CIPS CONNECTIONSINTERVIEWS by STEPHEN IBARAKI, FCIPS, I.S.P., ITCP, MVP, DF/NPA, CNP
James Zhang: Top-ranking China Internet/E-commerce Entrepreneur and Startup Company Management Authority Shares His Keys to Success in the World’s Fastest Growing Marketplace
This week, Stephen Ibaraki has an exclusive interview with James Zhang.
Mr. James Zhang has a long 18-year record of accomplishment in China, the world’s most dynamic, rapid growth marketplace. As co-founder and president of Pay100.com, (a “Top-Three” online payment services company in the burgeoning China E-business sector), Zhang is looking to repeat his success with ChinaHR.com.
Celebrated as one of the most successful entrepreneurs in China, James founded E-Channel Consulting Co. Ltd. in 1995, which became ChinaHR.Com after James led a successful drive to raise US $7m. Serving as President, CEO, and Board Director of ChinaHR.com Corp., James innovated a new campus recruiting business model, launched the first Job Index in China, the first Online Salary Survey, and the widely media reported “Most Famous Employers…” program -- and as a result rapidly grew the company to 10 branches, 4 million registered users, and more than 280,000 corporate clients. Due to ChinaHR.com’s status as one of China’s leading and most widely recognized online Recruiting/HR Services Companies, in 2005, Monster.com, the world’s largest recruiting company, acquired a 40% stake for US $50m.
A long time veteran in China’s Technology sector, Zhang’s prior positions include: Sr. China HR Manager for Compaq Computer Corp.; and Operations and HR Manager for Unimac Computer Systems Ltd., a Unisys’ joint venture.
Due to his distinguished career and highly-sought management expertise, Zhang has been widely interviewed in the media (Beijing TV, China Education TV-1, Shanghai TV, etc…) and has served as an invited guest speaker at many industry and academic forums including the Tsinghua University Venture Capital Seminar.
Zhang has a BA in English from Sichuan. After graduation, he worked as a translator for the Yugoslavian Embassy and interpreter for the British Embassy.
Q: James, with your long history of career successes and remarkable achievements, thank you for taking the time to share your valuable insights and widely acknowledged internet and management expertise with our audience.
A: I am glad to do so.
Q: Let us begin at the beginning of your career. What important lessons did you learn from your studies and your work with the Embassies? How have they contributed to your success?
A: My study of English gave me the key to open the door to the West by removing the language and cultural obstacles. My work with the Embassies formulated the way I worked afterwards; especially in the following four years after my graduation. My work experiences in the early years, two or three years after graduation, were very important in “shaping” my work style, to do my work professionally and well, (whether I liked or disliked it), and to always be results oriented, etc.
Q: What problems did you face while at Compaq and Unimac? How did you resolve them? How has your experiences contributed to your reputation as a top management authority?
A: 1)At Unimac as a HR in early 1990s, HR was totally new, not only for me, but even for China. At that time the western HR management theory was just introduced to China and you could hardly find a HR management book. The company was a new start-up and needed to set up all the HR systems, procedures, etc. I had to contact the relevant government authorities to understand the governmental regulations and laws; learn from the specific cases of some joint ventures and foreign companies, and then draft our own proposal for management discussion and decision.
2) Another problem I faced while at Unimac was to communicate with the local and foreign partners. As a joint venture, the local and foreign partners did not always have the same opinions because of different interests/benefits. The company’s policy needed agreement from both; therefore, I had to consider both sides’ interests and that of the employees when submitting a policy for discussion.
3) Another problem was that the foreign general manager was not always stationed in Beijing; he always had one week in Beijing and then traveled in Hong Kong, Shanghai, US. Email/IM was not as popular as today. It was not easy for employees to communicate with the general manager. I was in charge of the cross-function communication and sometimes had to take initiatives and responsibility to make decisions that might be made by the GM. My belief was that if you were doing something to meet customer’s need, it would always be right. Of course, you needed to report after doing so.
4) At Compaq: When I joined, Compaq was just entering China and would open several offices. The big problem then was how to hire the right people as scheduled. I had to use various methods to set up the candidate pool quickly, including participating in job fairs, using headhunters, launching employee referral program to encourage employees to refer their friends, relatives, etc. There were no online resume resources at that time.
Q: You have a long history of innovation and successes with E-Channel Consulting and ChinaHR.com from 1995 to 2004, providing a rich background of experiences. Describe these times, the roadblocks and challenges, your innovations and market leadership, and what insights you gained. What would you do the same and what would you do differently? Also, discuss your daily operations: sales, marketing, finance, and web systems production. What do you feel is unique to operating in China?
A: Well, when I started my own company in China in 1995, it was not as easy as today to raise money. You could hardly find a book telling you have to grow your company. Therefore, it was “pass through the river by touching the stone”. You have to “change” your way from time to time to catch the opportunity to grow your business. This made me invest in Internet in 1996, when there were only 200,000 internet users in China.
Try to find a good way to promote your brand. It’s cheaper than in the US to attract consumers. ChinaHR’s Job Index was the first one in China, launched in 1999; the Job Index drew lots of public attention to know the labor market. We summed the job opening numbers of China’s major cities by industry and job function from the newspapers’ job classified advertising, then analyzed it and provided our report to the media.
In 1999 and 2000’s internet bubble, all dot coms were trying to attract attention. We launched China’s first Salary Index by using the most cost effective way: Individuals share their salary information online (without exposing their name, company, but just an email), and then he/she are able to know others’ salary based on the qualifications, working experience, job function, industry, etc. I remember that there were over 200 national and local media which reported it and the salary information of each city, and different industries were widely quoted by the local city newspapers and the industrial publications. Today, ChinaHR’s Salary Index is announced every six months.
With ChinaHR’s campus business being the market leader, we launched “Most Famous Employers selected by University graduates”. With comparison of the university graduates’ choice of employers for their first job, Japanese and Korean media wanted to know why Japanese and Korean companies were not in the “top ten”. In this way, we successfully promoted our brand to the Japanese and Korean companies.
To operate a business in China, you must understand the differences of business practice and customer behavior from the West. Even among China’s different cities, it’s different. China’s growth is in a high speed, maybe the highest speed in the world. There are lots of business opportunities to start your own business, and opportunities to grow your business into different fields. The key is to focus; to do “one” thing and grow in “one” or “same” direction.
China is developing very quickly. China’s Internet is developing very quickly. You cannot do things today in the way yesterday. We must think differently and act differently to meet the changed situations.
Q: You were able to raise $7m in Venture Funding, which is both a difficult and rare achievement. What rules [of advice] would you give to others seeking to do the same?
2) Try your best to seek money to help your business. This is easy for US entrepreneurs to understand. But in China, we were more familiar with using our own money to start and even to grow our business. This is because of the lack of the fundraising channels. Another reason may be that the entrepreneurs don’t want lose his/her control on the company.
3) Analyze your investor to get “smart” money! This is important. Find out if the investor can assist you in your business, not only with money, but with experience and expertise to bring to your company which you don’t have. The best investor at the early stage is someone who has the operational experience to share with you. This will save you lots of time and gives you less operational pressure because he/she can really understand you -- not only your company and business, but also your mentality, and the pressures you have managing the company.
4) Present your business plan to more potential investors for a “good” price.
5) Understand and manage your investor’s expectation. Tell them the truth about your company, your business; don’t exaggerate your growth forecast. Tell them “No” if you can’t do it, and though your company is not a public company, it does not mean that you don’t have pressure from the investor(s).
6) A “strong team” is important to raise money, but you, as the founder, are more important, i.e., you can also get money even if you don’t have a team, when you just start your business, because you use the money to build the team. It’s investing on you.
7) Adhere to your strategy until it’s proven not to work. Adhere to your goal until it’s proven not to work. Sometimes you may have pressure from investors to change your strategy and goals.
Q: In a recent report,China just passed the UK and France to be ranked fourth in GDP (US $1.65 trillion) behind the US, Japan, and Germany. China’s President Hu Jintao predicts the economy to be US $4 trillion by 2020, rivaling Japan. The growth rate exceeded 9.4% this past quarter and even with the government’s attempt to slow the economy down, growth is predicted to exceed 8% for 2005. Internet usage is second only to the US with an estimated 115 million users in 2005, and mobile phone usage leads the world at 300 million. As a leading internet entrepreneur, can you provide your detailed thoughts on China’s e-business sector and overall market? What business opportunities are there today and into the future? Why do you make these predications—what are the reasons behind your forecasts?
A: It’s reported that there are over 100,000 online shops (not including the shops opened in eachnet/Ebay, Taobao, 1Pai). China’s e-commerce turnover exceeded US$50 billion (RMB440 billion) in 2004, and will reach US$75 billion (RMB620 billion) this year. There are lots of opportunities in China’s e-commerce business -- we have some “supermarket” online already like Taobao, eBay China, 1Pai.com (Yahoo/Sina joint venture) -- but you will find more featured shops online from now on, not only to buy books from US-based Amazon.com and China-based Dangdang.com, but you can buy almost everything online for your living soon – of course, easily, quickly and securely. I say so, because the Internet is no longer mysterious and is widely accepted, especially by home, small and medium-sized companies. The Internet greatly helps to cut the marginal cost with a company’s business expansion. The Internet also helps SME’s easily reach nationwide (or even international) customers with limited costs in marketing and promotion.
Q: What factors make for success in China? And, how can foreign companies succeed in China?
A: For entrepreneurs, some factors for success are the same as in western countries: long-term commitment, working hard, and making changes quickly to meet different situations. For foreign companies, being patient is important for success; don’t be eager for quick success and instant benefit; try to keep your costs as low as you can.
Q: What do you see as the major risk factors for doing business in China and how can they be resolved?
A: In my view, the governmental policy risk is no longer a major one, although some foreign companies may still think so. China is not a paradise for foreign companies, but in the past ten years, China’s business environments, from the infrastructure to official administrative efficiency, have been greatly improved. The major risk factors for doing business in China are to hire the “right” people, who know the market well.
Q: James with your many experiences and accumulated wisdom, you are in an ideal position to make other predictions about China. So make your top predictions in any areas of your choosing and provide specific time frames? What are the solutions and the value to businesses? Who are the winners and losers?
A: It’s difficult to predict the future and I am not good at it, but I can share some of my views.
With China entered into the WTO, more and more areas are open to foreign companies, such as retail, banking/financial, insurance, telecommunication and other service sectors. There will be more foreign investment involved in these areas.
WTO’s business practice will help foreign SMEs to easily run business in China in the way they are familiar with in the West.
China attracted foreign investment for export by providing preferred policy such as the tax policy, and China will attract foreign investment with its big consumer market.
The winner will be those who runs fastest and longest.
Q: What are your favorite information links, tools, and other resources? Why?
2) Reading business magazines’ report on other enterprises to learn the way to success and avoid failure.
3) Of course, the Internet is also a major source to get information and resources.
Q: The media have interviewed you many times due to your valued expertise. And you have spoken at many forums. Describe these experiences and any tips you can share.
A: I was just sharing my experience, my thinking with the audiences, and really nothing special.
Q: If you were doing this interview, what questions would you ask and then what would be your answers?
A: Well, I think you have already asked the right questions like:
“What factors make for success in China? And, how can foreign companies succeed in China?”
“What do you see as the major risk factors for doing business in China and how can they be resolved?”
These are the questions I would ask.
Q: James, thank you for taking the time to do this interview and sharing your invaluable expertise with our audience.
A: My pleasure.