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As an American living in China, I agree with you 100%. A few points: - I would not consider Taobao a clone. - The US has its advantages but also its disadvant

by tiatia 11y ago

As an American living in China, I agree with you 100%. A few points: - I would not consider Taobao a clone. - The US has its advantages but also its disadvantages. Funding (e.g. SBIR grants) is very corrupt in the US (corrupt in the Latin sense, meaning not necessary meaning bribes but personal relationships. I could tell stories, Lordy Lord). - "true rule of law" The true rule of law is a question of money in the states. For the average citizen the law has become more a risk than an asset. http://www.amazon.com/Three-Felonies-Day-Target-Innocent/dp/1594035229 http://www.amazon.com/Three-Felonies-Day-Target-Innocent/dp/...

seanmcdirmid 11y ago
Venture capital or a bank loan in china for your biz requires guangxi galore, they are not at an advantage over the USA. Rule of law is very strong in the U.S.; but ya you need to afford a lawyer. In contrast, a lawyer cannot help you much in China if the government has already made up its mind. The level of dysfunctions in either system differ by an order of magnitude.
- rahimnathwani 11y ago
  "Venture capital or a bank loan in china for your biz requires guangxi galore" What makes you think that?
  - seanmcdirmid 11y ago
    Because that is what I've been told by all my friends trying to get VC or bank loans for their companies. VC is always based on guanxi, sure, but banks will only lend to SOEs or big private companies, there isn't much credit for small private companies.
    - tiatia 11y ago
      I don't know the Chinese VC-Scene well but I know a few "Western" VCs in China so I can't make a judgement. It is my impression that it is much easier to get money in China than in the states, at least until recently. On the other hand: Often you get money from non VCs and VC is not very in the nature of a true Chinese. Chinese prefer M&A (with the focus on the A). How much is it to buy everything? They don't want any long term partner and they want everything based in China.
      - seanmcdirmid 11y ago
        You need a reputation, and they'll only fund you for something safe (like copying and localizing an already successful western internet service). The money doesn't flow easily at all for higher risk, which is sort of the point of a startup. Anyways, Beijing is the best city for software startups, but ranks pretty low compared to many cities in the west for funding. If it's not china related, don't do it here.
    - rahimnathwani 11y ago
      "banks will only lend to SOEs or big private companies" Banks' prefer to lend to SOEs or larger companies, sure, and those customers get the best rates. Credit _is_ available from banks for smaller businesses, but banks' role in this lending is a little different than in the US/UK. A bank making a small business loan in the UK is serving two functions: (i) providing capital, (ii) taking on credit risk. In China, many small business loans are granted by banks (and live on a bank's balance sheet), but the credit risk is taken on by a credit guarantee company.[0][1] The small business will pay interest to the bank, and fees to the guarantee company. "there isn't much credit for small private companies" There is, it's just that (i) when banks lend money sourced from their wealth management products (理财产品) , it doesn't show up on banks' balance sheets, and (ii) there are other non-bank lenders. Search for 'wenzhou rate', 'shadow banking' or 'china wealth management' if you're interested in more detail, e.g. see the 'wealth management' section of this paper[2]. [0] http://www.ft.com/cms/s/0/2653ed8e-21a2-11e0-9e3b-00144feab49a.html http://www.ft.com/cms/s/0/2653ed8e-21a2-11e0-9e3b-00144feab4... [1] http://www.wsj.com/articles/next-up-for-chinas-central-bank-how-to-get-loans-to-small-firms-1431344756 http://www.wsj.com/articles/next-up-for-chinas-central-bank-... [2] http://journals.sub.uni-hamburg.de/giga/jcca/article/viewFile/851/852 http://journals.sub.uni-hamburg.de/giga/jcca/article/viewFil...

by tiatia 11y ago

seanmcdirmid 11y ago

Venture capital or a bank loan in china for your biz requires guangxi galore, they are not at an advantage over the USA. Rule of law is very strong in the U.S.; but ya you need to afford a lawyer. In contrast, a lawyer cannot help you much in China if the government has already made up its mind. The level of dysfunctions in either system differ by an order of magnitude.

rahimnathwani 11y ago
"Venture capital or a bank loan in china for your biz requires guangxi galore" What makes you think that?
- seanmcdirmid 11y ago
  Because that is what I've been told by all my friends trying to get VC or bank loans for their companies. VC is always based on guanxi, sure, but banks will only lend to SOEs or big private companies, there isn't much credit for small private companies.
  - tiatia 11y ago
    I don't know the Chinese VC-Scene well but I know a few "Western" VCs in China so I can't make a judgement. It is my impression that it is much easier to get money in China than in the states, at least until recently. On the other hand: Often you get money from non VCs and VC is not very in the nature of a true Chinese. Chinese prefer M&A (with the focus on the A). How much is it to buy everything? They don't want any long term partner and they want everything based in China.
    - seanmcdirmid 11y ago
      You need a reputation, and they'll only fund you for something safe (like copying and localizing an already successful western internet service). The money doesn't flow easily at all for higher risk, which is sort of the point of a startup. Anyways, Beijing is the best city for software startups, but ranks pretty low compared to many cities in the west for funding. If it's not china related, don't do it here.
  - rahimnathwani 11y ago
    "banks will only lend to SOEs or big private companies" Banks' prefer to lend to SOEs or larger companies, sure, and those customers get the best rates. Credit _is_ available from banks for smaller businesses, but banks' role in this lending is a little different than in the US/UK. A bank making a small business loan in the UK is serving two functions: (i) providing capital, (ii) taking on credit risk. In China, many small business loans are granted by banks (and live on a bank's balance sheet), but the credit risk is taken on by a credit guarantee company.[0][1] The small business will pay interest to the bank, and fees to the guarantee company. "there isn't much credit for small private companies" There is, it's just that (i) when banks lend money sourced from their wealth management products (理财产品) , it doesn't show up on banks' balance sheets, and (ii) there are other non-bank lenders. Search for 'wenzhou rate', 'shadow banking' or 'china wealth management' if you're interested in more detail, e.g. see the 'wealth management' section of this paper[2]. [0] http://www.ft.com/cms/s/0/2653ed8e-21a2-11e0-9e3b-00144feab49a.html http://www.ft.com/cms/s/0/2653ed8e-21a2-11e0-9e3b-00144feab4... [1] http://www.wsj.com/articles/next-up-for-chinas-central-bank-how-to-get-loans-to-small-firms-1431344756 http://www.wsj.com/articles/next-up-for-chinas-central-bank-... [2] http://journals.sub.uni-hamburg.de/giga/jcca/article/viewFile/851/852 http://journals.sub.uni-hamburg.de/giga/jcca/article/viewFil...