Doing Business in China...in the Grey Zone

Recent Stanford MBA Grad Jason Jianyu Tu was born in 1989 in a small village 125 miles south of Xian--in what he termed a "sixth-tier city," meaning, "There's a very slim chance you can be successful." (See post one.) His parents, well aware of this, searched for ways out of this small village, and eventually found a path to Xian. (See post two.) The big city of Xian--although only a hop, skip and a jump away--was like a different planet, with buses and fast food and a really tough school. (See post three.) Jason gave up trying to do well in school, instead focusing his energy where his passions lay: guitar and blockbuster movies. (See post four.) While Jason's high school headmaster did not have high hopes that Jason would get a college degree, Jason jumped through hoop after hoop to get accepted to the University of Washington. His only problem? Funding. (See post five.) Thanks, however, to a mass e-mail marketing campaign, Jason found himself accepted to the University of Evansville in Indiana. (See post six.) He was thrilled...until he landed in what felt was the middle of nowhere. (See post seven.) As Jason was one of two Chinese people at the school, he was immediately the expert on anything and everything that had to do with China. (See post eight.) Not only that, but he was soon paired up with an American host family, something he looks back on as a very important part of his life. (See post nine.) Despite the warm welcome in Evansville, he decided he needed to move to a bigger place. (See post ten.) Upon graduating with a degree in Economics from Purdue University, however, Jason still had trouble finding a job. He was initially relieved to get a Research Fellowship at Toulouse School of Economics in France. (See post eleven.) The inefficiency of France drove him nuts. (See post twelve.) When his professor failed to grade an important exam, Jason realized he was in the wrong spot. (post thirteen.) After a two-year stint working in Hong Kong, Jason applied to Stanford MBA program--and was accepted. (post fourteen.) As part of the MBA program, he was charged with leading a group of students to China. (post fifteen.) 

As a result of his trip to China, Jason changed his mind about where he wanted to be. “In the past only bribery or unofficial ways or connections (guanxi) could help you achieve. But with the technology wave there are so many entrepreneurs coming forth. Entrepreneurship and technology is really changing the landscape of China.”

Jason decided he wanted to be a part of that new landscape. Still, I'd heard the  nightmares of people returning to China with big dreams that got stomped on. Jason agreed.

“I am concerned about the (Chinese) government creating obstacles. One of the main headaches is not developing technology or getting the company set up. It is actually getting licenses from the Chinese government. 

“But at the same time, if I were to start a company in the U.S., I wouldn’t be able to start it at all because there are very strict legal requirements and compliance requirements in the finance industry. 

“In China, because the rules are not so well-defined, you get to operate in the grey area. Why do they (the Chinese government) allow this to happen? One thing is because there’s such a huge population, people need to feed themselves. Because so many people want to make a living and management in China are still learning to manage companies, small businesses/entrepreneurship are really flourishing.  The government is deliberately leaving spaces for them so that Chinese people can think of all ways to survive. 

“For example, in China there’s a lot of street vendors, small shops. In the U.S. you have Safeway, Whole Foods, etc. that dominate the industry, leaving no chance for the small vendors. The same is true in the finance industry. There are so many dominant players, and their rules are so well-defined, if you don’t have a very firm kind of financial background like from the Walton family, you can’t start anything because the number of licenses you have to accumulate—it takes a long time.  The best you can do is join one of these large groups.”

In August, Jason moved to Beijing to start an investment-product company called Mioying, which means ,”Earn Smartly.” He managed to gather a team of the Bay Area’s top engineers to work with him. “I feel fortunate to have cohorts who are willing to give up high salaries to go back to China and make a difference.”

The company will allow Chinese people to invest in American stocks and mutual funds. “China has tight control—so people are not able to buy American investment products or Hong Kong investment products.  The U.S. is still financially the best market to invest in. Through our platform, we will be providing access.”

(To Be Continued. Next: For Young Chinese, Freedom of Speech isn't THAT Important.)