(Reuters) - Chinese entrepreneur Feng Jun tried five times to set up overseas branches to market his MP3 players and other consumer electronics goods. Three of the branches made money, the other two failed, but he said they were all a "total headache."
It was the headaches that inspired Feng's latest venture, the Aigo Entrepreneurs Alliance (AEA), a club to help private Chinese companies navigate the uncertain world outside China.
Private enterprises account for the majority of jobs created in China, but they are often disadvantaged compared with their state-owned brethren in tapping financing or government support, both at home and overseas.
It is a bigger problem overseas, given the scant knowledge most Chinese entrepreneurs have of operating in alien surroundings. China has a decade-old "going out" policy, but it is primarily oriented toward helping the biggest state-owned firms establish themselves internationally.
"Managing from afar was tough, and also there's the problem of scale," said Feng, who is the founder of Aigo Electronics. The name of the firm translates roughly into 'patriot'.
"Going out by yourself, if you aren't very familiar, it's very hard from a management perspective."
Chinese companies are "going out" in droves, trying to secure raw materials, buy foreign technology and brands or simply sell products without having to go through a middleman.
The notion conjures fears overseas of a monolithic Chinese business juggernaut driving Western firms out of business, undercutting prices and forcing factory shutdowns. But for the Chinese companies, the experience has been far from a uniform success: many have crashed head-on into walls of unexpected regulation, labor laws and unfamiliar languages.
While state-owned enterprises can count on institutional support from the Chinese government, private firms are more often left to fend for themselves, the vacuum AEA hopes to fill.
"This is an excellent solution to a problem in China, which is that the official mechanisms that would help Chinese companies coordinate and pool resources aren't doing that job," said Scott Kennedy, director of the Research Center for Chinese Politics & Business at Indiana University.
The largest state-owned firms account for about 80 percent of China's overseas investment, most of it geared towards acquiring energy and resources and building the infrastructure to bring that back to China. Unlike the private firms, only a few, primarily in the telecoms sector, are engaged in directly selling to external markets.
"The state-owned enterprises are a pillar domestically, but that's hard to translate internationally," said Feng.
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