Best Practices For New Tech Ventures in China

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A guide to adapting your new tech venture successfully for the Chinese Market.

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Best Practices For New Tech Ventures in China

  1. 1. + Best Practices for New Tech Ventures in China 1
  2. 2. +• July 2011 population: 1.343 billion • Major cities include: • Shanghai (16.575 million) • Beijing (12.214 million) • Chongqing (9.401 million)• Land covers 9,596,967sq km • Fourth largest country in the world Source: The World Fact Book 2
  3. 3. +Age0-14: 17.6%15-64: 73.6%65+: 8.9% Source: Moi 3
  4. 4. + China Overview: Economy• China has the third largest GDP at $11.29 trillion• Labor sectors: • 28.7% is based on industry • 43.6% is based on services • 34.6% is based on agriculture• Labor force of 795.5 million• 13.4% live in poverty • 128 million Chinese earn under RMB 2,300 (USD $363) Source: The World Fact Book 4
  5. 5. + China Overview: Education • 92% Literacy rate •Male-96% Female-88.5% • 9 years of compulsory school • 20million students study in 2,263 higher learning institutions •Enrollment rate 23.3% of those who applied to take the National College Entrance Examination 5
  6. 6. +• Administrative • 23 provinces • 5 autonomous region • 4 municipalities• Communist State• Chief of State • President Hu Jintao • Vice President Xi Jinping Source: The World Fact Book credit: Access China 6
  7. 7. + • Life expectancy at birth : 73 years • Population using improved drinking water sources: 89% • Population using improved sanitation facilities: 55% • Total health expenditure as % of GDP (2009) : 4.2 Sources: WHO Health Profile UNICEF 7
  8. 8. + Source: KPMG 8
  9. 9. + 9  Social responsibility is important in Asian countries, it affects how people feel about and see a company  Companies have to show people that they are not only profit hungry, but that they also contribute to the common social good  The purpose of social responsibility is not to encourage consumers to increase revenue, but to built a good brand and enterprise image  Coca Cola China, Starbucks China, and Sony China are great examples. Each has a social responsibility section in its menu bar 9
  10. 10. + 10 10
  11. 11. + 11 11
  12. 12. + 12 12
  13. 13. + 13  Coca Cola provides a detailed explanation on its website about how it contributes to society  Social responsibility can be divided into three parts ◦ Commitment ◦ Social Activities ◦ Annual Report  The following slides are snapshots from Coke’s website 13
  14. 14. + 14CEO Muhtar Kent talks  about  Coca  Cola’s  social responsibility concept 14
  15. 15. + 15 Coca Cola contributes to Education, Environment Protection, Health Care, AIDS research, and more. 15
  16. 16. + 16 Coca Cola also provides a detailed annual report available for download 16
  17. 17. + 17 Coca Cola’s  Japanese  website Starbucks’  Japanese  website 17
  18. 18. + 18  QR codes are very common and popular in Japan.  They can be used to direct mobile phone users to special websites to download brand ads, ringtones, character logos, viral videos, branded Flash games, and more.  Implementation : QR codes can be used on company websites, blogs, flyers, and business cards. 18
  19. 19. + 19 Poster Drink Cup Snack food packaging Building guide 19
  20. 20. + 20 T-shirt tag Magazine Boarding Passes Billboard 20
  21. 21. 21
  22. 22. + 22  China is a communist state  The government blocks outside sources of information and controls the media. It fears that its people will not blindly accept the media’s stories, and instead base decisions on free information.  China’s government blocks foreign websites such as Facebook, Twitter, Youtube, etc.  Rather than eliminating social media, restrictions on foreign websites and social media have resulted in a flourishing, home-grown, state-approved ecosystem in which Chinese- owned properties thrive. 22
  23. 23. + 23  Rather than short videos of cute animals or silly domestic mishaps that may be popular among YouTube watchers, Youku and Tudou are filled with longer form content, up to 70 percent of which is professionally produced.  Users in China spend up to an hour per day on the sites, compared with less than 15 minutes spent by Americans on YouTube.  In the way they present programs, the Chinese sites seem more like online television stations, or a replacement for digital video recorders.  Much of this content consists of foreign programs pirated, subtitled, and uploaded hours after broadcasting in the United States. 23
  24. 24. + 24 ◦ Launched in 2009, just about three years after Twitter, Sina Weibo is by far the most popular micro-blogging platform in China. ◦ Similar to Twitter, Sina Weibo allows users to post 140- character messages, and users can follow friends and find interesting comments posted by others. ◦ Small, but important, differences in the platform have made some say it is a Twitter clone, but better. For example, unlike Twitter, Sina Weibo allows users to post videos, comment on other people’s updates, and easily add comments when re- posting a friend’s message. 24
  25. 25. + 25 ◦ A more specialized social networking site, attracts art students and those passionate about books, cinema, culture, and music. ◦ Users connect according to their interests and often hold offline activities, such as trips to local art exhibitions. 25
  26. 26. + 26 ◦ a platform designed for a more mature audience of young professionals, has a membership that is heavily dominated by white collar workers in Beijing; Guangzhou, Guangdong; Shanghai; and second-tier cities. ◦ Users do not upload personal content, but rather share information they find elsewhere, often relating to health, relationships, and professional advancement. 26
  27. 27. + 27 ◦ the platform in China most similar to Facebook, attracts university students who use it to connect and interact with classmates. ◦ The site is organized around users’ school and graduation class. Many users upload videos and photos of their activities. 27
  28. 28. + 28 28
  29. 29. + 29 ◦ Unlike Facebook, Mixi users do not use a real picture of themselves for their profile ◦ Mixi users also tend to not disclose their real name and often keep their profile/diaries/pictures private to the first degree of friendship  Reasons why Japanese don’t use Facebook ◦ Facebook launched Japanese version in 2008, but Mixi was already popular in that time ◦ Japanese don’t like to use real name on social media, but Facebook has to register by real name 29
  30. 30. + 30 30
  31. 31. + 31  Chinese websites must pay attention to font size, because Chinese characters are more complicated than English letters. If the font size is too small, it will be very hard to read.  The last slide is good for comparison. The 9px- 11px characters are hardly legible. Therefore, the appropriate size for Chinese characters is12px- 17px. These are the most comfortable sizes for readers. 31
  32. 32. + 32  Chinese characters are not intended to be italicized  Using italic style function for characters will make them appear saw-toothed 32
  33. 33. + 33  Chinesecharacters have a smaller spacing than English words  Large amounts of texts tend to look cluttered on Chinese websites  The next slide shows an example 33
  34. 34. + 34 Huge amounts of information on the website cause clutter and strain the reader’s  eyesight   34
  35. 35. + 35 •Use lighter color •Don’t  use shadow •Less words 35
  36. 36. + 36 36
  37. 37. + 37  By using different pictures in flash, companies can create unique brand images and personalities  P&G, Dell, and IBM are good examples 37
  38. 38. + 38 With appropriate pictures and a simple slogan, P&G clearly delivers its positioning message to consumers 38
  39. 39. + 39 39
  40. 40. + 40 40
  41. 41. + 41 41
  42. 42. + 42  Don’t just translate word for word. Adapt a message to meet different needs in different countries  P&G is a good example 42
  43. 43. + 43  Global companies usually have a Chinese name to help local people remember it easily  It’s good to have a Chinese name, because English brand names because it is difficult for non-English speakers to pronounce  Some examples: ◦ P&G 宝 ◦ Coca Cola可口可 ◦ Sony 索尼 ◦ Appconomy 艾帕卡納米 43
  44. 44. + 44 44
  45. 45. + 45 45
  46. 46. + 46 Chinese calligraphy has been deeply rooted in the culture for thousands of years. Using it can help build a stronger connection to China. 46
  47. 47. + 47 You can create your own mascot for your product, in order to help build your brand. 47
  48. 48. + 48  Avoid using colors, styles, and layouts similar to competitors  Create a clear and unique brand image for customers If  two  logos  look  too  similar,  it’s  confusing  to  consumers. 48
  49. 49. + DOING BUSINESS IN CHINA – COMMON MISTAKES ‣ Do your homework o A lack of research and adaptation led to Google’s struggle in China. Competitor Baidu offers a search box better suited to Chinese characters as well as free music downloads - a major attraction o Developers say Apple’s App Store is hampered in China because of language and payment restrictions. The interface is in English and users must have credit cards that work for both dollar and Yuan transactions to set up an iTunes account. Only 14% of Chinese even own a credit card. 49
  50. 50. + ‣ Being hazy on the legal structure o Partnerships are often structured as WFOE (wholly foreign-owned enterprises, or “woofies”, representative offices, or Joint Ventures. o The ownership/tax/implications of each vary widely. o “Leaving that stuff to the lawyers” in China can lead to severe implications later on, particularly as most foreign enterprises in China have a strong local ownership component. 50
  51. 51. +  Allowing time differences and distance to affect management and communications o Distance does make some disconnects inevitable, but foreigners spending too little time on the ground could cause the Chinese-based staff to become disgruntled and feel like second-class partners. o Being committed to doing phone calls in the evening US time / morning China time shows that you are willing to be accommodating. 51
  52. 52. +  Lack of clarity surrounding IP / Security ◦ Relates back to the importance of understanding the precise legal structure and constraints you are working with, such that the risks undertaken are well understood by both parties. ◦ Why it matters: There’s a tension here. Agreements that treat these topics vaguely can leave parties dissatisfied later on. At the same time, it is customary for Chinese MOUs to be high-level in nature, so pressing for very specific details on how issues of IP will be handled could be seen as odd by a Chinese partner. 52
  53. 53. +  Rushing to put cross-Pacific coordinating staff in place, instead of vetting them thoroughly  Exit Strategy ◦ Having a contingency/exit plan if something goes awry is important. Again, this is why having excellent Chinese lawyers becomes key. 53
  54. 54.  Chinese Business Etiquette ◦ Chinese Business Etiquette Video 1 ◦ Chinese Business Etiquette Video 2 Lessons Learned ◦ Wall Street Journal ◦ Lessons From Troubled Partnerships 54
  55. 55. Shanghai Headquarters Austin Headquarters Bridge 8, Building 9, Unit 9605 No. 1300 Guadalupe St., Ste. 20125 Jianguo Middle Rd., Luwan District Austin, TX 78701 200000 Shanghai, China For more information please contact: info@appconomy.com 55

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