City rolls out red carpet to be destination of choice in China for global entrepreneurs

Shanghai’s quest to become a global science and technology center by attracting top overseas talent to boost innovation is quickly gathering pace, with the local government rolling out several measures to attract overseas entrepreneurs.

“We want to be the first port of call for top international talent and the hotbed of entrepreneurship by 2020,” said Sun Jiwei, the head of Pudong district, Shanghai.

According to data provided by the Shanghai Municipal Human Resources and Social Security Bureau, there are about 88,000 foreign experts from 139 countries living and working in Shanghai permanently, accounting for one-sixth of the foreigners in China.

Like many others, 27-year-old United States-born Bolivian Sebastian Martin, and Adrien Fabry from France are busy weaving their China expat dream in Shanghai. However, they are also struggling to find ways to stay put in the city with their businesses.

Martin, who is already set to open his second Cambio cafe in Shanghai soon, said: “Cambio means change in Spanish. We want to be the harbinger of change in China’s coffee industry and in the lives of coffee farmers in developing countries.

“I want to introduce high-quality coffee from my home country and other countries in South America to China, and let the consumers here taste the freshness and richness of our coffee,” said Martin, who spent five months sourcing in South America and nine months learning how to make coffee before launching his company in Shanghai in early 2013.

Martin first came to China from the US to study an entrepreneurship course in Hangzhou, Zhejiang province, in 2011 and decided to start his own business after seeing the growing demand for quality coffee.

Unlike most of his industry peers, Martin sources the best coffee beans from farmers and cooperatives directly, instead of wholesalers.

“I focus on the bottom of the supply chain so that I can offer farmers good prices and they in turn can continue their hard work and shorten the time needed for getting fresh coffee beans from the trees to become cups of coffee,” said Martin.

To minimize expenses, he chose to register as a trader first before taking the big move to open a coffee shop. That step has paid dividends, as it enables him to save costs and raise funds from investors.

“Now I am keen to develop the business focusing on online, retail and wholesale,” said Martin, adding his second cafe will offer customers South American cuisine from December onwards.

In addition, the company website will also offer suggestions on flavors and basic background knowledge and origins of coffee beans for coffee drinkers with videos and photos taken on his sourcing trips.

Like Martin who is now banking on e-commerce for further growth, Fabry from France made a brave decision to set up the Heritage Wine Club, a wine website in Shanghai, in 2012. He was the first foreigner to sell wines online in China.

“We want to be the reference point for Chinese consumers to buy and understand wine,” said Fabry.

As an e-commerce platform with a selection of about 250 wine products from 20 brands, Heritage Wine Club is keen to enable Chinese wine buyers to purchase smart and carefully selected wines from all over the world.

“Online shopping will be the choice for people to buy everything sooner or later, so I decided to open an online shop instead of a real store,” said Fabry.

“I chose to target Chinese wine lovers as I have seen the obvious growth in wine consumption in China,” said Fabry.

The online shop started operations in Shanghai with two to five orders per day for the first month.

Now it has expanded its network to Beijing, Guangdong province and other regions. On average it is executing 60 to 80 orders every day. It also has a showroom in Shanghai.

“It is a bit difficult for a foreigner to operate a business here, so we have to try all means to get the attention from the locals, by opening showrooms displayed with our wines and organizing wine tasting activities,” said Fabry.

The Shanghai government, on its part, is planning to roll out the red carpet further by planning steps to liberalize visa requirements for foreign experts and graduates.

Ken Jarrett, president of AmCham Shanghai, said: “The plan to allow foreign students who have studied in China to stay on and set up businesses is a positive step which will attract more young talents to contribute their innovative ideas to the industries here.

“Anyone can start a company, but to be successful in China, it requires very deep commitment to the place, and you have to add value, to create products that people want to buy, you have to create something different that Chinese people like,” said Martin from Cambio, who wants to create a lasting brand for Chinese consumers.

Though the local government has unveiled several steps to encourage foreign investment, Fabry and Martin still feel that more needs to be done.

“In my opinion, the most important step would be to simplify the procedures for setting up a wholly foreign-owned enterprise as entrepreneurs need flexibility at the beginning,” said Fabry.

Martin said: “China is a unique place to operate, of course. You have to understand how the government policies are going to affect you, especially if there are benefits, or sometimes restrictions and you need to be on top of it.”

In the long term, both Martin and Fabry are planning to explore interesting options in cities outside of Shanghai — the nearby second-and third-tier cities.

“These places are slower to accept foreign lifestyles and not as open or multicultural as Shanghai. That to me represents the big challenge of how foreign entrepreneurs are going to scale out in China,” said Martin.