Foreign startups chase « Chinese dream »

In 2015 at Shanghai, Thornhill, Erickson and McNew, three U.S expats founded baopals.com, a website that helps English speakers to use Alibaba’s e-commerce platform Taobao and Tmall.

They realized that shopping on Taobao (china’s leading e-commerce platform) is quite difficult for most foreigners in China while Taobao is a one of China’s marvels. It is a daily convenience for Chinese natives which allows to purchase a large range of stuffs (almost all needs can be satisfied).

Erickson, former English teacher in China shared “when I needed or wanted to buy something on Taobao, I always told my students or colleagues to help me purchase”.

The trio soon realized the potential market demand and started their e-commerce business. They divided their work into 3 ways: Thornhill took the responsibilities of product, Erickson was in charge of the business development and McNew the tech development.

Baopals.com was officially launched on march 1st, 2016 and after being featured on the expat magazine, the company began to grow at a steady pace. After 18 months, baopals.com has sold more than 640,000 products and the team has grown until 30 employees, moving from a 80 square meter apartment to a bigger office.

Thornhill said he believes “if you work, you can achieve your goals” and described this experience as their “Chinese Dream”.

Why are startups coming in China ?

As Erickson said, “once you come here, it’s hard to leave”. China is offering a lot of advantages and opportunities for foreign brands but also bring a unique experience for young (or less young) entrepreneurs.

Chinese will become wealthier and increase in number

The development of the society will lead Chinese consumers to seek for a better way of life. As results, more and more high-end products such as premium chocolate, original coffee shop, luxury fashion are gaining ground in China.

The increase of the average income level and the middle class in China support this the demand and the consumption in the country, bringing an unstoppable growth in the country.

Chinese people love abroad product

Nowadays, Chinese customers are more and more attracted by foreign products. Indeed, after many scandals in China, Consumers worry about products’ quality made in China.

Particularly for young people, they are very connected to each other and like to discover and share new things. Thus, foreign companies and brands have to emphasize on the entertainment in order to attract Chinese target.

Low labor costs and helpful taxation policies

Even China is no longer the workshop of the world, labor costs remain lower here. Also, the country is supporting foreign companies to settle in Chinese market, especially in second and third tier cities, which need to be developed.

In recent years, China has been pursuing a mixed-ownership reform of SOEs (state-owned enterprises) and Xiao Yaqing, Head of SASAC said “we welcome foreign compagnies, including US-funded ones, to participate in China’s mixed-ownership reform. […] We also hope US enterprises have a complete and objective knowledge of China, and open more to China”.

Startups should be warned about this

The internet environment will make you stronger

Overseas entrepreneurs must work hard to adapt to the internet environment in China. A lot of foreign websites and services and blocked inside the country which can often make young startups crazy at the beginning. For example, you can’t get the access to Google services, Facebook or twitter instead of having a VPN. Even with the VPN, to access some contents can take a long loading time. If “Google is your friend” for a while, you better prepare yourself to see an “older Google”, running in a slower speed.  Otherwise, you can also make friends with Baidu.

Baidu is the biggest search engine in China. According to the authoritative data of third parties, Baidu PC and mobile total market share is 73,5%. It has over 800 million active users in and 97,5% of China’s citizens have searched via Baidu. Take a look on our Baidu Search Engine Optimization services (indeed, we became friends with Baidu).

China is a Mobile-based society

The point here is not to talk about the mobile addiction of Chinese people. In fact, they are almost guided to do all the things on their phone. The mobile payment merely is everywhere. If you are planning to come to china, you will have to download a lot of mobile applications just for your daily life, including Wechat, Alipay, Taobao, …

I have now two information for you, a good one and … another good one. First, even if go to the Chinese market isn’t easy as a deep cultural gap remains, there is still a lot of opportunities for foreign startups. Thanks to the digitalization of the society, which provides a lot of tools to market in China, new brands can nowadays start their business in a way easier and free than before. How to benefit from the Chinese market ? Here is the second good news.

Our Agency is specialized on the digital marketing in China. Our services include e-commerce solutions in China, advertising and SEO strategies. We can help you implement your activity in China, through platforms such as Tmall, JD.com for e-commerce, Little Red Book and Wechat for your branding.

Want to develop a business in China ? Contact us for more information.

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