“If you are a small company, it is not a good position to be in. I didn’t understand how the game is played. We were a small, foreign, underfunded company, [so] some customers took the attitude: ‘Why do we have to pay them? If they go out of business, it doesn’t matter.’”
Eric Rongley (USA), Founder and CEO, Bleum
Having battled to acquire the startup money and to win the necessary government approvals to launch your business, the next goal for most foreign entrepreneurs in China—as everywhere—is to start bringing in revenue. But achieving this goal in China involves some unique challenges. Here, startups face difficulties not only in attracting and keeping customers, but also in actually getting paid. In fact, “getting paid” was one of the most difficult challenges for many of the startups we profiled. Many had faced customers who disputed, delayed, dodged, or simply disregarded making payments. Two findings to note: first, the smaller the startup, the more acute their collection difficulties; and second, the problem was particularly acute among startups selling to Chinese customers and clients.
As young, small-scale newcomers to the market, many of our profiled entrepreneurs quickly learned the disadvantages of lacking clout—to the point where some saw their initial business models fail (as the opening quote describes). ...