Do Not Write China off, Says IE Singapore
Though China has been described as a brutal place for global start-ups, IE Singapore believes it could well be a promising location for ambitious Singapore firms.
It believes that what is needed is a more strategic approach and companies should not be deterred by the fact that plenty of companies have failed in China.
China has a huge market and a vibrant tech ecosystem but companies may need some convincing as competition is white-hot and failure rates are high.
Many companies, including major players like Google, Amazon, Uber and Facebook have bowed out, while other global companies have struggled to navigate the different business culture and adapt their solutions to meet the market’s needs.
Lim Ai Leng, IE Singapore’s divisional director for East China, said there is a place for Singapore tech start-ups in China.
“Instead of trying to conquer it, Singapore companies should look to be connected to China’s vibrant ecosystem and to carve out a niche,” she noted.
She noted that four cities, Beijing, Shanghai, Suzhou and Shenzhen were relatively more mature and advanced in their tech ecosystems, with each having its particular strengths and opportunities.
Singapore’s familiarity and connections with South-east Asia, as well as its strengths in the English language and intellectual property, are value propositions, especially since many Chinese enterprises and start-ups are internationalising.
“Beijing has the third-largest ecosystem in the world; Shanghai is a cosmopolitan city, which makes it easy for international investors to navigate.
“Suzhou makes a conducive and familiar environment for Singapore start-ups due to the presence of the NUS (Suzhou) Research Institute (NUSRI), and Shenzhen is strong in hardware innovation,” she said.
Chope, the Singapore-based restaurant-booking platform, ventured into China via Shanghai.
According to it’s chief executive Arrif Ziaudeen, they saw very strong growth in middle-and upper-class spending, particularly in the food and beverage sector, while the demographics of the Shanghai market were aligned with it’s market-entry strategy of establishing a presence with high-quality restaurants.
A Singapore-founded new media tech firm, MXR International also chose Suzhou as its entry point.
It’s managing director Gerald Cai said Suzhou was a natural choice because it is a focal point of the Singapore-China government partnership, and provided strong ecosystem support through various agencies.
Deep Understanding of Local Market Needs
Lim said Singapore firms must build a deep understanding of local market needs and habits, and then identify a strong value proposition that the market requires and which cannot be easily copied.
She said this was especially so for consumer-centric products, as Chinese start-ups will know the local market best.
“Rather than aim to build a “perfect” product, firms should try and test their products quickly to first build the market, and then improve them along the way,” she said.
She added that in China, speed-to-market is critical and product development is quick for two main reasons – consumer’s speed in adopting new services is high and companies in China are quick to adapt their products to suit the market.