• Chinas Returnee Entrepreneurship: In the Right Place at the Right Time
  • Nov 23,2009

     

    BEIJING, Nov 23, 2009 (CBNC - BUSINESS WIRE)

     

    China is enjoying unrelenting economic growth even against the backdrop of the global recession. The business potentials of the country's dynamic and vast market are being recognized by a growing group of returnee entrepreneurs, according to a report by Z. H. Studio.

     

    They, armed with overseas education and global experience, are able to take advantage of what for many foreign managers is still a challenging market, both in terms of business culture and consumer behavior.

     

    Despite China's widely acclaimed reputation as an entrepreneur-friendly place, as the old adage says, in China, anything is possible but nothing is easy. As with the success of all businesses, the conjugation of a series of enabling factors is crucial for a returnee entrepreneur's rise to prominence.

     

    Smartly Managing the Differences China's returnee entrepreneurs definitely enjoy a unique position of having a foot in two different worlds. They know China very well and also understand the outside world. As such, by leveraging differences to their business'

     

    One such returnee poised to maximize the huge market potential is Ray Zhang, founder and CEO of eHi Car Service in Shanghai. With a fleet of more than 4,000 vehicles comprising some 50 models, eHi offers a full range of car-rental services catering to three largely diverse demands, from self-drive and chauffeur-driven limousine service to the urban-oriented 'zip car' concept, whereby customers have access to a fleet of cars in residential areas for use for a matter of hours or days, thus fomenting a car-sharing culture.

     

    When US car-rental giant Hertz made inroads in China back in 2002, it failed because the China market was not ready for the US-style car-rental model. "China's business environment is very different from that of the US...Such things as credit-card transactions and personal credit history did not even exist several years ago," eHi's Zhang explains.

     

    Not only have online transactions now become a part of everyday life in China, but also the country has emerged as the world's largest auto market. Aided by tax incentives for buyers of smaller cars, car sales saw a 75.8 percent rise in October over the same month last year, with 946,000 cars sold, according to the China Association of Automobile Manufacturers.

     

    Mission Alignment

     

    While soaring car sales inherently trigger auto-related services, Zhang finds this trend potentially disastrous for China. "Look at China's parking, traffic and pollution problems today...The ownership rate in China is still just 4 percent, as opposed to 70 percent in the US. If we double or triple the number of family cars, we are going to have serious social as well as environmental problems."

     

    Simply put, in Zhang's view, China's urban areas are not designed for two-car families. "It's our mission to avoid that."

    He believes that nowadays all the ingredients are present for China to follow the car-sharing route. Population density aside, vehicle dislocation is another condition. It takes a lot of people to move vehicles in any given city, but low-skilled labor is cheap in China. E-commerce is also a vital part of eHi's business, with 90% of the company's orders received online. The zip-car service, for example, has only become available with the advent of GPS, smart-phones and wireless. "It's prime time for the car-sharing concept to flourish."

     

    Born and bred in Shanghai, Zhang spent almost 20 years in the US. He founded a logistics software company for ground transportation before returning to his hometown and setting up eHi. "Understanding how that industry evolved in the US and how to avoid the potential pitfalls in China has helped. The largest car rental industry in the world will be in China in the next 10-15 years -- we are riding a tide now," Zhang claims.

     

    The Chinese government shows no signs of neglect for the ever-growing returnee community. In Shanghai alone, the Shanghai Overseas Returned Scholars Association (S0RSA) predicts that the city's total number of returnees will be 100,000 by 2010. Both the central government and city municipalities have announced a variety of schemes -- including cash awards of up to 500,000 RMB, three-year tax exemption, free rent on business premises and other preferential policies -- to promote returnee entrepreneurship.

     

    A lot more returnee entrepreneurs have achieved prominence beyond commercial success. "Being in the right place at the right time, many returnees bring to China their global experience and expertise in terms of industry standards, processes, rules and regulations," says Xie Ning, deputy chief editor of China Economic Net. "Therefore, chances abound for them to voice opinions in policymaking and legalization processes, which is another gratifying factor for China-bound entrepreneurs." Not Always Rosy In spite of the relatively higher social status, returnee entrepreneurs do face some common challenges.

     

    "Some returnee entrepreneurs experienced a 'reverse cultural-shock' when coming back to China," notes Richard Cant, a seasoned businessman with experience in several international startups in China. "There is still a lot of resistance to the adoption of 'Western views and ideas' by Chinese companies even if they are delivered by a returnee-Chinese national. Foreign-born Chinese (ABC's, CBC's, etc) often have a harder task."

     

    According to Laurie Underwood, co-author of the book "China Entrepreneur: Voices of Experience from 40 Business Pioneers", the trick for most China-bound entrepreneurs is "to maintain international business standards in the core practices -- while adapting to local norms when possible."

     

    Juan A. Fernandez, a professor of Management at China Europe International Business School (CEIBS) agrees. "China is not a quick-learn market, and business development can be excruciatingly slow (at times) and blindingly fast at other times." "So what's the 'right stuff' for China-bound entrepreneurs? Be patient and learn to go with the flow, reacting quickly whenever possible, and maintaining a steadfast and positive attitude whenever necessary." Indeed, China is not a good place for those whose blood pressure rises when faced with unexpected setbacks. More often than not, many of the problems may be solved in a "smart way". Copyright Business Wire 20.

     

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