Student Wants Views On Biz In China

My comments are between the *** ***...

Hello John,

I have some questions and concerns about getting a trading business going. Right now, my good friend (A Chinese local) who has a background in studies of world trade has decided to start a business with me. Our biggest problem is that we are not even close to having the sufficient funds to register capital for a company (American, Chinese, or otherwise).

***Money is never the problem in business, the only problem is getting customers. I am not sure what "register capital" means, but why bother forming a business before you have customers?***


The good news is that we are interested in the renewable energy sector and my partner has good connections with a prominent solar business in his hometown of Tianjin.

*** I am interested in renewable energy too. I am on the listserv for http://www.nanosolar.com/ because I hope to install their solar panels on my roof soon. But I'd never go into that biz, since I have no passion for it. Have you reflected whether or not you are making the error of organizing around a resource, and not around an opportunity?***

The owner of that company has agreed to allow us to export products abroad, and would give us access to wholesale pricing and free-reign to trade any of her products.

***Please understand it is not remarkable that a businesswoman would allow customers to buy her products. I recommend you move away from "feeling lucky" and get to "makes sense."***

Once we are registered, we could begin to locate buyers.

***Why not locate buyers first?***

Our selling strategy is to start with the U.S market and solar businesses in South Carolina and other states. The owner of the solar company is currently only doing business domestically within China.

***Certainly an english-speaking agent in china is a benefit to an importer in USA, but why South Carolina? Would you not be better off to merely consult the Directory of US Importers for solar panels and then contact those USA companies with specs and prices? Your pitch would merely be "we can deliver solar panels at 68 cents a watt, and believe your company will buy from us. Is this true?" Don't even try to sell yet, just get all the cards on the table. Find out if so, and, if not, why not?***

Our financial woes have forced us to think creatively about what process we will use to get ourselves going. I recall you saying that a good entrepreneur always starts and proceeds with “low-risk”. We do not want to look into getting a bank loan or borrowing money from other sources.


***You have no financial woes. Your problem is you have no customers. Mustn't confuse the two. Yes, entrepreneurs are paid in part to eliminate risk. Now here is that part you need to unpack...

If you have no customers, you need no money...

If you get any money before you have customers, you'll spend it on things which are unlikely to in any way serve customers...

If you identify customers, any money spent thereafter will likely be allocated to please customers...

"Customers" are likely to be just one USA importer, who neither needs nor wants your opinions on the USA markets. ***

My partner has proposed that perhaps we could get our feet wet by working directly for this company as an export broker. That is, exporting under the umbrella and name of the company. This would be a way to also secure a visa for me after my contract expires with my current employer (a school). This would also be a way to gain valuable experience from working hands-on.

***You go to work for the company, say Tianjin Solar, under its umbrella, and set up export customers in USA, and of course you'll be paid after you get the customers lined up. You succeed in getting your feet wet. Your visa expires, you get the boot from China. Tianjin Solar has no need to support you. The USA solar panel importer continues to do business, and has zero interest in talking to you. Nix-nix on that.

Instead, how about you first meet the communist party official who issues visas. Tell him your plans to export from China, but make it clear it is only plans so far. Next, lose the partner that suggested you go to work for Tianjin Solar. Next find out if there is market in USA for Tianjin Solar, on your own, right now, by asking (see above).

If not, move onto another project, hopefully something you are passionate about.

If there is USA market, what is the business worth? Visit bankers, the Visa-meister, and anyone else who matters... tell them what their money is worth to you, the visa is worth to you, etc, and prepare to negotiate within bounds. Your partner is the Visa-meister and the banker (if you need one). When you talk to the boss at Tianjin Solar, you do so as a customer, not as an employee. You don't need friends to do business in China, you need partners in your success. Friends are for after work.***

After we earn enough money to make the funds for registering a company, then we can go from there.

***We? You mean you and the visa-meister? When you have customers in the USA, you'll tell the "company registerers" what a registration is worth to you. It is either do-able or not... leave off hope and luck and gratitude and help. Don't ever get in a position where you depend on your private expectations of fair dealing after the fact with you a mere guest in China. Make face to face "if, then..." deals up front with people who matter. My experience is the Chinese, especially the communists, honor their agreements and commitments, but are not interested in paying out to people who deal in mere expectations. And in any event, any money will be flowing thru your hands, so why let anyone else touch it. You are best positioned in China if you are the paymeister.

Yes, one does usually get ones feet wet when using an umbrella, but why be out in the rain at all? Focus on the one value you can provide, reeling in a USA importer as a customer, and then see if that is worth keeping you around, at a price that is worth you staying around. You can know this in advance. Why bother getting hands on anything else?***

Bookmark this post --- Email this post