My feature story on Chinese students building up startups in Boston area

By. Chen Shen

Hanlin Hong’s arrival, one sunny afternoon last November, at MIT’s bizarrely shaped Stata Center drew glances from a good fraction of the passers-by. Plastic black-framed glasses on nose and button-down flannel shirt covering the “W.P.I” on his chest, Hong squeezed himself through the crowd to approach his booth in the corridor. In the center of the crowd, beef and broccoli were stirred in a transformed rice-cooker. It was lunchtime, and the smell drew more people to the booth. Dozens of smart phones were held high, taking videos of the rice cooker working on itself. It was Hanlin Hong’s second time presenting his cooking robot in the public, and the first to such a crowd.

“Smart Wok”, the rice-cooker, drew much attention at the MIT- China Innovation and Entrepreneur Forum for its inventor, Hanlin Hong, but it was the 26-year-old’s second startup project. Graduated from Worcester Polytechnic Institute with a Master in Robotics Engineering in 2013, Hong was determined to build robots as a career.

The “Smart Wok” team now has four members. As the founders of most Silicon Valley startups do, the four lived in a house together, and their meetings would often be held in the living room over lunches or dinners. Fed by his roommate who is the only one among the four young men who could cook a decent meal, Hong figured that if he could save his roommate the time cooking three times a day, they would have more time focusing on building robots together, hence the cooking robot.

The team figured it could be a great product that can sell. Eight recipes including beef and broccoli, shrimp with Chinese vegetables and Kung Pao Chicken were included for users to choose from. After typing “smartwok.menu” into the browser, Hong pressed the button. Five seconds later, the propeller installed in the rice cooker started to swirl. Hong continued his introduction to the smart cooker for another three minutes until the propeller stopped. He then opened the rice cooker and started to pass around paper plates and plastic forks.

Seven people at the front row got a taste of the dish, including Luna Yang, an exchange student from the University of Hong Kong at Boston College. “This tastes pretty good. Although I’d prefer the broccoli to be better cooked,” said Yang. Like most people chatting in the corridor over their lunch boxes, Yang wears a pair of frame glasses and had a stack of business cards in hand. Finishing up the last slice of beef in plate, she gestured the crowd in the corridor, “I’m here only for a semester. Yet I was totally amazed by the tech(nology) and entrepreneur community in Boston, especially people I met at events like this,” said the statistics and computer science double major, “I will apply for graduate school in a year, and Boston is definitely the first place I will look into. ”

Ever since 2010, hundreds of Mandarin-speaking Chinese students like Yang would pack the lecture halls in the Stata Center during the weekend in mid November. The annual two-day conference called the MIT- China Innovation and Entrepreneur Forum(MIT-CHIEF) is organized by MIT students to bridge the technological and capital gap between China and the U.S.. Each year, dozens of industry leaders, specifically in technology and medical industries, were invited to speak at the event.

Chris Zhou, a UC-Berkeley graduate student, took a red-eye flight to Boston for the conference. Her Ralph Lauren dress didn’t wrinkle a bit during her six-hour flight, and the following Uber ride from Logan Airport. The 23-year-old Beijing native worked for TechNode, the Chinese counterpart of the technology blog TechCrunch, and she was one of the most eager business-card exchangers at the conference. “I’ve heard there’re lots of hardware startups built by Chinese students here in Boston,” said Zhou. Her giant drop earrings blinked while she talked enthusiastically, with her head nodding. “I think the ecosystem for Chinese students to start their business, especially high-technology business in the U.S., is maturing.” Eyes scanning through the crowd while she talked, Zhou quickly wrapped up the talk and walked towards a star angel investor, Xiaoping Xu from China, to introduce herself. Standing by her side, two Chinese students were waiting patiently for their chance to impress the investor, and more joined the line while Zhou talked.

The MIT-CHIEF is not the lone stage for Chinese students in greater Boston area to present their business ideas and meet with the like-minded. The Harvard China Forum, China Innovation Center at Cambridge, and pitch contests arranged by Chinese Student Associations in the colleges and universities across Boston over the weekend, are where the Mandarin-speaking crowds can be often spotted.

Charles Zhang, founder of the Nasdaq-listed Sohu.com, was among the Mandarin-speaking technology enthusiasts 20 years ago. In 1996, the MIT-trained engineer brought a $1,7000 investment he got from his professor at MIT back to Beijing and built a website, which today is worth $ 2 billion. Similarly, founder of Baidu.com Robin Li, angel investor Xiaoping Xu who co-founded NYSE-listed education firm New Oriental, or higher-profile Jack Ma of Alibaba.com, all belonged to those who sought ideas in the U.S. and successfully brought them back to China. “There wasn’t anything like this when I was in the U.S., studying and thinking about going home to build something,” said 52-year-old Xu on MIT-CHIEF, who has invested in and coached over 200 projects in the past eight years. “I would say about half of the projects were discovered at events like this.” Xu’s name was always listed on the top of the posters of any events like MIT-CHIEF. The release of a movie featuring how Xu and his two friends founded the New Oriental, a Chinese counterpart company of Kaplan Inc.,, in the 1990s won him wild popularity among Chinese students studying in the U.S. “It was the compassion he showed that we think he’s more trustworthy than any one else,” said Chris Zhou, who got a chance to chat with Xu at the event.

What attracted Chinese students studying hard in the U.S. libraries to the startup events was something more than the investors’ charisma. It was the hot money in their pockets. A web application built overnight and a two-minute PowerPoint demonstration could turn into hundreds of thousands dollars in the bank account. With the urban legend becoming truths at events like MIT-CHIEF, more Chinese students showed up to similar events, carrying iPads to showcase his or her website, or a bag of plastic prototypes for anyone interested to play with.

According to a report published by Brookings Institute in August 2014, the number of Chinese students in the greater Boston area almost tripled to 10,913 in 2013 from 3,800 in 2009. And most of all, those students are disproportionately studying STEM (science, technology, engineering and mathematics) and business fields. The Brookings report indicates that 37 percent of all incoming foreign students were studying towards a degree in the science, technology, engineering or mathematics (STEM) fields, and 30 percent are studying towards degrees in marketing, business and management. While current U.S. job market indicates that the STEM job openings are still hard to fill, a majority of the STEM students, whom Chinese students accounted for a large proportion, are no longer interested in exchanging their coding and researching skills for a chance to settle down in the U.S., as the previous generation of Chinese students commonly chose to do.

“I think our generation is definitely open to more opportunities,” said Yi Ding, co-president of the MIT-CHIEF and a third-year PhD student at MIT. Ding studied French literature at Peking University, and is now researching theoretical soft materials under a fellowship at MIT. Like most of the active members participating the startup social events in Boston, he belongs to a group of Chinese students who take pride in the schools they’ve beaten hundreds of thousands to enter, both back in China and in the U.S. Like lots of students coming to meet potential co-founders or investors, Ding’s eyes would float in the crowd while he talked, accompanied with nodding towards some acquaintances from time to time. “I knew lots of people here even before I came to the U.S. We graduated from top universities in China and knew each other pretty well through all kinds of contests, or math camps,” said Ding, his eyes moving back from the crowd.

Before joining the MIT-CHIEF, Ding worked for a startup co-founded with a friend whom he also met at a contest during his undergraduate years back in China. He wore a confident smile when he talked about the booming Chinese startup community in Boston, which MIT-CHIEF played a key role in. “China has become the second-largest economic entity in the world, and there are a lot of hot money coming from China and that definitely promotes our innovation,” said Ding. He paused for a second and looked around. “And people are open to broader horizon. More Chinese students are getting to know that they have this choice of starting their own business because of the capital.”

Ding’s colleague Yan Tan, who he co-chaired the MIT-CHIEF with, concurred. “We are very different from our parents’ generation who came here to pursue better lives,” said the PhD student at MIT. “Spending ten years in a big company and waiting for a green card is not why we’re here.” The duo admitted that most people in the startup community are thrilled about taking risks, which were somehow against the traditional East Asian social protocol that values humble, stable and average attitude towards life. “Over the last thirty years, China accumulated a lot of wealth. Our generation can afford to be more risk-taking. We love risks because the more risk you take, the better chance you will be successful, ” said Tan, with Ding standing shoulder-to-shoulder by his side, nodding and cutting in. “Exactly. Building what we want to build and working the job we really love is what we want. And more Chinese students are thinking like that. That’s why our community is getting bigger.”

Ding and Tan’s predecessor, Pei Qi, who became more active in the startup ecosystem after obtaining his PhD from MIT, are taking seats across a table. Qi is providing early investment for Chinese students building up their business in Boston. He earned his first barrel of gold by selling a biotech startup he co-founded with another Chinese student in MIT’s laboratory to a genomic company from Hangzhou, China, in 2014. Qi’s focus is now switched to help Chinese students conquer the barriers they face in starting a business in the U.S.

“The most obvious challenge is the lack of business instinct. For most Chinese students like me, we didn’t have enough training in terms of entrepreneurship, or how to start a business, compared to students from the U.S.,” said Qi, taking his 12-year-old neighbor as an example.
“They started to sell lime juice in the backyard since fifth grade. When I was his age back in China, I was staying up late night doing math homework to compete for a chance to enter better school.”

Apart from the different education methodology, Qi believes the cultural code embedded in minds is setting obstacles for Chinese startups, making it harder to have legendary skyrocketing development or for Chinese students to become over-night billionaires from their startups. “We are still the minority in the U.S.. Also Chinese, or Asian, tend to be quiet, comparing to people from a Western background,” Qi told a Northeastern Chinese graduate student who consulted him on an application prototype. “If you want to do something big, you have to become the majority, or at least try to get your voice heard by as many people as possible. That’s another challenge for us being Chinese to take.”

The impediments for Chinese students who aspire to start their business in the U.S. will accumulate while the firm develops. The Annual Report on the Development of Chinese Returnees from studying abroad, a report published by the Chinese government each year since 2012, pointed out that most Chinese students who founded their companies abroad would choose to return to China after the seed funding stage, or even before.

Hanlin Hong, who successfully acquired first-round seed funding from a Chinese robotic company a month after his MIT-CHIEF presentation, is now facing another obstacle which most foreign entrepreneurs would encounter in the U.S.. Bringing the company back home has been secretly brought up on his agenda.

“I’m luckier than most of the foreign students starting their business in the U.S.,” said Hong, in a much lower voice than he used in his presentations. “I got funded, and most people would fail at that stage,” he added, his almond-shaped eyes narrowed behind the frame glasses when he put on a smile and continued. “Few investors would consider backing startups founded solely by foreign students. The U.S. investors would worry if you will bring the startup back home and ditch them, and the investors from the home country would worry if you’ll ever bring the project back to the home market and start to profit.”

Hong said getting funding in the robotic industry is particularly hard for him as a Chinese in the U.S.. “The reason is two-fold: one is that we need much more money than regular startups building applications or websites; also military presence is hard to ignore in the industry,” said Hong. He added that the latter is the main reason he chose to build a domestic robots, which are robots take care of household chores for people, instead of any other robots.

With the funding provided by a Chinese company that can sustain the team until September 2015, Hong didn’t even attempt to raise a second round. “I don’t want to be a lag for anyone, either my team members or investors, because of my legal status,” said Hong.

Starting the firm under the F-1 Optional Practical Training status, Hong has applied for a H1B working visa with the sponsorship of his own firm. His immigration status is about to expire in September 2015, when the money also runs out. “What happens afterwards is really out of my control,” he added.

According to the U.S. Citizenship and Immigration Services (USCIS), where all the visas were processed, 233,000 applications for H1B working visa were accepted in the first week of the April in 2015. The USCIS began accepting H1B visa applications on April. 1st each year, and all applications go into a lottery system. Applicants with a master degree or higher will get a second chance to enter the lottery, if they failed in the first one. Only 85,000 applicants will get their working visa in the fiscal year 2016, and applicants who are not lucky enough will have to leave the U.S. immediately.

Hong tried to look calm and relaxed, especially in front of his team members. Three days after he filed his H1B application, he chauffeured his engineers and web developers, who he also lives with, to a Karaoke Bar in Quincy. A day before their road trip, the USCIS announced this year’s application figures, and Hong quickly calculated his chance of winning the ticket to continue his business in the U.S. “It’s 69 percent for people like me and 17 percent for a person with a bachelor degree,” said Hong while driving South on I-93. It was a warm Saturday afternoon. The four young men——dressed almost identically in frame glasses and flannel shirt with jeans——rolled down the window of the car when the topic switched to working visa. Hong’s voice was quickly blown in the wind.

Despite the 31 percent chance of being unlucky, Hong didn’t give up. He’s been an active member at the gatherings of FWD.us, a non-profit organization supporting immigration reforms. The day after the startup’s Karaoke party, he flew to Washington D.C. to join 14 other foreign entrepreneurs, most of whom have STEM degrees from U.S. universities, to sit down with officials from the Office of Science and Technology Policy in the White House.

“It would be a waste of time, if it wasn’t spring or the cherry didn’t blossom all over D.C” Hong told me over text message that he spent most of his D.C. trip sightseeing. To his disappointment, meeting with government officials for an hour didn’t bring any concrete promises to his immigration status.

However, Hong wasn’t in a complete youthful naiveté when he boarded the D.C. flight, “I’ve talked to some friends and investors from Shanghai and Harbin about bringing the project back home,” said Hong, almost whispering, trying not to attract attention from his teammates eating and chatting across the table in the Chinese dim sum café two days before his trip to D.C.. The team was having their regular meeting over lunch. Hong became very quiet and cautious speaking of his visa status. While a week ago in the Karaoke Bar, he was still the same Hanlin Hong who would erupt into laughter when talking about his robots.

The choice Hong is trying to make up his mind about is another common subject brought up a lot at meet-ups and events in the Chinese startup community.

“Regarding where you want to do your business, it mostly depends on where your market is and where your supply chain is. It’s more about which market likes you, instead of the other way around,” said Pei Qi, who has invested mostly in startups that Chinese students brought back to China from the U.S. over the past year. He also agreed that the visa issue can destroy a startup, and he’s seen several cases. “Sometimes, we want to physically be here to focus on the U.S. market, but the visa issue became a pain in the ass.”

Despite the difficulties, Chinese students, who count for almost 40 percent of all the STEM students in the greater Boston area, are still trying to incubate the technology they learnt in the U.S. to produce business ideas. “The startup environment is better here,” said Yan Tan. “If it’s a really good idea, it will probably be easier to build your business in the U.S., with much more support coming from the local startup community.”

Both Tan and Qi said the most successful cases and stories they’ve heard and witnessed over their years in Cambridge followed the path of Chinese students learning about the startup culture and kick-starting their first business in the U.S., before bringing the project back home to shoot for a bigger market. “Sometimes, especially in what we call the O2O(Online To Offline) market, the share is eaten up quickly by Chinese startups heading home earlier. If you don’t rush home to occupy the market, you get nothing left,” said Tan, taking the U.S.-listed Alibaba and JD.com as examples.

The ecosystem has become friendlier to entrepreneurs in China in the past few years, while Tan was away from his country. Ever since two years ago, when it became hard for a Chinese college graduate to find a job because it’s no longer a big deal to graduate colleges, the Chinese government started promoting entrepreneurship from the top down. China’s premier, Li Keqiang, endorsed burgeoning private enterprises founded by young college graduates across the country when he took the office two years ago. A statewide promotion of encouraging entrepreneurship among the young generation, from the state media to local government, has been taking place over the past two years. “The good news is that in the past couple of years we did not resort to massive stimulus measures for economic growth,” Premier Li Keqiang said during the two-hour-long televised news conference in 2014, which was the only scheduled press conference he gave in the whole year. “We still have more tools in our toolbox.” Encouraging private sector growth and innovation seemed one of the tools the Chinese government decided to use, to boost the employment rate and the economy growth.

Hanlin Hong, although in hardware industry, where engineers instead of businessmen dominate, also gets excited about the change in China and the potential of the Chinese market. “I think the future of the domestic robot,” Hong paused for a minute to swallow the dumpling in his mouth on the team’s lunch meeting, “is in China instead of in the U.S.” He punched his chopsticks into the dumplings and said, “The rising middle class in China is craving for better living standards, which our domestic robots can satisfy.” He put the dumpling in his mouth and continued. “Think about the population, that’s the scale of the market. And Chinese people tend to have dramatic enthusiasm on products foreign- invented, at least for now,” the smile went back to his face again.

The flourishing startup ecosystem STEM students are beckoning in Cambridge across the Pacific, is becoming Jack’s beanstalk to many who was in China and couldn’t care less about the word “startup” twelve months ago, thanks to the state campaign encouraging money and labor pouring into the “innovative economy”.

Boston University graduate student Min He was one of those who was shocked by the heated startup scene back home. She uses a Chinese messaging application Wechat to connect with her family and friends in China while she’s studying in the U.S. The application has a feature “friend circle,” which is basically the Wechat version of the Facebook. Whenever He’s friends post a status, it shows up on her wall. In the last six months, four acquaintances He had on her Wechat friend list quit their jobs to launch their own startups. Two of them were her age, 23.

“Scrolling down the ‘friend circle’ wall is stressing me out. Selfies with star venture capitalists, posts looking for web developers, or quotes from young billionaires would pop up any time I open the application on my phone,” said He. “I felt like I missed the chance when my college dorm mate showed off her meeting with investors over coffee, and I was staying up late catching up my homework deadline in the library,” said He, eyes glued on the photo her college dorm mate posted, a girl wearing white dress thumbed up with a middle-aged bold man in front of a Starbuck logo.

A year ago when He graduated from Wuhan University in China, becoming an entrepreneur right after college, or even before, was almost equaled to becoming a “loser”. But things have changed. Chinese columnist Fangzhou Jiang, who has over 7.8 million followers on Chinese microblogging platform Sina Weibo, wrote in her recent column at “News Weekly”: “I feel like all my friends under 30, who can read, write and use Internet, are becoming entrepreneurs in Beijing. It’s getting crazy.”

“Living in metropolitan cities in China, either Beijing, Shanghai, or Hangzhou, it’s common to hear something like a friend’s friend just had dinner with Jack Ma, founder of Alibaba Group,” said Feng’an Lee, a 26-year-old public relation manager who worked at Alibaba right after graduating from college. “I had an acquaintance who I met at my friend’s wedding ceremony three years ago. I just heard that he raised six million yuan (about one million US dollars) for his startup, to sell overpriced noodles,” said Lee, who shrugged. “If you know what those startups are actually doing, you will think the fever is almost like what can be written in a magic realism novel.” A business plan typed in a six-page word document, a PowerPoint slide and a ten-minute chatting in a café will make a person millionaire overnight. It’s the plot of stories people share on platforms like Wechat “friend circle” and what Wei Lu, a 30-year-old man who barely speaks a complete English sentence repeated at the startup social events he attended in Boston in April, 2015.

Wei Lu, whose business card is jam-packed by titles like founder and CEO of Magic Entrepreneurship College, the youngest angel investor in China, practitioner and preacher of methodology in innovation, innovation coach at Tsinghua University, consultant at Qianhai Innovation District in Shenzhen, China, was invited to speak at MIT and Boston University and to sit in as one of the judges on the pitch contests held at these two schools. At the two schools, Lu repeated similar stories of how he introduced three or four Chinese young college graduates to meet with each other and how they quickly became best friends, then it seemed natural that the story went to how the young men win the money and trust from the investors under his coaching.

A year ago, Lu was a consultant at General Electric in Beijing. He quit the job to tidal surf the startup-mania. Eleven months later, his Magic Entrepreneurship College claims to have successfully incubated dozens of startups from scratch, with the team, product and funding all set in three months. “It’s just like what Peter Thiel said, zero to one,” said Lu in English, wrapping up his speech.

The Boston audience didn’t appear to be too excited for him, as Lu seemed to be accustomed to, according to the video of him giving a speech at a Chinese university earlier this year. In the Q&A section following his speech, questions like “are you taking advantage of the information gap between young people who want to start up a business and the investors who are looking for good projects?” were thrown against him. “It’s interesting seeing filling the information gap becomes a startup business model by itself,” Yi Ding commented after listening to Lu’s three-hour speech, shaking his head, but kept smiling, “I can totally see the market though.” Walking by his side, his colleague Yan Tan, who just threw the hard pitch to Lu asking about the business model of his Magic Entrepreneurship College, nodded.

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