Wang Yahui started his first business in 2008, as a 17-year-old middle school student hoping to cash in on the growing popularity of social networking sites.

"Starting my own business was my dream, the thing I always wanted to do," said Wang, from Shijiazhuang, the capital of Hebei province. "So I started my own social networking website."

He wasn't alone. A host of similar sites sprang up, and after a short battle for supremacy, a clear winner emerged, a Facebook clone called RenRen.

Despite the setback, Wang was determined not to treat the experience as a failure. "I was still in school, so I didn't have a lot of time to manage the website," he said.

Wang later studied computer science at the University of Delaware in the United States. At one point he considered staying in the US, but that changed when he met his business partner, another Chinese graduate student in Delaware.

"I can't remember what brought us together, actually. We just talked and talked, and shared the same vision. Because we were overseas students, we weren't allowed to start a business in the US, and the competition from Internet companies there was way too fierce. We thought the opportunities would be better in China," he said.

Wang dropped his courses during his sophomore year and returned to China to follow his dream.

His company's first product was Simnet, an advertising platform aimed at the mobile-gamer market. "Our thoughts about the market were totally wide of the mark," he said. "The point is that in China the games that are making money actually don't have advertising."

The realization forced Wang to refine his understanding of the market, and his company is now looking for funding for a new product - a communications platform for mobile-gamers - via an incubator business in Shanghai.

Comparing the situation in the US and China, Wang said business would improve if the atmosphere for startups was friendlier in China.