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We're always hearing hard-luck stories about venues shutting down, Chinese partners screwing over poor laowais, landlords jacking up the rent and employees stealing their boss's business model. It seems like everyone's got a reason why they failed to make a fast buck in China. For , we went and found a few people who bucked that trend, opened a business here and made a success of it.

Grant Horsfield success in China started a bike trip through the Bamboo forests of Moganshan. He got lost and stumbled upon a small, secluded warren of farmhouses. By 2007 he converted eight of them into guesthouses. A few years later, he and his partners Evan Lai, Gabriela Lo and his wife Delphine Yip grew purchase another parcel of land to build . Today, the resort is almost synonymous with Moganshan, and Horsfield and Co. are in the process of building the naked brand in such places as Shaoxing and Guilin. We had a chat with Horsfield about what it take to build a successful business in China. Here's what we came back with.

ADVICE:

1. You're in China. The Chinese are your target market.

When we built naked Homes, it was just the way we wanted it: no air conditioners, really rustic, good coffee machine, good fridge, good space. Everything was built for us and the foreigners loved it. The Chinese would come and say, "I kind of get it, but it's not exactly what we're looking for." They didn't like walking up the stairs to the old place. They came in their high-heel shoes, and it just didn't work. I realized early on that if we wanted to do business in China, we should really talk to the people who live here. So when we built naked Stables, we were very conscious in making sure that it suited the Chinese customer without losing the conscious nature of being environmentally friendly.

We never had a Chinese name until 2011. That's the first time we came up with "Luoxing". We didn't know how to translate "naked" and we didn't want to be a translation of a foreign thing. We wanted to be the true thing. When we launched the brand Luoxing, it made naked look like an idiot, because Luoxing just boomed. The Chinese just absolutely resonated with it. Today the Luoxing brand is a thousand times more well known than the brand naked. So the key is to try to realize your core market is Chinese.

2. Respect your community and give back to it.

Whether you're Chinese or a foreigner, village people around the world are the same: notoriously nervous about outsiders. But naked Home's village was tiny. There were 12 people. No one was under 60. They fought a lot with us in the beginning, but we got over it and became close friends. And because of the smallness of that project, we built up a reputation that was truthful. We live up to what we say, we did massive education programs, we cleaned up the village, we supported the people, even people tired of working for us, we still paid them. We look after their families regardless. That little village, it's been seven and a half years since I arrived there, and we're now as tight as family. Those relationships helped our next project so much.

...But don't overstep your boundaries.

One time I made a big mistake, though. I funded a water project, it was piped off my water project from the resort and I supplied one village with water. The idea was, if we give them water, it would be a great thing for the village. That was the biggest mistake of my life, because I just opened a can of worms. The government was angry with me. They said, "You can't do this!" I had only good intentions, but I ended up overstepping some boundaries.

3. Find your niche.

My wife and I were looking for anywhere that was simply nature, where there weren't factories and we could look and couldn't see a highway. In fact, we never went for Moganshan. We never even made it to the top of the mountain. The truth is I got lost there. I went on a bike trip... and found this village, and that's when I knew this is it. This is the place I want to be. The government never understood why I liked this site. They always said, "We have this site next to a lake which is next to a factory over there." ... The whole idea is I can have an insulated environment, where I can control the experience. And no one can build something nearby and destroy it. It's not a bad thing to say that this is what happens in China, it's just a normal thing. If I were a local operator wanting to compete with naked Stables, I would want to build as close to it as possible, because the peripheral business is massive. But we're isolated, and no one can ruin that experience now.

4. Keep your nose clean, but know how to play the game.

There are a lot of different types of corruption in China. But as a foreigner, I'm not exposed to a lot of it. I've never been put in a situation where I have to give or accept bribes. Still, in my experience, almost every contract that you enter into, the paper is fairly insignificant, and really its just prepaying the money understanding the leverage you have with the other person. And if you have no leverage, then you need to understand the leverage he has on you, because the minute that transaction begins, he may try to blackmail you somehow. And you can get hurt pretty badly.... I don't see it with the Western eyes I used to have. I see it just as the way of doing business.

5. Start small

The biggest mistake people make starting businesses here is having grand ideas and trying to bite off more than they can chew. I've been here 10 years and I've seen the same mistakes—a big dream that never gets realized. I just think the best advice is if you have big idea, take a small piece of it and do that first. We were lucky that naked Homes was bite size and now naked Stable is bigger. Now we've got five projects. We now know how to do it. We have our own road map.

6. Don't let yourself get complacent.

I don't think we've made naked successful yet. I think we have a long way to go to get to where we hope to be. We hope to be a brand in China that is as strong as the top 100 brands in China. And at the moment, we're only strong in Shanghai, not in Beijing, Guangzhou or Hong Kong. I think as a company we are doing well, but I think there are a few more steps we need to take in order to call ourselves "successful".

7. Be tenacious and flexible.

You have to be a bit mad, and there's no joke in that. That is very important. If you're a normal dude, you can't go through this stuff... When you think it's gone shit, just hang in there. It can change like that [snapping his fingers] in China. So just hang on. Things change. You've got to be extremely changeable, what you think is the right route today is not right for tomorrow.