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China Expat Entrepreneur: "You Need A Little Bit Of Arrogance, Actually"

This article is more than 7 years old.

Few expat entrepreneurs in China have been as successful or respected as Melbourne-born Michelle Garnaut, founder of the M on the Bund restaurant in Shanghai. Having previously worked as a dishwasher, waitress and chef, Garnaut opened M at the Fringe in Hong Kong in 1989.  After starting M on the Bund, a European-style eatery, in 1999 and the nearby Glamour Bar in 2001, Garnaut expanded to Beijing with the opening of Capital M in 2009.  A colorful speaker, she is involved in numerous charities and was a judge for the Cartier Women’s Initiative Awards for five years.

Garnaut talked about her experience and offered tips on business success in China at Startup Grind, an entrepreneur startup event held on Saturday at her Glam Bar in Shanghai. Edited excerpts follow:

I think you’ve all started businesses, and there’s a lot you already know. At the beginning of something, it’s easy to have all of that fantastic enthusiasm, until you start hitting so many challenges.

I’ll give you a little bit of my own background. I’m a university dropout who cooked in my spare time and decided that cooking was more fun than being a schoolteacher, or whatever. I’m older than most of you. I think the whole environment of starting a business (today) is really interesting. There is much more enthusiasm among younger people about starting businesses.  In the 80s, it wasn’t such a common aspiration. Many people were daunted by the idea of starting a business.

So when I set up a restaurant in Hong Kong, I didn’t have any money and that was a big challenge. When I set up, people were really surprised. I was a woman, I didn’t speak Cantonese, I was in Hong Kong, I wasn’t Chinese. What did I know? How was I going to

manage it? And this was in Hong Kong.  There was a lot of negativity. That was one of the things that for me was quite challenging. But I was quite arrogant, too, and I think you need a little bit of arrogance, actually. (Laughs.)

But I did open a restaurant. I convinced a group of people to give me money. I had about 20 shareholders who gave $10,000 each. It seemed like a lot of money to me, but it really wasn’t for most of those people. I did know some of them.  What was interesting when I think back about asking for money was that my good friends didn’t give me any money. I was really upset and thought, “They know I can do this.”

I realized down the line it was actually it was a good thing that my good friends didn’t give me any money because it was a sure formula for disaster in friendship at some point or other.  Another thing was that I was very female about money, thinking I shouldn’t be too pushy or talk about money too much. I had to really get over that. With other people’s money, it was much easier to be really tough.  That was an interesting experience right at that beginning.

Then we were also very successful very quickly. That was one of the hardest things to cope with. We didn’t have enough staff. There were a half a dozen of us working 20 hours a day. You can only do that for so long. You stop becoming effective. You’re out partying because you’ve got to let off steam. All that.

So there’s a real balance (between) when you do have success and when things are tough. I opened in Hong Kong in 1989, and we were instantly packed. It was sort of the right thing at the right place at the right time. And it was a bit the same here.

People came in (to M on the Bund in Shanghai in search of a table when it first opened) and said, “You’re not full.”  We couldn’t cope with more than 100 people.  We didn’t have enough food. We didn’t have the waiting staff. That was hard because people were really angry. That involves managing people’s expectations.  I didn’t know how to cut that back. I was worried about being empty.  Those conditions were really challenging.

That success in the beginning had so many people on our case. “Oh, you should really open in Singapore, Indonesia, London and New York. Why aren’t you in Istanbul?”  For a while I got distracted, and went to Rangoon of all places in the world 1990 to go– it was lunacy.  I said, “I think there are opportunities.”

Of course, there were opportunities, but making those decisions (means recognizing that) you only have so much time and energy. You only have so many hours in the day. You have to make decisions about what’s really worth it. I spent a year going to Singapore – and I don’t mean to be offensive – but I hated Singapore. (Laughs.)  At the end of the year, we had a deal, we were about to sign and open a restaurant  I thought to myself, “What the hell am I doing? I hate this place! ” It didn’t occur to me that I had to go and be there. Luckily, I’ve learned to like Beijing, because I didn’t think I would have to live in Beijing, either, but I did.

I’ve always liked Shanghai. In 1995 (when I started to look into opening M on the Bund), everyone around me said, “Are you mad? You want to go to China?” and I said, “We were in Hong Kong, China is coming whether we like it or not. If we’re not a part of China in Hong Kong, Hong Kong’s finished. We have to be part of China.” That drove me.

In 1999, we had many of the same really big problems (as starting up in Hong Kong): staff, training, sales, regulations, the fire bureau. Getting money in, getting money out  Getting it in was even more complicated than getting it out. We had to put down $30,000 as an initial deposit.  It took me 11 years to get that money sorted out.  I think that is one of the big challenges in China.  The bureaucracy is one of the really big challenges in China. The bureaucracy is enormous.  We’ve just been told in Beijing that we have to start recording every imported product, its production date and its batch number. Think about how many imported items there are in the restaurant. We basically have to employ two more people just to do all of this.

I want to talk for a couple of minutes about mentors and CSR, and what CSR means. It’s such a loaded term – corporate social responsibility -- but it’s expected in every business now. I think it’s important for young people to have some sort of vision in a business, no matter what the business is. That’s not to say you should do CSR for crappy reasons, such as publicity. There has to be some authentic reason, as your young team wants to see that sort of commitment from the company they work for. Otherwise, you lose people, and human resources is one of the biggest challenges we all face.

One of the things I (also) wanted to mention was something we set up in Beijing and Shanghai,  “Mentor Walks.” It’s only for women.  The idea is that there are lots of people that have an hour (to share). We decided to walk, so it’s not set around meals or eating or drinking. It forces people to concentrate on what’s useful. I found that it’s really a good system. We now have a bank of over 120 mentors in both Shanghai and Beijing. Once a month in the early morning, we get together with mentees and walk, giving advice, listening and guiding.  It’s been a great success and is now being replicated in other cities.

I’d like to finish by saying:  Use your friends. I run this company by myself but set up an advisory board last year, and it’s been really useful. Do it!

--Follow me on Twitter @rflannerychina