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  • Failure to Success, You might never know these stories

    Post by : expatree

Thanks to government officially support, nowadays thousands of startup companies are born in China, not limited to local entrepreneur, more or less foreigners intend to setup their own business. In a rough figure, average 10,000 new companies were daily registered from 2014, the huge investment news and successful fundraising activities has always been an interest of media and public, everyone dreams up “a billion super unicorn” in opposite few people pay attention on those facts of failure.
In 2016 it shows most startup companies are facing a frustrated situation, lack of financial sponsorship, unexpected weak market etc. leads to a difficult decision, continue “Go” or “Not Go”. A Chinese saying, “Failure is the mother of success”, it's a good time for us to recall  lessons learned from the failure rather than the fact itself, even those success had a painful experience you might never know this.

Alibaba group founder, Ma, aged 35 started this business in 1999, after 2 projects were failed. In 1994 Ma opened a translation company but higher operation cost pushed him to sell goods on a flea market in order to keep daily business running. In 1995 Ma and partners raised 20,000 RMB with a “China yellow page” project startup however he gave it up on the way due to a huge argument in the team.

A rich failure experience provides Ma a deep insight of “mistakes”. General speaking 95% startup companies will go bankrupt, if you could avoid these mistakes you ever had then you will remain in the list of 5% survivor.

Wechat founder, Zhang, ever had an ownership of Foxmail with 2 million active users as well as a biggest shareware in China. Although Foxmail owned amounts of users, it always lacked of profit model in a long term perspective. A rapid user explosion brought a huge pressure on the daily operation instead of financial benefits, finally Zhang sorrowfully resigned and sold Foxmail to other company.

In China, most of business still rely on the contribution of population dividend, and especially in internet industry we believe “Gain more customers is important than build a clear profit model”, but Foxmail story tells us a controversial opinion.

Xiaomi Mobile founder, Lei, influenced by Steven Job’s story, decided to create a famous software company when he was studying in university of last year. Unfortunately new company had no clear business service scope, they vigorously pursued whatever leads to make money, on the other hand equivalent shares mechanism caused a wide divergence of opinion on strategic decision making. In the end company had to be closed after 6 months.

Homogeneity is a common phenomenon in the market and it will become a competition of investment capitals. In addition a good balance of team structure is very important at the beginning stage, because it’s a mature professional attitude to a company rather than a workshop.

Besides these, when we advocate “creative”, “innovative” new business, we found young entrepreneurs sometimes abuse these concepts, a lot of projects finally went to dead, not because “crazy idea” but because of unrealistic demand and the violation of economic model.

Demand, team, capital are three key dimensions when we review new project.
One tip for foreign entrepreneur who starts business in China, we have to pay attention on a gap of cultural and user behavior between China and your home country. For a case study, one well-known fashion brand meets a straight conflict of global marketing strategy against local tastes even if its Chinese online shop was successful launched with nearly 2 million sales volumes.”
said by Expatree Founder, Gordon
Date:2016-05-28 12:09:24
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