China's internet industry is a black box for most Westerners. They may have read headlines about Baidu, Alibaba or Tencent (BAT, for short), but the inner workings, trends, decisionmaking and structures remain a mystery.
As a former senior executive at Alibaba, and an early recruit of Jack Ma, Porter Erisman is among the best placed Westerners to comment as an insider on what it takes to succeed in the Chinese e-commerce space.
Watch his views based on first-hand experience competing in this market.
''My advice for internet startups in China is number one: be prepared for intense competition,'' said Porter. ''But on the other hand, be ready to harness all of the entrepreneurial spirit here.''
All it takes sometimes is the courage to go out, find a capable team, create a make-shift office in an apartment, work with them, and sometimes great ideas will come out of it. Alibaba started this way. Jack Ma set up a team in his apartment for months to work on a product before launching. It was high risk at the time and no guarantee of success.
Be Smart About Picking Your Industry
There is space for entrepreneurs to come to China from outside and build local internet companies, according to Porter. The main thing is figuring out in what area of the internet you are targeting. If it is e-commerce, or something politically neutral, you should be fine. If you plan to get involved in media or social networks, then chances are you will run into a lot of government barriers.
''I have a friend, a Westerner, who came to China and started a company as a hobby in Zhongguancun, in Beijing, and then a few years later sold the company to Baidu for US$ 500 million,'' said Porter.
Zhongguancun is considered China's own Silicon Valley. Its eco-system brings together top universities, including Tsinghua and Peking University, with startups, investors and incubators. Baidu and Lenovo are based in Zhongguancun.
Is It a Level Playing Field?
''Beyond those sensitive areas of the internet where the Government pays a lot of attention, the internet in China really is a meritocracy where I think there is room for foreigners to compete with the locals as long as they move quickly and build a product or service which really meets the local needs.''