Image source: Visual China
"We have been observing the spillover of China's advantages around the world."
At 11:00 a.m. Beijing time, the Titanium Media App made a transoceanic interview call, and at this moment, the west coast of the United States was around 8 p.m.
On the other end, the person who answered the phone was Richard, chief representative of Daguan Capital North America, who stayed in North America after graduating from graduate school in 2013, and his first job was in the American overseas branch of a Chinese listed company, and he personally experienced the product going overseas, from ODM to mergers and acquisitions, from tradeshow to blogger, from independent stations to offline channels, and the whole process of brand landing.
Later, by chance, he joined Daguan Capital to take charge of north American and overseas markets. Daguan Capital is an early-stage fund founded in 2015, all-in overseas, invested in News Break, Bow and Arrow Legend, Shopmaker Technology, Menusifu and other well-known Chinese overseas products or enterprises, and the invested enterprises are active in Europe, America, Southeast Asia, India, Africa, Latin America and other overseas markets.
Recently, the word going to sea has been frequently mentioned and concerned by capital again, but this seems to be "contrary" to the complex international situation we see.
So, is it a good time for Chinese companies to go to sea at this moment? What are the advantages of going abroad for enterprises to go to sea? How do I choose my destination? What kind of team will create the myth of the sea to take root overseas? With these questions in mind we dialed Richard's phone.
Daguan Capital Xu Ruicheng (Richard)
1. Titanium Media App: How to view the phenomenon of "Chinese enterprises going to sea"?
Richard: "Going to sea" is only one direction for the development of enterprise business, just like the "To C" and "sinking" that people often mention, this phenomenon represents an overflow of China's advantages.
Going to sea is also the only way for many enterprises to go international. Enterprise internationalization is like people to grow up, it is impossible to choose hibernation because of the bad market environment, whether it is a giant attack or a new start-up company looking for a new market, a new situation, a certain time must be tried and configured in this regard.
In general, the trend of going to sea is unstoppable, the global market is large enough, new tracks are emerging, and there are always good opportunities.
In our past investments and observations, we have also seen different types of companies begin to move towards overseas markets.
The first category is those who take the initiative to go to sea, they may be returnees or emerging entrepreneurs who have created a project for the global market, or they may be medium and large enterprises that have reached a certain stage of development and need to expand overseas markets.
The second type is passive going to sea, such as a certain track has developed into the Red Sea in China or is forced to start looking for new overseas markets due to policy restrictions.
The third is accidentally going to sea, some companies originally did not plan to do overseas markets, but unexpectedly found that the users of the product have overseas users and the compound rate is good, so they began to consider entering overseas.
2. Titanium Media App: Is the current international situation a good time to go to sea?
Richard: In 2015, when Daguan Capital was founded, Slogan was "China's advantage to go global", during the continuous investment period of these 7 years, we obviously saw that the "Chinese advantage" of Chinese enterprises has gradually been revealed, so as long as we find our own positioning and advantages, no matter how the overseas situation changes, it is the "best time".
Good opportunity tracks actually emerge little by little. At first, Daguan Capital did not define it in a specific track when it invested in the sea, but with the growth of investment time and experience, it found a commonality: the more successful enterprises basically concentrated on the three tracks of mobile Internet, cross-border e-commerce, and enterprise service SaaS.
On this basis, more subdivisions have been derived, the mobile Internet track includes games, social networking, tools, content, education, etc., which belongs to the "old line" of China's overseas, we observe the user; cross-border e-commerce track includes logistics, brand going to sea, express e-commerce empowerment, platform, etc., which originate from the foundation of China's early OEM oem, we observe the scene; enterprise service SaaS includes a vertical field of tool SaaS or industry general SaaS and other technical products. One of the key words in this track is "organizational change," which is closely related to the post-pandemic world we are changing now.
During the epidemic, different tracks have been affected by different international impacts, relying on offline business enterprises are facing a huge pressure of capital flow, while online business-based games, social networking, remote office has shown a substantial growth trend, so how the situation changes, there is always an opportunity worth exploring.
3. Titanium Media App: What do you mean by "China advantage"?
Richard: "China's advantage" is a relative value rather than an absolute value, and it is better to do a relative scale, and the advantages of Chinese enterprises in terms of traffic, supply chain, technology, and talent have been highlighted.
Traffic advantage is something that Chinese Internet people play through, arrow speed iteration, to promote the strengths and avoid the shortcomings, this set directly leads to the mobile Internet social, entertainment, tool application of the strong sea potential; supply chain advantages, strong, large and complete Chinese supply chain in the last era to support foreign trade and cross-border e-commerce ecology gradually matured; technical advantages, mainly reflected in the SaaS and hardware field; talent advantages, although it seems that the United States, India engineers and entrepreneurs a lot, but from the perspective of cost, work efficiency, ability China has a large number of middle and high-level engineers and technicians who can make very beautiful products, and 996 is also very capable of "playing", so these are the more important advantages of Chinese enterprises.
Of course, the advantage is a relative thing for a period of time and a specific market, different stages will have different potential energy forms, we also have to constantly think about finding new advantages and opportunities.
4. Titanium Media App: How to understand the technical advantages?
Richard: Chinese companies are very good at providing products with relatively suitable prices and excellent technical level.
For example, when clubhouse was particularly popular last year, YC's audio-related projects in the current period were almost all used in the services provided by Agora, a real-time call cloud service solution; for example, the unmanned convenience store technology provider Yunna has exported technology to Japan, Singapore, Germany, South Korea and other countries. In fact, China's technology products are not worse than overseas.
We look at overseas, some team products are doing very well, but the price can not come down or the ability to perform the contract can not keep up, this is the opportunity, Chinese companies can be at a user acceptance level, as far as possible to do the best technology, this is the embodiment of the advantage.
5. Titanium Media App: Is there a judgment model for the choice of destinations to go to sea?
Richard: Going to sea is faced with a constantly changing frame of reference, and different judgment models for destination markets are different, and the founder is the core determinant of destination selection.
In about 200 countries around the world, there are abundant destinations for Chinese enterprises to choose from overseas, but due to the different cultures and development stages of each country, the products accepted by the market are also different.
For example, Yalla Group's voice chat room Yalla and board game Yalla Ludo are very popular in the Middle East market, and in 2020, it will become the first Middle Eastern unicorn to successfully list on the New York Stock Exchange in the United States in just four years; Transsion Mobile Phone is mainly focused on the African market, ranking fourth in sales among global mobile phone brand manufacturers, second only to Samsung, Apple and Huawei.
Different types of products can find their own "territory" in different markets. The choice of overseas destinations is not a blind "casting of lots" but needs to be judged according to the entrepreneur's own ability advantages, team structure composition, business expertise, market familiarity and other advantage indicators.
If half of the team is familiar with the North American market, then it will definitely choose the European and American markets; if the founder has never been to India, but wants to do the Indian market, it will not be particularly smooth to think about it.
Therefore, the choice of sea destination is not a particularly metaphysical choice, it is a rational decision deduced on the market and the track after combining its own advantages and characteristics.
6. Titanium Media App: What characteristics must entrepreneurs who go to sea have?
Richard: Being able to speak a foreign language or work and live in a particular country is the icing on the cake, but for the core, the understanding of the overseas ecology and the full recognition of competitors are the sufficient conditions for starting a business abroad.
Domestic new users drain a set of more mature ways of playing on the Internet, in foreign countries generally rely on Facebook, Google Analytics They have a more systematic way of playing. If entrepreneurs do not understand the platform gameplay, services provided, functions, and rules, how to carry out overseas customer acquisition?
There is a certain threshold to understand the overseas ecology, not only the language problem, the founder needs to really spend money, have fought, which is why we now see many VCs like to invest in big factories or entrepreneurs who have successfully started overseas businesses.
7. Titanium Media App: Is this the logic of Daguan Capital's investment in overseas entrepreneurs?
Richard: Every capital investment has its own methodology. Entrepreneurs who invest in overseas will look at several aspects: first, for overseas ecological understanding; second, have a precise positioning, such as specific markets, at first may be one or two important target markets, not globalization, which is the choice of the corresponding path; third, in cognition and subjective initiative, tend to choose projects with international cognition and active going to sea.
Specific aspects, such as the same data project in Indonesia to do well, in Vietnam may not do well, of which the judging factors are various, can not be unified tone, specific project specific analysis.
Overall, from leveraging China's advantages to building global awareness, this is the big change we have experienced most directly from entrepreneurs in the past few years.
8. Titanium Media App: What challenges may Chinese enterprises facing overseas?
Richard: There will be many challenges, localization is probably the most talked about challenge in the industry, first of all, localization is subdivided into brand localization, operation localization, team localization, legal localization and other different perspectives.
The so-called localization is to make products that locals like, but it must not be able to draw a tiger according to the cat, and the giants cannot escape the "curse" of localization failure.
Localization is a resource problem, is it a team problem? I think the core behind the localization challenge is the team's challenge to internationalization, which is the underlying driver of localization.
9. Titanium Media App: What kind of support does the institution give to overseas enterprises?
Richard: The tangible support is intuitively reflected in the investment, on the one hand, it is the direct investment of Daguan Capital, on the other hand, it is to help overseas enterprises get overseas resources, including overseas cognition, services, talents, and capital, and grow into an international enterprise.
This is the problem that many start-ups face when they go international: how to go from only taking the money of the Chinese market to the money of the international market or the money of the target market funding institutions, how to move from the team only in China to the international team, and how to create from the advantages of China to the global brand product. This hurdle is very important, and if it can be passed, it will become a company with an international vision.
If you can't go over, it will always be a Chinese overseas enterprise, selling Chinese money, Chinese people, and Chinese products abroad, and this pass is often not enough to be completed by the entrepreneur's own ability.
In addition, in the past few years, Daguan Capital has emphasized that "people who go to sea help people go to sea", so it has created a public welfare "Overseas Alumni Association" mutual aid community, on the one hand, to help overseas entrepreneurs establish an understanding of overseas ecology and resources and international cognition; on the other hand, to integrate the resources of the entire industry to the corresponding overseas enterprises, which also forms our characteristic investment.
We are also gradually exploring how to give the invested enterprises a more systematic and valuable service, after all, the most important thing as an institution is to play a good role as a companion.
10. Titanium Media App: Compared with previous years, what changes have taken place in the overseas market?
Richard: There are a lot of changes.
First, the change in the logic of going to sea. The time effect of copying the Chinese model to an emerging overseas market has failed in the past, and this model may make quick money, but it is not a long-term career. Today, we need to focus more on localization, globally native innovation, which is one of the more important logical changes in the past three years.
Second, the earning power of Chinese enterprises has steadily improved. Last year, when Daguan Capital and Google released the "2021 Guide to the Globalization of Mobile Applications", they found that the growth rate of Chinese developers' mobile application downloads abroad is not much different from the growth rate of other overseas countries, but the growth rate of developer revenue is much stronger than that of other countries, which I think is a very noteworthy point.
The ability to make money is mainly reflected in two aspects, on the one hand, Chinese entrepreneurs are doing a very good job of accurate delivery and cost control, which is the Chinese Internet has been tempered by thousands of hammers; on the other hand, the ability to mix and monetize is constantly optimized.
Image credit: Guidelines for the Globalization of Mobile Apps in 2021
Third, brand capabilities are enhanced. Cross-border e-commerce track is the most intuitive, the best to understand, now we from the supply chain FOUNDRY to the brand, POB and high-end manufacturing, the international environment is changing we also have to adjust. It is worth mentioning that the brand awareness of enterprise service SaaS industry and mobile Internet App industry is also gradually entering the vision of overseas entrepreneurs.
For example, SaaS brand Salesforce has global influence, but many of its products and development are outsourced to Indian teams, some small countries or some Chinese teams, and still sell well overseas, which is completely the logic of consumer goods OEM and brand solutions and ecology.
In the future, China will finally embark on this road in the mobile Internet App industry and enterprise service SaaS industry.
Fourth, the service system is now more perfect, especially in the cross-border e-commerce industry. Since 2021, there have been about 28 investment and financing in the field of domestic cross-border e-commerce service providers, covering SaaS empowered by cross-border e-commerce such as payment, ERP, and CRM, and the head VCs are basically laid out in them.
For example, Daguan Capital's 2018 Pre-A round investment of Shopsmith Technology, which is a technology company that provides enterprise-level independent e-commerce website (independent website) SaaS platform for global brand merchants, the number of merchants and transaction scale are firmly ranked among the domestic cross-border independent station SaaS industry leaders, and has now developed to the C round, of which the investors include SoftBank Vision Phase II Fund, Abu Dhabi Royal Fund (Chimera), the world-renowned wealth management group Stepstone Group, Sequoia China, etc.
Overall, the improvement of the service system is a good thing, and everyone can get more help and full competition.
Fifth, science and technology to the sea gradually emerged, hundreds of industries are going to sea, in addition to the industry is now concerned about the global SaaS, open source software, high-tech content of the sea software and hardware products will be more and more.
In the past, going to sea may be a local market, an attempt at some industries, and now how to do internationalization and how to go to sea has become a topic that cannot be avoided in all walks of life, and people who go to sea also continue to iterate forward from the early concepts of foreign trade and tools going to sea. I hope that everyone can do more experiments together on the way out to sea, and we accompany each other. (This article was first published on the Titanium Media App, and the author |.) Guo Hongyu)