CEOs Learnings from China: Doing Business, For Business by Vikram Raichura

Vikram Sir

Do you wonder why China is growing so fast? I shared same kind of inquisitive sentiments prior to my recent visit to the country. Let’s consider some simply fascinating facts. The entire US population stands at 31.6 crore people, whereas the number of online transactions happening in China alone notch a 60 crore mark. What makes these figures even more Interesting is the fact that Internet penetration in US is at 81%, while it takes less than half of China’s population to beat it with only 45.8% Internet users. Needless to say that the Mobile and online  market in China is 3x bigger on its own!

As an ardent lover of technology, I was elated on taking a business trip to China. I was excited for a handful of reasons and must say that I did return getting much more that what I anticipated, indeed. Visiting China was a splendid experience as it’s the only country that manufactures probably everything, right from a needle to a Jet plane.

Being at E-commerce giant – Alibaba’s China Headquarters was clearly an all time high. I was absolutely amazed to know that Alibaba had a 100 year vision for its businesses and are totally metrics driven. Taobao,Tmall and Ali Express, they all exhibit how a clever Chinese visionary has created so many businesses from a single one that took China atop world market. Alibaba is bigger than Amazonand Facebook in terms of market price. Out of the total online transactions taking place in China and a whopping 80% of it happens over Alibaba.

Alibaba was all about sheer scale and power and it was noticeably evident. Their miles long warehouses, plush offices spanning thousands of acres, bird nest architecture (Signifying power of Network and Connect) and so on. Stepping at their China HQ it’s hard to miss a big nude statue of a strong man standing tall in the open ground, a symbol of their Power & Strength. Yet their philosophy remains simple at the core,‘One thing leads to a lot more things, do one thing well and you’ll have a lot of things.’

They are now evolving to increase their reach by incorporating the B2C front, wherein they expedite online payments through ‘Alipay’. They are growing organically as well as inorganically and it is their growth which they look to conquer the global trade.

My next visit was to Google Shanghai, where I had the pleasure and opportunity of meeting theirDeveloper Relations Head who explained Google’s Android Ecosystem in China. Over there every smartphone manufacturer has their own app store and in all there are 4000 app stores. Every smartphone brand sells their mobile phones at a very low price point and make revenue through in app advertisements.

Though this system creates a challenge for every App developer, making it tedious to manage and predict app customization to match with every app store optimization. The overall app store ecosystem is fragmented, which also creates a lot of opportunities to generate a business ecosystem within itself.

Later we paid a visit to Ctrip (Equivalent to India’s ‘Make My Trip’) where the majority focus is optimizing customer service. Their voyage talks about  ‘patience’ and ‘1 to 1 Marketing’. Back then when they started in 1999, their sales team donned Ctrip T-shirts and flashed banners at airports and train stations to optimize outreach to their target consumer – customers traveling by plane and train. Taking the time to interact and explain to consumers how they can log on to the website, reserve tickets and additional benefits.

Through their targeted approach, they today have established a 15,000 people call-center to attend to customers, with sales tipping at 9 billion dollar per year. One interesting observation was that in China Call Centers are not treated as a lower end job, instead it is considered to be the backbone of this company. They consider them as the driving force to their success. Also many businesses talk of a big leap, however Ctrip showed that the scale comes with lot of small consistent steps, as one big step is seldom possible for a start-up  – a very different perspective of believing that it’s always one customerat a time. They believe in absolute Humility, stating Nobody is small and Nobody is less.

Businesses in China live in abundance, their market is so huge that they never worry about ‘What will happen to their business if a customer leaves?’. They are absolutely clear that whatever they do if it is of a good quality, they will have customers, No matter what. They don’t worry if 1, 2 or even 100 customers leave, they put it simply as  ‘if they went away, then they were not our customers’.

The next stop was Yihaodian, an online Grocery shopping site that was started by 2-3 people, which in its initial years faced a slow start up. But now they are so successful that Walmart has bought 51% of their company. This visit was followed by JD.com who are the 3rd largest e-Commerce company and have over 62,000 employees who aptly deliver to their tagline ‘make joy happen’. They have 97 warehouses in 39 cities, a total of 1.8 million square meters and 1,800 delivery stations with 915 pickup stations. The core of both of these Businesses is IT and Logistics.

Their work pattern showed that if any business one does to replace the offline world (physical structure and assets), they will still be offline. As it is only the customer presence that has moved online and one cannot eliminate brick and Mortar at all. The online interface gives businesses’s the distribution and reach to the consumers while the offline segment delivers to customer experience.The better combination one can have of online-offline, the better a business can thrive.

China has the Largest Internet user base in the world with 632 million active users, 332 million E-commerce buyers and 368 billion (36 crore people) online gamers. They don’t have scarcity of anything, not in assets nor in thoughts. They have an abundance of capital, people, customers andproducts.

In stark contrast to Indian markets, China doesn’t have a wholesaler, retailer or a distributor supply chain. They sell only online and this online store is open only on Tuesday at 12 noon. The system is highly organised: to gain access into the store, one has to register a week in advance and enroll for the next shopping cycle. They brilliantly use the concept of scarcity and glamour to sell their products.

In China, FREE is what works. Over 75% of the game apps monetise their apps through advertising. It’s a huge market. They even provide incentives to increase app downloads.

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“Thinking Aloud” reflects the emerging trends and varied outlook of the rapidly evolving internet and communication sector. An IAMAI publication, this is a part of the market education initiative of the association.


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