“China Redefines The Dictionary Meaning Of Scale”

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China redefines the dictionary meaning of scale. From history to the present moment Chinese love building everything from the perspective of scale. Be it the Great Wall built thousands of year ago which stretches upto 10,000 Kms to modern day ecommerce scale is embraced with gusto here. What was astounding was the sheer number of domestic consumers who make all this possible. In fact most companies in the e-commerce and mobile space are primarily targeted at the domestic market which is growing rapidly.

Over 500 million internet users and growing at 25 percent! Unlike India, most entrepreneurs and their companies have solid government support where outside competition is actively thwarted and the Chinese companies are allowed to corner the customers first. This is a huge advantage.

English as a language is rarely used in China. All business happens in – you guessed it Mandarin. So not having the British with the English language is not at all a deterrent. In fact one language and a by large homogenous race has helped them advance as a nation far more effectively.

China is a fully developed country at least the cities we visited which were Shanghai, Hangzhou, Beijing in that order. The infrastructure in China is a well documented fact but nevertheless it leaves one with a sense of wonder with what the Chinese have achieved be it the flyovers, ring roads, elevated expressways  bullet trains and lovely walkways in city centres, is to be seen to be believed. All in last 2 decades. In fact, Nanjing in Shanghai which we visited one evening looked like Manhattan. If I was left blindfolded on this street and somebody slowly opened my blindfold I would have sworn I was in Times Square albeit with Mandarin billboards and signage.

We visited some of the largest ecommerce and gaming companies and were very impressed with their vision, clarity of thought and pure business like attitude. These were young and not so young entrepreneurs who had studied abroad and had a lot of the American mannerisms and business acumen which they were using liberally in their own country.

The ecommerce potential was truly mind boggling. A company called 3 squirrels particularly impressed me. It dealt with packaged nuts, available only on the Internet through Taobao it had garnered a turnover of over Rs 120 crores approx in a span of 3 years and was growing rapidly. The company which excited everybody was definitely Xiaomi. Negative working capital, positive cash flows, product available only on the net mainly through flash sales, great aspirational  brand , growing at a rapid pace ,stuff that dreams are made of.

Xiaomi with global aspirations has got the pulse of today’s consumer. Right priced product with cutting edge technology, permanent scarcity, strategy to discontinue model while still in demand, outsource manufacturing completely, no overheads on factory etc. This is how legends are born.

What I was left wondering with was, what if these companies did not have the protectionist policies of the government and had to face competition from day one would they have become Nasdaq listed companies?

Would they have built the scale they had if they did not have the assurance that per capita income of the Chinese consumer was a healthy 2994 $ approx as of 2103.
If the government was not supportive of infrastructure, bandwidth would the Chinese consumer market grown the way it has? What if the Indian entrepreneur got opportunities like this would we leave the Chinese far behind?

The companies we visited really threw open their doors to us and were as candid as they could be in sharing many aspects of their business. Indian entrepreneurs can learn a lot from the Chinese companies.

The Chinese like Indians are betting big on mobile and the maximum innovation and investments are in this space. Digital businesses definitely need to make a trip to China to see what the mobile companies are doing and what can be the future for India. Therein lies the lesson…a visit to China opens your eyes to see the future potential of India.
I must truly appreciate IAMAI for making this trip happen. The group we travelled with also made a difference with members from diverse backgrounds all successful in their own right which made for lively intelligent interaction and much learning for everybody.
Let’s do it again.

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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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