grown up in a tough environment, local entrepreneurs have had to learn to fend for themselves, he explained, adding that there is also a culture to always be number one.

Network with benefits
So while competition among startups in Silicon Valley is hard, in China, "it's very difficult", the Dutchman said.

Foreign entrepreneurs looking to break into the Chinese market face even tougher hurdles in the form of government regulations. Local businesses can also decide to band together to compete against foreign entrants, he added.

Hence, "guan xi"--which means "relationship" in Mandarin--is paramount for foreigner entrepreneurs to have any chance of success in China, van der Chijs stressed.

"Without networks, you cannot do anything."

He also emphasized that these expats will need to spend sufficient time in China to know the ground well and identify the right business partners.

"People think of China as the holy grail," van der Chijs said. "They come fresh out of the plane [thinking] they can make it, but then they all fail.

"If you know the right people and know how to work your way around, you can succeed, but these are things you can only learn if you're there a long enough time."

He said Tudou was successful because it was based on a local partnership and focused only on the domestic Chinese market.

So rather than launch the site in English to target a global audience, the "laser-sharp focus" on China eventually helped Tudou become one of China's top video sites, he noted.

"If we tried to launch it globally, we'd be crushed."

van der Chijs founded Tudou in 2005 together with Chinese businessman, Gary Wang, who is the company's CEO.

The Dutchman has since left the company and founded another Web startup, a fashion site called United Styles, in Shanghai last year. This business is global, he said, adding that he plans to relocate the company outside of China sometime this year, moving to either Singapore or Silicon Valley.

China is a "great place to do business" if foreign entrepreneurs want to tap only the domestic market, he said.

More help for startups
At Demo Asia, Microsoft unveiled an enhancement to its startup support program, BizSpark.

Called BizSpark Plus, the scheme targets startups of high potential as identified by startup accelerators and incubators. Investors can offer startups up to S$60,000 (US$48,000) worth of Microsoft's Azure cloud services for a two-year subscription.

Battle Ventures is one of the partnering accelerators. Its CEO and founder, Jeffrey Paine, described high-potential startups as those with a regional, if not global, presence or plan in place. Besides a strong team and domain expertise, their products or services should ideally have already been launched or have good market fit that is expected to gain traction, he added.

For startups, the ability to access software tools and cloud at little or no cost offers several benefits, Paine said. A business can be up and running with few hassles at the infrastructure backend, and product development can be quicker and cheaper, which also means faster time-to-market, he said.

Joei Huang, technology director for Flok, added that besides access to technology resources, business contacts, support and training are also helpful to startups. A homegrown digital interactive and marketing agency founded in 2010, Flok joined the BizSpark program that same year.

Huang said the company benefited from the scheme which opened up more opportunities to address clients, as well as allowed it to scale IT-supported projects to boost cost-effectiveness.

Singapore is the second Asian country in which BizSpark Plus is introduced, after Australia in January this year. It is already launched in Europe, the U.S. and Middle East.