At 24, Buckhead native making good dough in China
Olav Kristoffer Bauer makes an unusual business mogul. At just 24, Bauer co-owns six restaurants in Beijing and it looking to expand.
The Buckhead native, who also lived for a time near Stone Mountain, has a tattoo of a Chinese flag on his back (he decided against a hammer and sickle design) and wears his hair in a shaggy Mohawk. He figures he lost $100,000 last year by ignoring his accounting books and dreams of opening a charity school.
Bauer's eateries include one modeled on a combination of a Fellini's pizzeria franchise and Fox & Hounds, the English-style pub in Buckhead. He's not sure how much money he's earned since 2006, when he opened his first pizzeria, but he estimates that the number might "push like six zeros."
Bauer's story is both about a young Atlantan who has found success far from home and, in a bigger sense, about the opportunities and challenges facing entrepreneurs who invest in China.
As China's economy has surged — growing 11 fold since 1980, according to Chinese government data — investors have poured into the market.
Foreign investment in China's "wholesale and retail trade" sector rose to $1.79 billion in 2006, the latest available figure, from $740 million in 2004. In 2006, foreigners invested another $300 million in China's food and beverage industries.
"Ten years ago there was a tiny handful of foreigners involved in small-scale enterprise in China," said Arthur Kroeber, managing director of Dragonomics, a consulting firm in Beijing. "Now there are people all over the place doing all kinds of business."
New restaurants sprouting in Beijing and other cities are catering to a growing number of Chinese interested in foreign cuisines and rich enough to spend $10 or $20 on dinner. Restaurants also have benefited from a surge in foreigners living in China.
Kroeber estimates that the number of foreigners living in Beijing has quadrupled over the past decade to 200,000, most in the "upper-middle class."
Bauer's business is a long way from his roots in Stone Mountain and Buckhead, where his parents, Edward and Vigdis Bauer, still live on Margaret Mitchell Drive.
He first became interested in China when he spent his junior year at The Westminster Schools studying in Beijing, a program he chose over Germany and Norway.
The experience left him with a love for languages. When he later enrolled at the University of Hawaii, he studied Chinese, Japanese and German among others.
Atlanta, on the other hand, gave him a love for food. During summers in college he worked at a Fellini's pizzeria franchise in Buckhead and frequented the Fox & Hounds pub, which he liked for its dart boards, pool tables and "the old arcade game in the back."
After graduating in 2005, he combined his two loves: "I wanted to be in China and I saw there was no good pizza," he said.
The start-up costs were appealing. Opening a restaurant in Atlanta would have cost $250,000 "with a bunch of the capital up front," he said.
But in Beijing he could open a comparable restaurant for a quarter of that price, low enough that he convinced relatives to lend him money.
From there, Bauer's path has been straight, if not always smooth.
First, he had to locate ingredients in local markets. He found good Chinese-grown tomatoes but had to help a local distributor buy American pepperoni from Hormel and Australian cheese.
Maintaining quality was also a problem. The contractor he hired for the first restaurant installed shoddy wiring that had to be replaced and all of the chairs broke in the first month.
Protecting his intellectual property was also difficult. Shortly after he trained his first chefs, several left and sold his recipes to a competitor.
"My biggest threat is that another dumb foreigner will come in and open a place just a little bit better," he said.
Many foreign business owners face similar problems. More than a quarter of companies responding to an American Chamber of Commerce survey last year said intellectual property rights infringement — including counterfeiting and violations of copyright and patents — was either their biggest challenge or a major challenge.
Other business owners complain that China's tangled system of permits and regulations are difficult to understand and are sometimes used to target foreign firms.
"You have to be prepared for the hassle factor, which is much greater than in the United States," said James Zimmerman, chairman of the American Chamber of Commerce in China.
Bauer has avoided some of the challenges by working with a Chinese partner. But he is still finishing paperwork on several of his restaurants and admits that his legal rights are murky.
His contract with his partner, a friend of several years, "is on an old piece of paper," he said.
"If my partner were to die, I'd be done," he said.
Bauer's first pizzeria returned the $62,000 he and a Chinese partner invested within eight months.
The other restaurants they have opened — a second pizzeria and four sandwich shops on Beijing college campuses — have been steadily profitable and they are considering franchising.
Bauer also plans to open a "Georgia-style barbecue" modeled on Fat Matt's Rib Shack, the barbecue restaurant on Piedmont Avenue, and a "1950s-style American diner."
"Because China is developing so fast, there are so many holes (in the economy) waiting to be filled," he said. "Even if it's just for a short period of time, you can make your money and get out."
During a mid-afternoon lull between the lunch and dinner crowds last week, Bauer relaxed on a wooden bench at one of his pizzerias.
"Sometimes I don't even believe myself that I can be a 24-year-old living like this," he said. "It's like a pipe dream. It seems like it could disappear at any time."
