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Although only roughly 20 French business projects exist in all of Asia, from Calcutta to Tokyo, attitudes are changing. Young French entrepreneurs are discovering the vast business potential in Asia, the ease with which companies can be set up simultaneously in a number of different markets, the low costs, and the advantage of having a tech-savvy workforce. Risks, however, are also numerous. But the French, still new to the game, are optimistic. "Asia? There is no immediate competition here. We would be crazy not to try it," says Stanislas Chesnay, CEO of Netsize, a French startup that develops software allowing companies to communicate with mobile networks. Sébastien Breteau is another Frenchman who has taken the leap to the East. After settling in Hong Kong in 1996 and starting his own promotional marketing company, he was contacted by Loïc Le Meur, a fellow graduate of the prestigious French business school HEC. Le Meur had created the incubator Business Pace back home and was looking for contacts in Asia. The two men created the joint venture Business Pace Asia last February. "It took us just two Hong Kong dollars, and in a single day we were able to create [our company]," says Breteau. "A GODSEND." The company's primary goal is to help projects developed by Business Pace in France expand into Asia. Breteau sees Asia as a succession of regional markets rather than one big market, and expects therefore to create subsidiaries in Taiwan, Singapore, and China by the end of the year. With this view, Business Pace is encouraging startup Marketo, an electronic marketplace for small and midsize companies, to simultaneously establish a presence in Shanghai and in Hong Kong. In the future, Business Pace Asia sees itself as a relay between Europe and Asia. The company also hopes to take advantage of low investment costs and the abundance of qualified and cheap software developers in countries like the Philippines and India to develop offshore computer services. Asiabooster, which is competing with Business Pace Asia as Hong Kong's biggest French startup, is currently opening offices in Singapore and South Korea. Its CEO, Loïc Fery, who helps Western companies open subsidiaries in Asia -- often in two or three markets simultaneously -- insists on the importance of finding local investors, adapting technologies to Web users' habits in each specific market, and hiring local work teams. Fery explains that Internet portals in Asia were originally developed by big conglomerates that disregarded the added value of technological applications. Today, though, "they are actively looking for these types of services." That's good news for Asiabooster's first official client, Dealpartners, which sells such services to Internet portals and expects half of its sales to come from Asia by 2001. Unlike other French startups, Netsize, which raised $6.6 million this month, has chosen to concentrate on Japan, Korea, and Taiwan rather than on Hong Kong. "Hong Kong and Australia aren't easy markets. Japan...is a country in high demand of technologies and with a small number of startups. It's a godsend," says Chesnay, who dreams of expanding into other markets like Malaysia and Kuala Lumpur. Companies like Netsize and Asiabooster can afford to be optimistic, since both began operating in Asia only a few weeks ago. Neither, however, is assured a smooth ride. For one thing, places like Hong Kong, Taiwan, and Japan are just now coming out of a major economic crisis, and it's not uncommon for Asian countries to clamp down on foreign investments every once in a while. Also, places like Hong Kong have a shortage of engineers, making it difficult at times to hire qualified employees. Companies such as Business Pace Asia have experienced problems with worker loyalty, since many employees have left after only three months on the job. Language and cultural differences are also barriers: "English often stops the moment you get off the plane," says Netsize's Chesnay. And even though competition may not yet be a problem among French startups, other companies such as Yahoo! and CompuServe -- which have been in Hong Kong for some time -- are sure to present a challenge. Tech markets in Taiwan and Korea also have a huge potential, according to Pierre Hudry, high-tech analyst in Singapore, thanks to the return of the Chinese diaspora from Silicon Valley. Since 25% of the CEO's of startups in Silicon Valley are of Chinese origin, there is sure to be hefty competition if and when those entrepreneurs decide to tackle Asia. French startups may be less excited once the exoticness of Asia rubs off and the difficult realities of doing business in unfamiliar turf start kicking in. |
