If you are looking for a buzzword that could represents the spirit, business and development of China’s Internet industry or ICTs (information and communication technologies), entrepreneurship is the one. The scale of Chinese startups, the legendary Zhongguancun, the rising Chengdu innovation hubs often grasp media’s headlines. But are China’s startups doing as successful as they are portrayed? What should be the takeaways from these stories for those who want to set foot in this market?
First, for those who are lured by the idea that China’s Internet industry is a huge, untaped market, it is time to change such perception. Take Zhoangguancun, the technology hub in Haidian district, Beijing, China which is frequently referred to as “China’s Silicon Valley”. China has more than 1,600 technology incubators as of March, 2015. Zhongguancun alone birthed 49 startups daily last year as innovation takes root in the country, Wan Gang, the nation’s minister of science and technology, said Wednesday at a briefing for the National People’s Congress in Beijing. The wave of startups is so overwhelming that it is not surprising to hear a fresh graduate, a student or anyone saying “let’s just go start a company.”
What investors or latecomers should focus, therefore, is not the size of the market but potential niches in this country with growing numbers of Millenials/Generation Y and middle-class spenders. One notable example that make use of the business value of these social groups is JiuWu. Based on the idea of “sharing closets” (or probably inspired by its Western counterpart “Rent The Runway”), it targets at urban white-collars who have relatively high spending powers, like brands, desire to dress up for different occasions and yet don’t that much money or simply don’t want to spend lavishly. Within a month, JiuWu has attracted over 10,000 active registers even though it’s monthly subscription fee is still quite a lot for some people.
Second, the Internet industry in China, like elsewhere, is rapidly changing but at the end of the day, it is patience and perseverance that leads to success.
The scenario is not uncommon to us: a X Chinese company or an app that we’ve never heard before suddenly rises to the top trending topic in the Apple/Android market or that every one of our friends are using it. lianmeng and Zuji—two photo-related cellphone applications created by young Chinese entrepreneurs—both made it to one the top downloaded applications in Apple/Android markets and attracted huge volume of venture capitals. But both quickly went quiet in around just two weeks. Wang Xiaochuan, CEO of Sogou, a subsidiary of one of China’s largest Internet companies, poignantly concluded that Chinese startups and owners are too obsessed with getting rich overnight, getting their company IPO without actually thinking why they start the company at the first place and how they want to sustain their business.
It all boils down to a cliche but truth: there is no short cut to success. For example, if a company wants to employ the O20 model to its business and resort to social media such as WeChat or Weibo to reach out to its market, it would and should entail thorough market research, consistent and strategic offline action plans and clear understanding of campaign goals. Where do you place your company? Where to launch your offline campaigns? If you are using WeChat/Weibo platforms, is your goal about raising people’s awareness of your product, growing followers, or building a sustainable business? These are all essential questions to bear in mind when entering the fast-Chinese market.
One of the potential location to look at is a rising O2O hub is the “Street of QR Code-Scanning” in Wangjing district, Beijing. While it only came into being in the beginning of 2015, the monthly transaction via WeChat, Alipay and other mobile payment services in this district is said to exceed the annual volume in Zhongguancun. But again, it requires comprehensive market research before deciding the direction of your company rather than blindly following an “innovation trend”.