Notices were put up on the various country sites yesterday stating how JigoCity is “consolidating operations” and will only remain operational in “select countries”. They appear to be doubling down on Taiwan and the rest of China.

The company has assured customers that existing deals will continue to be honored.

JigoCity’s market share in Singapore (and perhaps other cities) has reportedly been minuscule, and that could be a contributing factor to its withdrawal in these countries.

In September last year, JigoCity was acquired by FriendFinder Networks for approximately US$65M. They claimed to be generating a revenue of US$1.1M in August.

FriendFinder Networks owns a wide assortment of dating sites catering to different niches, including Indians, Italians, Christians and gays. They also own a wide variety of adult sites. All in all, the company says it has some 484 million users in over 200 countries.

Dr Ni Zhengdong (second from left) and Marc van der Chijs (second from right).

Depending on who you speak to, China is either a dead zone or the land of milk and honey for foreign entrepreneurs who want to set up a new enterprises there.

Firmly entrenched in the Avoid China camp is Marc van der Chijs, who, ironically enough, is the founder of Tudou, the second most popular video sharing site in China. It was recently bought over by Youku.

“There are less opportunities in China these days; the environment is not so positive anymore,” he says at the sidelines of DEMO Asia in Singapore, “I’ve been there for 12 years, had a great time. I still love the country. But doing business as a foreigner has become more difficult.”

He reached this conclusion after starting a new business called unitedstyles, a site that allow users to design, share and buy their own fashion.

They needed to hire a lot of foreign designers, but it was getting hard to woo these people and bring them into China.

“Getting a visa was impossible,” he says. There’s a maximum number of visas a startup can apply for, as the government wants more local talent to be hired.

But getting competent local staff who know social media and can speak excellent English is hard. Marc couldn’t find them.

Another challenge was finding Venture Capitalists with a global outlook. If you’re an entrepreneur based in China who wants to serve a global market, securing funding might be a challenge.

“When I talk to Chinese VCs, they want to focus on the Chinese market. That’s the only market they know” he says.

But while the golden age for foreign entrepreneurs in China has long past, Marc believes that businesses focusing solely on China still have a decent shot at success. Given how large the market is, startups don’t have to look outwards to succeed.

For now, Marc has decided to relocate part of unitedstyles elsewhere. He cites Singapore as a possible location.

“If I set up a business today, it won’t be in China,” he says.

On the other hand…

However, Dr Ni Zhengdong is more optimistic about doing business in the country. He is the founder and CEO of Zero2IPO Ventures, a service provider for venture capital firms that also does some investments.

Having started the firm in 1989 and helped raise funds for 150 companies over the past two years, he has seen how the startup ecosystem in China has grown over time.

He still believes opportunities are abundant for foreign entrepreneurs, citing how annual angel and VC investment has ballooned from US$500M a year in 2000 to over US$30B today.

“That’s a lot of money,” he says.

Funds in China are divided into two types. US dollar funds, set up by prominent American VC firms like Sequoia Capital and KPCB, offer nearly the same term sheets and legal counsel as their Silicon Valley offices. Valuations can be even higher.

Renminbi funds, on the other had, focus more on manufacturing and traditional businesses.

“If I’m a young tech startup doing mobile commerce, I’ll look at the US Dollar fund. It’s very easy to communicate with the fund managers,” he says.

Despite the fierce and brutal competition in China’s tech space, he believes opportunities are still present in the SoLoMo and e-commerce industries.

Government funding is also another way to kickstart a company in the country.

Dr Ni says that there are technology science parks where startups are given grants just to work there. Companies can receive anywhere from 100k RMB (US$16k) to 5M RMB (US$800,000) in their first year.

The goverment’s aim is to attract more expat Chinese to return to their homeland to set up businesses.

However, that avenue is slowly being overshadowed by the private sector, which has now become the dominant source of funding for entrepreneurs.

China’s not for everybody

Despite the large size of the Chinese market, many entrepreneurs have gotten themselves burnt while taking a crack at it.

Sometimes, the best option is to stay away, as tempting as it might be to get in on the action.

That’s what Adeo Ressi, who runs startup incubator Founder Institute and TheFunded.com, an online community where entrepreneurs rate investors, did.

When asked about why he hasn’t set up in China and India, he says: “We’re not in a rush. India and to a lesser extent China have a lot of backroom dealings that I’m not comfortable with. If I have to run sessions on how to deal with corruption, then I don’t want to be in that market.”

He adds: “Entrepreneurs have enough problems in the world, they should have a set of rules to play by and not accept bribes.”

But for those who are convinced that setting up a business in China is their goal, Marc and Dr Ni both have similar advice to give: Spend at least a few years working in the country first.

“Understand the culture and market, and make sure you have many connections. Having Chinese partners is also very important,” says Marc, “if you don’t have any experience in China, don’t even try; it’s a waste of time.”

Related content:

The Chinese government is more pro-business than Singapore
Tradesparq makes finding suppliers in China less nightmarish

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When: Friday 19th November 2010
Time: 1500-1700
Where: National University (Hall Auditorium), Lee Kong Chian Wing, Level 2, 21 Lower Kent Ridge Road, Singapore 119077

Register by emailing Aditi at necv4 [at] nus.edu.sg.

This event is part of Global Entrepreneurship Week 2010.

SGE is proud to be the Official Online Media partner for GEW 2010.

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About Chris Evdemon from Innovation Works: Chris Evdemon is the Investments & Business Development Manager at Innovation Works and Venture Partner at Eastern Bell Venture Capital. Chris has 10 years of ‘hands on’ entrepreneurial experience primarily in Information Technology, as well as in the shipping and hospitality / entertainment industries. He has served as the CEO of ICDL Asia Pacific Ltd., an organization with operations in over 25 Asian countries which he helped turnaround and relocate in Singapore. Chris has considerable expertise in start-up environments and operations, as well as in franchising and licensing networks. He is also a Founding Member of the China Business Angel Network (CBAN) as well as a Director of the Business Angel Network South-East Asia (BANSEA). Chris has a M.Eng. in Mechanical Engineering from Imperial College and an MBA from INSEAD.

About Benjamin Joffe from CMUNE and +8* | Plus Eight Star: Benjamin Joffe was selected among the “China’s TOP 100 Mobile Industry Influencers” in 2007 and 2008 and frequently quoted in various online and offline media such as CNN.com, AdAge, Asian Business Leaders and many more. Joffe’s specialties are in Asian Innovation, SNS, Mobile and Internet industries, social networks Web 2.0 in Asia, 3G services and many more.

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Our friends at Tech65 starts off this week with their weekly podcast on the following issues that dominated the tech landscape: [1] Google turns off filter in China, [2] GoDaddy to stop registering domain names in China, [3] HTC EVO 4G, [4] Every citizen to have personal webpage: eCitizen. Do click and check out their latest podcast here. You can now also listen to the Tech65 podcast here as well by coming to the blog post directly.