There have been a lot of hypes and advertising about doing business in China, and if you search “doing business in China” in Google, you will find some articles here and there, which you might find it a bit confusing, as you can’t be totally sure about whether the information is up to date and accurate or not.

That is the reason I am conducting a Chinese entrepreneurs interview series; to report the truth and write an authentic story about Chinese entrepreneurs, and the difference between doing business in the East compared to the West.

Recently I have had a two-hour interview with Peter Lee, Co-founder and CEO of a fast-growing organic food Internet start-up in China. I interviewed Peter via WeChat.

After my brief introduction, he said: “The start-up and entrepreneurial spirit in China is getting strong. I think it is stronger than the West to certain extent.” The Chinese Government is encouraging people to make use of the Internet to innovate and become entrepreneurs.

Chinese start-ups are popular amongst the younger generations: the Gen X, Y, and Z.

He said: “On Zhongguancun Street in Beijing, you will meet someone who is either an entrepreneur or an investor.”

“The generation is changing. Most of the Chinese graduates whom I know want to start their own business, instead of working for someone else.”

About Peter Chan’s business. 

He and his seven Chinese partners/shareholders started a Chinese organic food Internet start-up called Best Farm (果佳队 in Chinese) in May 2015, and the company is now employing some 20 staff members. He said his partners are mostly his inner circles such as family, relatives, friends, ex-colleague etc. because they are people whom he can trust and can work together in a long term.

Peter said: “Starting your business is hard. You want to partner with a trustworthy, committed, and like-minded person whom you feel comfortable with, so that both of you can overcome all the difficulties and challenging circumstances, no matter how difficult the situation could be. It is like you are both feeling comfortable with revealing and expressing your emotions on a day to day and on-going basis.”

I understand what he meant – it is quite similar to brotherhood or emotional bonding in the West. As a native Chinese, it is not surprising to hear that most of the Chinese companies are formed by family and people in their inner circles. Chinese people want to work with someone whom they trust. This remains quite true until today and tomorrow, which might be a bit different from the West such as in the USA.

Tell us about your background. 

“When I graduated from university in 2009, I was working as an engineer. In 2011, I quit my job and then I joined my father’s shopping mall business. I helped my family business all the way until 2015. I worked all the way up from reception, sales manager, HR manager to director. I wanted to transform the shopping mall business into a new Internet business model, but the shareholders would not agree, so I quit the job and founded my own organic food Internet start-up company.”

What inspired you to start your business?

“In the USA, farmers are very rich, but in China, farmers are very poor. In China, there is a lack of industrialisation, equipment support, etc, since Chinese farmers couldn’t afford to standardise and industrialise their production. So the farming business falls into several business people.

“I would like to help Chinese farmers to sell their products directly to consumers without the need of going through layers of people and gain most of the profit. During my start-up journey, I met different people who inspired me to do better. When I and my business partners visited a farmer in the North East of China, we found that the product is very good, but the family is very poor, and that inspired and motivated us to make the world a better place.”

What kind of challenges have you faced thus far? 

  • People – Being a first-time entrepreneur who stepped into a totally new field that I had no experience. I had gone through the challenges and the whole journey of finding the right partners, identifying good employees, etc.
  • Direction– The worst thing is not lacking money, but is lacking direction. Lacking direction means no hope. Since we had no prior experience in running an organic food Internet business, we had faced many challenges and setbacks in finding the right direction of the business proposition. But luckily I and my partners went to Alibaba’s headquarters and received a lot of inspiration and help. After our visit to Alibaba, we decided that we needed to do a proper branding for our organic food Internet start-up.
  • Management – When you manage two or three people, communication is much easier. But when it comes to 20-30 people, some issues are inevitable. When I worked in my family shopping mall business, the management style was very traditional – i.e. a top-down hierarchy. When I founded my Internet start-up in China, we tried to use a different management approach, but in the end I found that the traditional management style still worked well.
  • Government – In China, mastering a balanced relationship with the Government is very important, especially in our industry.
  • Finance – Initially, we didn’t know why we needed to finance because we have partners and partners contributed money into the business. But later we found that our competitors had raised funding and made rapid expansions, so we found that it was not just the money that was important, but the connection to people, resources, influences, advice, knowledge in the industry etc. are critical to the success of the business in a long term.
  • Quality control –Since we are not producing the organic food ourselves, it is important to have good quality control.
  • Price control –Since we are not in charge of the production, it is difficult to control the pricing of the products.

And what you have done to overcome these obstacles? 

“Being an entrepreneur, I needed to adapt to the ever-changing world and get familiar with the industry that I had no prior experience at all. So being a quick, good and independent learner is very important. I read a lot of books to seek for answers. I found talking to other entrepreneurs helped me a lot as well.

“Our competitors get the support from venture capitalists (VCs) which enabled them to grow fast. Since VCs can help start-ups to utilize relationships and resources to expand the business. The funding company will see if the founder is trustworthy, if there is a market, and if other people will also invest as well.”

For Marketing, we rely on Chinese social media and community a lot, together with Chinese search engine optimisation and Chinese video marketing. We found that using Chinese social media and community works well for us. 

At the end of 2015, I have spoken to three financial institutions, of which two of them wanted to invest in our business. We are looking for viable business models, agricultural resources, finance, personal relationships, etc.

What advice would you give to those who want to start their business in China? 

  • Don’t blindly quit your job and start a business that you don’t know if you don’t have some basic foundations. Being an entrepreneur and CEO is not easy at all.
  • Don’t give up once you have started your business.
  • Choosing the right partners is extremely important – I suggest finding partners from your inner circles such as family, friends, etc.
  • Find the right business direction – It is important to stop dreaming and find the right way to position your business. Be practical, execution is very important.
  • Find the right VCs –It is important to know when it is the right time for more investment that’s not only simply to raise funding, but also getting the connections and knowledge that the investors have.
  • Keep finding the right people – In terms of finding partners, it is important to measure how much the person has given up to join your company, it is either that he had made commitment in investment or the person has given up his stable high-paid job with a big company. I found that the person who had made little sacrifice couldn’t sustain very long in an early start-up process since there is no income yet. In terms of finding the right staff members, it is important to look for skilful people to get things done for early start-ups. For a big company, it is fine to hire by character since big companies have the time and money to wait and train the person.
  • Division of labour – Division of labour is important for start-up businesses, it is very important to assign tasks by ability and interest. What works for us is that we divide the group into three: the leader tends to be older, followed by one male and one female who are younger.

To learn more about Peter Lee, visit  http://www.txhnys.com/en/.