Lessons learned launching an educational tech. startup in Beijing

This article was written by Nicholas Jenkins, founder of Language Confidence (LC). Nick is a 24 year old Australian currently living in Beijing. He sold his first business at 21, was part of startup accelerator Muru-D  and has since raised 400k of capital for his new company Language Confidence that automates tutoring and spoken assessment. LC has a team from MIT, DeepMind, Google, IBM, Morgan Stanley, GoPro, Stanford and more.

Doing business in China, aka ‘The Middle Kingdom’, as a foreigner is something that is very hard to explain to someone that has not experienced China is all its ‘glory’. 

This is an account of my experiences traveling and living in China for nearly three years; I have resided in Beijing for over a year, various regions around China for a further 6 months and seen over 40 cities and regions. I can speak day-to-day Mandarin and like to think I can hold my own at a Chinese business dinner, particularly when it comes to drinking, smoking and talking smack.

Explosive economic growth, thousands of years of tradition, a culture that is 180 degrees to that of the ‘West’ (in my case Aussie culture), a market that is the largest on the planet in terms of potential customers and a once in a lifetime opportunity are all combing factors to make attempting to do business in China one hell of an experience and a right-angled learning curve.

A bit about Nick Jenkins 

I was born in Sydney and moved to near Byron Bay when I was very young. I spent my younger years on a large property and from 8 years old onwards, my family relocated to a small coastal town near Byron Bay. I attended a Catholic High school on academic scholarship with a grand total of 44 students in my grade in year 12. Both my parents are academics and do not possess a slice of business acumen between them. My sister is a surgeon and, similar to my parents, still doesn’t really understand what it is that I actually do.

I started our building websites and working in tech not far from home and I then moved to Brisbane (‘The Big Smoke’) at 20 for university. I started and sold my first real business during my first year at university and have since raised over $500k for two other ventures. My latest seemingly to be going quite well.

This all lead to my residing in China, deals with China’s largest education firms, meeting and greeting some of China’s most influential business people and a somewhat steep learning curve of foreign cultures, delivery of value and speed needed to move to succeed (not there yet!)

Why did I choose China? The challenge of building a business in China and the sheer size of the (education) market were a big draw card. But more importantly, it’s a maturing market that offers even greater opportunities down the track. Risk = reward. And China is a huge risk.

See below a 360-video where Nick explains his startup journey in China:

Copycats, speed and culture

Chinese culture is hard to explain unless you have firsthand experience and business culture is even more complex. Take a look at these photos (traffic jam and parking right angle).

Photo 1: this was taken near my apartment in Beijing. The traffic lights had stopped working and a 3-4 hour traffic jam proceeded to appear. Why? Let’s look at Photo 2.

Photo 2: Car doesn’t fit? No worries, let’s just occupy the sidewalk.

Whilst comical to some extent, these photos are a great representation of Chinese business culture: leave any form of gap and no matter the consequences, someone will figure a way to jump into it. From the western POV, this is seen in the ‘copycat’ business culture in China where companies will find a niche, achieve some form of success in the market and quickly be copied by competitors.

The perfect example of this is the recent event of shared/pay per use bicycles in the major cities. First there was oFo bicycles (yellow), quickly followed by MoBike (orange) and within 1 month, the sidewalks were full (yes, ridiculously packed!) with a mixed bag of brightly colored bikes. (yellow, organse, green, blue, silver and more).

OFO Bike, in 2 years, has achieved over 20 mln users and a valuation north of $2bln USD.

On the concept of saving and giving ‘face’

This was a truly confusing concept when first confronted; the concept of saving a giving ‘face’ to others to appear to ‘win’ (or not, I am still figuring this out, though I have learnt to emulate this behavior)? These behaviors are not unique to China in any way thought very obtuse to Australian culture as a whole.

Saving Face: Appearing not to be hungry, tired, injured or in anyway reduced in capacity.

Giving Face: Building others up in form of vocal compliments, paying for things or even serving food at formal dinners whilst leaving your plate empty.

When combining this culture with business, it tends to complicate things. We learnt the hard way.

One of China’s largest education firms, let’s call it company X, took a meeting with us in mid 2015. The first meeting was very exciting; they rolled out their head of partnerships, investment, products  and the list goes on, to the point where there were 5-6 people standing in the board room. Meeting went well and everyone felt a buzz. Great.

Next face to face conversation was similar, though with less grandeur, during the 3rd quarter of 2015. Again, very positive. Still buzzed.

3rd and final face to face: less people. VPs falling asleep at the table. Not so great. However, the hussle never stops, and we proceeded to agree to a trial agreement. For a baby start up, this was game changing.

NDAs done, contracts done and pilot delivered: 6 months of back and forward and focus for this moment. Thousands of hours, dollars and dreams later and the emails suddenly stopped.

1 month later, still nothing.

Then, finally another month later, at 11pm on a Friday night:

“Thanks for delivering the pilot. We have agreed internally to hold off on any partnership for now. We wish you all the best.”

F*ck.

Hindsight screams that this deal was never going to happen. However, first time at that level of Chinese business was one of the steepest, realest and most humbling learning experiences to date.

Finding your way in the maze

If you’re travelling to China, please, please learn some basic Chinese and have your desired location written in Chinese, in large font, for the taxi driver to read. Get a Chinese sim card, and a VPN, so you can access Google et al. But do not expect Google Maps to work, even with a VPN.

The number of times I have been lost in a taxi, unable to speak the language, missed appointments, spent hours searching and asking strangers if they can speak English and can help (Ni hao, ni hou shou ying wen ma?) will make for a great book when I am older.

One of my most memorable experiences is when I was in Guangzhou, one of the less international T1 cities in China. This was for a deal similar to the above, ie: bullshit.

Before funding was a real thing, hostels, and the cheapest one in the city, were always the ideal place to stay. This usually was someone’s apartment whom had managed to get their ‘hostel’ listed on HostelWorld and was usually around $8/night, the bathroom smelt like a sewerage plant, the beds were literally plywood (yes, have actually had a plywood bed in Shenzhen), and pillows nonexistent. Who needs chiro?

This particular trip, my flight from Beijing was delayed 6 hours from an original 9pm landing time. 3am arrival, large local address in hand and taxi gets lost, of course. Eventually we arrive at the address, pay the taxi the last of my RMB cash and enter the building. 25th floor, 3.30am and I knock at the door.

Nothing.

Knock again, loudly. Finally, someone opens the door. They look at me, me at them, they shake their head and close the door.

20 minutes later, using a translator on their phone, it turns out the apartment is no longer a hostel. So, nowhere to stay, no cash and no Chinese sim card and a meeting at 11am and not a soul to be seen anywhere in the area.

Solution? Dragged my bags around until I found an ATM, which then proceeded to eat my card. Now minus a debit card too. Yay, China.

4 hours later, I walked into a hotel, managed to withdraw cash from my credit card, and had a quick shower and a nap before off to meet the potential partner.

None of these were what I would classify as ‘bad’ experiences. They were just experiences in one of the oldest (Han Chinese one of the most successful ethnic groups ever), most complex cultures on the planet. China is an interesting place to be and there are opportunities galore and I have met some of the most fun, interesting and unique people ever whilst living there. I don’t plan to move back to Australia in any great hurry and look forward to conquering the Chinese education system in the coming decade. The culture, however, is something that I safely say I will never conquer.

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