Expanding into China from Singapore: The 101s of market access via Suzhou

Honest truths from an entrepreneur and an incubator

As part of Entrepreneurial Link: Singapore x China, NUS Enterprise and BLOCK71 Suzhou’s Deputy Director Hui Kwok Leong, and VRtist’s COO Herbert Wang joined us at BLOCK71 Singapore for an afternoon of candid sharing on market and growth opportunities in China.

The focus? Key opportunities for Singapore-based companies to expand into China — and the first steps of what you need to know to adapt to aiming to serve 240-times the population size of Singapore, and beyond.

Read on for our takeaways from both speakers, briefly broken down into discussions on (1) When to explore the China market, (2) How to go where the talent and resources you can afford are, (3) What to know to tap on local government grants, and (4) Why tapping on Enterprise Singapore’s resources, are all key in ensuring strategic next steps in a pretty heavy investment.

If you don’t have a product, don’t bother coming to China

So when will you know you are ready?

‘’Early stage” has quite a different meaning in China. Incubators (like BLOCK71 Suzhou) are now focused on targeting and interested in working with growth stage companies.

The amount of RMB floating around in China is enough to get the government concerned and moving a clampdown on money floating out. While investments are being poured into new business models — whether money can be made remains the question — so know how to answer that for your own business, and for your potential investors before the tide shifts.

If you do, patents are key, and not worthless

And if you do have a product, get around to securing an IP protection as soon as possible, else you will be copied in a flash.

On VRtist, Herbert shares that though they have a secured patent, the going has been tough. He gives his advice optimistically: If you want to grow faster, focus on being faster and stronger, if not, put something in your product that makes it special, not easily copied. Find the loopholes: sign exclusive agreements with valuable parties — from manufacturing to large corporate buyers, to capture the biggest pieces of the pie.

Kwok Leong warns: Even though you might think your product is special, coming in at this stage of the game to compete in a Tier 1 city (Shanghai) will be tough as a young company challenging the incumbents. Tier 2, 3 cities may be nascent in its tech development and adoption, but being an early mover can do you good. Just remember to move fast.

Mobile, AI form the holy grail of success in China, apparently

While Kwok Leong asserts that good technology, a business plan that makes sense could be you recipe for success (or at least, VC investments), Herbert adds that to even get capital (grants or funds), you need to know exactly what you want for a fair exchange before you step into a negotiation. Kwok Leong adds: combining AI and mobile could be your holy grail in 2018. After all, China and the US are still apps’ big spenders.

Photos with important people opens doors, and more unspoken rules of the trade

While this triggered laughter from the audience, Kwok Leong’s advice on the importance of photo taking with government officials and the who’s-who of the business and political world rings true as the equivilant of plastering big brand logos on your website.

More importantly, even though China recently eased ownership limits on foreign joint ventures, Herbert advises that you best still have a good local partner running the groundwork. Face to face meetings are key for all relationship building. Have a local salesforce on the ground — no one’s going to pick up your phone call.

While the government has been relaxing certain business related regulations, know the limits of what you can build a venture in. Anything political (regarding the communist party), and religion is taboo.

Going for grants? Find the smart money

Government Recognitions (ie registrations and licensing) are key to even start applying for other grants.

Treating China as a single market is akin to business suicide. From country, to provincial, to government level policies, evaluate which city base can actually get you money in the bank. Find someone you can trust to help you do homework on the ground on the ins and outs of each regulation.

There are unwritten rules in these grants — whether lost in translation or not. Do not expect official websites to state it all. Meeting with a government representative on the ground helps you get the full, detailed picture.

In this case, being Singaporean (aka kiasu and kiasi), might just be your best asset.

Your own cost of living is a key determinant for setting up shop, and more reasons Suzhou makes a great launchpad

As a start-up, it is unlikely you can afford the Cost of Living in Shanghai. Rental for a studio/ 1-bedder can cost two to three-times more than in Suzhou. Carefully consider your cost of living, before it stops you from making an actual living.

The numbers speak for themselves. As of 2012, the percentage of migrants in Suzhou exceeded that of locals. Working migrants mainly stay in Suzhou due to its proximity — a 25-minute high speed train — to Shanghai (China’s financial hub), and its educated and skilled talent pool. According to Enterprise Singapore, Suzhou is well positioned for Singapore companies who are keen to use this city as a gateway to create footprint.

Furthermore, Singapore enjoy great government relations with Suzhou — and hence good leverage for Singapore companies eyeing a stronger Chinese presence.

Of course, for start-ups, BLOCK71 Suzhou’s facilities and support services will always serve as a friendly landing pad for you to navigate unchartered waters.

Check out China only with the best tour guides — the Government(s)

Innovfest Suzhou will be the best opportunity to visit and understand how fast China start-ups are innovating and evolving. Alternatively, join the 2018 China Ready Programme by Enterprise Singapore.

Enterprise Singapore runs a China Ready Programme with NUS Research Institute (NUSRI). This programme allows Singapore-based companies companies to easily link up with China’s business market, identify unique business opportunities, attend market mentor lectures, on-site learning, fast-track through diverse networking sessions, and capped with an outing to Innovfest Suzhou.

Learn more about the benefits, including highly subsidised airfare and accommodation here or check out the Enterprise Singapore website.

About the speakers

Hui Kwok Leong is the deputy director of special projects at NUS Enterprise. He now oversees the operations at BLOCK71 Suzhou, helping technological start-ups from Singapore and other cities launch their business in China.

Herbert Wang is the Chief Operations Officer of VRtist, a virtual reality content platform. VRtist has offices in both Singapore and Suzhou.

VRtist Information Technology Ltd. together with Digital Communication Group has successfully published a VR 3D animation named “Jiuge-Donghuangtaiyi”, a first episode of Chu Culture VR project. By execution of these projects, they have received recognition of government agency of Hubei province.