In 2019, Chin HuiLin had barely settled in after landing in the bustling metropolis of Beijing, China. She fumbled with her phone, doing her best to tread through an unfamiliar interface to set up her WeChat Pay account. When the app asked for her passport information, she did a double-take.
“I’ve never given up my passport information before,” she recalled. This was just one of the instances in which she had to learn how to navigate a completely new culture and, as a venture capitalist, a completely new market.
Chin joined Antler at the beginning of 2018. The firm started out with just three to four people huddled around a few desks in the basement of a WeWork shared workspace in Singapore, each one nursing big dreams, she said.
Within the 18 months, Antler, now a full-fledged early-stage VC headquartered in Singapore, expanded to eight locations worldwide. Antler has a vast portfolio that spans 30 industries and counts Facebook’s co-founder Eduardo Saverin among its backers. The firm invests in various locations around the world and its portfolio includes startups like Sampingan and Airalo, which went on to receive funding from Golden Gate Ventures and Sequoia Capital, respectively.
“I’ve seen us really go from zero to one, and to ten,” Chin recalled.
In July 2019, she moved to China, where she is currently an associate partner at Antler’s office in Beijing.
“China is a very exciting player on the global stage. I wanted to see it from the inside, rather than just reading news from the outside.”
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The Chinese ecosystem continues to churn out startups that break new ground. Although VC and private equity investment in China slowed down in 2018 and 2019, the Chinese market remains an important player on the global stage, with its population of over 1.4 billion citizens. There is no better way to comprehend the scale of the industry in China, except to be there in person, Chin said.
“While we are starting to see some of [these Chinese companies] on the global stage . . . a lot of them are actually very difficult to understand, unless you are in the market, and you are seeing how these products, solutions, and apps are integrated into everything. It’s difficult to truly understand it conceptually.”
Understanding the local business environment
It’s no secret that localizing is important for any company seeking to expand. In 2018, localization and translation of content was the third-leading method for marketing products and brands on an international scale. Having witnessed how different the Chinese market is compared to the Singaporean market, Chin was able to fully appreciate the importance of understanding the local business environment.
Airbnb, for instance, has made concerted efforts to localize in China. In a podcast, Nathan Blecharczyk, Airbnb’s co-founder and chairman of Airbnb China, talked about how he would make multiple trips to China and sit down with both Western and local companies to get their perspective and advice. The firm also changed its name to “Aibiying” and worked with Alibaba and Tencent to create a smoother payment process. These small nuances in how Chinese consumers interact with online platforms were key to Airbnb’s localization.
Tailoring a platform’s services for a local market is not just about generating insights about consumers. It also entails understanding consumers’ language, culture, and practices. For example, most consumers prefer to shop in their native language, according to Common Sense Advisory, and avoid purchasing products that do not have instructions in their mother tongue.
Given the importance of embracing localization, Chin stresses that founders, at least those with an interest in entering other markets, have to be open, adaptable, and capable of crossing cultural barriers.
“If you’re looking at a founder building a [consumer] company specifically in China, they better understand how consumers think. Not just, ‘Oh, I’ve seen these steps and this data,’ but also [questions like] what is the psychology of a consumer?”
“Is it a good client segment? If it is, are they actually able to do that kind of business?” Chin added.
It is also vital to have local partners who have already tapped into the industry in the target market, says Chin. Antler, for instance, has two partners in China, Guan Wang, and Hongye Wang, who have been part of the startup and VC ecosystem for the last ten years.
“That’s really important to us, because you can’t build relationships overnight,” she said.
Cross-regional partnerships are increasingly important
While Chin says that it is hard to generalize a place as big and diverse as China, she explained that most companies can start to internationalize their businesses once they achieve a stable market share in their initial markets. Didi, for instance, has tried to break into emerging markets like Russia and Brazil. “ByteDance, I think, is making a very concerted push to make sure that their product remains relevant in multiple markets,” Chin added.
Notably, Chinese tech groups have made efforts to establish and strengthen their presence in Southeast Asia. SenseTime, Ctrip, YY, and China Telecom are all in talks to expand in the region, according to Financial Times.
Alibaba recently purchased half of a skyscraper in the heart of Singapore’s Central Business District—AXA Tower, which is also home to Lazada, Alibaba’s Southeast Asia e-commerce business—for USD 1.2 billion.
“I think that as a market, Southeast Asia is very interesting to them, but succeeding in this region requires the same process of adapting and localizing, as it’s different from China.”
Chinese VCs are also keeping their eyes on Southeast Asia. In the first half of 2019, Chinese VCs invested USD 667 million in the region, compared to USD 148 million in 2018. Some, like Qiming Ventures and GGV Capital, have set up offices in Singapore.
With a growing middle class and a population of more than 650 million, Southeast Asia is an attractive market for Chinese investors. The region’s internet economy is expected to reach USD 240 billion by 2025, while Southeast Asian startups have also aggressively expanded in recent years, something which was partially fueled by Chinese investors like Tencent.
Coming from Singapore, a country barely visible on the world map, yet one of the most advanced startup ecosystems in the region, Chin says that market size is a key consideration for companies. “If you do come from a very small country like Singapore, where the market is quite limited, you definitely want to think about how you want to expand that pie.”
For founders who are looking to expand to other markets, Chin advised, “Some regions are easier or more accessible than others, but in general, keeping an open mind, being respectful, and genuinely seeking to understand practices, beliefs, and behavior of wherever you’re expanding to is a must. Be clear what you want and why you’re there. Try to find someone who really understands the market.”