I’ve been in China for a year working in a joint venture with the China Medical City Government and it has been a terrific education and given me the opportunity to learn the business practices undertaken by government officials, their close associates and partners.
I’ll start with the positive aspects of starting a business in China;
• The optimism and willingness to take risks
• There is a hardworking talent pool in the major metropolitan areas such as Shanghai, Tianjin, Shenzhen, Suzhou and Beijing. Salaries are not as low as one might think for people with experience in biotechnology and pharmaceutical sciences.
• The availability of laboratory space, although it typically needs more investment that one might expect to make operational.
Some of the negative aspects of running a business in China;
• Negotiating with a Chinese national typically is not focused on a “win-win” outcome. The perspective is that one hasn’t won unless the other party has lost.
• Contracts, even after signed, are continuously under negotiation.
• Contractually defined funding, linked to milestones, is never on time in spite of verbal commitments, and business is always in “start/stop” mode due to the availability of money.
• As part of normal business practice there is the tendency to revert to an inefficient bureaucratic process if one has not been defined at the outset.
At this point I have withdrawn my involvement with the joint venture until the government has tangibly demonstrated their commitment to consistent funding and government-imposed management processes are streamlined. I can be more specific if there is interest from the readers.
My experience may be tainted by my interactions with the China Medical City management, but I remain upbeat about China and the prospects for innovation, business development and biotherapeutics development for the international and domestic markets. My advice at this point is, if you want to start a business in China, don’t have the government as your investor at any level, because their system of incentives and political motivations are not aligned with what is typically needed to mitigate the myriad of risks that are inherent is starting a new business. However, don’t for a minute think that the local, provincial and central government can be ignored. Having someone in your organization devoted to working with the government employees, and developing collegial working relationships at all levels will be critical for your business. You will need their support throughout the evolution of your company.
Please feel free to post questions and comments, and I encourage all dialogue on this subject.