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Opening my own language school... Capital Invested

Viewed 1092 times 2012-6-8 15:46 |Personal category:Opening my own language school...| Capital Invested, Language school, Business, NanNing

When we decided to go into business together, we agreed to be equal partners, which to me meant equal investment and equal share of future profits.


When I wrote the business plan, I did a financial analysis and concluded that we would need approximately 75,000RMB, this money would cover all expenses within a 6 month period. I told them how much money the company needed and everyone agreed.


On the day we signed the rental contract for the apartment, no one, including myself had made an investment into the company, so Barry invested 7,000RMB, Jack invested 6,000RMB and I put in the remaining 2400RMB. I was pleased that Jack and Barry had so positively and easily gave the money for the rent, but this happiness was short lived.


When we went to buy our furniture we put a deposit down of 500RMB for the student chairs, Barry invested 300RMB and I put up 200RMB, small sums obviously, so there should be no problem right? Wrong! Shortly after giving the 300RMB, Barry and Jack spoke and then Barry asked for the money back. They said that, to make things easier to calculate, I should pay for our purchases and they would, at a later date, invest money. As by this point, I had invested the least, I agreed.


So I paid 9,280RMB for furniture, 520RMB for a printer, 764RMB for books, 1,600RMB for a glass wall, 1,150RMB for the internet, telephone and mobile phone, and over 1,000RMB for small miscellaneous purchases, bringing my capital investment to 19,118RMB, obviously still less then the 25,000RMB investment initially estimated, but over 13,000RMB more then Jack and 9,000RMB more then Barry who in addition to the rent, bought the over priced computers.


As my spending increased I decided we needed a formal partnership agreement. Nothing complicated, just outlining required investment and responsibilities of partners. I found a template on the internet of a Chinese Partnership agreement and adjusted it to fit our needs, printed 3 copies and headed for a meeting with them. They read the document slowly, and then didn’t sign. They said they wouldn’t sign because it was not clear how much investment was actually needed, even though I had already estimated the requirement to be 70,000RMB.


For our next meeting, I reprinted the financial analysis and showed them and asked them to sign again, they refused saying the contract was useless and meaningless. Very frustrating, but what could I do? The Chinese perception of a contract is very different from the Western perception of a contract and my friends did not care that my opinion on the matter was completely different from theirs, so I caved into pressure, 2 v 1, no contract was signed


Jack said that he would invest further capital in the coming weeks and that if the company needed money, just ask and they would sort it out. This seemed reasonable and as we have been friends a long time, I believed him, mistakenly!


Since the conversation about investment and a partnership contract, Jack has invested 70RMB, yes, just 70RMB! He bought the landline telephone, and even this phone was not the type I wanted, but he refused to buy a phone with a built in answer machine because it was too expensive. Barry has invested a further 610RMB, of which, 400RMB was given to an online design company who we ended up not using and 210RMB was for printing business cards.


So of the total 35,198RMB invested, I have invested 54.3%, Barry is on a reasonable 28.4% and Jack is sitting on a pitiful 17.2%. Does this mean that I would get 54.3% of the profits? No! They just say that capital invested now does not represent full capital that will be invested.


Will I invest a further yuan without them contributing further? No! I will let them be responsible for all costs until their capital reaches a respectable level, even if this means things go slowly. I am not their bank account! I have told them I have no more money, simple as that.

(Opinions of the writer in this blog don't represent those of China Daily.)




Shake hands

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My name is Daniel, I am 27 and I come from The UK. I have been in China since September 2009.


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