Business Plan Contest Looks East: Risk, Opportunity Define China's Economic Landscape
China's seemingly endless economic potential inspired this year's winners of the 10th annual HBS Business Plan Contest. Tingting Zhong (MBA '06), a native of Shanghai, won first place in the traditional track for 8Baorice ("bow-bow-rice," a favorite Chinese dessert), a lifestyle, fashion, and beauty Web site for Chinese women. In the social enterprise track, Yashmere, a venture to export yak yarn from one of China's poorest regions to the United States, took top honors. It was the first time in contest history that winning plans for both tracks focused on China, where GDP is expected to grow over 10 percent for 2006.
"China's business landscape right now is very similar to what the United States looked like in the 1950s and 1960s," Zhong explains in a phone interview. "There are so many unexplored opportunities available here." Although she was educated in the United States, Zhong says that her roots are in China—and that understanding the culture and language in her home country is a clear advantage in doing business there.
The diversity of her classmates' experiences was a change for Zhong, who arrived at HBS with what she describes as a more "traditional" background in investment banking and private equity. "A few of the students had worked in nonprofits, some came from a military background, and others were entrepreneurs before they came to business school," she recalls. "I think there was a part of me that was longing to try something more entrepreneurial, too."
Like so many new ventures, the idea for 8Baorice began with a question. "What interested me most," Zhong notes, "was why there were Web sites addressing women's needs and interests in the United States and Europe, but not in China."
In the first semester of her second year, Zhong undertook an independent field research project with HBS Professor of Management Practice Nabil El-Hage, interviewing U.S. companies with women-focused Web sites and conducting focus group studies. "HBS has an amazingly extensive network," Zhong remarks. "I was able to talk to a number of Internet entrepreneurs in the United States who had tremendous insights into the industry."
After winning the contest, Zhong returned to China to conduct more due diligence on the idea, working with a strategic partner based in Taiwan and fielding inquiries from angel and venture capital investors. A beta version of 8Baorice tested well with users, but the content was rapidly copied by competitors. "We developed very strong content, but there was no way to protect it without intellectual property enforcement," Zhong says. "Suddenly, our advantage became a disadvantage, which was very frustrating."
Now, she is working with her strategic partner to test the concept for 8Baorice in Hong Kong and Taiwan, where copyright laws are enforced more strictly. "Participating in the Business Plan Contest has taught me more than any other work I've done," says Zhong.
Exporting Yak Yarn
While millions of Chinese in coastal cities such as Beijing and Shanghai have benefited from the country's economic growth, those living in China's interior have been less fortunate. Yashmere, winner of the Business Plan Contest's social enterprise track, hopes to change that in some small way by exporting yarn and knitted throws made from an abundant local resource: the long, soft fibers of the local peoples' yaks. Money paid for the yaks' down will go directly to the animals' owners, while profits from the products will fund customized community projects that best fulfill the needs of each region.
Shawn Tan (MBA '06), a native of Singapore, says that the idea for Yashmere came from Carol Chyau and Marie So (both 2006 graduates of Harvard's John F. Kennedy School of Government), who traveled in the Western Chinese provinces of Yunnan and Gansu last winter. (Other teammates included Esther Hsu of the Wharton School and Jose Dias de Barros, MBA '06.) During their travels, Chyau and So spent time in communities where the yak is seen as the area's primary resource. In addition to using the animal for transportation, the poor people of these provinces drink yak milk, eat yak meat, make clothing from its coat, and use its dung for fuel. Back in Boston, the pair teamed up with Tan, Dias de Barros, and Hsu to brainstorm how to best use the incredibly fine, warm fiber found in a yak's coat. It took some time, however, to determine what sort of product to make from the soft, fluffy down.
"It was a bit challenging to determine how to best utilize this resource, given the fact that none of us really has experience in textile or apparel," Tan notes. "It was also difficult to think concretely about the various possibilities when the yaks and the communities we hoped to help were thousands of miles away. The Business Plan Contest provided discipline that forced us to think carefully—while on a time line—how to best help those communities exploit the opportunity at hand." The venture, now named Shokay (Tibetan for "yak down"), has begun testing the waters by shipping yarn to a few U.S. knitting stores. Luxury throws are the next product being developed, with a projected launch date of winter 2007.
Tan expects to return to a career in finance after Shokay finds it feet, leaving Chyau and So to oversee the organization's day-to-day operations. He says that the start-up experience has taught him the skill of bending both ways. "Over the course of refining the plan and launching this business I began to understand the importance of planning ahead and being careful and systematic in my thinking—there are so many early decisions that affect how you use your limited resources," Tan remarks. "But at the same time, it's essential to be pragmatic and willing to change your idea when you find it's not entirely practical."
Like Zhong, Tan emphasizes the element of risk involved in launching a business in an emerging market. But he also encourages would-be entrepreneurs to "just go out there and do it."
"It's been surprising to see how receptive people are to an idea when they see its potential," he says. "We've had many positive interactions, I think because people recognize the need we're trying to fulfill. The focus right now is on China as a powerful economic entity, but many people also recognize that there are a vast number of people not enjoying the rising economic tide who could use some help."
"China's business landscape right now is very similar to what the United States looked like in the 1950s and 1960s," Zhong explains in a phone interview. "There are so many unexplored opportunities available here." Although she was educated in the United States, Zhong says that her roots are in China—and that understanding the culture and language in her home country is a clear advantage in doing business there.
The diversity of her classmates' experiences was a change for Zhong, who arrived at HBS with what she describes as a more "traditional" background in investment banking and private equity. "A few of the students had worked in nonprofits, some came from a military background, and others were entrepreneurs before they came to business school," she recalls. "I think there was a part of me that was longing to try something more entrepreneurial, too."
Like so many new ventures, the idea for 8Baorice began with a question. "What interested me most," Zhong notes, "was why there were Web sites addressing women's needs and interests in the United States and Europe, but not in China."
In the first semester of her second year, Zhong undertook an independent field research project with HBS Professor of Management Practice Nabil El-Hage, interviewing U.S. companies with women-focused Web sites and conducting focus group studies. "HBS has an amazingly extensive network," Zhong remarks. "I was able to talk to a number of Internet entrepreneurs in the United States who had tremendous insights into the industry."
After winning the contest, Zhong returned to China to conduct more due diligence on the idea, working with a strategic partner based in Taiwan and fielding inquiries from angel and venture capital investors. A beta version of 8Baorice tested well with users, but the content was rapidly copied by competitors. "We developed very strong content, but there was no way to protect it without intellectual property enforcement," Zhong says. "Suddenly, our advantage became a disadvantage, which was very frustrating."
Now, she is working with her strategic partner to test the concept for 8Baorice in Hong Kong and Taiwan, where copyright laws are enforced more strictly. "Participating in the Business Plan Contest has taught me more than any other work I've done," says Zhong.
Exporting Yak Yarn
While millions of Chinese in coastal cities such as Beijing and Shanghai have benefited from the country's economic growth, those living in China's interior have been less fortunate. Yashmere, winner of the Business Plan Contest's social enterprise track, hopes to change that in some small way by exporting yarn and knitted throws made from an abundant local resource: the long, soft fibers of the local peoples' yaks. Money paid for the yaks' down will go directly to the animals' owners, while profits from the products will fund customized community projects that best fulfill the needs of each region.
Shawn Tan (MBA '06), a native of Singapore, says that the idea for Yashmere came from Carol Chyau and Marie So (both 2006 graduates of Harvard's John F. Kennedy School of Government), who traveled in the Western Chinese provinces of Yunnan and Gansu last winter. (Other teammates included Esther Hsu of the Wharton School and Jose Dias de Barros, MBA '06.) During their travels, Chyau and So spent time in communities where the yak is seen as the area's primary resource. In addition to using the animal for transportation, the poor people of these provinces drink yak milk, eat yak meat, make clothing from its coat, and use its dung for fuel. Back in Boston, the pair teamed up with Tan, Dias de Barros, and Hsu to brainstorm how to best use the incredibly fine, warm fiber found in a yak's coat. It took some time, however, to determine what sort of product to make from the soft, fluffy down.
"It was a bit challenging to determine how to best utilize this resource, given the fact that none of us really has experience in textile or apparel," Tan notes. "It was also difficult to think concretely about the various possibilities when the yaks and the communities we hoped to help were thousands of miles away. The Business Plan Contest provided discipline that forced us to think carefully—while on a time line—how to best help those communities exploit the opportunity at hand." The venture, now named Shokay (Tibetan for "yak down"), has begun testing the waters by shipping yarn to a few U.S. knitting stores. Luxury throws are the next product being developed, with a projected launch date of winter 2007.
Tan expects to return to a career in finance after Shokay finds it feet, leaving Chyau and So to oversee the organization's day-to-day operations. He says that the start-up experience has taught him the skill of bending both ways. "Over the course of refining the plan and launching this business I began to understand the importance of planning ahead and being careful and systematic in my thinking—there are so many early decisions that affect how you use your limited resources," Tan remarks. "But at the same time, it's essential to be pragmatic and willing to change your idea when you find it's not entirely practical."
Like Zhong, Tan emphasizes the element of risk involved in launching a business in an emerging market. But he also encourages would-be entrepreneurs to "just go out there and do it."
"It's been surprising to see how receptive people are to an idea when they see its potential," he says. "We've had many positive interactions, I think because people recognize the need we're trying to fulfill. The focus right now is on China as a powerful economic entity, but many people also recognize that there are a vast number of people not enjoying the rising economic tide who could use some help."
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