My answer might be little different, as I made this in Europe, but probably, most general lessons learnt also apply to China.
Chose your places wisely, for earning and spending money For this rule, most readers must not do much: You have the luck to be born in a very exciting place (China) at the perfect time (your country continues to boom).
If I had to chose where to be born or where to move to, this might just be the place, at least when it comes to the topic how to make a fortune. It reminds me of the “promised land” of the United States in the time of 1850 for example.
I had the luck to be born in a developed economy, Germany, but the timing (1973) was just the beginning of the end of our boom after the war: The oil crisis brought everything to a halt, and since then, growth rates are very low. Next year, we expect 2.5%, which is considered exceptionally well, the best in 7 years.
From where I live now in Southern France, I can see the Spanish border, just 3 km away. In Spain, a real estate bubble burst in the global financial crisis after 2008, and the result were unemployment rates of ~25%, and > 40% for young people. They call these young people today “the lost generation”, because they could have done everything right (studies, grades, internships, foreign languages etc.), and then still not find a job at all, or one for which they are totally overqualified.
Depending on where you have been born, you might have to move. Many Germans today don’t have that mobility in their minds.
In my case, I followed this rule by creating a company which then created a 100% daughter company in China within one year. We are in the professional services industry (management consulting, market research), and our clients either want to benefit from the Chinese market, or are actually Chinese customers themselves.
Besides where you earn your money, where you spend it also plays a huge role: Don’t forget that it is not the 1 Million you need, but the purchasing power to buy the things you want to buy.
I started my company in Munich, the most expensive city in Germany. Not as expensive as Shanghai, but still, for the price of a 3 room apartment in Munich, I could buy a villa of twice that size, with pool and with ~10.000 m2 of land around it, with views on the mountains and the beaches in Southern France.
They have everything down there (nature, clean air, history from the Greeks and Romans to our time, culture, great food, wine etc.), but NO WORK, only tourism and agriculture mainly. That is what limits their income, and therefore their prices.
So I needed to have a job which I could bring with me, but in today’s world of the internet and virtual work places, this is not so difficult anymore.
2. You can not save your way to wealth
A lot of rich people are known to think twice before they spend 1 Yuan. But this does not mean the earned their wealth by saving. It is rather a habit which they have from the times they were less affluent, and they consider staying humble as a very healthy attitude, preventing them from hubris and potentially losing what they have built. I fully subscribe to this idea. I will not fly business or first class just because I could afford it.
3. You have to invest and that means taking a risk
There are hardly any fixed employment jobs out there which allow you to become truly rich. Our German Chancellor Merkel makes something in the neighborhood of 225.000€ annually, and with that, is one of the best paid politicians. As CEO of a large listed German company, you might make 5 or maybe 10 million€. But consider this: You won’t reach that position before age e.g. 50+, and the likelihood is close to zero. It is much more likely that you lose your health and your soul in the process trying.
Instead, you have to do something, to undertake something, and that is what the world “entrepreneur” really means: Somebody who undertakes something.
4. Few successful entrepreneurs had a master-plan from the start which worked
Instead, there are 3 qualities needed much more than a master plan (which hardly ever exists)
Keep looking for opportunities, and if you spot a really good one, seize it. Oftentimes the opportunities come when you expect them the least. That is why I like the saying
“Luck is when opportunity meets preparation”.
Others might later call you “lucky”, but it took preparation work so be ready to strike when the opportunity presented itself.
For me, the best way to create opportunities is to say
“Let’s turn a liability into an asset”
(originally in German “Aus der Not eine Tugend machen”).
This concept means: Every problem that you face, and that others face too, is actually an opportunity to develop a solution and market it.
In my case, working as a strategic management consultant, I always felt somewhat uneasy about the external data which I could use for my work. At the same time, I had not enough time to go out and find the information I was looking for, e.g. at trade shows etc., because we as consultants were invoiced so high to customers (2.500 €/day/person), that no customer wanted to afford a long project.
I tried different things to fix that.
But when this would not work (my colleagues would not change their business model, processes or organization), I decided to create an external service provider, who generates the insights which we were lacking. This worked from the start.
The idea is 2%, the execution is 98%.
Most entrepreneurs believe that their idea is what makes or breaks their company. But in reality, the best idea will not work with poor execution, and flawless execution can make you successful even in a market that has been around for a long time, without a new breakthrough idea.
While looking for “my” idea, a colleague once told me:
“Why do you search for a good idea? Stick your finger into the yellow pages, and where you open them, that’s what you’ll do. If you think you are better than the average guy, you should be able to make it a success.”.
While I did not find my idea in the yellow pages, it did make me think a lot.
My business model has worked for > 11 years without big changes, but mistakes in execution could be fatal any time. **Success is if you stand up one more time than you fall.
** There is no shame in failing in a business venture. Many successful entrepreneurs have a history of failed ventures, before or during their breakthrough.
In fact, some venture capital companies only accept pitches from teams which have tasted defeat and know how to get themselves out of tight corner.
Ideally off course, you can learn from the mistakes of others