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14 Foreign Startups & Companies Who Succeeded in China

Estimated Reading Time: 9 Minutes

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.

1- LinkedIn

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:

  • Listening to the boss: LinkedIn adapted to the Chinese market by listening to the Chinese government’s restrictions on content. It also stored its Chinese data in local servers to allow the Chinese government to access the data at will. This earned LinkedIn more favor in the eyes of the administration and led to ease in regulatory red tape.

Linkedin stored its Chinese data in local servers.

  • Making local friends: LinkedIn partnered with local investment firms Sequoia China and China Broadband Capital and relied on their experience to further understand the Chinese market.
  • Changing face: LinkedIn quickly realise it was a jungle out there in China and hired a local to become president for LinkedIn China. The company also pooled together a team of locals and gave this team more freedom in order to connect with Chinese users. This was LinekdIn’s smartest move as its local team adapted the product to collaborate with Chinese websites and apps such as WeChat and Weibo to allow for cross-platform LinkedIn profiles sharing.

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:

  • A different beast: Evernote’s COO notes that the company treated China as a stand-alone market and carefully catered sales and marketing operations for China. Evernote performed a major costume change by adapting services and prices for the market, employing locally, creating a WeChat marketing strategy, and including mobile payments, amongst others.

Evernote treated China as a stand-alone market.

  • Doing the homework: Evernote also did it’s homework by conducting China-specific marketing research to learn how to retain and engage its China user base. After implementing a new strategy based on information learned from the study, Evernote saw a jaw-dropping 156 percent increase in users. Evernote also promoted the product as fixing common issues that the Chinese consumer experienced, namely: Security and privacy.
  • Do as locals do: Evernote did its best to go local including creating a localized marketing strategy using Weibo and WeChat, and setting up real-time customer service on official WeChat and Weibo accounts, a service that was common in China.
  • Listening to the boss:  Like LinkedIn, Evernote also played the government’s tune by storing its data locally and censored all content. Storing data in China also meant faster data synchronization for customers.
  • What’s in a name: Lastly, Evernote created an easy-to-recall Chinese name that rolled easily off the tongue.

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:

  • Partnerships, partnerships, partnerships: Coursera spread the word and it content by forming partnerships with local Chinese online content platforms. Coursera’s first move was to partner with Guokr and Yeeyan. Guokr was a Chinese networking site that provided over 45 platforms and helped to easily distribute Coursera’s content whilst Yeeyan helped to translate Coursera’s material. Over time Coursera also made a friend in NetEase (a popular online content distributor) who created a Chinese-language portal, Coursera Zone, to help distribute Coursera. Recently, in 2015 Coursera also partnered with Hujiang, China’s largest online learning platform, to give Coursera access to Hujiang’s 80 million users. These partnerships helped Coursera cast a wide distribution net and also helped to provide it with political protection by giving them legitimacy in the eyes of the Chinese government.
  • Hitting the key market: Coursera also hit the nail on the head in China by partnering with China’s elite universities like Fudan, Shanghai Jiao Tong, and Nanjing to reach a stronger consumer base. The start-up also catered its content to long-term Chinese users by translating and producing content/subjects that helped to fix China’s high-skilled worker shortage.

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:

  • Creating a niche: Villet spent a great deal of time researching the Chinese luxury market and was able to gain expertise on Chinese online retail trends. Villet realised that the Chinese luxury consumer enjoyed shopping online as opposed to in-store, and his online luxury marketplace appealed directly to this consumer.
  • Experience talks: Before opening Mei.com Villet held senior positions in luxury brands such as L’Oreal and Coach making him a luxury brand veteran. This experience connection to the world of luxury and to international brands was his 6th sense and he had an unrivalled level of understanding.
  • Chinese DNA: Villet made sure Mei.com had Chinese DNA with a localized management and company design. By surrounding himself with Chinese fashionistas, Villet filled his knowledge gap when it came to the Chinese luxury consumer, thus his start-up was able to easily adapt and evolve to Chinese tastes.

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:

  • Friends in high places: Demopoulos’ brokering of investment with Baidu kick started Qunar’s engine and made it one of China’s online travel giants. Baidu not only provided Qunar with technological and financial resources ($306 million), but brought Qunar much needed online traffic as a search engine. Demopoulos knew that his technological advantage allowed Qunar to scale much faster than it could have with a non-web-based investor.
  • A “grass roots” effort: Demopoulos knew that he was as Chinese as McDonald’s so he let his local team take care of product. As a CEO, he gave his workers creative autonomy and used their localized imagination to better cater to Chinese needs. He also gave his Chinese co-founder sole responsibility for product management as Demopoulos lacked the communication skills and cultural knowledge. By making product management a “grass roots” effort, Qunar was able to grow organically and in-tune with Chinese consumers.

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.

Baopals (e-commerce website translating Chinese products on Taobao and WeChat for expats in China)

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.

Smartbuyglasses (BNC e-commerce platform selling designer eyewear)

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.

Pozible (crowd funding website)

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.

Smarttrans (a payments platform)

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.

Cadence (formerly SeekPanda, a marketplace that matches consumers with interpreters):

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.

by XNT

contact@thexnode.com 

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