Key Factors for Foreign Tech Startups Successfully Start Business in China

Within China, rising incomes, increased consumer spending and an increasingly open business environment have all helped to make the Chinese market increasingly attractive to foreign tech startups. Similarly, declining sales in their home markets has forced many US and European companies to relocate China to the center of their long-term global growth strategies. But starting a business in China is not an easy job, and in my view, there are several key factors for foreign tech startups to successfully start business in China.

Understand Chinese Customers

WTOIP do research on foreign tech startups, and also mentor in the IPIEC Global in Guangzhou to help foreign entrepreneurs to start business in China. We believe that the first key obstacle for them is to understand Chinese customers, to understand what the customers really want.

However, understanding customers’ needs is getting harder, not easier. Nowadays you have to look beyond your core business and understand your customer’s full range of choices, as well as their ecosystem of suppliers, partners etc., of which you may be part. This may take more time and effort, but it will also deepen your understanding of competitors and help you better anticipate their moves.

Understand Local Competitors

The second obstacle is to understand the local competitors. Most foreign tech startups usually underestimate the competition brought by Chinese companies. They all know about Silicon Valley, the center of technology investment and innovation, but usually ignore that China is also developing very fast in the tech field.

So before foreign tech startups finalize a decision about starting business in China, they should conduct competitive analysis first. It is vital to the success of a new or existing business because it reduces risk, time, required resources, and expense. Research can include:

• The products or services they provide
• How they reach customers
• The prices they charge
• How they distribute and deliver
• Their brand and design values
• Whether they innovate - business methods as well as products
• Their annual report - if they're a public company
• Their media activities - check their website as well as local newspapers, radio, television and any outdoor advertising

Understand the Regulations and Policies

The third obstacle is to understand the regulations, the inconsistency and changes of policy. For foreign entrepreneurs, it may take longer to get used to it. Chinese regulatory bodies often operate in a quite opaque manner, making it difficult to anticipate regulatory changes before they happen. A further problem is that China’s regulations are often vaguely worded and open to interpretation, which can be unsettling for foreign companies used to a more transparent regulatory environment.

It is critical to spend time researching and understanding the regulatory environment prior to making any decision to enter the market. Having entered the market, it is equally important to constantly monitor for any changes to legislation or regulations and how these could affect your business. Partner with a local company that is familiar with China’s laws and regulations can help foreign tech startups to better understand how China’s laws and regulations should be interpreted.

Connect Local Entrepreneurs

The fourth obstacle is connecting to local Chinese entrepreneurs in the ecosystem. Some foreign entrepreneurs may stick to their own foreign community. If they could try to interact more with the local community of Chinese entrepreneurs, they can probably better understand local Chinese customers, competitors and regulations.

Some Chinese companies such as WTOIP will organize online or offline events where foreign tech startups can meet potential and promising partners, providing a compelling opportunity to allow people from relevant industries or with similar interests to gather together to have direct communication.

About WTOIP

WTOIP Global, as a sharing service platform with a focus on IP, provides comprehensive entrepreneurial and legal services to our clients, helping foreign tech startups start business in China with no legal hurdles. Services include preliminary project feasibility study, potential business partner pitching, one-stop intellectual property solution plan, local incorporation registration and application for government funding. WTOIP is your best companion to start a business in China.