Where Should You Base Your Startup in China? China can be a great place to do business. But setting up shop in the world’s largest consumer tech market can be a lot more difficult than it sounds.From the southern manufacturing cities of Shenzhen and Guangzhou, to the finance hub of Shanghai and the culture capital of Beijing, there are many great cities in China, each with a unique offering. However, with great cities comes great rivalries, and it’s no different in the world of entrepreneurship where startup founders vie to build a solid base of operations.While Beijing has previously been dubbed the centre of startup culture in China, new waves of investment have seen semi-gentrified southern cities develop burgeoning innovation hubs closer to manufacturers. At the same time, Shanghai’s foreigner-friendly atmosphere has made it an attractive proposition for the growing number of startups doing market entry. We asked five entrepreneurs to share their experiences in China’s various startup hubs.Beijing "Beijing Welcomes You" is a go-to karaoke song for most foreigners in China. When it comes to foreign entrepreneurs, I’d say this song’s title is 70% accurate.Beijing Pros: Beijing has a startup culture resembling Silicon Valley, with Garage Cafe acting as the type of nexus for VCs, entrepreneurs, developers in the same way that Coupa Cafe does in Palo Alto.There’s also a very high concentration of VCs, and an incredibly high concentration of universities. On top of this, several government-run programs supporting foreign and domestic entrepreneurs are based in the capital.Beijing Cons: Beijing as a startup hub is somewhat inefficient. The community is split, not by the traditional English / Chinese language barrier, but by distance. Zhongguancun and the East Third Ring Road are two centers of gravity for startups that are quite far apart.A rule of thumb, B2C startups should be in Zhongguancun, and B2B along the East Third Ring Road. Here’s hoping new co-working spaces like the Manning space in Liangmaqiao help overcome this gap and can make "Beijing Welcomes You" 100% accurate.Shanghai "As China transforms itself into a leader in the global economy at such a rapid pace, I saw the opportunity to create a platform where people from around the world can learn Chinese and get plugged in to the dynamic, complex, and modern culture in China today." Shanghai Pros: Shanghai is a very charming and livable city, definitely the most western style offering on the mainland. This means attracting foreign talent is comparatively easy.Shanghai Cons: As far as the mainland goes, Shanghai has the highest cost of living in China, including both residential and office space. While the city’s foreign focus is attractive, the industry is still very focused on finance and retail, not techShenzhen "We chose Shenzhen as we are right on the Hong Kong – Shenzhen border, some of our team is based in Hong Kong, while others are in Shenzhen. We get to maximize both sides of the border with access to China’s large talent pool as well as the network of business development contacts in Hong Kong."Shenzhen Pros: As a manufacturing city undergoing rapid gentrification, Shenzhen still has a relatively low cost of operations and living for the time being. The big draw of Shenzhen is its dual proximity to manufacturing hubs, consumer electronics markets and factories as well as Hong Kong, a hotspot for innovation. There are also lots of young entrepreneurs, both Chinese and Western, not to mention warm weather.Shenzhen Cons: While the city is still developing, costs are rapidly rising. There is also enormous competition for developers in the region, with giants like Tencent and Lenovo scrabbling to grab them up as quickly as they can.Chengdu "The essence of Chengdu is 'confluence.’ The city blends so many important factors together and does it so well, that it is hard to imagine a more suitable location for an entrepreneur. Urban and rural integration, tradition with modernity, business with leisure, industry with the environment and the list goes on."Chengdu Pros: Chengdu boasts excellent transportation systems and infrastructure, with both public and private auto use very convenient. The living is much more affordable than eastern centers, resulting in lower HR costs without sacrificing any quality. The lifestyle is also very well developed in the inland city, including unsurpassed natural scenic areas within an hour’s drive.Chengdu Cons: Despite being a very large city with a well developed manufacturing and distribution presence, Chengdu suffers from its general 'under-the-radar’ perception, and can present a steep learning curve for foreign investors unfamiliar with the city. Chengdu also has a lack of established tech savvy regional equity pools. In terms of lifestyle, the only big downside in the humidity and gloomy weather given that the city is surrounded by mountains.Guangzhou "We chose Guangzhou as it’s the capital and epicenter of the manufacturing province – Guangdong. Guangzhou is the center of global trade in China, and hosts the largest trade fairs and the immediate access to manufacturers is unbeatable."Guangzhou Pros As both a manufacturing city and a trade and commerce hub, Guangzhou is a very attractive option for startups looking to enter China. Like Shenzhen it has an advantageous proximity to Hong Kong, as well as a burgeoning expat community focused on trade.Guangzhou Cons Unlike Shanghai and Beijing, Guangzhou is not a Mandarin focussed city, with most people talking in cantonese, this poses some barriers. The pollution and extreme weather also make it a bit less attractive for long-term residence.
