What happens when a Southeast Asian Internet company is like a Chinese Internet giant?
For Shopee, a star company owned by Singapore-based internet conglomerate SEA, at first, it meant crazy growth.
Founded in 2015 by Chinese entrepreneur Li Xiaodong, SEA, from the founder's background, to the business model, to the financing process, has followed the path of Chinese Internet companies, and has been called "Singapore Little Tencent" because of Tencent's shareholding. Its star e-commerce company Shopee has killed in Southeast Asia and suppressed Ali's Lazada in multiple markets. At that time, the competition between the two was also closely watched by the domestic Internet circle because of the existence of Chinese giants behind them. As a result, in the wave of Chinese Internet talent pouring into Singapore in the past two years, Shopee has become their hottest destination.
The shadow of these Chinese elements helped it quickly become singapore's first Southeast Asian supercompany with a valuation of more than US$1 billion, a total market capitalization of nearly US$200 billion after four years of IPO in the United States, and the beginning of global expansion in the same period. SEA Group once jumped to become the third largest Internet company in Asia, and its founder Li Xiaodong also became the richest man in Singapore.
However, just as it was further transforming into a "super company in Southeast Asia that most resembles a Chinese Internet giant," problems arose.
Externally, in the past nearly a year, SEA Group's stock price has plummeted by more than 81%, the majority shareholder Tencent has reduced its HOLDINGs in SEA, the Indian market has banned Shopee and SEA's game product Free Fire on the grounds of data security, and in the past few months, Shopee has closed a number of overseas sites.
And the greater turmoil comes from within.
According to Pin Play and a number of people close to Shopee's core decision-making level, the company is experiencing an organizational crisis, a battle of management routes, and an unsolvable growth dilemma - it is "rolling" itself up, and thus falling into a series of problems.
In fact, Shopee has been regarded as a benchmark by many Chinese companies with global ambitions, and has been called the proud son of "born to be global". The model it represents – headquartered in Singapore, with talent in China and global business – is a state that is increasingly sought after by a new generation of Chinese entrepreneurs, and this structure can be seen in Chinese star companies with global ambitions such as ByteDance, SHEIN, and Mihayou.
Restoring the inside story of the "inner volume" of the Singapore star company may make these Chinese global companies have some new thinking.
Clash of cultures
Chinese executives parachuted in, and Singaporean employees frowned.
In March 2021, Shopee held a seemingly ordinary Town Hall Meeting, which later appeared to be a turning milestone for the global company.
In this Town Hall Meeting, Shopee's regular executives are in addition to CEO Chris Feng and CPO David Chen, and a newly appointed Shenzhen CTO Huang Yicheng. According to public information, Huang Yi studied at Fudan University, obtained a doctorate from the National University of Singapore, joined Garena, a game company owned by SEA Group, in 2017, and then transferred to the e-commerce platform Shopee.
Several Shopee employees described the Chinese CTO as follows: There are means in the city government, a strong desire to control, although the education and professional background are relatively international, but the heart is very committed to Confucian and Taoist culture, often do not shy away from expressing sharp views.
An example that most Shopee employees remember is that at the Town Hall Meeting where Huang Yicheng first attended as cto, a technician reported to him that the overtime in the group was too intense, and it was often not until 9:30 p.m. or even midnight to finish work, which was not in line with the work life balance culture advocated by global enterprises. However, the new executive did not ask about the specifics of the employee's group, but said in public:
"Do you leave work late at 9:30?".
"I don't understand why the work that can be done at 7 o'clock has to be delayed until so late, is there really so much to do?" A Shopee employee told Pin Play that Huang Yicheng's remarks caused strong dissatisfaction among overseas employees.
The backlash from Singaporean employees has not prevented such a cultural clash from continuing. Even, this conflict extends to the level of the corporate system.
"The first big thing Huang Yicheng did after taking office was the introduction of ByteDance's OKR system. At that time, he pulled all our middle leaders to a meeting, took out OKR on the spot, and said that we are going to learn from Byte now. A former Shopee employee said.
According to the understanding of the product play, Shopee's OKR and performance appraisal binding relationship is very frequent and close, in the quarterly unit OKR formulation, each quarter will be a performance appraisal, plus the year-end total appraisal, a total of 5 appraisals throughout the year.
A Singaporean technology executive who left the adjustment process said that in the OKR system led by Shopee's domestic team, the technical team spends nearly a month every quarter to repeatedly confirm the alignment with the Chinese senior management, but the newly established Chinese team lacks coherence in the formulation and implementation of OKR goals, often setting the direction set last quarter, and the next quarter will be overturned.
In addition to the OKR system, Shopee Singapore management is also required to report ideas to the Chinese management team every two weeks in the form of written reports, some of which have a biweekly report with a word count of more than 10,000 words.
Rolled up.
The first to express opposition were the grassroots employees at the Singapore headquarters. They said they were puzzled that the OKR system, which fell from the sky, was only notified in the form of a few forms and did not introduce corresponding measures.
"I can understand that companies need to have a unified performance appraisal system when they get bigger, which is also a way to motivate employees, but Shopee's OKR measurement is completely subjective by management, which becomes a means of controlling people," said Shopee Singapore's front-line technicians.
In fact, Shopee is no stranger to this practice of learning from China's Internet experience, and even has its own unique tradition.
According to public information, LI Xiaodong, the founder of SEA, was born in Tianjin, China, graduated from Shanghai Jiao Tong University, and worked for Motorola and Corning before starting a business. The impression left by Li Xiaodong to the outside world is that he is introverted, and he rarely appears in public even after becoming famous.
He was one of the first entrepreneurs to successfully localize in overseas markets with the help of China's Internet experience. Whether it is the "Southeast Asia Small Tencent Garena" or the "Southeast Asia Ali Shopee" he created, there are distinct Chinese Internet characteristics behind it.
In the early days of entrepreneurship, Li Xiaodong used the ground push model that was once highly respected by the Chinese Internet to form a strong business push army and formed a network of more than 70,000 nodes in Southeast Asia.
But more importantly, Li Xiaodong combines these experiences with localization. A number of Shopee employees said that Li Xiaodong attaches great importance to localization, which forms the global gene of SEA, and also allows Shopee to carry a natural localization operation thinking when expanding overseas markets. For example, it has the flexibility to launch apps in each market according to different local conditions, and thus beat Lazada in multiple Southeast Asian markets.
Such a background determines that when the chinese founder encounters a growth bottleneck in the company, he will naturally choose to look for answers from Chinese Internet companies. But this time, Shopee began to encounter reverse localization problems, cultural differences and management model caused by turmoil, began to affect the global company's corporate atmosphere and business development.
OKR is an example. In the eyes of Singaporean employees, this system is beginning to become more of a tool for personnel struggle.
In Shopee's OKR evaluation system, divided into three levels of ABC, employees who have been Ced face the result of restrictions on job transfers, salary cuts, and even discouragement, and the above-mentioned former Singaporean technology executives have also chosen to leave because they have been Ced.
According to people close to the top, Huang Yicheng also set up a technical committee after taking office, one of the responsibilities of which was to handle the promotion applications of Singaporean and Chinese technicians, but 8 of the 10-member technical committee were airborne Chinese management, most of whom were hired for less than two months.
"There are senior technicians who go to the promotion defense, and the first question they are asked is actually - what are you doing with this project?"
"In the past year, the turnover rate of the Singapore team is very high, the turnover rate of the team I brought is more than 30%, the middle level has left and transferred more, and the management has basically changed the blood", on the personnel turmoil that occurred in the transfer of Shopee's core business team, many employees said that although they can understand "one day and one courtier", the whole process is "very undignified" and "completely has a more reasonable solution".
A concrete example of this "unseemly" is that when Huang Yicheng wanted to replace another Singaporean top tech executive, the Chinese executive had no scruples to say to him, "Your era is over," and when the tech executive asked why he was dissuaded, he got the following reply:
There's no one on your team anyway.
Transfer of power
Once there is a "you and me" division, the cultural conflict is not just a cultural conflict, the different forces of the company began to fight their own battles, and the Chinese team and the Singapore team became more and more seriously divided.
During the Town Hall Meeting, more than one Singaporean employee asked more than once, "Where is the future of the Singapore team?" In the reality of the frequent parachuting of Chinese management and the shrinking Singapore team, CEO Feng Zhimin and CPO Chen Jingye can only vaguely say that "Singapore is still recruiting".
"The truth is that we see very few new colleagues and the pace of hiring is much slower." Not only research and development, but also the product managers who left and transferred to other posts are not in the minority, "I have just come for more than a year, and I don't know how many people have changed the product."
During the same period, Shopee's continuous expansion of its global business has put forward higher requirements for the platform's own product technology.
This shift in discourse is already evident: several Shopee employees said that after the Singapore team completed the construction of Shopee from 0 to 1, the Chinese team was placed on Shopee's expectations from 1 to 10, and this burden was obviously to be picked up by Huang Yicheng, a new executive in Shenzhen.
Faced with the quarrel between Singaporean and Chinese employees, Shopee actually chose to transfer the power center, and the core business team began a major transfer from its headquarters in Singapore to China.
A number of Shopee employees in Singapore confirmed to Pin play that since March 2021, the Shopee Singapore team as a whole has handed over power to the Chinese team, the focus of technology projects has been largely moved to Shenzhen, the main body of the management structure has almost been taken over by Chinese executives, and many management and business backbones of the Singapore team have either transferred or left.
A Shopee Singapore grassroots technician described the big transfer as follows: At the beginning, I was a little confused, and after reading it, I felt that it was the core team transfer. According to the employee, his research and development team was the first to be "cut", perhaps the Shopee executives did not want to cause too much impact in the early stage of the transfer, so ostensibly using the internal horse racing mechanism commonly used by Chinese companies, recruited a team that was almost the same as the employee group's business positioning and work content.
"Later, it was found that it was not an internal horse race, and the newly established R&D group manager began to grab people explicitly or implicitly, and the more senior technical backbone of our group was basically talked about over and over again, and slowly the original manager of our group chose to transfer, and then the two groups naturally merged."
According to people familiar with the matter, in the past year or so, most of the business lines that were originally led by the Singapore team have been changed to report directly to Huang Yicheng. At the same time, Huang Yicheng also began to recruit in China, and many middle-level managers with the background of China's Internet factories were vacant to the Shopee Shenzhen team, and continued to expand in China.
In 2021, Shopee's recruitment boom in China is obvious to all in the Internet circle, and the major job search platforms in China are filled with recruitment information of this small southeast Asian giant, and the discussion of Shopee, the comparison of Offers, and the reverie and vision of global companies are also all over the domestic Internet forums.
According to informed sources, in addition to the executive talents required for school recruitment and ordinary social recruitment, Shopee's senior research and development of China's Internet factories is a thousand dollars to dig into the wall, Ali P7 level technical talents in the country Normal annual salary fluctuation is between 600,000 and 1.5 million, but in Shopee can get an annual salary of 2.2 million offers.
A number of Shopee employees said that after this large-scale transfer of the core business team, Shopee's staff in Shenzhen is about 4,000 people, Singapore's staff volume is about 1,000 people, and the proportion of employees on both sides of the team is basically flat before March 2021, and early employees said that Shopee's initial years of shenzhen R & D center is poor, the platform from 0 to 1 the technical bottom building, iteration, maintenance, are mainly completed by the Singapore team.
"The size of the Chinese team continues to expand, and on the basis of 4:1 employees in Shenzhen and Singapore, the decision-making level also hopes to establish another base camp of Shopee in Beijing, which is expected to be as large as Shopee Shenzhen." A person close to Shopee's decision-making level told Pin Play.
This is an interesting phenomenon – while a number of Chinese companies are shifting their global operations to Singapore and preferring foreign executives to run these businesses, this "Singapore company", which seems to have an innate advantage for many Chinese companies, is becoming more and more Chinese from organization to culture.
Whether Singapore itself is suitable for the birth of global enterprises has become a new reflection for many people.
"It is really difficult to recruit people in Singapore, and the company's development speed is very fast, whether it is the cost or efficiency of recruitment, the domestic is much better than Singapore." An early Shopee employee described to Pin Play that when he joined in 2018, SEA Group had become one of the small tech giants in Southeast Asia, but only from a technical point of view, the level was barely the same as that of domestic second-tier Internet companies.
In fact, many of the so-called Singaporean companies that have succeeded in Southeast Asia did not start out in Singapore in the first place. For example, although grab, an online ride-hailing and food delivery platform, moved its entire headquarters to Singapore in 2020, it was actually founded in Malaysia; Tokopedia and Gojeck were born in Indonesia, southeast Asia's largest market, and merged into GoTo in 2021, becoming Grab's strongest competitor. Li Xiaodong's Chinese background makes Shopee choose the path of China's Internet factorization. But the "internationalization" challenges that come with this look a lot more than other routes.
"I actually have a vague feeling that the core team of Shopee's business may turn to China in the future, but I didn't expect it to be so fast." In the employee's view, the e-commerce outlet brought about by the global epidemic outbreak has made Shopee's development far exceed expectations, and it has also invisibly become a catalyst for the transfer of core business teams to China.
According to the financial report data, Shopee's total GMV reached $35.4 billion in 2020, an increase of 101.1% year-on-year; The total number of orders reached 2.8 billion, an increase of 132.8% year-on-year. In the first quarter of 2021, Shopee maintained a strong growth momentum, with GMV reaching $12.6 billion, an increase of 103.2% year-on-year; The total number of orders reached 1.1 billion, an increase of 153% year-on-year.
In the midst of such changes, Shopee has become a de facto Chinese company in the eyes of many employees.
Shattered dreams of globalization
But the good times did not last long, and the growth of GMV in the early days of the epidemic quickly ended, and Shopee was already caught up in internal personnel struggles and business problems, further making it too late to adjust.
2021 is the year of Shopee's aggressive expansion of the global market, based on the original Southeast Asia and Brazil and other advantages of the business, the development of Mexico, Argentina, Colombia, Chile, France, Spain, India and other new sites. However, entering multiple overseas markets at the same time in the short term has actually brought huge financial pressure to Shopee, and its parent company SEA Group has repeatedly mentioned in the earnings call that "more attention will be paid to profitability".
From the perspective of the revenue composition of SEA Group, its three main businesses are games, e-commerce, and digital finance, of which games (Garena) has been the main cash cow of e-commerce (Shopee) since its inception, providing a strong financial guarantee for its global expansion. SEA Group's total market capitalization in 2021 was close to $200 billion.
However, in the third quarter of 2021, such a "complementary" model began to have problems: through the game business as a cash flow hematopoiesis, the supply of e-commerce business in the global large subsidies and cost-effective strategy model, in the latter's serious losses became no longer established. Its game business product line is thin and aging, and the progress of its self-developed game business is slow, and the growth rate of turnover has dropped from 65% to 29%, which is not enough to support the Shopee e-commerce business with serious losses.
The stock price began to fall. After the release of the third quarter of 2021 earnings report, and when Shopee just announced its entry into the European market, SEA's stock price fell from the highest point of $372 to the current $80, evaporating nearly 80%.
"The external environment is not good is the premise, but the blind confidence and uncontrolled expansion of the company when standing at a high point are also the main reasons for the decline", a number of Shopee employees said that the expansion step in 2021 was too large, and even internal employees could feel the radical strategic and lack of overall view.
A former core technical member who was in charge of shopee data center revealed that there are early signs of a slowdown in Shopee's growth rate, and expanding a new market before 2021 can directly double the traffic of the market, and later although the number of expansion markets has become more, the traffic growth is not even 50%, "there is a vague feeling of growth to the top."
Challenged by this, many Shopee Singapore employees have once again attributed the problem to the increase in Chinese elements.
"Now Shopee can't see any shadow of internationalization. After the transfer of the core business team, some people even proposed that "we don't need to speak English", and when meeting with the overseas team, they basically use Chinese, many Southeast Asian colleagues can't understand it, and the solution is to translate the records into English after the meeting. A veteran Shopee employee in Singapore told Pin Play that the company paid great attention to the internal diversity of culture and atmosphere in the early years, which also made overseas employees feel very comfortable and have a strong sense of integration, "Now Diversity has been killed."
In addition, many Singaporean employees have accused that such changes have also undermined the once flat communication mechanism.
According to a number of insiders, the internal organizational structure of Shopee is no longer as flat as in the early days, and the front-line technical personnel who used to report the relationship in a straight line can reach the CTO, but now it has become cumbersome and strict, and the bottom employees can't even see the complete reporting relationship of the business line. Some employees have pointed this out, and the company has set up a bottom-up feedback cultrue, and the QR code of the feedback system is posted throughout the Singapore office to encourage employees to fill in suggestions and ideas.
"It's more formalism, I've responded a few times without getting a solution, and over time there's no enthusiasm." One Singaporean employee said that when the bottom-up feedback mechanism was ineffective, "our sense of identity and belonging to the company was not so strong."
Over time, employees on the front line have a feeling of living in a "vacuum layer", the company's decision-making level is getting farther and farther away from them, although the Town Hall Meeting is still held normally, but there is less of a communication atmosphere of "finding problems, asking problems, and solving problems".
"What I can intuitively feel is that in the early years, we were small in scale, and indeed there have always been online technical problems, but after the restructuring, so many talents have been introduced, and the scale has also expanded, but the technical problems have not decreased at all." A Shopee Singapore employee told Pin play that the company's technical staff can see the entire product daily online accidents through a system, as far as his recent observations are concerned, the company has P0/P1 accidents almost every day, "This kind of big accident is one a day, sometimes two a day, but the bosses don't seem to care, it is really a chicken feather." ”
There are Shopee employees who have made even more serious allegations:
A person familiar with the technical situation said that after his group was managed by the Chinese team, the new technical leader not only brought a group of his subordinates in the former company, but also moved the technical code of the former company to use in large numbers, "these codes were also thrown to our old employees to modify, and the details and comments inside had a lot of information about the original company, which we think is a very serious code copying incident."
The former head of Shopee's other technology line in Singapore made similar accusations.
"At that time, there was a distributed storage-related project, and the Chinese team said that it had poached a big bull from Tencent and could make this within a year. We know it's impossible to do this line of work, unless you just take someone's code and run it directly." He was skeptical.
A number of Shopee employees said that due to the lack of understanding of Shopee products, coupled with online bugs caused by the direct reuse of other companies' technologies, the already unstable platform system problems are frequent, often only one quarter of implementation, it becomes impossible.
"Maybe the management is busy sitting in their place through the power struggle, first to achieve deep binding with the company, and the business problems can be slowly solved." Some employees speculated.
For Shopee and SEA Group, whether they can rediscover the balance between The Chinese gene and the global gene will be a decisive factor in their next stage of development. More specifically, Shopee should focus on how to define what the Singapore team means to the business and the company's development.
According to a Shopee Singapore employee, the Singapore team began to implement the Hot Desk system this year, all local employees no longer have a fixed workstation, and need to make a workstation reservation through the system before going to work. Although the reservation system has a precedent in global companies, Shopee's system has not been implemented in the Chinese team, and the company's explanation to Employees in Singapore is that "there are not enough workstations".
"I don't understand why this system is implemented, and the people in each group will sit together to discuss projects and work very conveniently, and after the implementation, everyone will sit scattered." A Singaporean employee said that the intuitive feeling of the system is that the company has no money, and to think more extremely, it is a disguised reduction in the size of the team outside China.
All these incomprehensions are a reminder to Chinese entrepreneurs who are eager for Singapore: how should "foreign" Chinese companies deal with this problem when a Singapore-born Internet company cannot handle this balance after the increase in Chinese elements?
The bad news that Shopee has been sending to the outside world lately is one after another.
First, at the beginning of the year, Tencent announced that it would reduce its shares in its parent company SEA Group, and the share price of SEA Group fell by more than 11% on the same day; On February 14, India banned Shopee and SEA Group's popular game Free Fire on the grounds of data security, and after the ban was announced, SEA Group ushered in a stock price drop of more than 20%; Since March, Shopee has closed stations in India, France, Spain and other countries.
Not long ago, in June, Shopee broke out in the internal layoff plan, and the optimization team involved Shopee Mexico, Argentina, Chile and other teams. Shopee's internal layoffs have also spread to the Chinese team in recent days, and the relevant information sent by employees of the Shenzhen R&D team has been seen more and more frequently in Internet forums, although the specific lines involved in the layoffs have not been clarified, but the posts have repeatedly mentioned "the dissolution of the entire group" and "the overall business is downsizing".
"We predict that there will be a wave of old employee departures at the end of this year and early next year, because many people who joined in 2018/2019 chose not to move because the stock did not expire." A Singaporean employee said.
"Shopee can't keep people anymore as it is now."