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How to start an IT-company in China
Hello Mr. Roncari, thank you for doing the interview with me. My name is Verena Bayer, I am from the website chinaorbit.com and I am now going to ask you a few questions about China and what your motivation was to come here.
Why did you decide to start an IT Company in China?
First of all, why a company in China. In two words, I believe China is an evolving market, where new comers can still find a relevant position. Then, my bet is on a very special target, that is, the increasing number of foreign companies interested in expanding their business in China or already set here, and requesting localised IT consulting.
Besides this, low starting costs and the extremely creative atmosphere that everyone breathes here certainly concur to suggest China as an interesting market.
Secondly, why an IT Company. Well, first of all because my background is in the IT field: I've directed another company in Italy, in the same industry. Then, because China provides a lot of young professionals with good technical skills, good communication skills, and some kind of enthusiasm towards international cooperation. Finally, as a matter of fact, China has a huge market of internet users, young people interested in the new technologies and very familiar with web applications: the ideal market for Eggsist.
What is the core business of Eggsist Ltd?
Eggsist's core business is software development and IT consulting. The software we develop is quite special: we basically apply very advanced programming techniques to serve different kinds of purposes (online services, community websites, mobile phone entertainment..). In order to do that, we have selected a small team of very highly skilled professionals, and we require each of them to spend at least 20% of their time in Eggsist training on the most recent technologies. The software we deliver is both ordered by corporate clients (international companies, for which we develop potentially any kind of software according to the requirements) and self-designed. A recent example of the latter is Matchdragon (www.matchdragon.com), a web software based on artificial intelligence algorithms, which matches Chinese job offers and job seekers' resumÃ©s... intelligently! We are also working on an innovative service based on a branch of IT called â€œnatural languageâ€, which we will provide by integrating mobile phones with an Internet engine.
The thing is, in such a huge market, with so many giant competitors, we have to be different: faster, more flexible, concentrated on technology research and able to switch to newer technologies as they get available.
When did you first come to China and what was your motivation?
The first time I came to China was in October 2005. At that time I was the director of a small IT Company in Italy, which I temporarily delegated to my business partners to come here and â€œsniff the airâ€, since a strong interest was arising all around Europe towards the Chinese market, and we felt it was the right moment to explore the ground, directly.
We wanted to understand whether it was possible to actually access business opportunities here. I spent few months in China, basically to sense the different business culture and to â€œget into the networkâ€. Then I went back to Italy, where I gradually defined the new business plan for China, together with my partners. I came back at the end of 2006, when I started Eggsist Limited.
Do you regret it?
Of course not, otherwise I wouldn't be here! After 6 months we already reached most of our business goals for the first year. It's really interesting how things get a different speed here.
What were your first impressions when you started the business?
When I started Eggsist I had the feeling that everything was extremely easy, and I wondered where the trick was. Then I realised that there is actually no trick, but the hard part of the job comes later, when you actually get to see that it's not possible to do things the same way you were used to, back in Europe. It's not possible to simply copy/transfer a business from Europe to China.
You need to face a different set of habits, a different market, a different user taste, and you have to find out a different way to make your business successful.
From having the idea, how long did it take to establish the Company?
It took â€œChabuduoâ€ (more or less) six months. Of course this was not only for the company set-up, but mainly to explore the real business convenience (costs and market possibilities) and to select the right legal/commercial consultants to guide us through the whole set-up process. It's all about getting into the network.
Has it been difficult to communicate with the local agencies?
Not that much, as there are some foreign consultants with consolidated experience, who can deal with local agencies while supporting you in a very effective and "western" way. Everything went smoothly during the whole set-up process.
So you didn't have any problems then.
No, I didn't have any problem. The thing again was to find the right connections, so it took a while to do that but then the communication between me and local agencies was perfect.
Has it been difficult to find appropriate staff for your business?
This was the greatest challenge for us. We are an IT Consulting Company: we provide services, we don't produce goods, so our raw materials are people and brains.
In our work everything depends on the technical quality of HR, and on the interaction among the people in the team. This was the main issue for us, as we had to face different ways of interacting, different ways of suggesting solutions, of managing the whole project life-cycle. So, it took a while for us to find people being both good technicians and "western-minded" professionals. This may sound funny (we've come to China and we're looking for western-minded people??) but, as matter of fact, as an entrepreneur I have a certain business model in my mind, which is of course inspired by western principles and culture.. and it also implies expecting a certain kind of feedback from the people I'm working with.
The difficult thing was, and partially still is, to find the right balance between two different business and relational models. I don't want to assume that the Western model is absolutely the best.. so the challenge is rather to find a right balance: this is what you have to do to deal with Chinese people, with Chinese market and with the local way of doing things.
How was your move to China? Did everything go smoothly?
I didn't have any problems. It was just about finding the right place where to live, finding the right office, and again, the only thing which took some time was to find the right connections. This is really a thing which I think people should take into account when they move to China and decide to set up a business in China.
Was it easy to rent an office in Beijing?
Yeah, this was no problem. The "agent" figure is very common and also quite convenient in China, so that you just have to hire a bunch of agents (with no commitment) and give them your office requirements, such as size and location. Some patience and a little bit of experience in the Chinese game of bargaining is the only thing you need to get a good solution.
What do you like most about living in China?
Surprisingly it's not about the business, it's about the people. I really like their hospitality and their positive attitude towards â€œthe otherâ€, â€œthe differenceâ€, quite far from the western perspective towards immigrants or, in general, towards different customs and habits. Also, the common relaxed attitude towards problems and social customs, as opposed to the Milanese stress coming from a crazy pace of life and strict social rules.
If you are working here, it's so pleasant to get out of the office and fall into this atmosphere, with people dancing on the street, playing badminton or sitting in circles on wooden stools while playing majiang or chess... well, taking life easy. That increases life quality, I really believe that.
So it's a good balance.
Yes, I think here you can find a good balance, whereas in my original environment stress is a kind of common â€œdiseaseâ€, as you found it in many different levels of social life, from study to work, to social life. Here business is growing fast, and business men are sharks, just like everywhere else, but somehow it's all still based on a different way of living and approaching problems.
What are the main differences between Chinese and Italian Business Culture?
In my case the business culture is nearly opposite, at least on two core issues: business size and organization.
First of all, size: Italy, and especially Northern Italy, is the land of small-sized, family-managed firms; there are very few big enterprises, whereas here the standard is normally several dozens of employees. My business model for Eggsist was certainly affected by my original background, as our goal is to establish a selected team of excellent professionals, and during our job interviews we often got a surprised feedback from candidates, who had some troubles in understanding the reason of such choice! Here everything works on big numbers, both on the production and on the market side. And that's radically different from the concept of an agile team of smart minds, where each member plays a crucial role.
The second big difference, still related to the first one, is business organization: Chinese companies' business model is normally based on hierarchy, partially due to the need for dealing with their size itself. Keeping everything under control, and everyone in her/his place, is an easy way to keep a big organization together, above all in a market where efficiency is historically ensured by low labor cost efficiency.
My business background is completely different, as in Italy a manager normally has to work on effectiveness, meaning that he/she has to try and maximize every person's productiveness: fewer people, but autonomous and very productive, and, in the modern business approach, this means to experiment new agile methodologies aiming to improve the value of every human resource.
In the first months, we had a lot of troubles in trying to do that on our Chinese team, as it's a way of thinking which is really different, and it affects not only the way of doing business, but also the expectations of Chinese professionals themselves.
Can you give us an example of a typical experience in China, which you wouldn't expect to happen in Europe at all?
Well, there are many. When you see more than 20 people working on a small hole in the street, or when you see people walking around in pyjamas, or dancing in groups around a CD-player... or when you want to cross a street and get directed by a couple of yelling "traffic-light-assistants"... there are too many examples!
What has been your worst / best experience in China?
Let's start with the good one. I had the best human experience of my life, with people ready to help me with no other purpose: every day I met people willing to know about my country, my family, my work, and making me gifts just to express their desire to make a friend, and no-one ever accepted any compensation from me, not even when they offered me a dinner or a room for the night.
And the worst experience?
Unfortunately, this has to do with business! It's a member of our team, whom we really believed in, and trusted. But then, suddenly, he stopped coming to the office with some random excuses, in the middle of a project... and, one week later, he let us know - by email! - that he had found another job!
The thing is that this guy didn't send out any signal that there actually was some problem, should it be about money, about his project tasks, about Eggsist's way of working.. so that we didn't have the chance to try and find a solution. Unfortunately, talking to some other local entrepreneur, I got to know that here this is not unusual at all; it's kind of part of the local business culture, and companies deal with that. Again, it's probably because of a system where the individual value is not as emphasized as it is in Europe, so here companies normally manage roles rather than professionals; therefore people can be replaced quite easily.
Is there anything else you would like to say, maybe a tip regarding starting a business in China?
There is one thing I could suggest, according to my experience, and it is not to expect to just duplicate or transfer a business from â€œthe westâ€ to China because it's just not possible. I think everyone should take into account the fact that it's necessary to deal with different standards of communication, a different market, a different way of working, of hiring people and rewarding people for their work.
So, I'd suggest to be as much curious and open-minded as possible, because here things work differently, and sometimes it takes a good amount of patience and flexibility to overcome the obstacles: a well balanced mix of western and eastern principles is probably the best way to develop a successful business here.
Thank you very much for the interview and good luck in the future with your IT Company Eggsist.