10 ms·

Why I’m giving up on Europe and moving my startup to China

97 points by jmillerinc 16y ago

varjag 16y ago
It reads incredibly naive, but I wish the author the best of luck. He should however be prepared that drawbacks of Chinese way of doing business sometimes outweigh its advantages.
- decadentcactus 16y ago
  To me it seems that the post almost solely focuses on Europe's negatives and China's positives as well.
  - arethuza 16y ago
    I think anyone who is taking the ballsy step of moving from Europe to China is likely to focus on things that way round. I wish him well in his new venture, even though I'm quite content to stay here in boring old Europe.
- freshfey 16y ago
  I don't think it's that naive. He mentioned several times that he has Chinese friends and locals who will help him. A lot of the replies here have been "don't do anything without a local" - that's exactly what he's not doing, because he knows some persons.
  - natch 16y ago
    Oh, he has "friends." Well then, they must be perfectly trustworthy and competent, and they no doubt play by his own ethical rules, and he has nothing to worry about. Yes, it is naive. But he'll have fun and learn a lot, so he should do it.
9oliYQjP 16y ago
China's great until you have to go to court there and realize you're being totally screwed over because your opponent has an "in" with the government. There are countries like Australia and Canada that strike a nice middle ground between too much and too little regulation, have decent, stable economies right now, and solid relationships with China in the case you want to partner with a company there. But I've heard too many horror stories from entrepreneurs getting burned in China to want to put all my chips in that stack.
- lionhearted 16y ago
  > But I've heard too many horror stories from entrepreneurs getting burned in China to want to put all my chips in that stack. I had a girlfriend who was working at a Chinese media company five years ago, and her company said something unpleasant (true) things about an important company in the local province. The mayor called up the newspaper, and was pressuring them... it turned out alright in the end, but it was a minor headache. If you're doing business somewhere where political influence plays in court, you should just factor that into the cost of doing business and take the mayor out to eat once in a while and do something nice for a local charity or university. The small time/money to be invested in that is still probably less than the costs of compliance in more regulated places (who also have corrupt laws, but the corruption is further upstream - see AirBNB... hotels don't pay off the judge, they pay off the governor).
  - fauigerzigerk 16y ago
    I would also be concerned about the legal system in China, but political pressure on the media is very widespread in europe as well. During the Iraq war, the entire BBC top management was fired for being critical of the war. In many European countries, polititians are the bosses of journalists at the most important TV stations.
    - semanticist 16y ago
      Do you have a citation for that BBC claim? I don't recall anything remotely like that. There was a lot of government pressure over the 'dodgy dossier' scandal, but nothing like 'the entire top management' being 'fired'. (By who? The BBC Trust?)
adamsmith 16y ago
having been in all three places, you should leave europe to start your company. but move to silicon valley instead.
- maxklein 16y ago
  I wish this were possible, but the difficulty in doing this is massive. If you are not U.S born, it's QUITE difficult to simply walk in and start a company in the U.S. And you'd spend a lot of time just solving those problems, and have a lot less time to setup your company. In comparison, I landed in china on thursday. Today is monday, and I have a fully furnished office (with furniture I selected myself), an assistant and 25 interviews with programmers scheduled for this week. The business papers have been submitted, bank accounts have been setup. This all goes really, really fast.
  - towndrunk 16y ago
    Where in China are you setting up?
    - maxklein 16y ago
      Shenzhen, beside Hong Kong.
  - desigooner 16y ago
    while the Startup Visa is a good thing, it's still difficult for people (who are not born here or who don't possess a GC) to start a venture here. Even with the startup visa, there's a lot at stake and a lot of pressure to meet the demands about a certain $ of investment, turnover, operating capital, etc. Not every startup is going to fulfill those criteria right off the bat and the cost of failure is too high. That's one of the reasons why I'm thinking of moving to India or somewhere Singapore/ Hong Kong in the near future.
    - maxklein 16y ago
      Shenzhen is Hong Kong without the terrible apartment costs, but with slightly better internet.
jacquesm 16y ago
When in China, do as the Chinese do. If you want to really get off the ground there you'll need to partner with a local that knows the ways things are done, which is not always intuitive from a 'westerner' point of view. A friend of mine is currently going this route and there are a few other HN'ers that are doing this, maybe you guys should get together somehow and compare notes. That might save everybody both hardship and time.
- maxklein 16y ago
  I would certainly love to meet other HNers that are going this route, perhaps you could set me up. I've got two close and old friends of mine that are locals and are collaborating with me, so that's good.
  - albahk 16y ago
    I live in HK and have lived, studied and now spend time working in China. If you are ever in HK and fancy a beer, drop me an email... first round is on me.
  - felipe 16y ago
    I live in Shenyang, Liaoning province (northeast of China) since June/2009. Drop me a line if you want to talk. My email is on my profile.
  - garply 16y ago
    I'm an American running a company in Beijing. I may email you some time. You have some things right and are too optimistic about some things. There are certainly freedoms here that you do not enjoy in the West - at the same time, relationship maintenance is an extremely time-consuming and expensive, never-ending process. Whenever you brush up with a bureaucratic organization, the experience can be hellish. I own, for example, a ~600 USD receipt-printing machine (fapiao machine) because the gov't forced me to buy it for my business. I also need to buy a new one every 5 years. Trust is a huge issue. You need a Chinese partner, or you're going to get your ass kicked. You need a Chinese partner you really trust (I recommend you consider finding a Chinese wife), or you're going to get your ass kicked. I know very few successful entrepreneurs who built their businesses here who do not have a Chinese spouse. I hope you're not building a business where IP is an important competitive advantage. Your code is not safe - safety lies in creating smaller products that are approximately as easy to copy from scratch as to steal. Alternatively, a good business model is one that uses very simple tech but makes heavy use of sales and relationships (for example, a Groupon clone). Good luck, and remember that people eat people here.
sdfx 16y ago
I really applaud your bold move and wish you the best of luck. But there is a lot of "the grass is always greener on the other side" mentality in this post, especially regarding personal freedoms and the bureaucracy/legal-system. I wonder how the example of your friend (getting sued for defamation) would have played out in China. How hard is it to hire good programmers in China? Does anyone have experience about what to expect for 600$ a month?
- patio11 16y ago
  Does anyone have experience about what to expect for 600$ a month? I am in favor of hiring outsourced Chinese programmers over Indian ones: it is possible to find ones with decent Japanese proficiency, which means that when Tokyo discovers the latest... curious engineering choice I don't have to spend a day doing the needful to communicate our displeasure about it. We told our outsourced team to write four functions to be accessible via a REST service, using RestEasy. I anticipated this to be approximately a 20 ~ 30 line job. Two weeks later, we received a scratch-built HTTP client which supported precisely one verb and two handwritten serialization schemes, with half the code containing precisely one comment in English by way of Babelfish and the other half containing very literate English comments like you would expect from code developed at a multinational with a legal department better funded than the armed forces of of most NATO countries. I pray your mileage varies.
sirrocco 16y ago
What I don't like in the article is the accent that is put on the advantages of the entrepreneur and little accent on the employee. It's great that you can fire people when you want, but it sucks if you're the one getting fired.
- decadentcactus 16y ago
  Me either, seems to go from one extreme ("Can't touch the employee") to another ("Yeah you can dump them if they dress badly"). I'm hoping to attribute it to just the way it's written though but it does come across like you said.
- davidw 16y ago
  Well; yes and no. If it's really difficult to fire people, like it is in many places in Europe, hiring is also less likely to happen. People tend to cling to jobs once they have attained 'unfireable' status. An alternative solution: make firing people easy, but provide some support to those who get fired. That has costs and benefits too, and is a discussion probably best left to another site. Its main benefit is that it moves the provisioning of "social assistance" from companies, who are no longer forced to hold on to unproductive/unneeded workers, to the government.
- yummyfajitas 16y ago
  Create value and it will suck to fire you.
  - sirrocco 16y ago
    Yes, I know this - but life's not always fair now is it ? In this particular case it might not be a problem since Max can keep an eye on his employees , but as soon as you have a manager - you might be very afraid to get on his bad side (maybe in an argument over something technical or a complaint about your chair) for fear of getting fired.
    - hnal943 16y ago
      Life may not be fair in every situation, but if you were really creating value for the company it shouldn't be too hard for you to find another job that may even furnish you with a proper chair.
patrickg 16y ago
"These rules are also very difficult to discover and very difficult to implement correctly. From the situation with healthcare for your employees through to filing your taxes correctly, the amount of paperwork is insane and complex." Sorry, but reading this is raising a question if the author of this blog article has experienced this himself or just hearing about it. The bigger your company is, the more complex tax forms and other things will become. But as a small startup company it is very easy to do taxes etc. You don't even have to fill out a standardized form for declaring your business income if you are a small company (EÜR in Germany). I was afraid of all this as well, but starting the company here is really easy, there are a lot of government/local institutions that help you with everything, even the IRS answers your questions if you have any. I cannot judge on the other things, but they sound - as other said here - like the other grass is always greener.
yardie 16y ago
Is it at all possible to change the title from Europe to Germany. Most of his complaints are German specific and don't apply to everywhere in Europe. Bureaucracy: I've heard regularly bad things about the German bundes. I've heard good things about UK, Sweden, Romania, Hungary. Labor: Whether you get it here or there the price of labor is only going up, but in China it's going up faster. Programmers are expensive. I'm expensive. If a better offer comes along that you can't match or even come close to I'll be out the door faster than the computer can shutdown. (Of course with my 2 weeks-1 month notice first). Don't expect anything less from the chinese. I don't know what you are working but have you ever hired anyone straight out of college? Experience costs money and mistakes costs money. Just make sure the latter costs less than the former. Costs and Taxes: Depending on the European country you may not pay any taxes on revenue while in the startup phase (generally 2 years). After that it's country specific, the rules that apply in Germany don't apply in the UK. Travel: Maybe as a German these things don't matter to you, but, as an American, I find Europe to be fascinating, so many different cultures, so much history, and its all packed in one half continent. When I speak to other french or english friends about SE Asia it's generally "which beach should I visit this week?". Little interest in the culture, history, or the language (I love ordering food in thai, but that's all the thai I know). I think a lot of people have a very romantic idea of what SE Asia is about but that's it. Plus it's huge region, you need a plane to do all that traveling and those flights aren't short. It looks like you've traded one set of problems for another. I don't know what the startup will ultimately be about but I wish you luck. Also be careful, lots of people have startup ideas that fizzle out, can't get funding, or can't get any promotion because it's not from the right place. One thing I've learned about a company is that it's the people you know as well as the idea that make it a success. If you are doing it in China, then have a chinese focus because no one in San Francisco is going to care about it, until it's too big to ignore.
- rxin 16y ago
  While I agree with you for Labor and Costs and Taxes, I beg to differ about the travel part. With all due respect, the knowledge you and your "french or english friends" have about Asia is obviously limited, and equating them to the culture and history of many Asian countries is ridiculous. It is like saying "what does Europe offer other than museums?"
againstyou 16y ago
how much money do you need to move there ?
ww520 16y ago
The taxes that German paid go toward the social benefits that the German enjoy. What if you get sick in China? Who pay for the medical cost? When you are out of work in China, who pay for the unemployment benefit? The statement that students graduated from university being competent engineers is not truth. You will find turnovers to be very high. You are just trading one set of problems with another. I'm sure it will be a fun adventure. Good luck.
mattm 16y ago
I lived in China in 2008 and while I'm no expert on China, you will learn quite quickly that some of your perceptions about China are not true: - In china, you can pay a programmer 600€ a month Sure, for average programmers. For good ones, you are going to be paying the same as elsewhere. A friend of mine there told me her brother was earning nearly $500 US/day working as a programmer for a company and they even gave him one week off per month. That would be a monthly salary of $500 x 5 days x 3 weeks = $7500 - you have a wide pool of qualified people leaving university which you can always pick from. True but the Chinese educational system is very different from the "West". Their educational system focuses more on memorization. Creativity and problem solving are not taught very much. This is going to be a huge problem when hiring programmers right out of university. They will be looking to you to tell them everything they should be doing. - Also, in china people are more willing to travel around to find an appropriate job than in Europe Yes, I would say this is generally true amongst all classes. - Quite apart from the chinese programmers, it’s also easier to get foreign programmers to work for you in china than in europe Are you talking legally or just by the candidate's motivation? When I was looking for a job as an English teacher, I went to one place and they told me they were only one of two officially registered English schools in the city. They told me that I would need a TESL (Teaching English as a Second Language) degree, which I did not have, in order for them to arrange the work visa. At the place I was hired, I still did not have a TESL degree but they arranged the work visa for me no problem. Yes, it is more of the wild, wild west but as a foreigner, you are not going to be able to figure out the system very fast and it will cause you a lot of frustration and wasted energy. - Important is that there are very low additional costs paid to the government. In Europe, you could pay 1/3 – 1/2 of your profits as a small company just servicing the goverment, China does not require this. To be blunt, this is a very naive statement. Official costs might be low but you're not factoring bribes and other unofficial costs into the mix. While teaching English, most of my students were in their 20s and 30s so I would often try to bring up topics of conversation for me to understand the way business works there. Many students would tell me that they would hate when government inspectors would come by as that would mean they would need to pay bribes to them. It is also expected that companies need to lavishly entertain these visitors, so in addition to the bribes, you are expected to drop hundreds/thousands of dollars on dinners and drinks. Many students would also tell me that their dream job was to be a purchaser for a company. Some explicitly told me that this is because then they could receive kickbacks. I also heard quite a few stories about people stealing from their own companies. In fact, one story came from a guy who was just hired at a company and the manager encouraged him to "take a little for himself." The guy was uncomfortable doing this but he later found out that pretty much everyone in the company was doing this and only the owners were unaware of it. This is the mindset that you need to adjust to. Many people do not think there is anything wrong with bribes and stealing from the company. If you are going to pay them low salaries, they will find a way to make it up from you. Anyways, I wish you the best of luck. You'll sure learn a lot. It would be great to see a follow-up post from you in 6 months with your experiences.
Tichy 16y ago
"There are so many little ‘unfreedoms’ in Europe" I must admit, China would have never crossed my mind as the country of freedoms. But then, I've never been there. Also, I weigh some freedoms higher than others - I don't like that the Chinese government has the freedom to shoot me...
- albahk 16y ago
  The odds of being shot by anyone in China unless you are comitting a violent crime is far less IMO than in the US.
  - Tichy 16y ago
    So all the death sentences are just for violent crimes? What about free speech?
jerf 16y ago
Make plans for when the Chinese bubble pops. I'm quite confident they are in one, but regardless of your own feelings on that topic you can't rationally put the probability of that at 0%. When it pops, I don't know what would happen and there is another non-0% (and IMHO significant) chance that it might not be pleasant to be a foreigner at the time, especially a Westerner. If something looks to be popping I would make sure I could get the hell out of there.
- yardie 16y ago
  I don't think they are in a bubble. Atleast not one that's going to pop. They have the advantage of developed and undeveloped markets. At the moment more of their money is going to fund internal investments since foreign investments have dried up. They have billions/trillions in soveriegn wealth funds so if they need capital they can break open a piggy bank. Hopefully, if they've learned anything is overinvestment can be just as bad as underinvesting. If controlled properly they can coast on internal projects until the US and Europe exit their recessions. Then things can go back to business as usual.
- yardie 16y ago
  I don't think they are in a bubble. Atleast not one that's going to pop. They have the advantage of developed and undeveloped markets. At the moment more of their money is going to fund internal investments since foreign investments have dried up. They have billions/trillions in soveriegn wealth funds so if they need capital they can break open a piggy bank. Hopefully, if they've learned anything is overinvestment can be just as bad as underinvesting. If controlled properly they can coast on internal projects until the US and Europe exit their recessions. Then things can go back to business as usual.
johnconroy 16y ago
he mad.
charleso 16y ago
Premature optimization is the root of all evil. Your company is young and your period of profitability is relatively short-lived to date. It seems unwise to have taken a business which appeared to be working well and overhauling it completely to (possibly) reduce costs which did not need to be reduced. Do you have a 'plan-b' to allow you to quickly revert your company to its previous state if things do not go as planned?
zatara 16y ago
My experience with surfing tells me that you don't paddle towards where the wave has been, you wait and position yourself for the next one. The basic assumption is very sound, in a global world economy repositioning may be very interesting. I too agree that Europe is mostly dead for innovation and startups, but China is probably over-rated and too much bubble-prone at the moment (not to mention corruption, cultural shock, state bullying, etc). From the big countries that will probably fuel the world economy for the next 50 years (China, India, Brazil and Russia), I would bet my horse in Brazil. There are problems as well (education, poverty, corruption), but none of the BIG ones (terrorism, crazy state rules, dictatorship). There is definitely a trend (World Cup, Olympiads) and I am considering it as well, but timing is paramount: you don't wanna be the first to jump ship and deal with all the crap, but you definitely don't wanna be too late.
- ww520 16y ago
  Isn't crime a big problem in Brazil? (BTW I have investment in Brazil and it has been doing great.)
- fauigerzigerk 16y ago
  I don't know much about Brazil but it would be the the first latin american country without crazy excessive regulation.
drinian 16y ago
I find your single example of "unfreedom" in Europe to be entirely nonsensical. Your friend was sued for defamation, and folded rather than take it to court, in one of the fairest court systems in the world, where she likely could have won cost plus damages if she had any evidence for her claims. In China, someone might have shown up at her front door with a club -- and that someone might have a police badge or work for the mayor. Also, the Chinese legal system is likely more Byzantine than that of Germany; it's just that it's not enforced. You're going to be in for a world of hurt when the government shuts you down for not having some kind of license you've never heard of.
eklitzke 16y ago
There was recently an article on HN (sorry, can't find it ATM) about how to create a startup in China. The typical route is to create a business entity called a WFOE[1], which lets you operate your business in China as a foreigner, and has some tax/legal advantages. The gist I got out of the article and HN comments was that this can actually be very expensive and difficult; the application fee is inconsistent, and especially if you try to base the WFOE in a city like Beijing or Shanghai, in practice the cost can be in excess of $100k USD (of course the alleged nominal cost is lower). This is from memory, so it might not be entirely accurate, but if you're considering starting a business in China you should definitely do some research into how much it will really cost to create and operate your business. There are some good resources on chinalawblog.com, and of course in the comments of HN articles about the topic. [1] http://en.wikipedia.org/wiki/Wholly_Foreign_Owned_Enterprise http://en.wikipedia.org/wiki/Wholly_Foreign_Owned_Enterprise
mhd 16y ago
Is the speed of hiring and firing programmers really that much of an option? I know that Germany has some rather old-fashioned laws about that, so it's hard to get rid of someone fast. But when we're talking about the usual startup fare, the legal ramifications and a few months of pay are probably the least of your problems. Or to put it another way, if it isn't a problem, it's likely that your product sucks.
patrickg 16y ago
I wonder why almost nobody mentioned "ethics". Besides the arguments in the blog post, is it morally OK to start a business in a dictatorship? I am not so sure about it.
- orborde 16y ago
  I don't know about anyone else, but I tend to make arguments on rational grounds before I try ethical ones. Ethical arguments are less reliably convincing because not everyone is in agreement about what is ethical, and some people don't have any ethics at all.
chrischen 16y ago
Actually to maintain a western standard of living your costs will probably be more in china, since many western brand name products are imported (despite being made in china). For example an apartment in shanghai can cost more than one in NYC, iPhone costs more, etc. Whatever you do, avoid street food.
- mattm 16y ago
  Agreed with the cost of living. No matter where you go in the world, if you want to live an American lifestyle - car, big house/apartment, western products - you will pay just about the same as living in the US. However, if you can live like a local, your cost of living will drop dramatically. I never had a problem with street food.
  - chrischen 16y ago
    http://www.chinasmack.com/2009/pictures/recycled-slop-swill-cooking-oil.html http://www.chinasmack.com/2009/pictures/recycled-slop-swill-... Even my relatives stopped buying street food for me there. Generally it's really unsanitary. Even street food in NYC is unsanitary, china is definitely worse.
    - mattm 16y ago
      I've definitely seen horror stories like that before. Maybe I was just lucky.
stefanp 16y ago
Dude, seriously... I can't believe it. Talking about freedom, comparing europe and china ... Come on ! Is this a joke ? Your friend is getting sued, so you move to a country where people are put in jail for their political opinions ? Don't invent stupid excuses, there's no need to. You're 24 years old and are looking for opportunity, and China, despite being a bloody dictatorship were a billion people work in slave-like conditions, is the new land of opportunity, so you're giving it a try. Good for you. But cut the ridiculous crap. You sound like a spoiled brat.
aaronkaplan 16y ago
When you were growing up, the previous generation of German businessmen gave up some of their profits to pay for your education and health care, and to ensure that you grew up in a relatively safe and pleasant environment. They did this with the expectation that you would in turn pay for the following generation. I wouldn't go so far as to say that you should be forced to perpetuate the system. You didn't choose where you were born, and if you think the system in place there is wrong you should be free to leave. But you've benefited from the generosity of others, and now by moving to a country where it's cheaper to do business precisely because it doesn't offer its people the same advantages that Germany does, you're ducking out of repaying that debt. Have you thought about other ways to pay it back? Or do you consider the previous generation to be suckers for paying your way without making you sign a contract first?
- fgf 16y ago
  Odds are his parents are net tax contributors, including whatever the state spent on him. Only people with poor parents really owe what they got to the state, as opposed to productive people like their parents.
patrickgzill 16y ago
I am assuming that the business Max Klein is in, is web-based? In such a case it may not matter very much where in the world he is physically located.

97 points by jmillerinc 16y ago

It reads incredibly naive, but I wish the author the best of luck. He should however be prepared that drawbacks of Chinese way of doing business sometimes outweigh its advantages.

decadentcactus 16y ago
To me it seems that the post almost solely focuses on Europe's negatives and China's positives as well.
- arethuza 16y ago
  I think anyone who is taking the ballsy step of moving from Europe to China is likely to focus on things that way round. I wish him well in his new venture, even though I'm quite content to stay here in boring old Europe.
freshfey 16y ago
I don't think it's that naive. He mentioned several times that he has Chinese friends and locals who will help him. A lot of the replies here have been "don't do anything without a local" - that's exactly what he's not doing, because he knows some persons.
- natch 16y ago
  Oh, he has "friends." Well then, they must be perfectly trustworthy and competent, and they no doubt play by his own ethical rules, and he has nothing to worry about. Yes, it is naive. But he'll have fun and learn a lot, so he should do it.

9oliYQjP 16y ago

China's great until you have to go to court there and realize you're being totally screwed over because your opponent has an "in" with the government. There are countries like Australia and Canada that strike a nice middle ground between too much and too little regulation, have decent, stable economies right now, and solid relationships with China in the case you want to partner with a company there. But I've heard too many horror stories from entrepreneurs getting burned in China to want to put all my chips in that stack.

lionhearted 16y ago
> But I've heard too many horror stories from entrepreneurs getting burned in China to want to put all my chips in that stack. I had a girlfriend who was working at a Chinese media company five years ago, and her company said something unpleasant (true) things about an important company in the local province. The mayor called up the newspaper, and was pressuring them... it turned out alright in the end, but it was a minor headache. If you're doing business somewhere where political influence plays in court, you should just factor that into the cost of doing business and take the mayor out to eat once in a while and do something nice for a local charity or university. The small time/money to be invested in that is still probably less than the costs of compliance in more regulated places (who also have corrupt laws, but the corruption is further upstream - see AirBNB... hotels don't pay off the judge, they pay off the governor).
- fauigerzigerk 16y ago
  I would also be concerned about the legal system in China, but political pressure on the media is very widespread in europe as well. During the Iraq war, the entire BBC top management was fired for being critical of the war. In many European countries, polititians are the bosses of journalists at the most important TV stations.
  - semanticist 16y ago
    Do you have a citation for that BBC claim? I don't recall anything remotely like that. There was a lot of government pressure over the 'dodgy dossier' scandal, but nothing like 'the entire top management' being 'fired'. (By who? The BBC Trust?)

adamsmith 16y ago

having been in all three places, you should leave europe to start your company. but move to silicon valley instead.

maxklein 16y ago
I wish this were possible, but the difficulty in doing this is massive. If you are not U.S born, it's QUITE difficult to simply walk in and start a company in the U.S. And you'd spend a lot of time just solving those problems, and have a lot less time to setup your company. In comparison, I landed in china on thursday. Today is monday, and I have a fully furnished office (with furniture I selected myself), an assistant and 25 interviews with programmers scheduled for this week. The business papers have been submitted, bank accounts have been setup. This all goes really, really fast.
- towndrunk 16y ago
  Where in China are you setting up?
  - maxklein 16y ago
    Shenzhen, beside Hong Kong.
- desigooner 16y ago
  while the Startup Visa is a good thing, it's still difficult for people (who are not born here or who don't possess a GC) to start a venture here. Even with the startup visa, there's a lot at stake and a lot of pressure to meet the demands about a certain $ of investment, turnover, operating capital, etc. Not every startup is going to fulfill those criteria right off the bat and the cost of failure is too high. That's one of the reasons why I'm thinking of moving to India or somewhere Singapore/ Hong Kong in the near future.
  - maxklein 16y ago
    Shenzhen is Hong Kong without the terrible apartment costs, but with slightly better internet.

jacquesm 16y ago

When in China, do as the Chinese do. If you want to really get off the ground there you'll need to partner with a local that knows the ways things are done, which is not always intuitive from a 'westerner' point of view. A friend of mine is currently going this route and there are a few other HN'ers that are doing this, maybe you guys should get together somehow and compare notes. That might save everybody both hardship and time.

maxklein 16y ago
I would certainly love to meet other HNers that are going this route, perhaps you could set me up. I've got two close and old friends of mine that are locals and are collaborating with me, so that's good.
- albahk 16y ago
  I live in HK and have lived, studied and now spend time working in China. If you are ever in HK and fancy a beer, drop me an email... first round is on me.
- felipe 16y ago
  I live in Shenyang, Liaoning province (northeast of China) since June/2009. Drop me a line if you want to talk. My email is on my profile.
- garply 16y ago
  I'm an American running a company in Beijing. I may email you some time. You have some things right and are too optimistic about some things. There are certainly freedoms here that you do not enjoy in the West - at the same time, relationship maintenance is an extremely time-consuming and expensive, never-ending process. Whenever you brush up with a bureaucratic organization, the experience can be hellish. I own, for example, a ~600 USD receipt-printing machine (fapiao machine) because the gov't forced me to buy it for my business. I also need to buy a new one every 5 years. Trust is a huge issue. You need a Chinese partner, or you're going to get your ass kicked. You need a Chinese partner you really trust (I recommend you consider finding a Chinese wife), or you're going to get your ass kicked. I know very few successful entrepreneurs who built their businesses here who do not have a Chinese spouse. I hope you're not building a business where IP is an important competitive advantage. Your code is not safe - safety lies in creating smaller products that are approximately as easy to copy from scratch as to steal. Alternatively, a good business model is one that uses very simple tech but makes heavy use of sales and relationships (for example, a Groupon clone). Good luck, and remember that people eat people here.

sdfx 16y ago

I really applaud your bold move and wish you the best of luck. But there is a lot of "the grass is always greener on the other side" mentality in this post, especially regarding personal freedoms and the bureaucracy/legal-system. I wonder how the example of your friend (getting sued for defamation) would have played out in China. How hard is it to hire good programmers in China? Does anyone have experience about what to expect for 600$ a month?

patio11 16y ago
Does anyone have experience about what to expect for 600$ a month? I am in favor of hiring outsourced Chinese programmers over Indian ones: it is possible to find ones with decent Japanese proficiency, which means that when Tokyo discovers the latest... curious engineering choice I don't have to spend a day doing the needful to communicate our displeasure about it. We told our outsourced team to write four functions to be accessible via a REST service, using RestEasy. I anticipated this to be approximately a 20 ~ 30 line job. Two weeks later, we received a scratch-built HTTP client which supported precisely one verb and two handwritten serialization schemes, with half the code containing precisely one comment in English by way of Babelfish and the other half containing very literate English comments like you would expect from code developed at a multinational with a legal department better funded than the armed forces of of most NATO countries. I pray your mileage varies.

sirrocco 16y ago

What I don't like in the article is the accent that is put on the advantages of the entrepreneur and little accent on the employee. It's great that you can fire people when you want, but it sucks if you're the one getting fired.

decadentcactus 16y ago
Me either, seems to go from one extreme ("Can't touch the employee") to another ("Yeah you can dump them if they dress badly"). I'm hoping to attribute it to just the way it's written though but it does come across like you said.
davidw 16y ago
Well; yes and no. If it's really difficult to fire people, like it is in many places in Europe, hiring is also less likely to happen. People tend to cling to jobs once they have attained 'unfireable' status. An alternative solution: make firing people easy, but provide some support to those who get fired. That has costs and benefits too, and is a discussion probably best left to another site. Its main benefit is that it moves the provisioning of "social assistance" from companies, who are no longer forced to hold on to unproductive/unneeded workers, to the government.
yummyfajitas 16y ago
Create value and it will suck to fire you.
- sirrocco 16y ago
  Yes, I know this - but life's not always fair now is it ? In this particular case it might not be a problem since Max can keep an eye on his employees , but as soon as you have a manager - you might be very afraid to get on his bad side (maybe in an argument over something technical or a complaint about your chair) for fear of getting fired.
  - hnal943 16y ago
    Life may not be fair in every situation, but if you were really creating value for the company it shouldn't be too hard for you to find another job that may even furnish you with a proper chair.

patrickg 16y ago

"These rules are also very difficult to discover and very difficult to implement correctly. From the situation with healthcare for your employees through to filing your taxes correctly, the amount of paperwork is insane and complex." Sorry, but reading this is raising a question if the author of this blog article has experienced this himself or just hearing about it. The bigger your company is, the more complex tax forms and other things will become. But as a small startup company it is very easy to do taxes etc. You don't even have to fill out a standardized form for declaring your business income if you are a small company (EÜR in Germany). I was afraid of all this as well, but starting the company here is really easy, there are a lot of government/local institutions that help you with everything, even the IRS answers your questions if you have any. I cannot judge on the other things, but they sound - as other said here - like the other grass is always greener.

yardie 16y ago

Is it at all possible to change the title from Europe to Germany. Most of his complaints are German specific and don't apply to everywhere in Europe. Bureaucracy: I've heard regularly bad things about the German bundes. I've heard good things about UK, Sweden, Romania, Hungary. Labor: Whether you get it here or there the price of labor is only going up, but in China it's going up faster. Programmers are expensive. I'm expensive. If a better offer comes along that you can't match or even come close to I'll be out the door faster than the computer can shutdown. (Of course with my 2 weeks-1 month notice first). Don't expect anything less from the chinese. I don't know what you are working but have you ever hired anyone straight out of college? Experience costs money and mistakes costs money. Just make sure the latter costs less than the former. Costs and Taxes: Depending on the European country you may not pay any taxes on revenue while in the startup phase (generally 2 years). After that it's country specific, the rules that apply in Germany don't apply in the UK. Travel: Maybe as a German these things don't matter to you, but, as an American, I find Europe to be fascinating, so many different cultures, so much history, and its all packed in one half continent. When I speak to other french or english friends about SE Asia it's generally "which beach should I visit this week?". Little interest in the culture, history, or the language (I love ordering food in thai, but that's all the thai I know). I think a lot of people have a very romantic idea of what SE Asia is about but that's it. Plus it's huge region, you need a plane to do all that traveling and those flights aren't short. It looks like you've traded one set of problems for another. I don't know what the startup will ultimately be about but I wish you luck. Also be careful, lots of people have startup ideas that fizzle out, can't get funding, or can't get any promotion because it's not from the right place. One thing I've learned about a company is that it's the people you know as well as the idea that make it a success. If you are doing it in China, then have a chinese focus because no one in San Francisco is going to care about it, until it's too big to ignore.

rxin 16y ago
While I agree with you for Labor and Costs and Taxes, I beg to differ about the travel part. With all due respect, the knowledge you and your "french or english friends" have about Asia is obviously limited, and equating them to the culture and history of many Asian countries is ridiculous. It is like saying "what does Europe offer other than museums?"

againstyou 16y ago

how much money do you need to move there ?

ww520 16y ago

The taxes that German paid go toward the social benefits that the German enjoy. What if you get sick in China? Who pay for the medical cost? When you are out of work in China, who pay for the unemployment benefit? The statement that students graduated from university being competent engineers is not truth. You will find turnovers to be very high. You are just trading one set of problems with another. I'm sure it will be a fun adventure. Good luck.

mattm 16y ago

I lived in China in 2008 and while I'm no expert on China, you will learn quite quickly that some of your perceptions about China are not true: - In china, you can pay a programmer 600€ a month Sure, for average programmers. For good ones, you are going to be paying the same as elsewhere. A friend of mine there told me her brother was earning nearly $500 US/day working as a programmer for a company and they even gave him one week off per month. That would be a monthly salary of $500 x 5 days x 3 weeks = $7500 - you have a wide pool of qualified people leaving university which you can always pick from. True but the Chinese educational system is very different from the "West". Their educational system focuses more on memorization. Creativity and problem solving are not taught very much. This is going to be a huge problem when hiring programmers right out of university. They will be looking to you to tell them everything they should be doing. - Also, in china people are more willing to travel around to find an appropriate job than in Europe Yes, I would say this is generally true amongst all classes. - Quite apart from the chinese programmers, it’s also easier to get foreign programmers to work for you in china than in europe Are you talking legally or just by the candidate's motivation? When I was looking for a job as an English teacher, I went to one place and they told me they were only one of two officially registered English schools in the city. They told me that I would need a TESL (Teaching English as a Second Language) degree, which I did not have, in order for them to arrange the work visa. At the place I was hired, I still did not have a TESL degree but they arranged the work visa for me no problem. Yes, it is more of the wild, wild west but as a foreigner, you are not going to be able to figure out the system very fast and it will cause you a lot of frustration and wasted energy. - Important is that there are very low additional costs paid to the government. In Europe, you could pay 1/3 – 1/2 of your profits as a small company just servicing the goverment, China does not require this. To be blunt, this is a very naive statement. Official costs might be low but you're not factoring bribes and other unofficial costs into the mix. While teaching English, most of my students were in their 20s and 30s so I would often try to bring up topics of conversation for me to understand the way business works there. Many students would tell me that they would hate when government inspectors would come by as that would mean they would need to pay bribes to them. It is also expected that companies need to lavishly entertain these visitors, so in addition to the bribes, you are expected to drop hundreds/thousands of dollars on dinners and drinks. Many students would also tell me that their dream job was to be a purchaser for a company. Some explicitly told me that this is because then they could receive kickbacks. I also heard quite a few stories about people stealing from their own companies. In fact, one story came from a guy who was just hired at a company and the manager encouraged him to "take a little for himself." The guy was uncomfortable doing this but he later found out that pretty much everyone in the company was doing this and only the owners were unaware of it. This is the mindset that you need to adjust to. Many people do not think there is anything wrong with bribes and stealing from the company. If you are going to pay them low salaries, they will find a way to make it up from you. Anyways, I wish you the best of luck. You'll sure learn a lot. It would be great to see a follow-up post from you in 6 months with your experiences.

Tichy 16y ago

"There are so many little ‘unfreedoms’ in Europe" I must admit, China would have never crossed my mind as the country of freedoms. But then, I've never been there. Also, I weigh some freedoms higher than others - I don't like that the Chinese government has the freedom to shoot me...

albahk 16y ago
The odds of being shot by anyone in China unless you are comitting a violent crime is far less IMO than in the US.
- Tichy 16y ago
  So all the death sentences are just for violent crimes? What about free speech?

jerf 16y ago

Make plans for when the Chinese bubble pops. I'm quite confident they are in one, but regardless of your own feelings on that topic you can't rationally put the probability of that at 0%. When it pops, I don't know what would happen and there is another non-0% (and IMHO significant) chance that it might not be pleasant to be a foreigner at the time, especially a Westerner. If something looks to be popping I would make sure I could get the hell out of there.

yardie 16y ago
I don't think they are in a bubble. Atleast not one that's going to pop. They have the advantage of developed and undeveloped markets. At the moment more of their money is going to fund internal investments since foreign investments have dried up. They have billions/trillions in soveriegn wealth funds so if they need capital they can break open a piggy bank. Hopefully, if they've learned anything is overinvestment can be just as bad as underinvesting. If controlled properly they can coast on internal projects until the US and Europe exit their recessions. Then things can go back to business as usual.
yardie 16y ago
I don't think they are in a bubble. Atleast not one that's going to pop. They have the advantage of developed and undeveloped markets. At the moment more of their money is going to fund internal investments since foreign investments have dried up. They have billions/trillions in soveriegn wealth funds so if they need capital they can break open a piggy bank. Hopefully, if they've learned anything is overinvestment can be just as bad as underinvesting. If controlled properly they can coast on internal projects until the US and Europe exit their recessions. Then things can go back to business as usual.

johnconroy 16y ago

he mad.

charleso 16y ago

Premature optimization is the root of all evil. Your company is young and your period of profitability is relatively short-lived to date. It seems unwise to have taken a business which appeared to be working well and overhauling it completely to (possibly) reduce costs which did not need to be reduced. Do you have a 'plan-b' to allow you to quickly revert your company to its previous state if things do not go as planned?

zatara 16y ago

My experience with surfing tells me that you don't paddle towards where the wave has been, you wait and position yourself for the next one. The basic assumption is very sound, in a global world economy repositioning may be very interesting. I too agree that Europe is mostly dead for innovation and startups, but China is probably over-rated and too much bubble-prone at the moment (not to mention corruption, cultural shock, state bullying, etc). From the big countries that will probably fuel the world economy for the next 50 years (China, India, Brazil and Russia), I would bet my horse in Brazil. There are problems as well (education, poverty, corruption), but none of the BIG ones (terrorism, crazy state rules, dictatorship). There is definitely a trend (World Cup, Olympiads) and I am considering it as well, but timing is paramount: you don't wanna be the first to jump ship and deal with all the crap, but you definitely don't wanna be too late.

ww520 16y ago
Isn't crime a big problem in Brazil? (BTW I have investment in Brazil and it has been doing great.)
fauigerzigerk 16y ago
I don't know much about Brazil but it would be the the first latin american country without crazy excessive regulation.

drinian 16y ago

I find your single example of "unfreedom" in Europe to be entirely nonsensical. Your friend was sued for defamation, and folded rather than take it to court, in one of the fairest court systems in the world, where she likely could have won cost plus damages if she had any evidence for her claims. In China, someone might have shown up at her front door with a club -- and that someone might have a police badge or work for the mayor. Also, the Chinese legal system is likely more Byzantine than that of Germany; it's just that it's not enforced. You're going to be in for a world of hurt when the government shuts you down for not having some kind of license you've never heard of.

eklitzke 16y ago

There was recently an article on HN (sorry, can't find it ATM) about how to create a startup in China. The typical route is to create a business entity called a WFOE[1], which lets you operate your business in China as a foreigner, and has some tax/legal advantages. The gist I got out of the article and HN comments was that this can actually be very expensive and difficult; the application fee is inconsistent, and especially if you try to base the WFOE in a city like Beijing or Shanghai, in practice the cost can be in excess of $100k USD (of course the alleged nominal cost is lower). This is from memory, so it might not be entirely accurate, but if you're considering starting a business in China you should definitely do some research into how much it will really cost to create and operate your business. There are some good resources on chinalawblog.com, and of course in the comments of HN articles about the topic. [1] http://en.wikipedia.org/wiki/Wholly_Foreign_Owned_Enterprise http://en.wikipedia.org/wiki/Wholly_Foreign_Owned_Enterprise

mhd 16y ago

Is the speed of hiring and firing programmers really that much of an option? I know that Germany has some rather old-fashioned laws about that, so it's hard to get rid of someone fast. But when we're talking about the usual startup fare, the legal ramifications and a few months of pay are probably the least of your problems. Or to put it another way, if it isn't a problem, it's likely that your product sucks.

patrickg 16y ago

I wonder why almost nobody mentioned "ethics". Besides the arguments in the blog post, is it morally OK to start a business in a dictatorship? I am not so sure about it.

orborde 16y ago
I don't know about anyone else, but I tend to make arguments on rational grounds before I try ethical ones. Ethical arguments are less reliably convincing because not everyone is in agreement about what is ethical, and some people don't have any ethics at all.

chrischen 16y ago

Actually to maintain a western standard of living your costs will probably be more in china, since many western brand name products are imported (despite being made in china). For example an apartment in shanghai can cost more than one in NYC, iPhone costs more, etc. Whatever you do, avoid street food.

mattm 16y ago
Agreed with the cost of living. No matter where you go in the world, if you want to live an American lifestyle - car, big house/apartment, western products - you will pay just about the same as living in the US. However, if you can live like a local, your cost of living will drop dramatically. I never had a problem with street food.
- chrischen 16y ago
  http://www.chinasmack.com/2009/pictures/recycled-slop-swill-cooking-oil.html http://www.chinasmack.com/2009/pictures/recycled-slop-swill-... Even my relatives stopped buying street food for me there. Generally it's really unsanitary. Even street food in NYC is unsanitary, china is definitely worse.
  - mattm 16y ago
    I've definitely seen horror stories like that before. Maybe I was just lucky.

stefanp 16y ago

Dude, seriously... I can't believe it. Talking about freedom, comparing europe and china ... Come on ! Is this a joke ? Your friend is getting sued, so you move to a country where people are put in jail for their political opinions ? Don't invent stupid excuses, there's no need to. You're 24 years old and are looking for opportunity, and China, despite being a bloody dictatorship were a billion people work in slave-like conditions, is the new land of opportunity, so you're giving it a try. Good for you. But cut the ridiculous crap. You sound like a spoiled brat.

aaronkaplan 16y ago

When you were growing up, the previous generation of German businessmen gave up some of their profits to pay for your education and health care, and to ensure that you grew up in a relatively safe and pleasant environment. They did this with the expectation that you would in turn pay for the following generation. I wouldn't go so far as to say that you should be forced to perpetuate the system. You didn't choose where you were born, and if you think the system in place there is wrong you should be free to leave. But you've benefited from the generosity of others, and now by moving to a country where it's cheaper to do business precisely because it doesn't offer its people the same advantages that Germany does, you're ducking out of repaying that debt. Have you thought about other ways to pay it back? Or do you consider the previous generation to be suckers for paying your way without making you sign a contract first?

fgf 16y ago
Odds are his parents are net tax contributors, including whatever the state spent on him. Only people with poor parents really owe what they got to the state, as opposed to productive people like their parents.

patrickgzill 16y ago

I am assuming that the business Max Klein is in, is web-based? In such a case it may not matter very much where in the world he is physically located.