How China’s Internet Economy Evolved Episode 2 中国互联网经济的演变 (下)

Here we share the second episode of Chinaccelerator MD William Bao Bean’s podcast with Adam Bao, founder of the emerging technology media The Harbingerwhere William pointed out:

本期我们为中国加速的小伙伴们分享Harbinger创始人Adam Bao采访中国加速董事总经理宾威廉的播客第二部分。其中,William谈到:

I think it is like the next World WarIt’s not going to be fought with the tanks and bullets and guns, but between global companies


Check out the first episode here

Commerce, Payments, Facebook


Q1: Given that in China you have this ability to buy stuff so easily on your phone, can you talk about how that might impact the overall commerce – the immersive commerce, the social commerce – space, and could you compare that to the U.S. For example, where you don’t really have payments linked on everyone’s mobile phones?


In the U.S., companies like Facebook have lagged behind China for a year-and-a-half to two years now. And it’s taken about a year-and-a-half for Facebook to develop many of the features that are currently coming out on [Facebook] Messenger and WhatsApp around payment and commerce.在美国,像Facebook这样的公司已经落后了中国一年半至两年。Facebook花费了大约一年半的时间才开发了Facebook和Messenger以及WhatsApp在付款和商业方面的许多功能。

Apple Pay

So here’s the difference: in China you can go on any social network and pretty much anything that you see you can click and buy, whereas on Facebook, on [Facebook] Messenger, on WhatsApp, on any of these platforms, they have a different business model, or actually, they do not have a business model. They are not making any money. So Facebook played the long game and now they are making lots of money.所以这里的区别在于,在中国,你可以在任何社交网络上或互联网上其他几乎你看到的任何地方进行点击和购买行为,而Facebook、Messenger、WhatsApp以及其他任何类似平台有着不同的商业模式,或者实际上,他们根本没有商业模式。他们没有赚钱。所以Facebook打的是持久战,现在他们赚了很多钱。But it’s all advertising based and if you think about basic economics, advertising drives behavior. And usually people want to drive purchasing behavior so advertising revenue is actually a subset of the actual commerce revenues. Advertising drives game revenue; advertising drives commerce revenue.


  Cash is already pretty much dead in China, CNBC

Facebook makes money on advertising while in Asia, social media platforms like WeChat and Weibo make money on commerce such that they get a cut of the actual purchase. So if you control the payment platform as well as the user, it’s much more powerful than just controlling the advertising. You can potentially have an order of magnitude of greater revenue.Facebook通过广告赚钱,但是在亚洲,微信和微博等社交媒体平台通过商业赚钱,从实际购买量中分到一杯羹。所以,如果您掌握支付平台以及用户,它比控制广告更有效你可能会获得更大的收入数量级。So we will see an interesting battle played out in other countries like India, where Facebook and WhatsApp are strong and where Chinese players have backed local commerce companies and local payment companies. So it’ll be the Indians backed by the Chinese against U.S. heavyweights like Facebook and Amazon. And that’ll be interesting to see how things play out, especially in comparison to China, because the Chinese retail industry is under a huge amount of pressure since people don’t carry wallets or buy offline anymore.


From: eMarketer

Q2: Given that Facebook is entering new markets like India, and with the other Chinese-backed providers which have payments attached to the virtual and social experiences, how do you think Facebook might localize their products or customize in those particular markets in terms of payments?


Facebook does not localize. They have an “one size fits all” strategy. Facebook in the U.S. is the same as Facebook in India. They can add features, and they are adding payment methods. But the bottom line is that a product designed for one market does not always work in another market. So far Facebook has been very successful in Southeast Asia and same with WhatsApp, but they are somewhat bounded by the fact that they do not localize. So what you’ll see play out is global companies like Facebook and Google increasingly going up against local players backed by Chinese companies like Alibaba and Tencent.Facebook不会本土化。他们有一个“一刀切”的策略。美国的Facebook和印度的Facebook是一样的。他们可以添加功能和付款方式。但问题是,为一个市场设计的产品并不总是在另一个市场上行得通。到目前为止,Facebook和WhatsApp一样,在东南亚已经非常成功,但因为不进行本土化,它们有一定的局限性。所以你会发现,像Facebook和Google这样的全球性公司越来越多地与阿里巴巴和腾讯等中国公司支持的本地公司展开竞争。
I think it is like the next World War. It’s not going to be fought with the tanks and bullets and guns, but between global companies. Instead of having 80 percent of the money made by 20 percent of the companies, it’s 99 percent of the money being made by 1 percent of the company.我觉得这就像下一次世界大战。将不会是用坦克、子弹和枪支展开战争,而是在全球公司之间展开的战役。未来,将不会再是80%的钱由20%的公司赚取,而是99%的钱都会由1%的公司获得。

Chinaccelerator and MOX, at the Crux of Cross-Border Opportunities

中国加速和MOX, 站在跨境创业机遇的关键位置

Q3: Let’s talk more about Chinaccelerator. For both Chinaccelerator and MOX, you have an emphasis on cross border entrepreneurship. Can you speak to that?


Most entrepreneurs are not lucky enough to be born in the U. S. or China. U.S. is the largest market; China is the second largest market. U.S. is the largest developed market and the largest digital market, whereas China is largest mobile first or mobile only market. They’re both very competitive and have large home markets.大多数创业者都没有足够的幸运能一开始便出生在美国或中国。美国是世界最大的市场,中国是第二大市场。美国是世界上最大的发达市场和数字市场,中国是最大的移动应用市场。他们都具备较强竞争力,并拥有庞大的国内市场。However, there are awesome entrepreneurs making really cool stuff in other countries. Unfortunately, their home markets are not large enough to support a global minded business interesting enough to secure VC funding.


We believe that startups are about solving problems. As early stage startup investors, through SOSV and 7 accelerators, we are vertically focused to better solve problems for those startups. And the problem that we are solving is helping companies go global – maybe not from day 1 but to year 1. They get product market fit, users, revenue and people that love them in one country, and our role is to take them cross border.


MOX Friday Happy Hour

So we help start up from all around the world enter China with Chinaccelerator, we help Chinese companies from early stage startups to Sequoia-backed companies with 30 million users in China to come out of China, and with MOX we are focused on Southeast Asia and India helping companies from around the world tap in these markets.由此,我们通过中国加速帮助世界各地的创业企业进入中国,我们帮助早期的中国创业公司,或在中国拥有3000万用户、并由红杉资本支持的企业走出中国。借助MOX,我们则聚焦于东南亚和印度,帮助世界各地的公司开拓这些市场。This is where the future is. There are a billion users on mobile and the next billion users will be in these markets. We call this the last 4 billion. That’s where we see the opportunity over the next 20 years: getting these users who don’t make 10 or 15 thousand dollars a year. They’re closer to the 5-to-8-thousand range. But the this is where the growth is. They have different needs and requirements than an American user or a Chinese user, and that’s the focus for MOX.


From: We are Social & Hootsuite

Q4: Back in the day, a lot of the companies, especially tech giants, try to enter China. Obviously they’ve encountered many difficulties. Google was operating in China before being shut down, and a lot of social networks cannot enter China. Companies like Uber, Groupon, eBay did have some level of success but ultimately acquiesced to local competitors. So can you speak to experiences some of your early stage companies going from abroad entering China?


I mean just to be clear Google didn’t get shut down; Google left. And how they’re trying to come back it’s a little hard. The reason why most international companies fail on China is not because of the government, but because of their poor execution. They tried to take a product that was built for another market and jam it down the throats of Chinese business and consumer users, which doesn’t work. Another mistake was to try to remote control the China business from another market. They assumed that if they took a product to Europe or Southeast Asia successfully, they should be able to take it to China. Unfortunately, that doesn’t prove out to be the case.我认为要澄清的是谷歌没有关闭,它是离开了。他们如何回到中国来的确有点困难。大多数国际公司在中国失败的原因不是因为政府,而是因为执行不力。他们试图把为另一个市场建造的产品,同样应用于中国企业和消费者用户,这是行不通的。另一个错误是他们试图从另一个市场远程管理在中国的业务。他们认为,如果他们成功地将产品带去欧洲或东南亚,就应该能够把它带到中国。不幸的是,事实证明并不是这样。
China is a different market with different user requirements and infrastructure, and therefore requires a different approach. I think most of the companies learned the lesson. LinkedIn created what’s now the “LinkedIn model,” where there is a local company with local, on-the-ground command-and-control, a different shareholder set, and a different technology and product set. LinkedIn China does not share code with LinkedIn global.中国是一个拥有不同用户需求和基础设施的独特的市场,因此需要采用不同的方法。我想大多数公司都吸取了教训。LinkedIn创建了现在的“LinkedIn模式”,在这个模式中,他们有一家本地公司,拥有当地的实地管理系统,一个不同的股东组合,以及不同的技术和产品组合。LinkedIn中国不与LinkedIn全球共享代码。This is only moderately successful for LinkedIn because business social networks are perhaps not really appropriate for China. I invested into startups trying to solve the same problem before LinkedIn came to China. They both failed.


LinedIn中国  (Earliest Version 最早版本,2014)

We take startups and even corporates – including companies that are already public – from around the world, and create a startup within the startup or the corporate. It has a very lean structure and doesn’t cost a lot of money. We come in with a small team, sometimes even just one person, and build a local team around them. They will try to get the product market fit for a product for China.我们从世界各地向中国带来创业公司或者大企业,并在创业公司或公司创建一家创业公司。它有一个非常精简的结构,无需花费很多钱。有时是一个小团队,有时甚至只有一个人,再建立一个本地团队。他们将努力生产适合中国市场的产品。In other words, we take the special sauce, the unfair advantage that this company might have internationally, and apply it to a specifically Chinese problem. The problem that 99% of the companies around the world are trying to solve is not necessarily a Chinese problem. But first you need to have a Chinese problem, and then an international solution that can be applied to it.


What Chinaccelerator Focuses on 中国加速关注领域 :One sector we often focus on is education. Chinese consumers tend to believe that international education is somewhat superior than Chinese education, a prejudice we can play upon. We focus on FinTech (with the exception of P2P), which is bit behind global FinTech. Crypto is included, and global and China crypto are both pretty well developed.我们经常关注的一个领域是教育。中国消费者倾向于认为国际教育比中国教育略胜一筹,这是我们可以利用的一个成见。我们还专注于金融科技(除了P2P)。加密货币也是我们投资的一部分,全球和中国的加密货币都已相当发达。

We also look at cross border commerce, where international brands might not be as trusting as a Chinese partner, so cross border companies with local roots but an international point of view can have an unfair advantage.


We focus on the health industry, including food and nutrition, which has gained increasing attention. 90% of the water in China is polluted, so where’s your food coming from? – we can play upon this. It’s been it’s been a fun, wild ride.

我们还关注健康产业,包括食品和营养,这已经越来越受到关注。90%的中国水质受到污染,你的食物从哪里来?—— 我们可以“玩”这个。这一直是一个有趣并狂野的旅程。

Q5: We’ve talked about going from abroad to China, and now let’s also talk a little more about China going to other markets, because it’s increasingly the case that Chinese companies are developing core abilities and innovative business models you don’t see in other countries. So can you talk a bit more about what’s happening in that direction?


One thing that a lot of people in the U.S. and Western Europe don’t understand is that China has already gone abroad. The cat’s already out of the bag, so to speak. For example, 6 of the top 10 highest grossing apps in Russia are Chinese. In India, either directly or through their investments, 3 to 4 of the top 10 of mobile players are Chinese. Similarly, in Brazil, 3 to 4 out of the top 10 are also Chinese.美国和西欧中许多人不了解的一件事就是中国已经走向全球了。也就是说,这只猫已经不在包里了。例如,俄罗斯排名前10的最热门应用程序中有6个是中国的。在印度,无论是直接开发还是通过投资,排名前10的移动程序中有3至4个是中国的。 同样的,在巴西,前10名中也有3到4名也是中国的。A Chinese product might not necessarily solve an American problem. China is largest mobile first mobile only market in the world, so the user requirements and experience users expect are different. These companies are not necessarily going to the U.S. or Western Europe first, but have gone into the other mobile first mobile only markets, where the user requirement is a bit more similar to China. Also there’s a lot less competition and the capital that the Chinese startups in the Chinese companies can bring to bear can be put to use.


Most companies in China are used to using money as a weapon in terms of marketing. They’ve driven up mobile advertising prices so much in Eastern Europe and Southeast Asia that the local players can’t compete. They cannot afford to buy users. There is an interesting state of affairs where international players dominate in Southeast Asia, South Asia, and increasingly in South America, and there is a knock-out-drag-down war going on in Eastern Europe and Russia right now.大多数的中国企业都习惯使用钱作为市场营销的武器。他们在东欧和东南亚地区的移动广告价格如此之高,以致当地企业无法与之竞争。他们买不起用户。这是一个很有趣的状态,国际公司主导着东南亚和南亚的市场,并逐渐在南美占主要地位,现在东欧和俄罗斯正在发生一场旷日持久的战争。

Chinese advertising in India

Q6: For folks in the U.S., you know we don’t hear too much about Chinese companies entering and selling their products there. For example, Xiaomi is doing very well in China and in India in particular as a global market, but hasn’t quite entered the U. S. just yet. Can you tell us a bit more about some of these are more established Chinese technology companies, and how they might enter the US market eventually?


There is this saying that you conquer the countryside before you hit the city. I think just like Amazon, Facebook, and Google, which have the developed markets, the Chinese are already dominating the more developing markets of the mobile first mobile only markets, and at some point, they will start bumping into each other.有这样一种说法,你在攻占城市之前先征服农村。我觉得就像亚马逊、Facebook和谷歌这些企业主导着发达市场,中国人已经“攻占”了移动主导的发展中市场。在某种程度上,这些公司将会相互冲突。It’s going to be very interesting to watch. I think there will be a lot of carnage. The international companies like Amazon, Facebook, and Google are struggling in the emerging markets. Amazon is trying to reenter India right now.


Xiaomi’s CEO talked with the President of India

On the other hand, companies like Tencent, Alibaba and Xiaomi have a difficult time in the U. S. markets because it would require a very significant change to the products, the business models, and the market approach.Consumers do not like to be sold at so much in the U.S. They’re not willing to take massive discounts in order to give up all the data and spam all their friends.另一方面,像腾讯、阿里巴巴和小米等公司在美国市场上遇到了困难,因为同样需要在产品、商业模式和市场渠道等作出重大变化。消费者不喜欢在美国这么被卖东西。他们不愿意因放弃所有的私人数据并向所有的朋友发送垃圾邮件而去获得优惠和折扣。In India you can, and we’ve been pretty successful doing that in southeast Asian and India. The marketing techniques and products layout that works in China tends to work in Southeast Asia as well. In the U.S., you have to localize, which is not happening right now.


Who’s going to do it first? Hardware, obviously. A drone is a drone. China is very strong in consumer apps, and some of the consumer apps are starting to creep into the U.S., but they’re very good at disguising themselves. You don’t recognize that the apps on your phone are Chinese. It’s not just cool karaoke video apps like, but also a lot of the utilities such as Meitu. You will see a lot of those consumer apps come in, but you are not going to know that their Chinese.

谁将成为第一个?毫无疑问是硬件。无人机就是无人机。中国的消费应用程序非常强大,一些消费应用程序也已经开始悄然进入美国市场,但他们擅长掩饰自己。 您不知道你手机上的一些应用程序是中国的。这不仅仅是像Musical.ly这样的视频应用程序,而且还有很多如美图一样的app。你会看到大量的消费类应用程序进来,但你不会知道他们是中国的。


Thanks to the Harbinger.

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