Beijing Entrepreneurs Roll With the Punches as China's Business Scene Evolves

Plenty of entrepreneurs come to Beijing with pipe dreams about making it big in China, thanks to outdated assumptions about the country, such as a low cost of doing business and plenty of unfilled market niches. But a range of Beijing’s savviest foreign business owners say those days are over: They say Beijing has become an increasingly challenging market, in terms of costs and competition.

To dive deeper into this topic, the Beijing chapter of the global Entrepreneurs’ Organization (EO) is conducting a survey of the city's English-speaking entrepreneurs (are you one? Fill out the five-minute survey before March 6 here).

Early returns indicate inconsistent regulations and language/cultural barriers are amongst the community's biggest concerns – though Beijing’s notoriously poor air quality tops the list.

Andreas Laimböck, founder and director of LTL Mandarin School, says Beijing’s frequently unclear skies are a perceptual issue as much as they are a health issue. “It's not really pollution [that's affecting business directly] – it's media coverage of pollution and the negative PR that it caused,” he says. "The perception of it ... definitely has a negative effect on business,” he says.

However, others are seeing more direct effects from air pollution. Dominic Johnson-Hill, founder and creative director of Plastered T-Shirts, says foot traffic in his clothing stores falls on highly polluted days. He also surmised that businesses attempting to attract talent from outside the city would surely have trouble convincing candidates to come work in a place like Beijing with its reputation for bad air. 

Bad air aside, the greater challenge for businesses like Plastered: Beijing’s seismic regulatory shifts and its attempts to re-engineer the heart of the city. Johnson-Hill and his fellow hutong shop owner have watched as city officials have shut down vast swaths of shops in traditional alleyways and courtyards, as well as chasing wholesale markets out of town.

Though he has yet to suffer an unexpected closure, the fickle nature of city planning has him nervous. “I’ve worked very hard to make sure my business has a good legal structure, so when a government official shows up he can't shut me down,” Johnson-Hill says. “Still, it's always a bit daunting to think ‘What's the next policy?’”

Claudia Masüger, founder & CEO of Cheers Wines Life, agrees that such policy shifts can seriously disrupt operations, especially for retail establishments like hers. “Business has indeed become more challenging over the last year as the government is closing many street stores and locations all over the city,” she says.

Such hurdles may surprise many entrepreneurial newbies in China, who all too often assume that success is a statistical inevitability, given the massive population. That was the case for Jesper Lodahl, who has been an entrepreneur in Beijing for 13 years (his latest venture is Limitless, which sells toxin free coffees and health-oriented MCT oils). When he started, "the dream of earning just RMB 1 from 1.5 billion people had me gung-ho on China entrepreneurship,’” Lodahl says. “But It took me a few years and a few million RMB to realize that it’s not that easy.”

More recently, difficulties for Lodahl come courtesy of Beijing’s rapidly rising wages, a factor of more experienced professionals as well as the rising cost of living in the city. As talent gets more experienced, their opportunities increase, and that means a lot of competing offers. "In that front, it will cost more to start and scale a business in Beijing these days – meaning larger risk,” he said.

However, there is an upside to this, as it means more consumers with more disposable income. “The middle class is growing to half a billion over the coming years, so opportunity is still enormous,” he said.

Are you an entrepreneur in Beijing? EO would love for you to spend 5 minutes on their survey here (it's mobile friendly for those of you on phones). As an added incentive for you to fill it out before March 6, EO member companies have lined up a bunch of swag to hand out to respondents, including Cheers Wine, Mandarin training course from LTL Mandarin School; Limitless ToxinFree Coffee, free beer from Paddy O'Shea's; breakfast treats from Miss Muesli; dinners at Pak Pak Thai Restaurant; gift certificates for Ricci Creative Eats; cooking classes from The Hutong, and college application consulting from Touchdown Education.