When talking about startups and foreign business in China, the “middle kingdom” is often seen as a wild jungle for foreign businesses and startups.
However the reality could not be further from the truth. Whilst foreign companies such as Facebook and Google have flopped in China, many foreign startups have actually managed to crack the infamously difficult Chinese market and make a mint.
LinkedIn entered the Chinese market in 2014 and have had a stellar run, expanding their user base to more than 20 million users. In their first year in China, LinkedIn reported revenue of $46million. The break-neck pace of success that LinkedIn has achieved in China is largely due to 3 main factors:
Linkedin stored its Chinese data in local servers.
Evernote also hit gold in China when it entered the market in 2012. To date, the Chinese market is Evernote’s new unicorn market and it’s second best market behind the US. In 2015 alone, their Chinese user base reached 17 million and is expected to continue growing in 2016. Here are 5 things that helped Evernote reach its peak in China:
Evernote treated China as a stand-alone market.
Evernote created an easy-to-recall Chinese name that rolled easily off the tongue.
With 125 courses in Chinese, the MOOC (Massive open online courses) giant has also found luck in the Chinese market reaching 1 million users in 2015 and growing. This made China Coursera’s second best market behind the US and ahead of India. Coursera is set to soar further in years ahead, and it success is due to these trump cards:
When French entrepreneur Thibault Villet started Mei.com, a luxury goods flash-sales site, in 2009 he exploded a new niche market and the start-up has been growing with leaps and bounds (an average rate of 70%) each year. By the end of 2016 the website is expected to have an incredible 10 million members. It has also opened a “Luxury Channel” on Tmall, giving it access to Tmall’s extensive market. However, much like most French goods, Villet’s start-up was a well thought-out venture a few swift moves:
As Ctrip’s long-time rival, Qunar’s former CEO Fritz Demopoulos has done well for an American “laowai” in China. He not only brokered a $306 million investment from Baidu but also led the company to an IPO on the NASDAQ in 2013. Having only moved to China 8 years before, Demopoulos started Qunar in 2005 and made his company a Chinese online travel giant despite his lack of local expertise. As an American in China, Demopoulos expanded Qunar through two main strong points:
Other Successful Startups in China
Flipboard (News and Social media Aggregation App)
The app was initially blocked in 2011 however it cloned itself by making a separate version of its app (Flipboard China) and followed the government’s requests to censor. In 2012 it returned to the iOS and Android markets and has been performing strongly since. Flipboard teamed up with a local engineering team and gave its workers more autonomy to develop the product to seem appealing in the eyes of Chinese consumers.
TuneIn Radio (Online Radio Streaming App)
Entering the market in 2012, the app also saw the writing on the wall and opted to self-censor its streams for China. It is not the only China-made online radio streaming app and is doing well in Chinese app stores. Having made friends with several Chinese-selling car manufacturers, TuneIn is also now preinstalled in several car entertainment systems.
Pocket (Read-it-later News and Media App)
Although not as large a unicorn as Evernote, Pocket has performed well in China since it released its Chinese-language platform in 2014. It entered the Chinese market with a bang by being the top US app on the Chinese iOS App Store in terms of ratings (132 ratings in 2014).
Airbnb (peer-to-peer marketplace and homestay network)
Airbnb found its way in China by first promoting outbound travel in China as it knew that it had a competitive advantage in this market. The start-up also implemented tailored management by choosing a VP of international operation who had years of work experience in Asia. Finally, Airbnb also fund itself a local guide in China by relying on private investors with experience in China to leverage their knowledge and resources within the Chinese market.
The startup was founded in 2016 by expats who understood the struggles of other foreigners in China who were missing out on online shopping on Tmall and Taobao. A simple service, it built upon Tmall and Taobao’s existing success and now gets 636,000 online visitors per month.
The Australian start-up entered the Chinese market in 2014 has steadily increased its profits ever since. The start-up from Down Under integrated its product in China by first observing which brands were popular in Japan and Korea, markets that were similar in fashion and trends to China, and promoted these brands on its Chinese store. It also opened up a 24/7 customer service account through QQ, Weibo, and WeChat to gain the trust of its customers. In 2015, the start-up saw a 20% jump in revenue and a 30% growth in orders.
In a similar vein to Smartbuyglasses, Pozible is an Australian start-up that made its way to China in 2014. Pozible was initially a crowd funding site focusing on listing IoT products but rebranded its listing when entering China to focus on smart hardware. Pozible conducted market research and realised that Chinese consumers preferred to crowd fund gadgets that were attainable. As a result of this face change, Pozible’s overseas pledges grew 600% in 2015, and 33 of its Chinese projects raised 10.7 million RMB from 16,641 supporters in the first 10 months of the site’s operation.
Another Australian startup in the Chinese wilderness, Smarttrans is a fintech that enables Western companies to enter the Chinese e-commerce market. It noticed a gap in payments between foreign companies and local telcos and formed a payment services bridge by producing mobile and online billing payment software catered to foreign companies. At the moment, Smarttrans looks to partner with China Mobile, Union Pay, and Alipay and is one of the fastest growing payment providers in China for foreign companies. In the second quarter of 2016 Smarttrans broke the bank with a revenue of $3.69 million in China, a 620% increase on the same quarter from 2015.
The Seattle-based translation company has changed the interpretation game by creating an online marketplace-networking platform that allows clients to view holistic interpreter profiles. These profiles allow clients to choose an interpreter based on the relevant EQ and IQ. This filled a gap in quality that was lacking in existing interpretation agencies in China who provided impersonal and inexperienced interpreters. Although Cadence is not yet a household name in China, it recently provided live interpretation of the first American presidential debate for Taiwan television and is set to expand further.
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