Text | Zhai Yuanyuan
Cover source|Figureworm Creative
At a time when the domestic market has entered the stock competition, it can almost be called a survival instinct for enterprises to turn their attention overseas in order to find incremental markets.
Different from the era of e-commerce, games, and mobile phone hardware of early Internet companies such as Ali, Tencent, and Xiaomi, enterprises have now shifted from the old head manufacturers to the competition of rookies. The threshold has been lowered, the involution has intensified, and more and more new consumer brands have deployed overseas markets. A few days ago, following the tea of Michelle Ice City, Heytea and Naixue entering Southeast Asia, the new tea brand Luckin also opened stores in Singapore.
Michelle Ice City, which went to sea earlier, even extended its tentacles from Southeast Asia to Australia in Oceania on the basis of more than 1,000 overseas stores; The trendy play brand Bubble Mart opened its first offline store in France, and the overseas pop-up store of domestic beauty flower Xizi opened in Tokyo, Japan.
According to public data, nearly 500,000 enterprises in China have tried or are planning to go overseas, and more than 40 million small and medium-sized enterprises are on the sidelines. It can be said that every enterprise has a dream of going to sea.
Enterprises have high hopes for overseas gold panning. Tencent previously set the goal of the game business to "achieve domestic and overseas markets each account for half of the game revenue", Bubble Mart chairman and CEO Wang Ning previously said at the performance communication meeting that the future overseas business accounted for 50%, but Tencent's overseas game revenue is nearly 80 billion yuan different from the domestic market, and Bubble Mart's overseas revenue accounts for only 3%.
The overseas market is not the ideal country where honey and milk flow as imagined, it is also full of thorns. Compared with the enthusiasm of new consumer brands to go overseas, the first batch of commercial rookies who burn money to go overseas have shrunk their fronts and shut down their businesses, and enterprises with dreams of going overseas will inevitably face the "waking time".
Kuaishou closed non-core areas, and investment in overseas sales decreased sharply
From overseas expansion to shrinking to focus on core areas, Kuaishou spent almost 6 years exploring and testing the waters.
Kuaishou released its Q4 2022 and full-year financial reports on March 29, showing that its domestic business will turn losses into profits and overseas revenue will continue to grow in 2022. Among them, the revenue of overseas business in the fourth quarter was 284 million yuan, an increase of 50% from 189 million yuan in Q3, and it was in a positive growth for three consecutive quarters. The annual revenue was 625 million yuan, a year-on-year increase of 732.1%, far exceeding the domestic business.
However, on the other side of the coin, Kuaishou's overseas business still lost as much as 1.5 billion yuan in a single quarter, and the annual overseas operation loss was 6.638 billion yuan. Moreover, overseas business accounts for only 1% of the group's total revenue. In comparison, Kuaishou's domestic operating profit in 2022 was 192 million yuan.
Kuaishou's overseas business has passed the "all in" stage, and shrinking overseas fronts will be Kuaishou's normal action in the next few years. In August 2022, Kuaishou underwent a large-scale organizational restructuring, and Ma Hongbin, who was once considered Kuaishou's "number three person", was transferred to the head of international business, and Ma Hongbin clearly mentioned internally that he must "lay the basics well and spend every penny".
Kuaishou CEO Cheng Yixiao put forward the goal of international business to determine phased, sub-regional, differentiated methods of play, and find space for long-term stable development of overseas business. Kuaishou overseas markets are divided into three tiers: the first tier is Brazil and Indonesia, where Kuaishou has the largest DAU scale; The second level is the region where DAU users are growing rapidly, and Kuaishou obtains commercial revenue through overseas exclusive authorized agents; In the third-tier region, Kuaishou only cooperates with third-party companies at the traffic level.
In addition to the two core markets of Brazil and Indonesia, Chen Chen, a former employee of Kuaishou, told Tech Planet that countries including Spanish, Pakistan, and Bangladesh may gradually be marginalized. Chen Chen said that since 2022, the number of overseas employees has been continuously reduced, and many outsourcing employees have been optimized, from safety audits, ecological audits, to recommendation mechanisms, the whole process has been cut a lot. The popular events, tags, etc. that are operated do not have the demand for activities. In February 2023, Kuaishou products in Bangladesh and other countries have gradually ceased operations.
Other non-core regional market budgets are also being cut again and again. An employee of Kuaishou told Tech Planet that Kuaishou used to invest $1 million a day in Spanish for creators, but now it only invests $200,000-300,000 a day, falling off a cliff. Data shows that in 2021, Kuaishou's overseas operating costs reached 12.07 billion yuan, compared with 7.26 billion yuan in 2022, a sharp decrease of 40% year-on-year.
Brazil and Indonesia, which are at the first tier of Kuaishou's overseas markets, do not seem to have such a high cost performance. According to Kuaishou employees, the number of Kuaishou overseas business is close to 1,000, and the overseas version has more than 20 million DAUs in Brazil and more than 18 million in Indonesia. The population base of the two countries is not so large, about 210 million and 280 million respectively, the culture is relatively scattered, and the creative ability cannot be compared with the domestic one.
Other countries have high investment and slow growth. Chen Chen told Tech Planet that Pakistan's DAU has remained at about 7 million for almost a year, almost stagnant, and it may be slowly shut down in the future.
Kuaishou overseas and domestic business can be understood as two systems, Kuaishou employees said that the overseas team operates independently, basically all products have made a separate set. Like Magnet Cluster, the overseas team made another one from scratch. In addition to the technical level may be shared, business generally does not reuse domestic things.
Station B went to sea to reduce the scale of personnel and shut down business in 4 countries
Unlike Kuaishou, the B station earnings report has almost no overseas business.
Station B went overseas at the end of 2020, entered the Southeast Asian market for the first time, took the lead in launching the overseas official website Bilibili, and then launched the comic product Bilibili Comics overseas in less than half a year. In terms of games, a number of games on station B are exported to the Japanese and Korean markets in reverse. So far, station B has realized the overseas layout in terms of main site products, animation, and games.
Station B's overseas business belongs to the Star Project Department, and the overseas business is mainly to do the Southeast Asian version of Bilibili. Li Wen, a former employee of Station B, told Tech Planet that nearly 400 people were laid off before the entire project department was cut.
Station B has certain advantages in anime and games. In June 2020, Chen Rui, CEO of Station B, said that Station B has bought more than 1,680 animation works with formal copyright overseas since its establishment. At the "2021-2022 National Creative Animation Works Conference", Station B released 49 animations, including many popular animations such as "The Three-Body Problem" and "Heavenly Official Blessing 2". In addition, Station B has also acquired animation studios such as "Youyouyou", with a rich reserve of works.
Although the game of station B is complained as a "mobile game graveyard" in China, before its listing in 2018, the game business has always been the main source of income for station B, because the game revenue once accounted for as high as 80%, and was jokingly called "a game company in the garb of a barrage" by the outside world.
Station B has also achieved good results in overseas markets. According to public data, in February 2021, App Annie data showed that the Thai version of Station B once ranked in the top 20 of App Annie's overseas application revenue list, ranking 6th. In addition, it has also won the Korean game application market overseas.
When Chen Rui participated in the 2022 World Internet Conference Wuzhen Summit in November last year, he revealed that 24 Chinese creations have been launched overseas on Station B, 15 documentaries have landed in overseas markets, and a total of 107 domestic and foreign awards have been won. APP Annie data shows that the overseas version of Bilibili Comics has been online for less than a year, and the monthly active user scale has exceeded 3 million, ranking third in the English-speaking market outside China, Japan and South Korea, with a peak daily activity of 824,000.
In public reports, station B is still recruiting in Southeast Asian countries in 2022, but also in 2022, cost reduction and efficiency increase have become the consensus of all Internet manufacturers, large factories have optimized the scale of organizational personnel, and station B has also started layoffs, including the main station operation center, games, live broadcast, stars and other departments are involved. Li Wen told Tech Planet that the Star Project Department, where the overseas business is located, laid off more than 100 people during the wave of layoffs, and Wang Xuan, the original head of the department, also left at the end of last year, and Wang Zhikai, the former general manager of the B station live broadcast center, was transferred to serve as the general head of the Star Project Department.
Li Wen said that the overseas overseas strategy of Station B was at its peak, covering 6 countries, and the region with the best business was Indonesia. After Wang Zhikai took office, overseas business began to lay off employees, some regions were cut completely, and services in countries such as Vietnam, Singapore, Malaysia and the Philippines were closed.
Domestic business can be used as a bellwether for overseas business expansion, and if a company's performance is under pressure on the main battlefield, the priority of innovation and business that needs to burn money and trial and error will be lowered. The latest financial report data of Station B shows that although the net loss in Q4 2022 narrowed to 1.50 billion yuan year-on-year, the net loss for the whole year was still as high as 7.5 billion yuan. Under the goal of "achieving breakeven", the investment of station B in overseas business may not be too large.
Genki Forest's overseas business changed coaches and adjusted its playing style
In terms of going to sea, in addition to Kuaishou and Station B, Genki Forest is also quite representative.
In an interview with Yuan Qi Forest founder Tang Binsen in 2021, he proudly said that in 2008 they were the first company to make games go overseas, 7 years earlier than other game companies that successfully went overseas, successfully proving to the outside world the possibility of success in the game track Chinese. But in consumer goods, this time Tang Binsen failed to replicate the myth of the game at the time.
Genki Forest's road to the sea was not smooth.
In March last year, Liu Zhen, head of global overseas markets of Genki Forest, left the company. Liu Zhen officially joined Genki Forest after leaving ByteDance in 2020, and her joining represents Tang Binsen's importance and determination to go overseas.
However, after less than a year and a half in office, Liu Zhen left the Yuan Qi Forest. An investor said on social media that at the beginning of 2021, Genki Forest raised 500 million US dollars to develop overseas markets, and from the performance point of view, Genki Forest's overseas performance was not satisfactory, overseas sales in 2021 were only about 200 million yuan, and more funds were spent on overseas markets to occupy channel expansion.
In comparison, in 2021, the sales collection of Genki Forest was 7.3 billion yuan, and the overseas revenue was 200 million yuan, which is almost negligible.
Muzi, a former employee of Genki Forest, told Tech Planet that after Liu Zhen left, Tang Binsen's entrepreneurial partner Zhu Bideng took over as the head of Genki Forest's overseas business.
The change of senior management, the bottom business employees also carried out a round of adjustments. Genki Forest's overseas business used to have about 100 employees, and it will lose a lot by 2022. Muzi said that because the organizational structure adjustment is more frequent, many people transfer to other products internally, and the turnover is relatively large.
Zhu Bideng almost overturned Liu Zhen's strategy of going abroad, Muzi said, Liu Zhen's way of playing is to pursue coverage and enter more mainstream national markets. Zhu Bideng advocates focusing on the markets of certain core countries, Southeast Asia and the United States, entering more offline channels, starting from overseas Chinese, and then affecting more local consumers.
According to the data, in 2022, Yuanqi forest products have been exported to mainstream consumption channels in more than 40 countries and regions such as the United States, Australia, the United Kingdom, France, and Singapore. However, frequent changes have led to the lack of a long-term plan for Genki Forest's overseas business, and it is difficult to ensure stable sales growth.
Since its establishment in 2016, Genki Forest has established itself as the leader of sparkling water in China in a short time. The data shows that from 2018 to 2020, the sales growth rate of Genki Forest reached 300%, 200% and 309% respectively.
However, in 2022, the growth rate of Genki Forest will slow down. In 2021, the number of Genki Forest employees was as high as 12,000, but in more than a year, the number of employees has been halved, Muzi said, and now Genki Forest has only about 6,000 employees. The overseas business is inevitably tested together with the company's broader market.
Whether it is Kuaishou, Station B, or Genki Forest, at the beginning of the sea, the company is full of ambition and hopes to stage an epic voyage, but the overseas market is undoubtedly facing challenges, and the voyage may not be smooth sailing.