SaaS in China

April 7, 2021
Innovation Insight

XNode Blog

SaaS in China

On March 25, 2021, West Jiang from Qingflow, Zee Lee from, and Caleb Kow from joined Emily Xu from XNode for an online panel as part of our “In Your Shoes” series, to help audience navigate the ongoing challenges and opportunities of the business growth of SaaS startups in China.

Three panelists investigated emerging trends, market drivers, and pitfalls in China’s SaaS industry. The panel also shared insights on traction building, strategic alignment, and risk mitigation for SaaS startups that seek to either grow or expand into China.

01 | China in a “closed” SaaS market

In contrast to an “open-loop” SaaS ecosystem in the US, China’s SaaS market is relatively “closed”, where the traffic is dominated by industry giants. They are  holding up the Internet traffic, which creates barriers for SaaS startups to enter the market and push their businesses on major platforms.

02 | Pick the right team & doing research

Careful due diligence and research applies to both local and inbound SaaS startups. Each local cloud service provider has its pros and cons in terms of security and functionality ease of use, as well as has its own way to help small businesses grow. If you are relocating your businesses inside China, it will be critical to develop a detailed comparative analysis of local cloud vendors and their services.

03 | Different locations and opportunities

Different provinces and cities across China have their own incentives promote the tech industry, especially towards the AI and 5G sectors. As a SaaS startup, it is crucial that you clearly understand the policies around the subsidies that are allocated to different regions and ensure that you fully grasp these funding opportunities.

04 | The myth of leveraging 2C in B2B

On the strategy level, most of the SaaS companies operating in China adopt a B2B business model. Whereas some believe that leveraging 2C strategy in a B2B model can intrigue your market outreach, we should recognize that the difference still exists in core businesses between B2B and B2C. In China, the renewal rate of their large enterprise clients is deemed the “lifeline” for most SaaS startups. SaaS startups should realize that the current B2B market for SaaS is nevertheless “immature” and has significant potential for partnership and collaboration solutions in the ecosystem.

How QingFlow gained traction - “good looking” UI/UX is the key to success
For SaaS companies, the UI/UX of a product is positively correlated with traction building in China. From the perspective of end users, as they use a SaaS product, they look for an experience as well as an interface that provides them with a good mood, which can meet their requirements and solve their pain points.
How build a fashion-related community – keeping agile
With a strong focus on fashion and lifestyle solutions, has been very lean in pivoting its marketing strategy. In reality, for B2B sales in China, it remains a closed eco-system and works well with mouth-to-mouth recommendation and "private zone operation". What a company can do is pivoting fast enough to the new trends.
About In Your Shoes

“In your shoes 创业有得聊” is a series of events for startup founders. We invite experts from different backgrounds as well as startups with pain points in their entrepreneurial journey, to meet, talk and share tips with practical tools and methodologies.