The Chinese startup scene is stronger than ever with cutting-edge technology, a rise of venture capitalists and a new throng of unicorns created last year.
The Chinese startup scene is stronger than ever with cutting-edge technology, a rise of venture capitalists and a new throng of unicorns created last year. Whereas founders used to be obsessed with breaking America, now the ‘middle kingdom’ is becoming more appealing with accelerator programs like Chinaccelerator helping foreign startups to prosper. Tempted to expand into Asia? Chinese startups like We Doctor, which was recently valued at US$6billion, show there’s great success to be found in the ‘Silicon Dragon’ – as China’s tech scene has been called – but there are also pitfalls to avoid. Here, Australians with their toe in the Chinese market share their insights – and why Asia is ripe with business inspiration.
Based in Shanghai, Paul Davies, is the marketing consultant for Aodaliya Exports – an agency that helps startups export into the Chinese market. “Focus group testing with locals is the most important thing you can do if want to crack the China market,” he says, “You might think your product is perfectly pitched to a particular demographic, only to discover that potential customer doesn’t exist in Eastern culture.” The focus groups they arrange throw up surprising results. “Fragrances that westerners love are often too overpowering for Chinese consumers. Packaging that Australians would describe as minimalist and sustainable, the Chinese believe looks cheap,” he says, “Getting your product into local hands can be an eye opener.”
Go the Distance
Although Google can tell you a lot about the Chinese market, online research will only get you so far, which is why Collective Hub’s Lisa Messenger is Asia-bound. “Later this year, I plan on going to Hong Kong and Shanghai,” says Lisa, “I’m pumped to search out inspiration, ideas, trends and learn about the next big thing. I have a complete fascination with Chinese-born tech at the moment. Concepts like WeChat and the online marketplace Alibaba were so far ahead of the game.” With Cathay Pacific, you can fly to 23 destinations in mainland China, and earn rewards – like lounge access and upgrades – by booking via their Business Plus programme.
When the tech startup ShareRing decided to expand into China they partnered up. “We found a local partner who could represent us in the Chinese market, and set up an operations office in Hong Kong to ensure we had local representatives who could easily speak the language,” says co-founder Tim Bos, “Do not expect to be able to sell your products or services into China if you don’t have a permanent local presence there.” The important of local knowledge also played into product development. “Show commitment and hire a team locally in China to build your products,” he says, “Don’t expect people to be impressed by a product that’s entirely in English. Make sure you localise it before you go out and demonstrate it.
Diversify your ideas
The online community, Investible, which links investors and early-stage startups, expanded into Hong Kong this year. One of the Australian startups they’ve supported is InSpace XR, a virtual reality startup who’ve pitched to Chinese Venture Capitalist William Bao Bean. “The same [pitching] strategy may not work across all of Asia,” says Justin Liang, cofounder of InSpace XR, “Singapore is different to Thailand, which is different to, China. In most cases, deploying the same strategy across the board will not work.” When pitching, demonstrate area-specific value. “There are many opportunities for foreign startups with capital investment from corporates, venture capitalists and the government looking to solve problems for a large population rapidly adopting technology,” says Justin, “However, many of these problems are unique to specific areas, so solutions need to be localised.”
Breathe it in
Andrew Logan, CEO of agtech company OneCrop also worked with Investible for their Asian expansion. “When you go to China, you need to really expand your worldview, be open, lift your head out of your phone and email and breathe China in,” he says, “Depending on which city you are in, try to go to the industrial areas, catch public transport and eat local. The worst mistake you can make is to go to China, hang around your hotel, get a driver to your meetings, and spend the whole time looking at Twitter.” However, do use your phone to get over the language barrier. “Without a WeChat profile you are a non-person, and in any case, you will need the translation tool. It is normal to sit at lunch with someone and have a conversation over WeChat using the translator,” he says.
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