Entrepreneurs Across the Ocean – They Are Not All the Same
Business gurus say it is the best time ever to be an entrepreneur. Recent news about such billion-dollar-worth start-ups as Instagram and Zynga have caught people’s eyes in the US. On the other side of the ocean, entrepreneurship has also become a hot word in recent years. In China, millions of graduates enter the job arena every year. However, the job market is not able to satisfy the huge appetite from college graduates. Today in China, there are more and more graduates from schools seeking opportunities to create their own jobs and grow their own businesses.
Forbes recently published the Top 30 Chinese Entrepreneurs. It is interesting to compare these young business people with their counterparts in the US.
Chart 1 – Locations Where Top 30 Entrepreneurs Locate Their Businesses
Where They Seem Alike
Most of these top 30 entrepreneurs are under 30 years old; two thirds of them are between 29 and 30. Their counterparts in US are in the same age group.
Chart 2 – Age Distribution of Top 30 Entrepreneurs in China
Noticeably, there is one boy who just graduated from high school, age 19. Yichao Ji, who is the founder of 7 apps on the Apple Store, created a popular browser called “Mammonth,” which is the most popular browser created by one individual. Another guy, Changcheng Lv, is the CEO of Fangcaoji. This grass-roots B2C platform has enjoyed an amazing growth rate of at least 200% every year since its creation. Changcheng means the Great Wall. This “Great Wall” is the only one who dropped out of school from this top 30 list.
A big chunk of these entrepreneurs are in IT, with 40% of them currently working in the IT industry. Platforms such as the Apple Store and the Android App Store stimulate many new businesses both here in US and in China.
Chart 3 – Industries Where Top 30 Entrepreneurs Chose
Where They Are Different
In my eyes, there are far more differences than commonalities between these Chinese icebreakers and their counterparts in the US in business arena. The stringent commercial policies in China as well as lack of investment capital are the top reasons for these disparities.
First of all, there is much diversity in the industries in which these top 30 people set foot. Qing Cao, a top graduate from Stanford’s B-school, created his cosmetics and clothing platform – JUMEI. JUMEI has over 4 million loyal customers and processes over 50,000 transitions per day. Yuefeng Dai, who is the founder of Yuninfang, also focuses on bio-cosmetics and facial-caring products. They both target young women as their major customers. Kaihuang is another example. He created the most famous desktop game, “Three Kingdoms (Sanguosha)” when he was a sophomore. In 2010 alone, his company sold over 2 million packages of “Three Kingdoms”. Jingming Guo, a renowned writer of novels for youngsters, is in the magazine industry. Among these 30 Chinese entrepreneurs, 60% are NOT working on IT apps.
Second and most importantly, Taobao (sort of like the EBay of China) creates business opportunities for 4 of them. Online shopping has been a fad for years and is now a huge market. On Taobao, various businesses have sold over 100 billion RMB items (nearly $19 billion) in the past year. The richest entrepreneur on this list, Qing Cao, runs a Taobao shop called “7GeGe” since 2006. In 2009, 7GeGe began growing aggressively and became a renowned brand on Taobao. In 2011, it processed 250 million RMB items. Changcheng Lv also has his Taobao shop, which targets on electronic goods. However, it is a different story in the US where most start-ups do not depend on EBay. Some of them sell their products on the Apple Store, such as Instagram. But the Apple Store is completely different than Taobao. The former focuses on virtual goods while the latter almost solely sell tangible products like clothes and electronics.
Thirdly, most Chinese entrepreneurs rely on other funding opportunities than than venture capital. Due to the policy restrictions in the finance industry, venture capital and angel investments are still at an immature stage in China. There are very few successful ventures. Kaifu Li’s (Former CEO of Google China) Innovation Works is the most famous one，which has invested in 39 projects and is worth nearly $40 million. Entrepreneurs in China, compared to their US counterparts, lack venture experience.
Lastly, the geographic distribution of these top business savvies is unbalanced compared to the US. Here in the States, IT entrepreneurs gather in the Valley. But they also locate across the country. For example, Groupon is from Chicago. Facebook is from Boston (though currently has its HQ in the Valley). Tumblr’s HQ is in NYC. The story is very different in China. As you can see from Chart 1, two thirds of these top 30 entrepreneurs are from two major cities – Beijing and Shanghai. And both cities lie in Eastern China. There are almost no entrepreneurs in the western part of the country. On the other hand, all entrepreneurs locate their businesses in major cities. None of them are from small towns or cities like those in Silicon Valley.
Entrepreneurship has just begun to be a word that people talk about daily in China. 99.9% of college graduates still seek for jobs rather than create new ones. The investment environment, cultural soil and personal characteristics all shape a potential entrepreneur. In China, the “climate” is not the same as in the US. This might be the major reason for their differences. However, China has recently experienced an enlightenment of entrepreneurship among young people and its prospect looks promising!
Runze Zhang is a graduate student in the Public Policy & Management School at Heinz College, Carnegie Mellon University. He hopes that he can start his own business sometime in the next 5 years in China.
 Even after the acquisition, Instagram continues its fast growth. Instagram Continues Stellar Growth, http://www.redorbit.com/news/technology/1112526834/instagram-continues-stellar-growth/
 Here is a very good story of Zynga, http://www.fastcompany.com/most-innovative-companies/2011/profile/zynga.php
 Forbes China, Top 30 Entrepreneurs in China, http://www.forbeschina.com/collection/china30under30/
 Guo Jingming Juggles Roles As Writer and Publisher, http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20120416000074&cid=1604
 A brief introduction of the company is here: http://www.digby.com/news/chinese-fashion-leader-7gege-com-selects-mobile-commerce-leader-digby-to-launch-mobile-retail-site-2/
 China’s Army of Graduates Struggles for Jobs, http://www.nytimes.com/2010/12/12/world/asia/12beijing.html?pagewanted=all