“Leaving The Nest” Part 2: China

After Hong-Kong we went to the mainland for a roadshow at Shanghai, Hangzhou and Beijing.

“We” is a an Israeli group of startups led by Omri Shamir from Startupeast  accelerator (http://startup-east.com/) – Great partners and COOL individuals with Tons of connections in APAC – Recommended to all companies that wish to do business in the east.

I’d like to also mention our 2nd great partners – YHT (http://www.yht.co.il/#!home-eng/c937) led by the lovely Dafna’s Linenberg and Bareket –  two extremely  experienced business women with deep roots in the Chinese market. Dafna Linenberg speaks fluent Chinese and is considered a Chinese native – a huge asset for Israeli companies to bridge the cultural gap.

Side note:

We are foreigners outside of Israel – “even” in English speaking countries such as USA. It may come as a surprise but not everybody knows where Israel is located. To succeed doing business – raising funds or selling – you need to have local presence since people you meet will forget about you after a week (or a day) .You ARE competing for resources and attention with local companies and foreign companies with much more resources and better presence. 

Two options, In my opinion –  Be there for at least few months or work with a partner you trust to become your “Knight in shining Armor”. 

Prior to telling about the trip; I wish outline the differences I noticed between Hong Kong and  mainland locals. Since this is a post on China, I’ll focus more on the Chinese (Pay attentions that Hong Kong was a British colony till 30 June 1997 becoming a special administrative region of China with a high degree of autonomy. Lot of British culture and manners remain).

Some of my observations are facts, others are my own opinions and conclusions. Though as a newbie in the east I am probably wrong in many (China Veterans, please correct):

hongkongese are not Chinese.

I’ve noticed that hongkongese don’t particularly like Chinese and vise-versa  – they think Chinese are rude and try to exploit HK – I actually liked both.

hongkongese speak fluent English. They are polite and formal – Suits and ties are standard dressing code in business meetings.

Most Chinese don’t speak English (though it is taught in schools). They are much more open and informal – lose the suit and tie.

Chinese are very hospitable – they will take you from the airport; invite you to dinner and keep ordering till you say enough.

Chinese cherish close relationships – they will feel more comfortable doing business with you if they view you as a friend. Lots of 🙂 and 😐 and other “Childish” notions in business communications via electronic Means – I guess they try to make it as informal as possible. My advice – play along.

It usually takes time to establish business relationships – so be patient – though sometimes it can be quick.

When they say they’ll buy 100 of your product; they usually mean 10; the rest will come later after you establish relationships.

Protect your technology- be careful with whom you do business with…

Last but not least – Chinese drive like crazies with total disregard to pedestrians or 2-wheel vehicles 🙂

Bottom line – both cultures have really nice people with strong sense for doing business.

Enough of that – Let  me tell you about the journey …

We started at Shanghai – A beautiful and modern city located at the east of China, with lots of Investors and Hitech companies. It is the largest Chinese city by population and the largest city by population in the world with a population of about 30 million. Weather similar to Israel (same latitude) .

Invited to multiple events; met with over 100 investors, incubators, accelerators (such as 7-Seas; Hyperspace capital; Yafo capital, Xnode)

and had some interesting experiences in a nightclub for the multi rich folk (spending around $50,000 – $100,000 a night on drinks and “company”)

Side note:

Large amount of individuals and companies that say they are investor (or worst finders). This creates lot of noise and consumes valuable time. The first questions you need to ask is whether the investor invests in Dollars. If the investment is in RMB only, it would be extremely difficult to get the money out of China.  The second question is whether the investor invested in foreign companies – specifically Israeli. It would be extremely difficult for him to invest in you if he hasn’t done investments outside China before.

My first advice is to have a qualified, Chinese speaking, advisor to introduce qualified investors and intermediate in the entire deal.

My second advice is to start the process in Israel and generate some quality meetings in-which both sides know that there is an initial fit.

Shanghai has multiple companies engaged in advance virtual and augmented reality technologies. One company – Famiku – develops arcade gaming stations, based on VR, which apparently is very popular in China. They used accessories such as toy rifles, balls, cockpits to enhance the experience playing a VR game – perfect fit for our technology – sold them on the spot – our largest sale in China. Since they had problems using our online payment system – they payed cash. So… we received a suitcase full of dollars… Just kidding it was just a grand.

Summarizing – Our accomplishments in the Shanghai tour were getting some understanding of the local market, generating new clients and progressing with one investor. Seems not much – but I believe it is a great accomplishment for a tutorial tour. Remember   – in China things take time…

Next we went to Hangzhou, southwest of Shanghai – a hour and a half train ride. Hangzhou is one of the most renowned and prosperous cities in China for much of the last millennium, due in part to its beautiful natural scenery. The city’s West Lake is its best-known attraction.

It is also a home to many startups, Incubators and accelerators and multiple companies – the best known is Alibaba.

Our most notable events in this trip – Being honored guests in an event with a panel consisting of four individuals – each responsible for a  “small” achievement – such as:

Bringing the Internet to China… (Right pic Left guy if I remember correctly)

Since those people started from nothing, they still look and dress like your average industry worker.

Second event –  visiting Alibaba headquarters… A HUGE place with tens-of-thousands of workers. It’s like a small city with a cinema and stores.  It’s also considered a “terrifying” company – don’t know whether the later part is true, but no company from our delegation was willing to present significant data.

They actually have a human size Taobao statue made of pure gold (Can’t photo unfortunately)

From Shanghai and Hangzhou, we flew north to Beijing – the second largest Chinese city by urban population after Shanghai and is the nation’s political, cultural and educational center. It is home to the headquarters of most of China’s largest state-owned companies, and is a major hub for the national highway, expressway, railway, and high-speed rail networks.

It is a HUGE city,  Cold, with one big traffic jam all day long (taxi prices are not that high – and the subway, though a-bit slow, is not bad and really cheap), Very polluted – actually in one day the pollution was so high comparable to sitting in a small room with 40 people smoking around you (the rich folk actually have multiple air purifiers at their homes). So if you are a clean-tech startup China and particular Beijing is the place for you.

I started my trip meeting an interesting fellow – a former General in the army and a current owner of a “small startup” with 2,000 employees engaged in urban UAVs (Unnamed Air Vehicles). Drove me in his Mercedes to an amazing chinese restaurant and nurtured me to death – finally remembered that I AM THE ONE WHO SHOULD SAY STOP…

Side note:

A “grayed hair” businessmen in Beijing had told me that if you wish to do business with a Chinese man – talk with his wife – she actually makes the BIG decisions. In the south east of China – it is even more obvious. Another, very wealthy business man takes his wife to all board meetings…

Women in China are intelligent, good looking, well-kept and seem very picky. The later may be related to the “one-child” policy (that is about to change soon)

Many women in China occupy positions of power – much more than in the western society. I’ve met lots of VCs led by woman – actually, in my last meeting with a VC in Shenzhen (2nd trip); Three out of the five participants were women.

So remember – if you wish to close a deal with a Chinese businessman negotiate with his wife  🙂

We participated in multiple events dedicated to our group celebrated Hanukah together and met lot of investors – wouldn’t bore you with details… Just one thing – the chines government encourages and invests a lot of money into the startup industry – they have, in Beijing hundreds of incubators and accelerators – many of them in one famous street – Danling street in the Haidian district…

Also had some fun in beijing – a bit of traveling + an invitation to a cool party with drinks and Nargila on the house…

Summarizing –  Our accomplishments in Beijing were selling more units… Actually I met with a really interesting startup that builds a kind of Star-trek holodeck using virtual reality and full body motion capturing. They aim to build a multiplayer virtual reality environment where players can move inside, see and interact with each-other.

Traveled to the MIT of china – Tsingua University which is considered to be THE BEST technical university in China. It’s a small city with actual companies within led by faculty members. A really strange notion to someone accustomed to Universities being purely academic. I met two companies there – one engaged in virtual reality for 360 degrees filmology and advertisement. And the second engaged in robotics, and other cool hardware products. Sold a few units to them…

Also met with Professor Benjamin Koo He is building a really interesting concept preparing his students being innovators and maker. We have agreed to cooperate and he invited me to lecture in the University in-front of his students. This is may be a great opportunity for the company.

So after a busy week of meeting investors and clients, selling units and “enjoying” Beijing weather and air quality – we returned to Israel.

But not for long… As I’m writing my journey accounts from my first trip to China – I’m on a China airline airplane flying from Beijing to Shenzhen after participating in the China-Israel Summit organized by the infinity group …

Hopefully to continue and establish our business in China …

Few pics from the Israeli-China Summit hosted by Infinity group and help in the World China hotel and trade center.

Avi Rabinovich

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