New | Forget the glamour, it’s a tough life out there: one venture capitalist’s hard truths on running start-ups and doing business in China

William Bao Bean, a partner at Shanghai venture capital firm SOSV, works with more than 120 start-ups every year. Bao Bean, who is also managing director of two venture capital firms – Shanghai software-focused Chinacceleratoras well as MOX, focused on mobile technology – tells us about his businesses and the reality of starting up your own company.

Why is it so hard for overseas companies to succeed in China?

The biggest challenge for overseas companies in China is not the Chinese government, regulations or laws. When you’re a company coming into China from the United States, Europe or Southeast Asia, you’re entering a completely different market.

Think about it like this – when you learn how to do something, you might spend 10,000 hours and become an expert. You develop a gut instinct. But once you go into a market that’s different, like China, your gut instincts are wrong.

One of the reasons major US internet companies have failed in China is because people making the decisions often have their instincts tell them what to do, as opposed to the data they have.

Is there any innovation in China, or does a copycat culture still exist?