“Consumers are at the center of our Universe”
Our first visit took us to Xiaomi Technology’s avant-garde new campus, where we learned about the smartphone giant’s mission to serve the mass market by offering quality products at an affordable price. Xiaomi’s top priority is to harness consumer trust by remaining close to its audience, and by basing its philosophy on four core pillars: Innovation, Design, Quality, and Value for Money.
One of Xiaomi’s biggest accomplishments has been to create the “MiFan” concept, a knit-tight community of fans who truly embrace and appreciate the value for money that Xiaomi delivers. Xiaomi has also developed the MiOT ecosystem, a large network of smart device manufacturers that develop high-tech products that can be accessed through Xiaomi’s MIUI operating system and follow standardized usability and design protocols. MiFans interact within the Mi Community on a daily basis, where they have an opportunity to learn about new products or give Xiaomi feedback on existing ones.
“Building global platforms that foster creativity and enrich people’s lives”
Then we visited ByteDance’s business headquarters, where we learned about the company’s ability to create viral products and use innovative content to reach the mass market in China and around the world.
Bytedance was founded in March of 2013 and launched Toutiao, a news aggregator platform that leverages algorithms to give readers personalized suggestions according to their reading patterns. Today, it is one of the largest news aggregator platforms in the world, present in over 200 million monthly unique devices.
Bytedance’s most viral product was founded in 2016; Douyin, or internationally known as TikTok. TikTok is a short-video creation platform that provides users with a myriad of content customization features and that is giving both consumers and commerces a powerful storytelling tool. Douyin and TikTok have surpassed the 500 million MAU mark that was disclosed last year and recently announced its marketing plans for advertisers in its short-video platforms. Today, the ByteDance content conglomerate is valued at over 75 billion dollars, the highest valuation for a private company worldwide.
“Tech globally, work locally”
We spent some time with VIPKid + LingoBus at their Qing Dynasty temple office. This company is revolutionizing online learning, offering kids from the ages 5-12 access to interactive language courses in English and Chinese, and even using virtual reality technology to assist real teachers online.
VIPKid is one of the youngest unicorns in China, valued at over 3 billion dollars since its inception just over 5 years ago. VIPKid has 600,000 paying students and over 70,000 teachers across the U.S., making it the biggest employer of teachers worldwide.
VIPKid deploys technology with a human touch. Through its artificial intelligence technology, VIPKid measures how frequently a teacher smiles throughout the entire virtual lesson, how often and for how long the pupil speaks and other facial expressions and behavior measurements that are paired to the performance of the student. VIPKid has a competitive recruiting program for its teachers and continuously trains its staff to give kids an exciting and productive experience.
“Our mission is to help people throughout their daily lives; to live better, to eat better”
On our second day, we had the opportunity to visit Meituan-Dianping 美团点评, a one-stop-shop lifestyle platform that allows users to fulfill almost any needs at any time of the day. One of Meituan’s competitive advantages is its ability to operate across the entire value chain with the power of fully automated AI systems and big data.
Meituan-Dianping reached profitability this year, just a year after its IPO, with a market cap of 56 billion dollars and over 3 billion dollars in revenue.
Meituan-Dianping has aggregated platforms across different services, such as movie ticketing, ride-hailing, bike-sharing, food delivery, trip and hotel booking, and airfare ticketing.
“Don’t stop, never give up, keep your head high and reach the top”
We then visited fintech startup Yooli 有利网, a P2P lending firm that offers transparent consumer lending products to borrowers. Yooli has created a powerful matchmaking platform that connects investors with borrowers that fit the right risk profile, a system that was fully developed in-house due to the lack of standardized credit systems in China.
It is important to notice that Yooli is one of the few FinTech firms that survived during China’s regulation crackdown of similar firms. Yooli endured by quickly adjusting to the new regulatory framework that the government developed, including strict reform on fund-pooling for investors and the banning of offline promotion of similar investment vehicles.
For its credit risk profiling, Yooli leverages open-source data from Alipay, the Chinese Central Bank, and consumer behavior data that hints at borrowers’ propensity to make payments in time and their overall purchasing power to identify accurate funding needs. The average consumer loan hovers at 7,300 RMB (about 1,000 dollars) and an installment repayment plan between 12-18 months.
“Social responsibility, credit responsibility”
CreditEase 宜信公司 is redefining fintech by leveraging the latest technology to offer consumer and SME loans, build high-return portfolios for high-net-worth individuals and even give farmers access to credit across China.
CreditEase operates across four main verticals: CreditEase Wealth and Asset Management, Yiren Digital (consumer, SME, Agriculture, and Supply Chain Financing), InsurTech and FinTech Enabling Services (risk management and infrastructure technology).
One of CreditEase’s biggest goals is to tap the RMB17.4 trillion (USD2.5 trillion) consumer credit market, where the outstanding balance has grown at a swift CAGR of 21%. This massive growth has mainly been driven by future consumption estimates of a larger middle class, low consumer credit penetration and total retail sales expanding at a 7-8% rate.
“The behavior of the internet user is changing. Consumers are shifting from a proactive to a passive interaction online, constantly seeking to be fed with new information. We must rethink how we offer products or services based on that change in the dynamic”
We had the pleasure of meeting LinkSure, the creator of Wifi MasterKey, a hotspot-sharing platform with over 900 million monthly active users, one of the most utilized apps in the world.
It was especially interesting to learn about LinkSure’s core strategy to acquire a massive database of users and leverage their internet traffic to learn about what consumers care about and why. For instance, the company has developed a platform for users to generate fiction short stories for anyone on the platform to read. These stories gave LinkSure insights on user behavior, tastes and preferences and allowed it to then generate in-house content that resonates. This strategy has allowed LinkSure to reach a purely organic 95% retention rate on average.
“Unlocking the value of new retail ”
We also discussed e-commerce trends with Ele.me, one of the largest online shopping platforms in the world. Ele.me has created and integrated an O2O ecosystem of lifestyle services in China. Ele.me was acquired by Alibaba in 2018 for 488 million dollars, and offers take-out and delivery food services as its core product, taking 4.5 million deliveries per day on average.
Ele.me’s philosophy is that a consumer that is acquired on one of its business verticals can easily transition to other services and in turn, monetizing a first-time user becomes much easier and less costly, increasing average profit per user as the company grows.
We also learned how Ele.me is leveraging the power of in-house video content, an extensive understanding of its consumers and a well-developed e-commerce platform to uplift its value proposition. For instance, a user can watch a “China food tour” video on Ele.me’s platform and as he or she watches, order the specific product or dish that is being filmed, and have it delivered at their footsteps before the video ends.
“Committed to constructing China’s road logistics infrastructure, providing the freight-truck matching platform for truckers and shippers, as well as integrated services to truck users”
We visited Full Truck Alliance Group (FTA), the largest inter-city logistics matching company in China backed by Softbank. The company is revolutionary in digitizing the traditional offline, human-heavy shipper and cargo trucker matching system, improving trucks’ operating efficiency by reducing empty runs and increasing matching success.
The company already dominated the Chinese market when two of the leading logistics matching platforms merged into FTA, Yunmanman, and Huochebang. Unlike most internet companies in China that were started in either Beijing, Shanghai or Hangzhou, both Yunmanman and Huochebang were created in second-tier provincial capitals in China due to the customers it serves. The truckers that the company serves are usually not technologically savvy, so the company built a powerful ground sales team in charge of installing the apps for the truckers one by one.
We visited Nio House, the flagship customer experience center of Nio, the “Tesla” of China. The company designs and builds electric vehicles and provides top-notch customer experience to its car owners.
Nio is also investing in charging stations in major highways to enable users to travel longer distances with the EV. The cars are powered by world-leading engines that accelerate to 100 km/h in 4 seconds. The cars are also equipped with an in-car AI assistant that can control temperature and air quality inside the vehicles. Our delegation test rode the flagship model ES8.
“To make easy to do business, anywhere”
On our last day, our delegation had the opportunity to visit Alibaba Group, one of the most successful e-commerce companies in the world. Alibaba has 601 million monthly active users and 666 million mobile monthly active users. The e-commerce giant delivers 100 million packages a day and has reached 900 million annual users on AliPay.
We spent some time talking with AliCloud’s strategy department learning about how the company’s mix of Cloud + Big Data + AI capabilities have enabled it to create an ecosystem of retail, marketing, finance, logistics, travel, healthcare and entertainment verticals that share and communicate data with each other.
Today, Alibaba’s public cloud services encompass a 47% share of the Chinese market with over 1 million paying customers.
“Helping new economy players keep their hard-earned profits”
To wrap up the trip, we visited Hangzhou-based PingPong, a company that supports new economy merchants in all aspects related to e-commerce cross-border transactions.
PingPong is a B2B platform with a product matrix of diversified services that leverage its core competencies: an extensive payments network, global compliance network, and geo-agnostic technologies. Some of its value-adding services for merchants include payout and collections, supply chain finance, currency exchange hedging, and local market intelligence.
PingPong already has 800,000+ merchant sellers using its services and is seeking to capitalize on the 1.1 trillion dollars gross merchandise volume that Chinese e-commerce exports see in China per year.
And so it continues…
These meetings, followed by The China-Latin America Tech & Innovation Summit put an end to a week full of insightful conversations with some of the most influential tech players in China. Stay tuned to read about the strategy that some of these Chinese companies undertook to win in China’s fiercely competitive landscape.