A Delivery Guy on Every Street Corner…Literally

Building an internet company in China can be very different than that of the USA. Google began its advertising business in the US by using telephone and online sales to acquire business advertisers. When Baidu Mobile first started its search business in China, the best way to attract advertisers to its online search engine was to send representatives directly to small businesses door-to-door. With the massive amount of inexpensive labor this made sense in China.

This inexpensive labor pool in China has always been a competitive advantage for China and this is no more obvious in the massive logistics and delivery infrastructure that has been leveraged by Alibaba, Tao Bao and other online ecommerce platforms in China. Unlike the US which has Fedex, UPS and other large players, most deliveries in China are handled by small independent delivery people riding an electric scooter and under contract to Alibaba etc. Jack Ma (Founder of Alibaba) recently revealed that 2M delivery people already exist in China but that number will rise to 10M in the next 10 years. Already there are 30M packages being delivered today in China rising to 300M in next 10 years.

But it is not only online marketplace companies that are getting into the delivery business, Baidu (China’s internet search giant) is now doing food delivery in dense urban areas.  Smaller O2O (offline to online businesses) are also innovating around delivery. A company that I recently visited in Shanghai called Z+ is taking it to a whole new level by leveraging neighborhood based entrepreneurs to do staple food delivery right from their own apartment.

The delivery world in the US is certainly being innovated through such players as Munchery, Postmates and even Uber but perhaps some of the real learnings can come from managing a large, diverse and independent delivery system such as what has already been done in China for the last 10 years. They certainly got it figured it out when I can order something and have it delivered in 10 minutes!

If you like this post, then please check out our other thoughts at www.impact10x.com/blog or email us at info@impact10x.com.

Wechat Marketing: How to get a Wife in 30 days

I’ve been back and forth between China and the USA for a good many years and in that time many things have changed on how I have been able to communicate between the 2 countries. It used to be the good old wired landline (and lots of long distance charges!), then to Microsoft MSN Messenger (is that around any more?), then to Skype and now the last couple of years it is using Wechat.  Wechat is an mobile phone based instant messaging App like none other. One of the leading Apps in China at 750 million users it has a plethora of features from online banking, video calling, instant messaging etc etc.  But just like any other powerful tool, it also has some interesting unintended uses that are just being discovered and explored. In fact, a friend leveraged a Wechat feature to meet new people and in a short 30 days was married!

So what are the secrets of Wechat marketing? Lets take a look at how to use some of the features that  are being used today to reach customers:

  1. People NearBy: this is a location awareness feature that allows you to browse people that are nearby you.  If you are in the mood to chat or send some interesting information then this is the way you can do it. In the US, there are many established dating apps like eHarmony, PlentyOfFish, match.com and new entrants like Tinder, League Dating app etc.  Putting together Wechcat with more robust “dating funnel” features from these other Apps would certainly be an interesting “habit forming” feature.
  2. QR Code scanning: walking down a road in Shanghai I noticed a table where there were a bunch of excited people looking at their phone playing with an App and eating oranges. It turns out distribution of Apps in China is not typically done online (like the App stores or through online ads) but actually is physically done by setting up a table and giving away food to people in exchange for downloading the App.  The QR scanner feature on Wechat allows App developers to easily get peoples’ account information quickly and also allows the user to be exposed instantly to the App in exchange for some goodies. Win-win!
  3. Company Groups: online business communication and group communication is now primarily done through Wechat. These group chats allow people to seamlessly communicate on any issue instantly.  It also allows companies to setup their own private group, which people to subscribe to and get updates from the business.  I’ve personally seen dozens of such groups setup on people’s accounts.

With all the marketing noise in China it is a never ending battle to capture the attention of the Chinese consumer.  Wechat is certainly a key marketing platform to any business trying to grab a piece of that attention.

If you like this post, then please check out our other thoughts atwww.impact10x.com/blog or email us atinfo@impact10x.com.

Why Internet Tech Companies Should Be Building Cars

The fastest I have ever driven a car is 180 km/hr on the German Autobahn.  The slowest I have ever driven a car was in Shanghai in 2016 when it took me about 2 hours to travel 700 meters when a major overhead car lane was damaged. That’s the equivalent speed of a crawling baby! So although it seems the “killer app” of autonomous cars is that I can drink my latte while scrolling through some cat videos on Youku (Youtube equivalent in China), that’s not what I am waiting for. One of the real disruptions of self driving cars is their ability to remove traffic delays from my life (and having a latte while watching Youku is a nice bonus).

Sohu.com is a leading internet brand in China, providing online games and news to over 400 million people,.  In a recent conversation I had with Charles Zhang, the thoughtful and humble CEO/Founder of Sohu.com, he commented that internet companies will be eventually building cars.  Internet companies building cars? Although this does not seem obvious, the idea of Charles Zhang is to take the efficiency and power of information provided by the internet to understand what the Chinese consumer really wants in an automobile. This allows Sohu.com to build cars that are tailored specifically to the Chinese consumer.  Baidu’s CEO Robin Li says that “China has a lot more population and hence has more chance to uncover needs before US companies do”.  By aggregating search queries (in Baidu’s case) and looking at sales of used cars through online classifieds (in Sohu’s case), these companies are getting an unprecedented view into automobile consumer needs and wants.

Most traditional auto companies are also now pivoting their strategy and are now envisioning a future where selling a car is not about the car at all…its about how to give the consumer a better experience while traveling IN the car. Nissan’s CEO Carlos Ghosn commented recently in January 2014 that “we are moving from the car being a slave to becoming a partner”.  Toyota designers are pondering the question of how to make the time in the car the most valuable part of your day.  General Motor’s recently created a position of “Senior VP Customer Experience” with their philosophy being the product is not the car anymore, the car is the container of the experience.  Ford is focusing on Infotainment for the car and their tagline is to deliver cars that are “safe, green and smart”.  The pattern is clear and the auto industry is heading towards a future of the “conscious car”.

So will internet tech companies transform the automobile industry? Well if Google and Baidu is any indication the shift has already started. Google heavily invests in mapping technology through Google Maps, it’s a leader in autonomous vehicle technologies, has a mobile phone OS through Android and recently purchased a company called Waze (which does crowdsourced traffic updates). All this technology allows us to be more efficient with the modern day automobile. No longer do you need to buy a car… maybe you can use it less, share it or get one only when needed because you are a lot more efficient through the use of these technologies.   This is the “dematerializing” effect that technology will have on the auto industry…a lot less cars and we are a lot more efficient with them.  So maybe Sohu or Baidu will not build the cars, but they will certainly make the use of them a lot more efficient and customized.

If you like this post, then please check out our other thoughts atwww.impact10x.com/blog or email us at info@impact10x.com.

China App Hacks That Are as Addictive as Good Dumplings

In March 2016, the largest gathering of Buddhist Monks since the Qing Dynasty reigned over 2000 years ago took place in a small mountain town of WuTaiSha, China. With my family having roots in Sri Lankan Buddhism and my wife who was a newly minted “Master Administrator” of one of the many Buddhist temple groups in China, we took the long voyage to participate in this gathering. It was a live 3-day spectacular gathering of people and monks showing their devotion to the Buddhist way of life. As intensive and social as this event was, there also is a very heavy use by Chinese Buddhist Temples to spread their teachings through the online environment. Wechat groups which aggregate hundreds of followers and managed by volunteers help to keep the community vibrant and alive. What is surprising though is that it just maybe the subtle features of Wechat that keep the community alive rather than the actual teachings of Buddhism.

One such innovative feature on Wechat is called “Red Packets” which allows a member of a group to send any amount of money at any time to other members of the group. The brilliant (and habit forming) part of this feature is that people don’t know how much is actually being sent. A typical example is:  Bill sends a red packet of $10 to the group. The people on the group gets notified via the App that someone has sent a packet of money which is an unknown amount. People then have the option to accept and whoever accepts splits the money.   At one point, my wife had asked her Buddhist group to send in some information on how many times they had done something. No response from the group. She then decided to send $1 as a “red packet” to see if people were actually online. Virtually everyone responded and accepted the packet! The power of small monetary awards in China can go a long way!

Another China App that brilliantly tapped into their members motivation was Didi Dache, which is the largest taxi based App service in China. Because of the large demand for Taxi services during peak hours it can be very difficult to get a Taxi in any reasonable amount of time.  In this case, the taxi drivers had all the control and would be able to accept or deny rides at their discretion. Some clever passengers decided to use the “voice chat” feature to not only tell the taxi driver where they were located but to make the messages funny and enticing for the driver to choose them over others. The drivers actually benefitted the most, giving them some humour and power of their otherwise dreary driving day on the congested streets of China. By adding a little bit of mystery to every ride request, the Didi Dache App added some fun to their driving day.

Basketball is gaining a lot of traction in China as a sport. Michael Jordan to this day is still an icon in Chinese culture even after retiring 13 years go.  This is no more evident in the shoes that bear his name and that Nike sells as an exclusive product every couple of months.  These exclusive deals are typically sold out online in seconds.  People would literally by waiting online at the precise moment of the opening of the web page to get on the list. Because of the overwhelming demand, even if you get on the list there is still a random selection process that happens afterward.  The list is constantly being updated which causes consumers to continually monitor the Nike App to get the latest information.   By adding randomness, exclusivity and time pressure the Nike App cleverly retains the attention of those shoe addicts for the duration of the deal!

Thanks to the work of Nir Eyal (author of Hooked) and research at Harvard, habit forming tactics are now an integral part of the design of the best Apps in the world. China Apps have certainly embraced their own unique twist on it.

If you like this post, then please check out our other thoughts at www.impact10x.com/blog or email us at info@impact10x.com.

Why Zappos Would Fail in China

There are many ways to deal with the punishing air pollution that sometimes falls upon the big cities of China. When outside you can wear a mask and when inside an air cleaner can be used to scrub the pollutants.  When we first shopped for our first air cleaner in Shanghai it was still common practice to choose foreign brands over those that were locally designed and manufactured. A quick comparison of Japanese models and we settled on a Sharp model. A long 2 hours later we were back at home, deboxed the unit and proceeded to get on with the cleaning of our apartment air. Unfortunately that was just to be the start of our woes as a rattling noise emanated from the unit.  My first reaction was “great…another 2 hour commute to return the thing and get another one”. Fortunately this is where my assumptions went wrong. With a quick dial on the mobile phone, my wife called the manufacturer and proceeded to discuss a way to remedy the situation. And this is where I discovered that service and support takes on a very distinct meaning in China compared to the USA.  Within the next day a service person showed up to do the first level fixing and within the next week another 2nd level team had arrived to remove the unit, give us a temporary replacement and take it to their repair shop. Within a day of that the unit was returned and all was well.

This pattern of servicing defective products rather than replacing them was a pattern that I experienced repeated over and over during the next years in China.  Whereas in the USA returns are a commonplace occurrence, this is rarely the case in China. Many factors have led to this unique practice including low labor cost (it is cheaper to pay someone in China to repair something rather than return it).  Structurally there is also financial reporting friction for most manufacturers in tracking returns because of the paper based accounting methods still demanded by Chinese government tax  requirements. Finally because of the frequent fraudulent schemes that are pursued by some consumers, manufacturers are reluctant to give money back after a product is purchased.  What that means for most hard-good companies coming into China is that having a robust service team or partner that can deploy people for repair and servicing is going to be expected by the Chinese consumer. Whereas Zappos would just say “go ahead and return the product no questions asked” with any product problems in the USA, the model would definitely need to be a lot more hands-on and personal in China.

If you like this post, then please check out our other thoughts at www.impact10x.com/blog or email us at info@impact10x.com.

5 Secrets Of People Management that Confucius Never Talked About

Ever taken a personality test? I have. Many, in fact. The most popular one when I was in school in the 1990s was called the Meyers-Briggs personality test. It is a series of questions which you self answer and then at the end a score is tallied which puts you in a series of personality buckets – introvert/extrovert, Sensing/Intuition etc. As I went through the test at school I realized that I wanted my answers to nudge towards the coolest personality type…extrovert and intuition. My hopes were dashed when it turned out I was in the opposite bucket of what I had hoped for. Although it served the purpose of defining some interesting attributes of personality types it never really became a practical way for me to understand or manage people’s strengths and weaknesses. When you meet a person for the first time, it is hard to ask them to take a personality test so I could get to know them better!

But this problem was actually solved thousands of years ago in China through an ancient practice called Face Reading. Written references to this practice go back 600 BC but the earliest roots can be traced back to 2600 BC. I was first introduced to this practice in 2013 when I stumbled upon a seminar in Shanghai being taught in the subject.  Even now in China this practice is not widely adopted or followed but my experience over the last years has put me in the camp of a firm believer that this is a great way to get a quick idea of how to manage people or understand the best way to communicate with them.

A blog post can do no justice to this topic but the core foundation of the practice is that the shape and features of the face determine personality types. Whaaat??…you might say.  The shape of the face is genetic and determined by genes its got nothing to do with personality! That was my first reaction, but as in anything living…the environment can have a huge influence on the physical form of something.  Communication between people has very little to do with the words or the actual voice but 70% of communication is through body language. Our brain has a massive 30% of it dedicated to visual processing and a large percentage dedicated to decoding facial features and expressions.  So why do we biologically have such an inclination to decode the face to such detail?  The face tells a lot about the emotional and thinking state of a person. The face is in fact a reflection of our internal state.

So when we have consistent emotions with certain personality types these characteristics will inevitably show up as consistent signs on the face. That is the foundation of Chinese Face Reading. One of the fastest ways to get a general idea of the personality of someone is to look at the shape of the face.  In Chinese Face Reading these are broken down into 5 major types:

  1. Metal: Sharp high cheekbones. Personality is professional and seeks perfection. The archetype is the Defender – who value justice, perfection and wholeness but are often the last to accept change.
  2. Earth: Round, squarish face. Nurturing type personality caring about other people. The archetype is the Muse – who want to see others reach their full potential but can often drift into passivity.
  3. Water: low round cheeks. Stubborn and likes options. The archetype would be the Pioneer—curious, innovative, brave and optimistic but does not stick around for long term value building.
  4. Wood: rectangular face and bushy eyebrows. Likes to take command. The archetype is the Captain —  who is confident and tireless to support a goal but can fall victim to issuing orders rather than inspiring.
  5. Fire: Oval egg shaped face. Passionate and likes to do many things. The archetype is the Magician – who is playful and delighting people around them but sometimes the mystery may look like fraud.

The above is a fairly generic description and there are many subtleties in Chinese Face Reading that give various types of insights. Now whether you believe in it or not, these are great tools to understand there are certain personality types and not everyone is the same nor is one better than another. Each has a unique strength and unique weaknesses that can be accepted for what they are. The power of this practice is that you just need to see someone’s face to get a gauge of their personality…no extensive conversation or tests needed. Confucius was born in 550BC just around the time that Face Reading was being written into texts and although he was not known for his teachings for Face Reading this one was a golden secret that he was wise not to teach so widely.

If you like this post, then please check out our other thoughts at www.impact10x.com/blog or email us at info@impact10x.com.

Google Copies the Chinese Government’s Management Style

In 2008, I had the pleasure of experiencing massive stomach pain one night in Shanghai. Not knowing how the Chinese medical system worked, I was taken to a local hospital in downtown Shanghai. To be honest I did not know what to expect…all that I knew was it was probably going to very different terms of the service and quality that I would receive compared to American hospitals. My low expectations were instantly dashed when I was ushered into an almost completely empty lobby. I was quickly attended to do by a doctor and with some rapid exchange of Chinese I was put on an IV drip and told that I had the stomach flu. It turns out this hospital was especially for foreigners but the level of service and apparent quality was impressive. Fast forward a couple of years and another visit to a hospital showed another side of the very unique nature of the Chinese healthcare system. This time the experience was less than comfortable with 100’s of people crammed into the lobby and different rooms. But this was more than offset by the mere 50 RMB ($8 USD) I had to pay to see the doctor and the efficiency of getting my tests and diagnosis in under 30 minutes.

Although far from being perfect the Chinese Healthcare system has advanced by leaps and bounds in the last 10 years. In 2004 only 23% of the population had any form of reimbursable health care. In 2015 over 95% of the population is now covered. This rapid modernization is just one of many examples of the unique characteristics of the Chinese government which for the last 2000 years has taken many forms from empires to communism to socialism but with one common thread….top down control and management. The central government is obsessed with 5-year, 10-year and longer plans. These plans are meticulously laid out, furiously debated and skillfully executed. The healthcare system was just one of many on the list in the year 2000 and when these objectives are put in place, all forms of government from the top government officials down to the township mayors are measured and rewarded by their support of these objectives.

One of the classic objectives of the Chinese government over the last 30 years has been the industrialization and modernization of the country. Before 2010, you can see the result in the simple metric of industrial output where cities and district government officials are awarded and careers advanced based on GDP growth. In fact, in the city of Jiading they would award companies with different levels of prizes and prestige based on their contribution to the tax base and employment. Anybody that supported these objectives were looked on favorably.  Today though, industrial output is now longer a key driver from the central government. Priorities such as health care and the environment are now being driven from the top and being executed by local government.

Although it may seem odd that the government still has so much control and influence over the economy their management style is actually no different than Google. Google’s OKRs (Objectives and Key Results) and many Fortune 100 company’s other popular styles such as MBO (Management by Objectives) are just flavors of focus that allows a lot of people to get behind some common goals.  Foreign companies that enter the Chinese market would do well to heed these governmental top-down goals because that could make a big difference in the access to resources and good-will that is generated by the Chinese consumer, businesses and government.

If you like this post, then please check out our other thoughts at www.impact10x.com/blog or email us at info@impact10x.com.

Your FACE is very important in China

Investments in the stock market can be a very complicated affair. Depending upon the level of rigor that is taken in looking at the business performance, understanding the management team, competitive understanding and customer value…it could be a long time to come to any conclusion to invest in any given company. Or maybe it is as simple as figuring out what your neighbor, colleague or friend is doing and just copy them.

Sitting down with an Ad Tech company based in Shanghai it was interesting to find out the profile of the Chinese investors that decided to invest in their company. It turns out most of the motivation for their Chinese investors was a reflection of their friends desire to invest. But not because of the rigorous analysis of the market opportunity that these friends had done or that they were good past investors, it was simply a reaction to the fact that these friends were of the same or lessor economic status as them. The attitude was “if that guy is investing, then we can definitely invest”.  Now this could be simplifying things but there is a very real historical and cultural importance of “face” or reputation in China.

Maintaining face and reputation is important in China and is an implicit tool that could be used to market and sell to the Chinese consumer. Here are a couple of clever examples of this:

  1. A microfinance company based in China that provides student loans and requires a family member to be a co-signer on the loan. The co-signer in this case does not necessarily have to own collateral but is mainly used as a form of social pressure to ensure payback of the loan. If the student does not payback the loan, the co-signer loses face or their own reputation.
  2. One of the more popular Restaurant Review Apps in China (similar to Yelp) is called DianPing. The people that reviews these restaurants number in the 10’s of millions. Unlike Yelp though, the reviewers are also rated by the App which motivates them to do even more reviews. An example of their rating system goes from 1 to 5. The more reviews you do the more your level goes up. A system of reputation and face for reviewers.
  3. Taobao.com which operates under the Alibaba brand has an even more complicated level system for reviewers of products that are sold on their site.  Taobao.com is the equivalent of Amazon.com in China. Their system has over 5 levels in each of the major categories going from heart, white diamond, gold diamond, white crown and then golden crown. That’s over 25 levels which are used as a sign of reputation and status for these reviewers!

Using these subtle “face” techniques can be an important part of any marketing and sales tool targeting China consumers and businesses.

If you like this post, then please check out our other thoughts at www.impact10x.com/blog or email us at info@impact10x.com.

China Innovations (and other hacks!)#1 : Finance Tech in China

10 years ago I got my first bank account in China. No problems. Fill out a couple of forms, sign a few papers and deposit a few RMB and away we go. As we were nearing the final stages of the process at the bank branch, I was expecting to see some details on my login and website details where I could do my online banking. After asking the question and a bit of scurry, the bank manager handed me a USB dongle. Hmmm I wondered what is this for?  Many many many minutes later I realized that online banking was pretty much nonexistent in China. This dongle was to be used as an encryption key when accessing my account online but only to view account details, no transactions were possible.  I also realized that banking in China was the equivalent of taking a couple of hours out your day to stand in line and push lots of paper, signatures, approvals and stamps around.  Doing anything in the archaic Chinese banking system was the equivalent of walking in molasses or really thick Canadian Maple Syrup.

Fast forward to today and China boasts over 2500 internet and App companies exploring crowdfunding. Compare that to the 150 that are based in the USA.  Finance Technology (fintech) in China is leapfrogging the western world’s traditional online banking infrastructure and coming up a whole new paradigm in mobile banking that can be arguably be the most innovative on the planet. Like African countries that never had traditional phone infrastructure and are adopting mobile phones first, starting from a clean slate without the burden of existing online banking infrastructure has many advantages in experimenting with innovations faster on the mobile platform.  Here is a sampling of some of these small innovations in the China fintech industry:

  1. A typical keyboard on a smart phone has the QWERTY format. To combat some of the issues around login security, China Construction Bank’s app has a randomized configuration of the keyboard characters. Why? So the swipe pattern of the password is never replicated the same way. If anybody is looking at your typing they wont be able to figure out your password which could be important if you are a “one password” type of gal.
  2. Wechat Pay and Alipay are the two leading mobile app platforms in China now competing for the mobile banking mindshare of the Chinese consumer. Wechat Pay has a fascinating way to interweave the very specific Chinese culture with features that resonate with the China consumer. The “Red Packet” feature is a great way to feel good about yourself by distributing small amounts money to people in your chat circle. Talk about response rate when one of these packets get sent out!
  3. M09 is a China internet company solving the credit card issuing process which has typically existed in the USA. People in China that don’t have credit cards don’t want to provide the normal credit card information to the bank. MO9 just asks for their mobile phone number and instantly approves microcredit.

Now I wouldn’t do justice to the China banking system if I didn’t comment on the clever ways that the traditional banks (like China Construction Bank) are fighting back.  Now, I could still put out my dongle and do a lot more than I did 10 years ago online with my Bank Account but there are fees associated with it.  But do this on my China Construction Bank app and there are ZERO fees and NO dongle. A good way to incentivize everybody to start adopting the App.  Kudos to that!

If you like this post, then please check out our other thoughts at www.impact10x.com/blog or email us at info@impact10x.com.

The Good, Bad and Ugly of Chinese Corporate Presentations

Would Walt Disney be rolling over in his grave at the sight of Disneyland Shanghai? When Walt created the first Disneyland theme park in California he would kneel down at various spots to understand what it would look like from a child’s perspective…he wanted to make sure that even the kids had a great view.  Disneyland Shanghai has taken that to the next level by making everything substantially larger than any other of their theme parks. The Shanghai Disney castle is now the largest actual castle in the world. Scale and bigness is everything in China.

Unlike the ever growing popularity of western style TED talks which emphasize gripping storyline and vivid visual presentations Chinese presentations tend to emphasize sterile facts and numbers. The bigger those facts and numbers that describe the company the better.  A typical presentation sequence would look like:

  1. 40 engineers with 5 PHDS and 10 Master degrees
  2. R&D floor space of 3000 m2 and factory capacity of X widgets per hour
  3. 100 product lines with X and Y performance specifications
  4. In business for 10 years

If you were to walk into the office or factory of most traditional businesses in China you could find a very very large room full of 100’s of their products lined up on their walls.  Bigness and numbers establish the message that the company has the capability to do anything that the customer requires whether it might be relevant to their business or not.

As consumers and business customers (both in China and America) get more sophisticated and have less patience to set these requirements, Chinese businesses that are winning are going from a “here is what we have” personality to “here are the problems we can solve for you” personality.  Although bigness and scale might never really go away because of its embedded meaning of credibility in Chinese culture, you can be sure even the Chinese consumer likes to save time and are looking for new products that help to solve their everyday problems.

If you like this post, then please check out our other thoughts at www.impact10x.com/blog or email us at info@impact10x.com.