China’s Site Selection Challenges: How One Company Hopped the Wall

by Robert Gaudreau, Regus

Frankly, people thought we were crazy when we began considering going to China. It was 1990, only a short time after the Tiananmen Square crackdown. Fears of political backlash and international trade sanctions against China certainly weren’t unwarranted. In addition, there were China’s sky-high real estate prices, labyrinthine bureaucracy and Third World infrastructure. All those things were readily apparent in our research on our potential Chinese operation.

So we weren’t flying blind. We knew the problems, knew how incredibly difficult it was to scale the wall of capitalism in China.

Nonetheless, we decided that our location project was a “go.”

As the world’s biggest untapped marketplace, with some 1.2 billion people, China presented opportunities that were simply too big to ignore. We knew we could make money in China. Given its massive scale, you don’t have to capture a lot of China’s market to be successful.

But it won’t be easy. Six years after our project set sail, we can look back on a host of obstacles we endured in setting up our Chinese facility: language and communication problems, bureaucratic red tape and high employee turnover, for example.

Consider this example: We’re the world’s largest provider of fully serviced business centers, which we furnish, staff and equip for lease to corporate clients. Regus has 130 facilities in 34 countries. Typically, we can open a business center in three months. Setting up our China facility took two years.

So it’s a fundamental given you’ll have to fight your way through a bevy of barriers to establish a Chinese operation. But it’s worth the effort.

In our particular case, it’s now clear we made the right decision.

The opportunity we envisioned back in 1990 has materialized. Even though our Beijing facility is only about half the size of a typical center, it’s our most profitable operation in the world. The Beijing business center is a “24-7” operation — open 24 hours a day, seven days a week.