Smart Guide for crowdfunding in China. Crowdfunding, funding a project through online donations, has become a popular way to invest in the West; but in China, it’s a relatively nascent industry with enormous potential for future growth. By the end of April 2016, there were a total of 332 crowdfunding platforms in China compared to 344 in the U.S. by the end of 2013. According to estimates by The World Bank’s 2013 Crowdfunding’s Potential for the Developing World report, China is estimated to generate $50 billion, or 52 percent of the global total, in crowdfunding by 2025.
Crowdfunding brings a ton of benefits to the entrepreneurs who use it, whether you’re looking to raise funds for your latest venture or gather helpful feedback from potential customers and backers.
Difference Between the Crowdfunding in China and the Western
Unlike its US counterparts, the Chinese crowdfunding industry is dominated by major e-retailers, such as JD.com, Alibaba, and Suning, who can take advantage of their huge consumer bases. There is a difference in regulations and investment culture…In China, there are essentially no regulations or oversight agencies that vet crowdfunding ventures. Additionally, Chinese crowdfunding platforms, more so than their counterparts in the West, offer more tangible rewards for their contributors. Frequently, a campaign will offer physical goods like coupons, souvenirs, books, and/or DVDs in return for the contributions, much more like a sale than a donation.
The Major Chinese Crowdfunding Platforms
Taobao crowdfunding app, YuleBao (roughly translating to “entertainment treasure”) is powered by China’s e-commerce giant Alibaba Group .launched in March 2014 Yulebao is involved in industries, such as film and television. In the first three quarters of 2016, it successfully raised RMB 1,009 billion in total, with more than 3000 successful projects. The funds allow “would-be financiers” to spend between 100 yuan ($16.13) and 1,000 yuan ($161.3) to invest in popular films. However each individual investor is allowed to buy a maximum of two plans from the available list of projects, and investors were offered an interest rate of 7 percent. Ordinary Chinese are generally not allowed to invest overseas, which could explain the popular appeal of Yulebao.
E-commerce firm JD.com in the crowdfunding field has launched its very own crowdfunding platform, called ‘Coufenzi’ (which means whip-round). The new platform is managed by JD Finance, which offers internet finance services for its customers. They accept crowdfunding applications from 6 product categories: novelty appliances, health equipment, ascetics of life, gourmet, art&culture, poverty-aiding projects. Unlike western platforms, JD is opened exclusively to Chinese firms and is promoted only among Chinese consumers. As the result, the foreign business has to find a partner who has local license to operate the event.
How to integrate these platforms?
- As mentioned previously, if you are a foreigner you will need a local partner with a suitable license.
- Definitive prototype. actually, the original model in which tests and improvements have already been carried out.
- Demand in the Chinese market. That is what you are proposing must be requested. Normally the highly demanded products in China are those that can significantly increase life quality and pleasure: like ascetic home appliances, local agriculture products, uniquely designed garments
- A budget for advertising. Nowadays advertisements are an inherent part of the daily lives of Chinese consumers.
Few Pieces of Advice
- WeChat marketing is key for your social media marketing in China. It’s the biggest social media platform and there are different options to advertise, one of them is WeChat moments which works similarly to Facebook timeline ads.
- Weibo: If you’re serious about advertising in China, you definitely need to feature on it. There are several different ways you can advertise on Weibo, with straightforward options such as banner ads and Weibo search engine promotion.
KOL, better known as Key Opinion Leaders, are what consumers are gravitating towards in hopes to filter the clutter that digital advertising has created.
They are seen as having more importance and relevance than mass media because they are able to connect and relate to their audience in a way that’s intimate and authentic.
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