Editor’s note: This article was first published in May 2011. The context is Spain in deep crisis with about 5 million unemployed, China about to become the world’s leading economic power, and todo a cien discount shops.
Today we focus on the 10 Chinese commandments for entrepreneurs, and we’ll explain each point so that we don’t end up thinking their success in business is down to luck, exploitation or mere chance.
We’ll see that their culture is based on honour, hard work and setting a medium- to long-term goal. Any Chinese person, business owner or not, considers it a “disgrace” to work for someone else all their life, which is why entrepreneurship runs in their blood. With this attitude and some initial sacrifice, they make the difference and are bringing their country close to becoming, if it hasn’t already, the world’s leading economic power. Meanwhile, in most countries we prefer to treat ourselves to luxuries that later leave us living close to the poverty line.
1. Choose good premises, in a good location, but cheap
Part of the success of Chinese entrepreneurs lies in the location of their businesses. They don’t bother drawing up a strategic plan, but they use common sense to judge whether a shop will succeed based on the foot traffic in the area.
They are born negotiators, so they will probably look for premises whose previous owner failed to make the most of them by choosing the wrong type of business. They will negotiate the price mercilessly. They know what they are willing to pay and won’t pay a single euro more than they had planned. The advantage for the landlord is knowing that, to this day, the Chinese community has a 0% default rate. There is currently not a single known case of a Chinese entrepreneur failing to pay the rent.
2. Start as early as possible
The average age of a Chinese entrepreneur is 23, although some start at 18. They aren’t afraid, and they know the worst that can happen is that the business fails, which will give them experience for the next one.
In most cases, Hispanic people don’t start a business precisely because of that fear, whereas the Chinese consider fear an unnecessary brake.
3. Don’t get attached to the business: if it doesn’t work, change it
They don’t like swimming against the tide. If a business isn’t going well, they don’t wait for losses to pile up. A Chinese owner wants the business to start turning a profit within the first two months, and it must grow by at least 20% over the following six months. If it doesn’t, they won’t hesitate to pull down the shutters and switch to a different type of business.
Hispanic entrepreneurs often make the mistake of trying to keep the business afloat no matter what, and before they know it, they end up closing with an astonishing pile of debt. As Donald Trump used to say, a business is a business, not a child.
4. Competition is healthy
While Hispanic business owners are alarmed when someone opens a similar business across the street, the Chinese entrepreneur is pleased. The more businesses of that kind open, the clearer it is that they chose the right business and are on the right track. Chinese entrepreneurs even call on one another to move into deserted streets and fill them with their businesses. In four months they can create a Chinatown, turning streets that once had only closed shops into busy shopping streets.
“If we manage to bring in customers, when they come they won’t buy only from me; they’ll also take the chance to buy from my friend’s business.”
5. Don’t settle for a single business
One problem for Hispanic entrepreneurs is that, with only one business, they end up becoming slaves to their business. The Chinese entrepreneur uses a different strategy. When a single business takes up a lot of their time, which is a good sign in itself because it means the business is profitable, they usually open one or two more. That way they can no longer spend all day on a single business, and they automatically become a business owner in the full sense.
6. For staff, Chinese workers are best
We explain this point because the documentary doesn’t mention it. Where we see exploitation, when a Chinese worker earns €20 a day without social security, they see a business partnership: over time, the entrepreneur will finance the projects of every worker who starts out alongside them.
A Chinese worker isn’t exploited; rather, they help the business owner grow and get the business off the ground. When the business is doing well and these workers have gained experience, they launch their own ventures and hire new workers on a low wage. Those workers, in turn, will start their own business in about five or six years.
The Chinese are hard-working savers and form a community in the full sense. Their honour-based culture means they aren’t afraid of being betrayed by someone they helped and gave a job to. If that ever happened, the person would be expelled from the community and would never again receive support from any of its members; in fact, they would be invited to leave the country “dishonourably discharged”, as in the army.
7. Never ask a bank for a loan: family and friends don’t charge interest
This point is unthinkable in Spain because of our culture. The Chinese work and save for years without spending anything on leisure. As the documentary says, if a Chinese entrepreneur needs €15,000 to open a business, they’ll go for it as soon as they have €15,100. If they need a bit more, they’ll ask relatives, friends or even their own “competitors” for the money and get the financing without any problem. But asking a bank for money? Never.
8. When a sector is saturated, look for another: spot business opportunities
Spain is going through a tremendous crisis: businesses are closing, there is no financing and unemployment has reached 5 million. The system is failing, while the Chinese open profitable businesses, create jobs and grow. Today they are the group that pays the most self-employed social security contributions per inhabitant. They don’t see the crisis; on the contrary, they see plenty of business ideas.
Wherever a Spanish business closes because it isn’t profitable, they take it over and make it profitable.
The Chinese arrived with restaurants specializing in “Chinese food”. When the crisis hit, it’s true that some had to close, although others are expanding. They switched their business model to bazaars in central locations or todo a cien shops (the Spanish equivalent of dollar stores), where, being staffed by their own people, they achieve prices that compete with Spanish-owned bazaars.
Now they have spotted a business opportunity in Spanish bars, where, by combining friendliness, a clean venue and exceptional attention to the customer, they are enjoying well-deserved success.
In short, they find business opportunities in a country where we are unable to find them.
9. Give customers what they need, even if you don’t understand it
Something that sets Chinese entrepreneurs apart is that if a single customer asks for a product they don’t stock, within a few hours they are already looking for a supplier who can provide it. They always listen to the customer and try to stock all kinds of products, some in greater demand than others. If there is something that can be sold and even one buyer, why lose a sale?
10. Work and save, even if you live in poor conditions for a few years
Why do they manage to save while we find it so hard? The answer is simple: they are willing to make sacrifices we would never make. Twenty people live in a 70-square-metre flat, so the rent works out very cheap. They have no bank debt, which is our worst enemy.
That’s why, as the documentary rightly says, a Chinese worker earning €600 can easily save €550. They don’t go out, they don’t indulge, and even when they have money, they don’t live like the rich. Once they reach their goal, they allow themselves all the luxuries they once worked for.
They are an enviable community from which we have a lot to learn, since it is more than obvious that their system works.
Featured image: Daderot, CC0 1.0, via Wikimedia Commons.
