Fritz Demopoulos, former CEO of Qunar.com, talked with Sarah Lacy today about his story here in China as well as how he views the current market at TechCrunch Disrupt: Beijing. Fritz arrived in China in 1997 while working for News Corporation, his Chinese language skills are poor (which gives me hope), and he’s been quite successful despite conventional wisdom.
When asked about the current environment in China, Fritz felt that things were good for certain people. Investors are making out rather well(SoftBank, DCM, etc.) – better in China than in the United States. Aquisitions have not be come big yet, but it is starting rear its head. Fritz felt this may have been due to the competitive nature of the Chinese business world. He referenced Romance of the Three Kingdoms when trying to illustrate that it sometimes felt like everyone was fighting everyone, building distrust. He feels pride is starting to give way to business sense though. Banks and law firms are starting to see an increase in M&A which is a good lead indicator of an industry shift.
As far as foreign companies failing in China though, Fritz doesn’t really buy the arrogance factor. While that may play a small part, he believes its the “Foreign” factor. The “foreign” in foreign companies that kill them. The problem, in his eyes, is that companies are trying to run these expansions from abroad. If they would build a “Chinese” company, even if it is made of foreigners, because it takes, dare I say “grass roots” effort to work here, then they would be successful. The founders/employees needs to have lived and worked in China. In his eyes, those are the foreign companies that succeed here. The culture and the demographics here in China just don’t meld well with U.S. corporate practices.
There are four types of entrepreneurs that make it in China right now:
- Brokers – The middle men that find the deals and match up buyer and seller
- Those telling the story of China – PR, Media
- Those working with or for government backed opportunities
- Those creating new markets
The last is where the biggest opportunities are located, but he doesn’t think you necessarily need government support to pull this off. While showing up on the goverment’s radar is a sign you’ve really started to make it, to get started, especially in tech, you don’t need the government’s blessing. But even if you do, there are 10’s of thousands of people within China that have that special “guanxi” you need to make things happen. With those kinds of numbers, if you really have a great idea and you find you need some grease on the axle, it isn’t terribly difficult to make the right connections.
Something to remember for any foreigner coming across to start something in China, Fritz says that while most entrepreneurs here are the same as anywhere, he feels that there are two main differences. They are more competitive and more flexible – be prepared.