Susie in Shanghai

This week I spoke with a man in charge of business development in Asia-Pacific for Cabot, a chemical company based out of Boston. He has worked for numerous companies despite being so young, and therefore has a lot of experience in many different fields of work.  This experience and the subsequent knowledge he has accumulated have made him interested in starting his own company one day.  Below is our interview:

PS – HAPPY FOURTH OF JULY!!! 

Q: Tell me a little bit about your background and the path that led you to your current position.

A: I am from Shanghai originally and went to school here for college. I majored in economics and then came to the U.S. to complete a master’s degree in finance strategy.  Since graduating, I have worked for many different kinds of companies. I first went into investment banking, then I worked for an automobile company, and then Johnson & Johnson.  I came back to China in 2006 because my family was here.  I worked briefly for a medical device company, then joined Sigma Aldrich in 2006, and now am working at Cabot.

Q: How did you get into the science industry since you majored in economics and finance?

A: I mainly focus on the business side of operations so I don’t need to know the details of the technology, although the know-how has been pretty easy to pick up over the years.  If necessary I will bring in technical support.

Q: Can you tell me a little bit about what you do specifically in your current position?

A: I am involved in business development for Cabot.  I run mergers and acquisitions as well as joint ventures with other companies in Asia-Pacific. Cabot has numerous plants all over China, but I work in the local headquarters here in Shanghai.

Q: In terms of joint ventures with other companies, what kind of company are you looking for? 

A: The company needs to have synergy. For my current position most of our joint ventures are with companies that provide raw materials such as coal, gas, oil, etc. These companies exist all over the country, but we look for facilities that are near our offices.

Q: Are companies typically willing to work with Cabot?

A: Yes, they are very eager to work with a large, international company.  They can learn a lot from a partnership with a bigger company.

Q: What about mergers and acquisitions—are companies open to this?

A: It depends on the type of funding they receive. If a company is in a special industry with a unique technology, they are usually more difficult to acquire.  Health care companies are particularly difficult because they receive a lot of government funding and therefore there is little incentive to sell to a larger company.  The global firms are not willing to spend the type of money that these start-ups expect.  However, if it is a regular company that focuses on low-cost products, but does not have a novel technology, they are typically more eager to sell.  The market is very saturated with this type of company and in the long run they will be replaced by the technology of advanced firms.  It really just depends on the industry and the technology.

Q: What are the differences between your current company and Sigma Aldrich?

A: Cabot is more of a traditional chemical firm.  Their main goal is to build assets, capacity, factories etc. to meet the growing demands in China.  Sigma is more involved in building a complete and competitive portfolio and providing new technologies and strong research tools to their customers.

Q: If you were starting your own business in China today, what industry would you do it in?

A: I am currently involved in a few ventures here in China.  One thing I’m involved in is running a trust firm. I establish relationships with the local banks to provide financial products to my customers, who are usually wealthy individuals who want a greater return on their money than simply putting it into savings banks.  This is becoming increasingly popular in China because people are interested in low-risk, high return products. Additionally, I am involved in manufacturing and trading for an automobile company.

Q: What do you think is the most important factor in starting a new business in China?

A: Business here is highly dependent on relationships and connections.

Q: I’ve definitely seen the value of connections and networking since graduation…

A: Yes, it’s very important, and I think it’s even more important in China. In the U.S., if someone has a good technology, then they can probably get their product commercialized.  Here you really need to develop personal relationships with people in order to be successful.  An investor may choose to work with someone who doesn’t necessarily have the lowest price, simply because they have good chemistry with the owner or they have some previous connection. And then the biggest risks in starting a business here involve contract risk and the constantly changing policies of Chinese government.

Q: Do you think there is still opportunity for someone to start-up a boutique private equity firm that invests in Chinese companies?

A: The competition is very tough right now.  There are 3000+ PEVC [private equity venture capital] firms in China, but less than 50 of them are very successful and making active investments. A lot of companies have been successful here but are relatively unknown outside of China, such as IDG.

China is an emerging market so of course there are plenty of new opportunities here, but like I said, the competition is fierce.  Having personal connections and good chemistry with other companies is very important. You also really have to understand the culture and etiquette of the Chinese people to win the deals.

Q: I recently read an article discussing the opportunities for development of green technologies here; from your perspective, what is going on with the environmental movement in China? Do you think there are many opportunities for a fusion of biotech and environmental ventures/green technologies?

A: Yes, absolutely.  This is a really hot industry because the environmental policies in China are improving and becoming stricter.  There are now emissions standards and special permits required for factory pollution.  If a new project is environmentally friendly, there are numerous government incentives, whereas there will be penalties for pollution and poor environmental standards. Pretty much any project that is involved in environmental protection will get money from the government.  If you develop a new green technology, then the government will most likely give you a free facility, labs, whatever you need. Once the tech is there you will immediately have numerous customers as well.  The customers will work with you in an effort to save money and also receive compensation from the government.  It really is a great area to look into if you want to go public.

Q: Where do you see yourself in ten years?

A: In ten years I hope to start my own business.  If that doesn’t work out I would return to the corporate world.  I think the first few years of your career learning is the most important goal.  The second phase is making money, and the third phase is to have fun.  But I’ve learned over the years that sometimes success can be based on sheer luck.

Q: Would you ever consider going back to the U.S.?

A: Yes, I would consider it.  I’d like to go back and forth ideally.

Q: As a recent graduate, can you offer me any advice in terms of business and which direction to head?

A: Figure out what your career goal is first.  If you were interested in investments, I would work for a private equity or venture capital firm to get exposure to different industries.  Having a science background will definitely be a plus in this field because it is a niche.

If you want to start your own business, I think it would be important to first get experience working in many different functions and meet a lot of people whom you can later form connections.  Try to find a position that provides exposure to marketing, sales, management, business development, and finance because you will need to have basic knowledge in all these fields before starting your own business. I also suggest working for both a big and small firm.  In a big firm you will have more of a specified task whereas in a small firm you will get a lot of hands on experience.

Q: You have worked for so many different companies, would you recommend that in order to gain a lot of experience in different fields?

A: If you work for a big company I think you should stay with them for about five years, whereas in a small company you can learn an enormous amount in only six months, so you can move around more frequently.  It is all about learning as much as you can in many different fields to make it on your own.