Why I’m giving up on Europe and moving my startup to China

China's great until you have to go to court there and realize you're being totally screwed over because your opponent has an "in" with the government. There are countries like Australia and Canada that strike a nice middle ground between too much and too little regulation, have decent, stable economies right now, and solid relationships with China in the case you want to partner with a company there. But I've heard too many horror stories from entrepreneurs getting burned in China to want to put all my chips in that stack.

Is it at all possible to change the title from Europe to Germany. Most of his complaints are German specific and don't apply to everywhere in Europe.<p>Bureaucracy: I've heard regularly bad things about the German bundes. I've heard good things about UK, Sweden, Romania, Hungary.<p>Labor: Whether you get it here or there the price of labor is only going up, but in China it's going up faster. Programmers are expensive. I'm expensive. If a better offer comes along that you can't match or even come close to I'll be out the door faster than the computer can shutdown. (Of course with my 2 weeks-1 month notice first). Don't expect anything less from the chinese. I don't know what you are working but have you ever hired anyone straight out of college? Experience costs money and mistakes costs money. Just make sure the latter costs less than the former.<p>Costs and Taxes: Depending on the European country you may not pay any taxes on revenue while in the startup phase (generally 2 years). After that it's country specific, the rules that apply in Germany don't apply in the UK.<p>Travel: Maybe as a German these things don't matter to you, but, as an American, I find Europe to be fascinating, so many different cultures, so much history, and its all packed in one half continent. When I speak to other french or english friends about SE Asia it's generally "which beach should I visit this week?". Little interest in the culture, history, or the language (I love ordering food in thai, but that's all the thai I know). I think a lot of people have a very romantic idea of what SE Asia is about but that's it. Plus it's huge region, you need a plane to do all that traveling and those flights aren't short.<p>It looks like you've traded one set of problems for another. I don't know what the startup will ultimately be about but I wish you luck. Also be careful, lots of people have startup ideas that fizzle out, can't get funding, or can't get any promotion because it's not from the right place. One thing I've learned about a company is that it's the people you know as well as the idea that make it a success. If you are doing it in China, then have a chinese focus because no one in San Francisco is going to care about it, until it's too big to ignore.

I really applaud your bold move and wish you the best of luck. But there is a lot of "the grass is always greener on the other side" mentality in this post, especially regarding personal freedoms and the bureaucracy/legal-system. I wonder how the example of your friend (getting sued for defamation) would have played out in China. How hard is it to hire good programmers in China? Does anyone have experience about what to expect for 600$ a month?

I find your single example of "unfreedom" in Europe to be entirely nonsensical.<p>Your friend was sued for defamation, and folded rather than take it to court, in one of the fairest court systems in the world, where she likely could have won cost plus damages if she had any evidence for her claims.<p>In China, someone might have shown up at her front door with a club -- and that someone might have a police badge or work for the mayor.<p>Also, the Chinese legal system is likely more Byzantine than that of Germany; it's just that it's not enforced. You're going to be in for a world of hurt when the government shuts you down for not having some kind of license you've never heard of.

Dude, seriously... I can't believe it. Talking about freedom, comparing europe and china ... Come on ! Is this a joke ?<p>Your friend is getting sued, so you move to a country where people are put in jail for their political opinions ?<p>Don't invent stupid excuses, there's no need to. You're 24 years old and are looking for opportunity, and China, despite being a bloody dictatorship were a billion people work in slave-like conditions, is the new land of opportunity, so you're giving it a try. Good for you.<p>But cut the ridiculous crap. You sound like a spoiled brat.

The taxes that German paid go toward the social benefits that the German enjoy. What if you get sick in China? Who pay for the medical cost? When you are out of work in China, who pay for the unemployment benefit? The statement that students graduated from university being competent engineers is not truth. You will find turnovers to be very high.<p>You are just trading one set of problems with another. I'm sure it will be a fun adventure. Good luck.

When in China, do as the Chinese do. If you want to really get off the ground there you'll need to partner with a local that knows the ways things are done, which is not always intuitive from a 'westerner' point of view.<p>A friend of mine is currently going this route and there are a few other HN'ers that are doing this, maybe you guys should get together somehow and compare notes. That might save everybody both hardship and time.

It reads incredibly naive, but I wish the author the best of luck. He should however be prepared that drawbacks of Chinese way of doing business sometimes outweigh its advantages.

"These rules are also very difficult to discover and very difficult to implement correctly. From the situation with healthcare for your employees through to filing your taxes correctly, the amount of paperwork is insane and complex."<p>Sorry, but reading this is raising a question if the author of this blog article has experienced this himself or just hearing about it. The bigger your company is, the more complex tax forms and other things will become. But as a small startup company it is very easy to do taxes etc. You don't even have to fill out a standardized form for declaring your business income if you are a small company (EÜR in Germany). I was afraid of all this as well, but starting the company here is really easy, there are a lot of government/local institutions that help you with everything, even the IRS answers your questions if you have any.<p>I cannot judge on the other things, but they sound - as other said here - like the other grass is always greener.

When you were growing up, the previous generation of German businessmen gave up some of their profits to pay for your education and health care, and to ensure that you grew up in a relatively safe and pleasant environment. They did this with the expectation that you would in turn pay for the following generation.<p>I wouldn't go so far as to say that you should be forced to perpetuate the system. You didn't choose where you were born, and if you think the system in place there is wrong you should be free to leave. But you've benefited from the generosity of others, and now by moving to a country where it's cheaper to do business precisely because it doesn't offer its people the same advantages that Germany does, you're ducking out of repaying that debt. Have you thought about other ways to pay it back? Or do you consider the previous generation to be suckers for paying your way without making you sign a contract first?

There was recently an article on HN (sorry, can't find it ATM) about how to create a startup in China. The typical route is to create a business entity called a WFOE[1], which lets you operate your business in China as a foreigner, and has some tax/legal advantages. The gist I got out of the article and HN comments was that this can actually be very expensive and difficult; the application fee is inconsistent, and especially if you try to base the WFOE in a city like Beijing or Shanghai, in practice the cost can be in excess of $100k USD (of course the alleged nominal cost is lower).<p>This is from memory, so it might not be entirely accurate, but if you're considering starting a business in China you should definitely do some research into how much it will really cost to create and operate your business. There are some good resources on chinalawblog.com, and of course in the comments of HN articles about the topic.<p>[1] <a href="http://en.wikipedia.org/wiki/Wholly_Foreign_Owned_Enterprise" rel="nofollow">http://en.wikipedia.org/wiki/Wholly_Foreign_Owned_Enterprise</a>

My experience with surfing tells me that you don't paddle towards where the wave has been, you wait and position yourself for the next one. The basic assumption is very sound, in a global world economy repositioning may be very interesting. I too agree that Europe is mostly dead for innovation and startups, but China is probably over-rated and too much bubble-prone at the moment (not to mention corruption, cultural shock, state bullying, etc).<p>From the big countries that will probably fuel the world economy for the next 50 years (China, India, Brazil and Russia), I would bet my horse in Brazil. There are problems as well (education, poverty, corruption), but none of the BIG ones (terrorism, crazy state rules, dictatorship). There is definitely a trend (World Cup, Olympiads) and I am considering it as well, but timing is paramount: you don't wanna be the first to jump ship and deal with all the crap, but you definitely don't wanna be too late.

I lived in China in 2008 and while I'm no expert on China, you will learn quite quickly that some of your perceptions about China are not true:<p>- In china, you can pay a programmer 600€ a month<p>Sure, for average programmers. For good ones, you are going to be paying the same as elsewhere. A friend of mine there told me her brother was earning nearly $500 US/day working as a programmer for a company and they even gave him one week off per month. That would be a monthly salary of $500 x 5 days x 3 weeks = $7500<p>- you have a wide pool of qualified people leaving university which you can always pick from.<p>True but the Chinese educational system is very different from the "West". Their educational system focuses more on memorization. Creativity and problem solving are not taught very much. This is going to be a huge problem when hiring programmers right out of university. They will be looking to you to tell them everything they should be doing.<p>- Also, in china people are more willing to travel around to find an appropriate job than in Europe<p>Yes, I would say this is generally true amongst all classes.<p>- Quite apart from the chinese programmers, it’s also easier to get foreign programmers to work for you in china than in europe<p>Are you talking legally or just by the candidate's motivation?<p>When I was looking for a job as an English teacher, I went to one place and they told me they were only one of two officially registered English schools in the city. They told me that I would need a TESL (Teaching English as a Second Language) degree, which I did not have, in order for them to arrange the work visa. At the place I was hired, I still did not have a TESL degree but they arranged the work visa for me no problem.<p>Yes, it is more of the wild, wild west but as a foreigner, you are not going to be able to figure out the system very fast and it will cause you a lot of frustration and wasted energy.<p>- Important is that there are very low additional costs paid to the government. In Europe, you could pay 1/3 – 1/2 of your profits as a small company just servicing the goverment, China does not require this.<p>To be blunt, this is a very naive statement. Official costs might be low but you're not factoring bribes and other unofficial costs into the mix.<p>While teaching English, most of my students were in their 20s and 30s so I would often try to bring up topics of conversation for me to understand the way business works there. Many students would tell me that they would hate when government inspectors would come by as that would mean they would need to pay bribes to them. It is also expected that companies need to lavishly entertain these visitors, so in addition to the bribes, you are expected to drop hundreds/thousands of dollars on dinners and drinks.<p>Many students would also tell me that their dream job was to be a purchaser for a company. Some explicitly told me that this is because then they could receive kickbacks. I also heard quite a few stories about people stealing from their own companies. In fact, one story came from a guy who was just hired at a company and the manager encouraged him to "take a little for himself." The guy was uncomfortable doing this but he later found out that pretty much everyone in the company was doing this and only the owners were unaware of it.<p>This is the mindset that you need to adjust to. Many people do not think there is anything wrong with bribes and stealing from the company. If you are going to pay them low salaries, they will find a way to make it up from you.<p>Anyways, I wish you the best of luck. You'll sure learn a lot. It would be great to see a follow-up post from you in 6 months with your experiences.

Premature optimization is the root of all evil.<p>Your company is young and your period of profitability is relatively short-lived to date. It seems unwise to have taken a business which appeared to be working well and overhauling it completely to (possibly) reduce costs which did not need to be reduced.<p>Do you have a 'plan-b' to allow you to quickly revert your company to its previous state if things do not go as planned?

Make plans for when the Chinese bubble pops. I'm quite confident they are in one, but regardless of your own feelings on that topic you can't rationally put the probability of that at 0%. When it pops, I don't know what would happen and there is another non-0% (and IMHO significant) chance that it might not be pleasant to be a foreigner at the time, especially a Westerner. If something looks to be popping I would make sure I could get the hell out of there.

having been in all three places, you should leave europe to start your company. but move to silicon valley instead.

"There are so many little ‘unfreedoms’ in Europe"<p>I must admit, China would have never crossed my mind as the country of freedoms. But then, I've never been there. Also, I weigh some freedoms higher than others - I don't like that the Chinese government has the freedom to shoot me...

Actually to maintain a western standard of living your costs will probably be more in china, since many western brand name products are imported (despite being made in china). For example an apartment in shanghai can cost more than one in NYC, iPhone costs more, etc.<p>Whatever you do, avoid street food.

Is the speed of hiring and firing programmers really that much of an option? I know that Germany has some rather old-fashioned laws about that, so it's hard to get rid of someone fast. But when we're talking about the usual startup fare, the legal ramifications and a few months of pay are probably the least of your problems.<p>Or to put it another way, if it isn't a problem, it's likely that your product sucks.

I wonder why almost nobody mentioned "ethics". Besides the arguments in the blog post, is it morally OK to start a business in a dictatorship? I am not so sure about it.

What I don't like in the article is the accent that is put on the advantages of the entrepreneur and little accent on the employee.<p>It's great that you can fire people when you want, but it sucks if you're the one getting fired.

I am assuming that the business Max Klein is in, is web-based? In such a case it may not matter very much where in the world he is physically located.

he mad.