Entrepreneus Sessions.Shenzhen

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workshop presentation did in Shenzhen in 2008. The report talks generally of the new business in China and specifically of entrepreneurship opportunities and how to foster a start-up and sme culture in China

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Entrepreneus Sessions.Shenzhen

  1. 1. EntrepreneurSessions Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  2. 2. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  3. 3. Chinese Chamber of Commerce Chinese Chamber of Commerce. Joan López González your name Shenzhen 2008 Shenzhen 2008
  4. 4. Joan is Head of Business – Asia Region atPorcelanosa. A Spanish Blue Chip companywith presence in more than 100 countries andwith more than 500 show rooms.Joan has 5 years of ‘hands on’ strategy andoperations consulting experience focusing ininternationalization of SME and start-up firms.Worked for premium brands such as Shell Oiland Gucci.Joan studied Industrial Engineering at UPV,Spain and Chemical Engineering at UV –Chalmers University of Technology Sweden.Trainee at Institut für Verbundwerkstoffe,Germany and Master in International Trade,Finance and Development at ShenzhenUniversity, China. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  5. 5. AgendaSession Topic2:00 – 3:00 China: Current Market Status and Trends.3:00 – 3:30 Tea Break.3:30 – 4:30 Venture Opportunities and setup in China.4:30 – 4:45 Tea Break.4:45 – 5:30 Resources in China for Spanish Start-Ups.Workshop’s Purpose: To provide insightsand a milestone to daring Spanish Start-Upcompanies with innovative products and serviceeager to target in the Chinese Market. Chinese Chamber of Commerce Chinese Chamber of Commerce. Joan López González your name Shenzhen 2008 Shenzhen 2008
  6. 6. 1 st SessionCurrent Market Status &Trends Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  7. 7. Chinese Chamber of Commerce Chinese Chamber of Commerce. Joan López González your name Shenzhen 2008Source: CIA World Factbook; Joan Lopez Shenzhen 2008
  8. 8. Beijing Shanghai Guangzhou TaiwanHainan Chinese Chamber of Commerce Chinese Chamber of Commerce. Joan López González your name Shenzhen 2008 Shenzhen 2008
  9. 9. The most intriguing consumer market•  China offers the world’s rapidly growing and attractive consumer market.•  With only 4% of global retail sales, China accounts 20% of global growth.•  Chinese’s consumer spending 35% of GDP in 2007. Chinese Chamber López González of Commerce Chinese Chamber of Commerce. Joan your name Shenzhen 2008 Shenzhen 2008
  10. 10. Unique set of challenges•  Most consumers are price sensitive.•  The consumer market is very fragmented.•  Top tier cities are becoming very competitive.•  Middle class have just started to pay attention on lifestyle. Chinese Chamber of Commerce Chinese Chamber of Commerce. Joan López González your name Shenzhen 2008 Shenzhen 2008
  11. 11. Chinese Chamber of Commerce Chinese Chamber of Commerce. Joan López González your name Shenzhen 2008Source: CEIC Data Shenzhen 2008
  12. 12. Share of ChinaImports increase Chinese Chamber of Commerce Joan López González(%) your name Shenzhen 2008
  13. 13. Asia: Retail Sales Chinese Chamber of CommerceVolume Joan López González your name Shenzhen 2008
  14. 14. China Outgoing Chinese Chamber of CommerceForeign Investment. Joan López González your name Shenzhen 2008
  15. 15. Total imports and Chinese Chamber of Commerceexports 2007 Joan López González your nameSource: Zero2IPO; Joan López Shenzhen 2008
  16. 16. China’s corporate world is divided into•  Revitalized state-owned enterprises.•  Globalizing players.•  Restless SMEs.•  Emerging innovative start- ups. Chinese Chamber of Commerce Chinese Chamber of Commerce. Joan López González your name Shenzhen 2008 Shenzhen 2008
  17. 17. 1. Revitalized state-owned enterprises•  Highly regulated and concentrated.•  Largely protected by government.•  Improvements in corporate governance and risk management.•  Long way to go before will be truly world class organizations.•  I.e. China mobile. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  18. 18. 2. Globalizing players.•  Started as state owned but evolved into a mix between public and private sectors.•  Serving as OEMs but rather playing with their owns brands.•  Own products, network and distribution channels. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  19. 19. 3. Restless SMEs•  Middle size but growing very fast and ranking among the leaders in their fields within China.•  Brands not yet well known to the world.•  Market targets: Russia, Africa and Middle East. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  20. 20. 4. Emerging innovative start- ups•  Unconventional business model.•  Innovative approach to developing products bringing them to markets.•  Fertile M&A territory to build up presence in China and foster new alliances in EU, USA and LATAM markets. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  21. 21. VC investment in China ($million) Chinese Chamber of Commerce Chinese Chamber of Commerce. Joan López González your name Shenzhen 2008Source: CBAN. Joan López Shenzhen 2008
  22. 22. China’s VC market is heating up•  2nd largest VC market in the world.•  Still almost 1/5th of the U.S.•  Traditional industries still account for almost 50% of the VC money invested in China.•  There is a major shift from offshore USD funds to domestic RMB funds. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  23. 23. Local IPO market•  Government is soon launching a genuine Growth Enterprise Board, ‘’China’s NASDAQ’’.•  Shenzhen’s SME board proved to be and exit for VC investment in China for more than 10x returns in a period of 3 – 4 years. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  24. 24. Entrepreneurship•  Today Chinese entrepreneurship is tradition.•  Young people in their 20s and even early 30s.•  A number of Chinese entrepreneurs dubbed ‘’returnees’’ with prior, overseas experiences. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  25. 25. Investment Environment.•  Legal Issues. A lot of regulations.•  Entrepreneurship is still a new concept for local graduates.•  The big problem: family pressure.•  Innovation government driven.•  Guanxi. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  26. 26. 2 st SessionVenture opportunities and setup Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  27. 27. Chinese Chamber of Commerce Chinese Chamber of Commerce. Joan López González your name Shenzhen 2008Source: Zero2IPO; Joan López Shenzhen 2008
  28. 28. High Technology Chinese Chamber of CommerceExports. Joan López González your nameSource: Deloitte; Joan López Shenzhen 2008
  29. 29. Where are the opportunities?•  Education: online / offline.•  Consumer Internet / Mobile: – E-commerce. – Internet communities. – Gaming. – Online advertisement. – Mobile applications. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  30. 30. Where are the opportunities?•  Technology: Logistics technology infrastructure.•  Retail: franchising / licensing.•  Healthcare: Services / Medical devices.•  Energy.•  Cleantech. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  31. 31. Additional skills requiredR&D Procurement Manufacturing Supply Marketing Sales Chain • Master • Improve overall • Negotiate • Rationalize • Undertake • Manage large advance process and terms manufacturing marketing modern technology. equipment aggressively logistics research retailers • Create a few efficiency wit a few large footprint • Control media • Manage large substantial suppliers planning and distributors innovations executionThe best candidateshould do not only Chinese Chamber of Commerce Joan López Gonzálezthis… your name Shenzhen 2008
  32. 32. Additional skills requiredR&D Procurement Manufacturing Supply Marketing Sales Chain • Simplify • Handle • Identify and • Configure • Master event • Transform products hundreds of manage low distribution marketing wholesalers • Tailor small cost and low network by • Focus on PR into products by suppliers. capital evaluating management distributors responding • Identify, investment low cost • Manage quickly to coordinate, options. alternatives small change motivate and fragmented consumers develop accounts reeds. suppliers.…but also this Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  33. 33. Pick an example Internet and Online Gaming Market Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  34. 34. China’s Digital Generation•  ‘’One Child Policy’’ today in the range 12 – 29 years ‘obsessed’ with internet.•  ‘’Reform Generation’’ today in the range 29 – 38 years opening up policies and enjoying internet diversity.•  39+ uses Mobile voice service. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  35. 35. Digital Entertainment•  There are not many alternatives for affordable entertainment. – Media/Music/Cinema are still in their infancy. – Internet is filling a gap.•  Chinese Internet Pop culture is on the rise. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  36. 36. The Chinese Internet Internet Users China USA Average Age 28 42 Education (Higher than college) 67% 40% Employed 75% 61% Online Contributors (Age 13 – 35) 50% 15% Active Bloggers 40% 13% •  In 2008, China reached 253 million of internet users being Chinese Chamber of Commerce the world’s biggest. Joan López González your name Shenzhen 2008Source: Deloitte; Joan López
  37. 37. The Chinese Internet•  70% of users are 30 or younger.•  Local Players won the top spot in all main Internet sectors.•  Baidu and QQ enjoy a strong lead in their sectors in terms of market.•  AliPay makes online payment easier. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  38. 38. The Chinese Internet•  China has turned a Web 2.0 powerhouse, with: – Large influx of Venture capital. – Overseas educated returning talent. – Low entry barriers (if any). Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  39. 39. China online trends for 2010•  Social networks: Mobile social networks are the future.•  Online communities are not a teen phenomenon.•  E-commerce is the key and will be the main growth segment for the next years. Chinese Chamber of Commerce•  Online gaming. Joan López González your name Shenzhen 2008
  40. 40. China online trends for 2010•  The new mass media. China has a population who spend more time online than watching.•  Online startups will face a strong dose of realism.•  Copycats want proven business cases. Time to innovate.•  Age of convergence Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  41. 41. Chinese Gaming Market•  China has an estimated 120 million online gamers.•  3 years where gaming industry has increased 25% yr-to-yr.•  Although 76,6% are free to play and 23,4% are pay to play in 2007 sold over $1,4 billion in prepaid cards. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  42. 42. China Online Game Market Chinese Chamber of Commerce Chinese Chamber of Commerce. Joan López González your name Shenzhen 2008Source:iResearch Inc; Joan López Shenzhen 2008
  43. 43. Chinese Gaming Market•  Online game publishers provide distribution to the content providers.•  The game publisher: – Prepays the content provider. – Pays IDC for hosting services. – Pays for marketing and promotion. – Pays the internet cafés. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  44. 44. Chinese Gaming Market Prepaid Marketing Content IDC Card & Interne Provider Hosting Publisher 36% t Cafés Total 5-10% Distributor Promotion 20% 8% s 16% 10%Distribution of the revenues.Next big wave: Chinese Chamber of CommerceSocial Gaming. Joan López González your nameSource:iResearch Inc; Joan López Shenzhen 2008
  45. 45. Setting up a legal entity Equity Joint Cooperative WFOE Representative Venture Joint Venture OfficeAdvantages •  Local •  Local •  Full * Few restrictions expertise. expertise. Control, and few downsides •  Government •  Government no to such a limited incentives. incentives. conflicts enterprise. •  Lowest Tax •  More flexible of Rates. capital. interest. •  No profit sharing.Disadvantages •  Shared •  Shared •  Strict control and control and foreign conflicts of conflicts of exchange interest. interest. controls. •  Increased •  Increased •  Higher chance of change of taxes. losing trade losing trade secrets. secrets. your nameSource:iResearch Inc; Joan López
  46. 46. Set up a legal entity•  Law enforcement in China is not very strong.•  Before incorporating: – Change the type of business is long and costly. Ventures. – There are grey areas and regulations are updated on a weekly basis. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  47. 47. 3 rd SessionResources in China for Spanish Start-ups Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  48. 48. Source:iResearch Inc; Joan López Management •  An exceptional CEO. •  Core team in place. •  Core product ready and rolled in Spain. Product •  Concrete future product development plan. •  Competition analysis and tracking for the Market Chinese market. •  Initial draft of the marketing plan. Revenues •  Clearly identified new revenue streams. Cash •  Reserve cash. •  Cash Flow positive.•  At what stage you should be before go to Chinese Chamber of Commerce Joan López González your name China? Shenzhen 2008
  49. 49. Source:iResearch Inc; Joan López Intellectual Regulatory Property Policy Business Commitment Exit Chinese Chamber of Commerce •  Beware of the risks… Joan López González your name Shenzhen 2008
  50. 50. Preparation•  Strategic decisions are a crucial component for a start-up company’s success or failure.•  Preparatory trip(s). Spend significant amount of time in China.•  Develop your ‘’Guanxi’’ or social network and business relationships. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  51. 51. Preparation•  Select and setup the right legal structure: SINA vs. Joint Venture.•  Manage intellectual property.•  Bring your ‘’know-how’’ from Spain.•  Study and learn from best practices in foreign markets. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  52. 52. Preparation•  Understand your customer.•  Competition analysis. Find out Who, How, Where, When…•  Listen, research and comprehend the political and regulatory environment.•  Add managerial value. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  53. 53. Preparation•  Where in the value chain is your place in China?•  Location: First cities vs. Second and Third cities.•  Can you get local government incentives?•  Brush up your mandarin. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  54. 54. Early Stage Investors in China•  Good and experienced venture managers are scarce in China.•  Good and experienced early stage venture managers that: – Have previous own start-up experience. – Truly work ‘hands-on’. Are very scarce. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  55. 55. Early Stage Investors in China•  Your select investors should add value: – Screening and recruiting management team. – Installing and maintaining financial controls. – Improving productivity through reducing product costs. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  56. 56. When to use your Spanish connection…•  Spanish’s brand.•  Integrity and quality of service.•  Chinese culture but also gateway to the U.S, Singapore and ASEAN markets.•  Particular industry expertise. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  57. 57. Chinese Chamber of Commerce Joan López González your name Shenzhen 2008
  58. 58. More info:joanlopezgonzalez@yahoo.es Chinese Chamber of Commerce Joan López González your name Shenzhen 2008

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