China's role in the global economy has been continuously changing. As the country's market matures, the world's largest enterprises have been venturing into it – with varied success. Meanwhile, Chinese new-economy companies are also expanding their presence in foreign markets.
On December 10, 2021, at the 'Localization & Globalization' Summit, a part of EqualOcean's World Innovators Meet (WIM2021), Shaolin Zheng, Richard Xu and Ted Lan shared their thoughts and visions regarding the global path of China's tech. Thanks to their diverse backgrounds, we were presented with a comprehensive set of views on the topic.
Shaolin Zheng, a co-founder of NextBillion.ai, is a senior Internet Technology management expert. NextBillion.ai provides technology services related to geographic information to companies in transportation, logistics, food delivery, ride-hailing and other industries. Experienced in IT and management, Shaolin has founded several technology startups and helped Grab set up its Beijing R&D center in 2015.
Richard Xu, US Head of Grand View Capital (GVC), focuses on TMT and EAS industries. Richard is experienced in taking Chinese companies overseas and investing in broader businesses. GVC is a cross-border fund with more than 40 portfolio startups in the U.S. and China, including Habby, Holla, Hiretual, News Break and Shoplazza.
Ted Lan is a country manager at JD.com, where he helps Chinese brands become 'glocal': thinking globally and acting locally. With More than ten years of practical experience in international businesses following various models (from OEM, ODM to OBM), Ted has successfully developed brick-and-mortar and online stores across Southeast Asia and Africa.
Cici Wang moderated the discussion. She is the host of 'Daohai Waiqu,' a podcast about Chinese companies expanding abroad that was awarded by Apple as the 'Best Chinese podcast of 2019.' She is also an urban economist and consultant with a leading international financial organization, conducting socio-economic analysis on international development issues, particularly in emerging markets such as Southeast Asia, India, the Middle East and Africa.
Below are key insights from their conversation at WIM2021.
Key challenges
Asked about challenges they have been facing in the international business expansions, the panelists provided a number of practical examples.
"Making the product to fit the global standard and global needs is the first priority," said Mr. Zheng. "It is also important to find an effective medium to reach potential clients." On the company side, NextBillion.ai's approach, according to the co-founder, is to build a highly experienced executive team.
Mr. Xu, as an investor, found particularly challenging the too-diverse-to-track benchmarks. For one, a promising startup in a developing market could have a three-digit annual growth, yet, in terms of monetization, a better deal could be a company operating in a developed market that might grow only by 20%. Based on his experience in working with startup founders, Richard summarized setbacks they often face in venturing abroad. One of the most encountered difficulties is competition: local incumbents are often way too powerful.
"Unlike those in the United States and China," Mr. Lan stated, "off-line channels in developing markets such as Southeast Asia and Africa still play a significant role in the retail industry." And this raised a serious issue: "I can't find the right people for these off-line stores at the initial stage, and I often need support from the headquarters in China."
Future of the emerging economies
Mr. Zheng's NextBillion.ai prefers to operate in the 'willing-to-pay' environment in developed markets like the US and Europe. According to him, even though the market is bigger in developing countries, potential clients often hesitate to pay for services and prefer to use the free pilot version. Therefore, Nextbillion.ai has shifted its focus to the developed countries and has hired sales teams across America and Europe in 2021.
Mr. Xu provided a broad overview of three types of markets that Grand View Capital is currently interested in: developed, developing and China. The developed markets are equipped with a mature system, a clearer monetization process and a more stable environment. However, in those markets, entrepreneurs must be prepared for the ferocious competition from other local startups and incumbents. Mr. Xu also agreed with Mr. Zheng on monetization being a big challenge in developing markets.
JD.com's Mr. Lan seems more optimistic towards the Southeast Asia market: "I think Southeast Asia has considerable potential: the young population there is enormous, and they also have a stable society and [somewhat] similar (to China) culture."
Selected Q&A
Below are selected questions we asked the speakers specifically about their businesses.
Cici Wang: Mapping is a highly competitive space where only the big players usually survive. How can you, as a startup, compete with the global mapping giants?
Shaolin Zheng: As a young startup, Nextbillion.ai is more versatile as regards the latest technologies, and it can set up the foundations on the most cutting-edge solution and doesn't need to care about the entire heavyweight system. On the other hand, by using community-based data sourcing, Nexbillion.ai can maintain a much lower cost compared to the big companies. More mature communities are often easier to find in the developed markets.
Cici Wang: Grand View Capital is focused on assisting domestic mobile Internet companies in developing their businesses abroad. From an investor's point of view, what qualities of a startup company, in your opinion, are the most essential to be successful in the overseas market? What are the emerging opportunities in the global market for Chinese entrepreneurs to explore?
Richard Xu: There are three promising industries to watch in venturing overseas: apps (short videos and games), cross-border e-commerce and SaaS. These three industries have all been proved valid in the Chinese market. In addition, China has accumulated more than enough experienced talents in software development in the past decade. Therefore, Grand View Capital mainly focuses on these three industries.
Cici Wang: There is usually a trade-off between local adaptation and global standardization for multinational companies (MNCs). The trade-offs can range from product standards, logistic management to human resource management. Has JD encountered such problems during its global expansion and how did the company manage them?
Ted Lan: In a simple answer, there is no shortcut; you just have to comply with rules, culture and customs in different regions.
Mr. Lan used the success of MINISO as a profound example of a retail business managing more than 8,000 SKUs across 100 countries and regions.
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About China & The World Summit
As a part of WIM2021, China & The World Summit was hosted on December 9-10, 2021. It was focusing on the world's second-largest economy's global impact and interaction with the rest of the world.
WIM 2021 China & The World Summit is built around two major topics:
Ⅰ. Investing in China: Seeking value amid global turbulence.
Over the past decade, China has been an attractive investment destination. But will it remain one in years to come? WIM 2021 gathered global investors, senior executives, and market participants to discuss this and other questions concerning the world's second-largest economy's past, present and future.
Ⅱ. Localization & Globalization: Global enterprises' 'China story' and Chinese companies' global expansion.
China's role in the global economy has been continuously changing. As the country's market matures, the world's largest enterprises have been venturing into it – with varied success. Meanwhile, Chinese new-economy companies are also expanding their presence in foreign markets. At WIM 2021, a number of eminent experts and industry insiders discussed the most important trends and narratives at the interface of China and the rest of the world.
Follow EqualOcean.com and stay tuned for other WIM recap articles!
About WIM2021
WIM2021 'Digital Reshaping the World' will be hosted offline in Shanghai and New York while broadcasting globally. The event covers 11 topics, including the hottest industries (from automotive to healthcare) and concepts (like Carbon Neutrality and 'Zhuan Jing Te Xin').
World Innovators Meet (WIM) is a yearly flagship event hosted by EqualOcean for the past 6 years. It is a time where international delegates gather to discuss hot button topics in China's key industries.
We see innovation as the biggest driving force to building a better world. Hence, through WIM we seek to create a platform for global innovators to connect. By uniting bright minds, we seek to foster learning, inspiration and wonder – and inspire conversations that matter.
In a short span of 6 years, WIM has grown from a local event in China to a global event that bridges the world and China by bringing together 1,500+ international speakers (including several Nobel laureates), 50,000 global attendees, and 2,000+ media and community partners.