The Era of Business Globalization: Chinese Founders Aim to Conquer the World

01 The New Logic That Exists in All Competitive Paths

At 7 a.m., Li Xiaodong rushed excitedly into his office. In a small three-story building in southern Singapore, the lanky CEO, his palms trembling, signed his name on an agency agreement.

Half an hour earlier, he had received the news he had waited too long for Garena, the game platform company he helmed, had picked up the rights to represent League of Legends in Southeast Asia. This phenomenal game would bring huge traffic and wealth to the company.

It was a day in May 2010. At the age of 32, Li Xiaodong, later regarded as the business creator of Southeast Asia's "Tencent+Ali", began to step into the center of the world business stage in a hurry.

Four years later, Garena became the first Internet company in Singapore to be valued at more than $1 billion, and in 2015, Li Xiaodong founded the e-commerce platform Shopee, which five years later became the No. 1 in Southeast Asia, and in October 2021, the shares of both listed parent company Sea Limited (Winter Sea Group) rose to a peak of $363, with a total market value of nearly $200 billion. This once made Sea the third largest Internet company in Asia, making Southeast Asia a group of uniqueness.

The name "Singapore's richest man" was also born. If we take the share price of Sea in August 2021, Li Xiaodong is worth US$21 billion.

However, the richest man is actually from Tianjin, China, which is more than 4,000 kilometers away from Lion City. Until the age of 27, Li Xiaodong, who graduated from Shanghai Jiaotong University, lived in China.

But even with that connection, Sea has long been a company outside its context for most Chinese entrepreneurs and investors. "Back when he shouted out that he wanted to be 'Tencent + Ali' in Southeast Asia, almost no one in China knew about him, and it was hard to believe he could make it." A first-tier dual-currency fund partner once told "Dark Waves". Except for a handful of institutions such as Tencent, Triumph Ventures, and High Tide, which got a share of the pie in Sea, the vast majority of domestic investors didn't miss it but simply didn't know about it.

For a long time, these kinds of startups whose markets are outside their home countries were not really favored by domestic mainstream capital. The same is true for successful platform companies founded by the Chinese, such as Larry Liu's Weee! From the domestic companies going abroad, whether it is the pioneer of foreign trade e-commerce established in 2007, the free tool representative Cheetah that went abroad to survive in 2012, or the various "copy from China" social, live, short video, financial and other applications that emerged after 2015, is not enough to make The reason for this is that it is "too difficult".

On the one hand, the reason is "too difficult". In the previous waves of overseas startups, the founders were mostly defeated by or afraid of competition from domestic Internet companies and turned to export the Chinese game overseas, or the inheritance of the traditional foreign trade logic to earn foreign price difference with the Chinese labor bonus. The result is often unconvincing, either in small businesses or indirect defeat and return.

On the other hand, the capital circle's neglect of overseas enterprises also contains an invisible bias in the mobile Internet era, that the best entrepreneurs must find opportunities, create value and influence in the domestic market, which is "full of gold". As for Chinese entrepreneurs going overseas, in the eyes of investors, they lack enough peers to "carry the sedan" in return, nor do they add a bit of shine to the institution's brand.

"It's hard for Chinese founders in overseas markets to have a huge sense of individual accomplishment." More than one investor expressed a similar observation to "Dark Waves" about three or four years ago.

The rift came in 2020.

People were surprised to find that SHEIN, a shopping app they had never heard of before, had continuously beaten Wish and Walmart in the app market and was competing with Amazon; revenue had grown over 100% for years, going from $600 million to over $10 billion in just four years. At one time, almost all primary market analysts began to study SHEIN, a company founded in 2008, headquartered in Nanjing, founded by the "post-80s Shandong grassroots" Xu Yangtian.

At the same time, Li Xiaodong's Shopee also ran into the top three in the global ranking of total shopping app downloads in 2020. A US dollar fund investor based in Singapore told "Dark Waves" that at public events attended by Li Xiaodong in the past two years, many people tried to squeeze in to get information from just a few words; others even tried to track down the three business jets Sea bought for its executives to determine the next expansion plan.

In the past two years, when you walk into a hotel in Shenzhen, it is no longer a novelty to bump into investors from Beijing and Shanghai during the breakfast buffet. In the wildest the year of 2020, an industry conference on cross-border e-commerce was held in Shenzhen's Bantian, known as the "cross-border base camp". The enthusiasm of the attendees far exceeded the organizers' expectations, and the conference had to be forcibly terminated by the police due to the overwhelming number of people gathered in the venue.

Ma Xiaoyu, Managing Director of Banyan Tree Capital, was even more impressed. The investor, who has focused on overseas opportunities since he joined the industry in 2015, has run through more than a dozen countries and flew to different regions every year to investigate markets and conduct due diligence on projects before the outbreak. Once relatively lonely, he found that "sea" and "internationalization" has become more peers and entrepreneurs talk about high-frequency words, "it seems that most tracks can add an option: the sea. "

"The domestic investors who used to look at TMT, consumer, SaaS, are starting to focus on going abroad." Lou Yang, executive director of Guangyuan Capital, who has been engaged in FA transactions in the fields of e-commerce consumption, auto travel, and cross-border going abroad for nearly a decade, told "Dark Waves" that going abroad investment has started to be "in the mainstream view" in the past two years, and after experiencing cyclical opportunities such as product going abroad, supply chain going abroad and talent going abroad, capital going abroad is becoming a more Long-term theme. Guo Wei, the founder of UpHonest Capital, known as the "Silicon Valley outpost" for domestic VCs, receives several calls in the same pattern almost every day: investors from top-tier funds in China asking about Chinese venture investment opportunities in North America.

In most Chinese integrated funds, "going abroad" has never been a marginal track or even a track at all. BAI Capital opened a European office this year to invest in Chinese entrepreneurs in the European market, with Long Yu at the helm.

In early 2022, Skyline Ventures, an investment firm that says it only invests in cross-border ventures, was founded. Founder Jay Liang told "Dark Waves", "Cross-border is one of the few, if not the only, track we can see at the moment that has a high degree of certainty."

02 Rising Through the Cracks

Everyone in the investment circle can give several reasons behind the boom of going abroad at this moment, such as: "the disappearance of the domestic mobile Internet dividend", "to B, hard technology, medical and other popular tracks with high cognitive barriers", "cultural entertainment, Education and consumption are gradually dumbing down", "fewer opportunities for sinking" and so on. But at the same time, everyone's heart actually knows that the starting point of this overseas investment boom is directly related to the two S's - Sky's SHEIN.

Investors tend not to admit that they are bullish on a whole track because of the success of one company, but the myth of SHEIN is indeed too tempting.

In 2020, SHEIN, which had moved to go public, first appeared on a large scale on the national scene. By then, SHEIN had become the most influential brand in China the sea together with Huawei, Lenovo, Xiaomi, Byte Jump, and DJI. In April this year, "Dark Waves" reported exclusively that SHEIN's current market valuation had reached $100 billion. Looking at the entire global textile and apparel sector, there are only three companies above this price: LVMH, Hermes, and Nike.

Just as SHEIN became the first Chinese consumer company to reach a valuation of $100 billion, two large cross-border e-commerce companies collapsed one after another within six months: in June 2021, "the first A-share cross-border e-commerce stock" Global E-Shop thundered and filed for bankruptcy restructuring, with its headquarters in Nanshan District, Shenzhen, under siege by suppliers; in February 2022, "the first A-share cross-border e-commerce stock" Global E-Shop thundered and filed for bankruptcy restructuring. In February 2022, JollyChic, the e-commerce platform that once "crushed" Amazon's Middle East and Noon, closed its website, once losing to SHEIN, the star of the sea.

Among the many cross-border e-commerce companies in China, why is SHEIN the only one that has run away?

The strategy of saying goodbye to the "small business" mentality and moving towards an independent brand station was the most crucial step SHEIN took. For most of its peers, the "store model" is both the starting point and the endpoint. As the name implies, the so-called "store" is to upload products in large quantities through the platform. The shopper can easily produce a scale effect, but at the same time, it can also cause huge inventory costs. A brokerage research report shows that the growth rate of the cross-border e-commerce industry began to slow down in 2016, and the inventory turnover takes longer and longer, coupled with the rapid iteration of product updates, resulting in rapid depreciation of inventory products. In this situation, the more goods are stored, the harder the loss is.

Founded in 2007, Global Tesco landed on the capital market in 2014, with stronger capital and more time, the team could have strengthened control over suppliers and raised the competitive barriers. Because of the different sizes in the apparel industry, someone had proposed to Global Tesco to "add $1 per piece of clothing on receipt" to enlist a large number of suppliers. But at the time, the company's executives felt that there was no need for such "hard work" given its stature and volume.

And when Global e-Shop was immersed in the joy of listing, Xu Yangtian was in Guangzhou Panyu, one by one to beat suppliers, and even put forward the attractive condition of "how much Taobao gives us 10 yuan more for each piece" to establish stable cooperation of flexible supply chain. This also laid the foundation for SHEIN to get rid of the early stocking and start the brand model.

"It was Global e-Shop itself that gave SHEIN the opportunity of the supply chain," an industry insider once lamented.

On the other hand, the outbound market, which is closely linked to the foreign trade industry, is probably the longest, but also the most neglected business sector in China. The underlying logic behind it is the advantage of cheap labor superimposed on the supply chain. However, to some extent, this layer of advantage tends to make companies fall into arbitrage thinking while gaining quick profits in overseas markets. This has become an important reason why entrepreneurs in the cross-border field have difficulty going further.

Before Jay Liang decided to start Skyline Ventures, he visited cross-border garment and washing factories in Guangzhou. At 9 o'clock at night, the bosses' families were still in the factories, and their children were doing homework in the factory. One washer factory owner told Jay Liang that he had to work until 1 a.m. every day. "I felt at the time that these entrepreneurs going abroad were too vital, just not ambitious enough."

When SHEIN was founded, Xu Yangtian, like many of his peers, looked at the category of wedding dresses. The price difference between domestic and foreign wedding dresses was no small surprise to overseas consumers. At one time, sellers flocked to the market, and around 2008, a number of industry bigwigs emerged, such as Lanting and Tadao. At that time, a simple and brutal pricing method was even derived, turning the domestic RMB price tag directly into USD, thus earning a lot of money.

In June 2013, Lanting Jisei IPO, while the other side was immersed in the joy of being the "first stock of cross-border e-commerce", Xu Yangtian quietly changed the track, bidding farewell to the barbaric path of cross-border dumping, not doing one-off business, but exporting brands overseas. Soon, Lanting Jieshi tasted the bitter fruit of stagnation. As the wedding dress, which is not just a necessity, is not only affected by the season, it has been "cheap" to solicit customers to expand sales but also has not established enough barriers and user groups. Coupled with the double blockage of Selling and Amazon, Lanting's own transformation has become difficult, and the listing has become the beginning of losses.

Another successful case of doing the opposite is Anker Innovation, which has annual sales of 10 billion and is known as the "light of national products". Among the Chinese companies doing overseas trade, Yang Meng, a graduate of Peking University and a Google engineer, created a rare "brand" company with self-developed products. Instead of taking the common route of "branding" foreign trade, he has been expanding the brand matrix. Yang Meng has revealed that Anker Innovation's benchmark company in brand expansion is: the consumer giant P&G.

An investor from a head organization looking at the direction of going abroad told "Dark Waves": "In the past, when a Chinese person said he wanted to create a brand in Europe and America, it was hard to convince people that it would be a very good and trustworthy brand, and he could only sell goods at a good price. But now, the new generation of founders have a strong sense of doing product matrix, and have more complete thinking in terms of culture, aesthetics and even historical heritage."

In addition to the vision to look farther, ambition has become greater, to a deeper level, from 15 years ago, "Lanting Jisi type" foreign trade e-commerce, to SHEIN as the representative of cross-border e-commerce, people tend to ignore another important variable: the field of overseas Chinese founders in the "Chinese advantage The Chinese founders in the offshore space are beginning to understand more about the "overseas market" based on the "Chinese advantage".

It is not easy to understand the local market well enough. Yang Meng has said that the first thing that overseas entrepreneurs should do is to have a clear target group and make products that fit the group. "If you are lucky, the product may be universal - but this is usually not easy and not the norm."

In 2013, more than two months after its IPO, Lanting was hit with a class-action lawsuit from three U.S. law firms accusing it of publishing misleading information and artificially inflating market prices when it went public. Kunlun Wanwei has been overseas for more than a decade, covering more than 70 countries and regions, and founder Zhou Yahui has been trying to build an Alipay in Africa, where the smartphone penetration rate is less than 50%. Although this is a matter of extreme scarcity, Kunlun Wanwei CEO Fang Han also told "Dark Waves" that the matter is surprisingly tough locally and "requires patience and time".

In 2021, in an analysis of SHEIN's success, business observer Cai Yu said that the company did the right thing by "catching a small crack in the evolution of business history - the Western The company did the right thing by "catching a small crack in the evolution of business history - the downgrading trend of middle-class consumption".

Peng Li, an early partner of SHEIN, once recalled a chat he had with Yangtian Xu to the media. In the context of the financial crisis sweeping the world, SHEIN's model was finalized based on the insight of the target market customers - to provide cheaper clothes for the middle class in the West where the economy was collapsing.

Similarly, in the early days of the business, Li Xiaodong spent most of his time researching the Southeast Asian market. He found that the local network infrastructure was weak, residential broadband penetration was extremely low, and the place where gamers were most exposed to big games was Internet cafes. After understanding the behavioral habits of potential users, Li Xiaodong built a powerful "Internet cafe ground pushing army", which eventually formed a network of 70,000 nodes throughout Southeast Asia, bringing a high penetration rate - and this was also the key move for Garena to win. A key move.

"Li Xiaodong knows how to rely on local sellers and make good use of local talent, and the success of Shopee's localization is the biggest reason for achieving later success and catching up with Lazada." Tao Yangfeng, vice president of Zero One Ventures, who has been focusing on early-stage investments in the cross-border sector for six years, told "Dark Waves" that, unlike the older generation of overseas companies that still send out teams dominated by Chinese, the primary focus of the new generation of Chinese founders is "how to build up the localization team with Chinese experience "This is a very big difference".

Zeng Yu, who has been in Vietnam for almost 20 years, has more than 400 tea stores in the region, with revenues of $25 million. Before starting this tea beverage brand called TocoToco, he decided to start his own business and thought about replicating the opportunities of Chinese food, clothing, and housing in the local area. For example, to do the mobile software that was emerging in China at the time, speculate in real estate, or even develop electric motorcycles. Later, he changed the entry point of his business to highlight Vietnamese characteristics and serve Vietnam's 100 million people, which led to the birth of TocoToco.

TocoToco is now a 99.9% local Vietnamese team, with only one Chinese person, Zeng Yu, remaining. In Vietnam, where job-hopping culture is all the rage, many of TocoToco's business practices have been taken to more local businesses by the mobile Vietnamese staff. The Chinese-founded tea brand has become a "Whampoa military school" for Vietnamese chain businesses.

In 2015, ICAST, the largest fishing tackle show in the United States, awarded the best product award to a brand called "KastKing". The award was presented by several gray-haired, sixty-year-old American men from the American Fishing Association, while a 27-year-old Chinese guy, Cui Tianshi, was on stage to accept the award.

Until today, many users of "KastKing" fishing gear do not know that this is a Chinese company founded by the sea. Some hardcore fans have their logos tattooed on their bodies, while others take wedding photos with their gear and frame them in large frames at home. That's not easy in the saturated U.S. fishing gear market. Cui Tianshi told "Dark Surge Waves" that from the first day he started the business in 2013, he decided to make localization the best. He hired local U.S. employees to do marketing and build up the brand tone first, then plugged into the e-commerce model and community operations that the Chinese are better at.

"E-commerce is an amplifier that amplifies the brand out." Cui Tianshi said, "I want KastKing KastKing to make American users accept it through the product's features, price, and expression. It will have a brand label, not a country label."

03 Searching for China's Founders

In January 2021, an epic battle of "retail investors versus short sellers" took place in the United States. Retailers banded together to boost the stock of GameStop, a $3 US brick-and-mortar gaming retailer on the verge of delisting, 40-fold in a month, leaving many of Wall Street's biggest short-sellers with heavy losses.

The incident quickly brought a Chinese Internet brokerage firm, Webull, to prominence. At the time, many brokerages in the US, including Robinhood, shut down trading on key stocks in the long-short battle midway through the day, directly causing many retail investors to flock to Webull, which did not shut down trading. webull's seven-day average new user metrics skyrocketed by 1,548%, quickly leaping to become the second-largest internet brokerage in the US.

It was a surprise to find out later that it was actually a company based in Changsha, China. The founder, Wang Security, has worked for Ali, Hengfeng Bank, and Xiaomi Finance, and is also a Chinese national.

The sudden emergence of a "dark horse" made Wall Street excited, and almost all the big international funds immediately went out to "find the founder of Webull". But in fact, Webull could not be considered a new client on Wall Street. Because of its main business of overseas securities brokerage, at the beginning of its establishment in March 2016, Wang Security began to plan to go abroad, and in only 178 days, Webull obtained a securities brokerage license issued by the U.S. Financial Industry Regulatory Authority (FINRA) and successfully settled in 44 Wall Street.

Webull's financing experience more or less reflects the long-term capital dilemma faced by Chinese companies going abroad: on the one hand, it is difficult to raise funds in the early stage of the venture because the business model has not yet run through, and the domestic mainstream investment institutions have long been ambiguous about going abroad; on the other hand, it is far from the international mainstream entrepreneurial circle, and is ignored by international capital.

These Chinese founders seem to be "outcasts" in the world of Chinese and foreign capital, surviving in the seams of the confines. "Unable to get close to the international mainstream capital, it is also difficult to get more local capital's real trust in the early stage, as if they have been in the vacuum of the world." One investor said.

Liu Chunhe, the founder of China's largest social outbound company, Red City, first went to Silicon Valley in 2014, and that was also the first time in his life that he stepped out of the country. It was also in that year, the fifth year of his business, that he harvested his first institutional investment. The decision to do only overseas markets made him suffer a lot of questions and blank stares around him, and people with little friendship even ridiculed him for being odd and doing crooked things, a "turd" who had never left the country and wanted to do a global business.

Even for companies founded by Chinese in Silicon Valley with some local background, this dilemma still exists; in May 2017, Larry Liu, the founder of Weee! The previous moment, he had just been rejected by a domestic investor.

In the previous three months, he had already met with more than 40 investors in a row due to the company's funding problems, running between the east and west coasts of the U.S. in a failed attempt to find the money. The three founders of Weee! had to abandon their strategy of doing fresh produce e-commerce in the Chinese head of the business model, instead of doing a more understandable one-stop platform, and put all their savings into the company to barely get a small amount of transition money from the investor.

In June 2015, Shopee was born and an investor from the Ontario Teachers Retirement Fund in Canada came to Li Xiaodong's office in Singapore. After finalizing the investment, this investor was still worried that Li Xiaodong would not lose the money to the inside. He asked, "You're sure you won't screw up, right? This is hard-earned retirement money for Canadian teachers." Li Xiaodong replied, "Don't worry, we Asians won't let our teachers down."

"In many cases, international capital is wary when faced with business models that are unique to China. On the one hand, it would be difficult for them to understand, and on the other hand, it's hard for them to believe that the Chinese can make these innovations, especially consumer-oriented ones, in the global market." An investor analyzed "Dark Waves". It is also true that the Chinese entrepreneurial community is emotionally detached from Western investors in terms of cultural closeness.

In the last two years, this has quietly changed. In the past nine years, "KastKing" only got a war investment from Anchor Innovation in 2017, but when it opened its Series A in 2021, the amount of unsolicited capital was unexpected, "China is full of mainstream VCs, and there are a few big funds abroad. ", Cui Tianshi chose only one after meeting four of them.

Guo Wei, who has been active in Silicon Valley for a long time, has the most direct feelings about the changes in international capital. "Today, if an investor here hears that some Chinese entrepreneur is doing a U.S. version of Jindo or Hungry, he will act very excited." honest Capital has invested in GrubMarket, an early-stage fresh produce e-commerce project, and has recently been approached by capital from Russia and Israel to offer old shares and introduce founders.

In order to be able to systematically find Chinese entrepreneurs with potential, as a representative of a new organization, the question that Jay Liang has to answer is: how to ensure that resources and efficiency reach sufficient focus in the venture phase of the main track out of China?

"First of all, we will systematically go to study where the main opportunities are in the cross-border field and where the opportunities can still be caught in the VENTURE stage. From the perspective of a time machine, the process of digital development in different regions of the world is very different, we have a simple summary, 'developed countries do supply, emerging markets do infrastructure'. Then specifically on the commodity side, channel brands, product brands, and which categories are worth doing, will focus on doing research comparison discussions. Secondly, as a small organization, both the domain leader and decision-maker role will give us a local efficiency advantage." Liang Jie said.

Even Ma Xiaoyu, who has been rooted in the offshore field for many years, admits that this track is "too fragmented" and is not considered an industry, but more like a choice for companies. "A Chinese VC has to study all the global national markets and every segment of the track, and then find Chinese entrepreneurs to invest, the logic of input and output is difficult to hold." He told "Dark Surge Waves", "To really have an EDGE, it still requires the investment institution to have enough knowledge of the specific track itself. At this point, if there happens to be a Chinese team with an advantage in that direction, then bottom-up combined to make a judgment."

Hedosophia, one of Europe's largest technology funds, has had its sights set on Europe and the U.S. for years in the past but set up an office in Beijing two years ago. Its China partner, Yili Duan, told us that Hedosophia's goal in China is clear: to find Chinese entrepreneurs with global aspirations.

"When a new direction in technology comes out, others look at how the domestic market is and which team is best, and we take the initiative to find which team is better suited for the international market." Hedosophia's headquarters remains independent from China IC, and investment decisions on local projects are made by a Chinese team that understands Chinese founders better. At the same time, as a global fund, Hedosophia has localized teams in Southeast Asia, Europe, and Latin America to maximize on-the-ground support for Chinese entrepreneurs with a global vision.

To a large extent, the shift in international capital is still due to success stories such as Zoom, Weee!, wish, Doordash, and others that have made money for early-stage investors and some mid-to late-stage global funds. But some of the more astute investors have observed that the "kernel of change" for Chinese entrepreneurs in the global market.

BAI Capital's first serious look at going abroad was probably in 2015. The team initially defined a theme - a China-based global company, i.e. Chinese entrepreneurs exporting their supply chain advantages and business model experience overseas. However, in the past two years, BAI Capital has changed its theme to a China-based international company, which refers to Chinese entrepreneurs who are looking for day one to go local and directly participate in international competition.

The difference between the two is that in the past, the former was a vague, unified and homogenized concept, "as long as you go out of the country is global". Now, as reform enters deep water and the international situation changes, the latter requires more accurate strategic choices and positioning: where to go, who to work with, and to find out the positioning of one's products and their value in the global value chain - before one can make friends from afar and attack from near, and join forces with others.

In the view of Duan Yili, partner of Hedosophia China, many enterprises going abroad previously did not raise globalization to the highest priority from the strategic level and were holding the way of doing domestic business first along with the international business. "We are eager for Chinese entrepreneurs to take an earlier step to define new business models internationally."

Many years ago, an investor met with Wang Xing of Meituan for the first time and talked for six hours. The two had only one topic of conversation: how to make a global company in the future. Even if Wang Xing has the great strategy of "infinite game", the environment at that time, the domestic market is huge enough, and then the first-class entrepreneurs can only give priority to locals.

In this regard, Kunlun Wanwei CEO Fang Han believes that the first Internet talent is living by oasis, and the oasis is brought by the demographic dividend, China's demographic dividend is disappearing, and talent to go to sea is the result of active choice; second, in Africa, the Middle East, Latin America, and other regions, the global Internet will continue to exist in the information dividend, which is still a particularly large opportunity for Chinese entrepreneurs going to sea.

In the last two years, Long Yu, who has been watching cross-border for several years, found that as the domestic competition dynamics changed and various dividends were eliminated, going abroad became an "extremely natural spillover". She believes that China has two advantages in the next decade that no country in the world can challenge: one is the supply chain, and the other is engineers.

"The best founders used to be busy in the domestic market, but now more and more entrepreneurs are heading overseas on day one. The new generation of Chinese founders are not at all afraid of overseas markets and are increasingly good at managing international employees."

If we have to summarize the characteristics of the new generation of Chinese founders at this point, we can say that they are a group of founders who have had global thinking and global configuration from the very beginning of their business. They are not afraid to build local teams in overseas markets and have strong ties to the Chinese Internet community. More importantly, this group of people deeply understands "what are Chinese people best at overseas?" And, "How to be one step ahead of entrepreneurs around the world?"

Zhen Huang left Ali in 2017 to found iMile, a logistics company in the Middle East that focuses on solving the last mile of e-commerce logistics in the Middle East. iMile serves Chinese cross-border e-commerce companies represented by SHEIN, and half of them are local customers. Once she went to Mexico to explore the market, she was eager to invite a local person who had worked in Amazon to join her. The other party was initially dismissive until she took out the Chinese e-commerce software demonstration, the other party froze, "This technology application level is beyond our 3-5 years. Not long after, he joined smile on fire as a Mexican executive.

Entrepreneur Shi Zhenrong once proposed the concept of the "smile curve", that is, the value of the industrial chain is U-shaped distribution: research and development and technology (left), assembly and manufacturing (middle), brand and market (right), the value of the two sides is significantly higher than the middle.

If the early Chinese companies going abroad are concentrated in the middle section, the development on both sides is the present and future. The DTC brand represented by SHEIN is located on one side, while the technology companies represented by SoundNet Agora are located on the other side.

According to Jay Liang, the ceiling of companies exporting "shallow goods" overseas is limited, and the core competitiveness of shallow goods is built on labor and supply chain. While SHEIN, TikTok, and Shopee as the representative of the culture, lifestyle, and even digital infrastructure and other "deep goods" export core competitiveness lies in China's digital advantage, behind the engineer dividend.

However, in Lou Yang's view, although Chinese founders can benefit from the Chinese market knowhow, engineers, supply chain, and a series of transnational advantages, on the financing side, Chinese capital is in the nascent stage, really familiar with the sea investment institutions are still a small part.

Now, the "time machine effect" of copying the Chinese model to an emerging market overseas has failed, and Liu Xinhua, the investment partner of Banyan Tree Capital and former chief growth officer of Racer, suggested that "entrepreneurs need to change from thinking about going abroad to thinking about globalization natively, which is a more important change in the bottom of going abroad in the past three years. This is the more important logical change in the last three years."

04 Sailing Against the Tide

Over the past two decades, China's new business civilization has become more domestically focused, not only because it has the most expansive market, but also because - at least in terms of results - the competitive environment, product updates, and even consumer acuity for innovation make the land the perfect place for entrepreneurs to hone themselves. In China, people destined to start their own businesses get a far more intense grind, having to invent and refine new business models earlier and learning from one another in an extremely competitive environment.

It is for this reason that one saw the first real initiative of new economy entrepreneurs going abroad in 2015. For example, to kill India and Southeast Asia and other places, UC News, News Dog, and other news aggregation tools, go to Thailand's WeChat, Ali invested heavily in Lazada.

It is not difficult to find the commonality of these enterprises: the great migration of China's emerging business models to the backward land.

At that time, the country was experiencing the last carnival of mobile Internet entrepreneurship, the generation of entrepreneurs best at business model innovation encountered the gradually saturated market space and the decreasing demographic dividend. So, just like the "time machine theory" proposed by Masayoshi Son, looking for new markets where the Chinese model could land and bring the future to the past became a new option for that group of entrepreneurs and investors going abroad.

Therefore, instead of saying that the wave of going abroad around 2015 was an evolution of domestic entrepreneurs' vision, it is more like a big leap under the arbitrage thinking of the times. But in recent years, a new generation of Chinese founders has emerged. North America and Europe, regions that we once considered "advanced", have been the targets of this group of entrepreneurs from day one.

Musically, born in Shanghai, has been testing the North American market since its inception, and was acquired by TikTok in 2017, becoming a sword for the latter to sweep Europe and the US. Aventon, founded in the United States, was one of the first companies to see the trend of electrification of two-wheeled vehicles, and its founder Zhang Jianwei, born in Yongkang, Zhejiang Province, has been developing E-Bike since 2017. industrial design, and brand marketing to "continue to create iconic technology products".

What's more surprising is that beyond the business model innovation that the Chinese are so good at, companies are gradually being born that can truly be called "technology abroad".

For example, the founder of Agora, known as the "first stock of technology abroad," is Zhao Bin, an old colleague of Yuan Zheng of Zoom. At the beginning of Agora, Zhao Bin set up dual headquarters in Shanghai and Silicon Valley with the goal of becoming a "world-class technology company. Currently, the companies it serves include Castbox, the largest third-party podcast platform in the U.S., The Meet Group, the largest dating social platform in the U.S., Lisbon, a Japanese second-gen audio community, and Hike, the largest instant messaging app in India.

Data show that in 2018 alone, the size of China's digital economy industry reached 34% of GDP. Some institutions expect that this share will exceed 50% in 10 years. According to Ding Lei of NetEase: to achieve 30%, you can spell local; to achieve 50%, you have to spell the world.

In this sense, the new generation of Chinese founders out of the country is an inevitability. Unlike the former walkers, the essence of this group is the Chinese business ecology or the overflow of Chinese entrepreneurs' abilities. Today, there is hardly a Chinese company that does not aspire to be an outbound - or global - company.

Beginning with its accession to the WTO in 2001, China has been deeply involved in the process of economic globalization. China has become the center of global manufacturing, the center of the engineer dividend, and the center of Internet business model innovation. One can easily find confident expressions in the mouths of Chinese founders in the offshore sector.

Wang Tao, the founder of DJI, one of the most successful overseas companies, said, "In the era of our parents, China has always lacked products that can impress the world, and Chinese manufacturing has never been able to get rid of the situation of obtaining the market by the advantage of cost performance. The success of enterprises in this era should have different ideas and values." When 25-year-old Cui Tianshi decided to found KastKing, he shouted the slogan: Chinese people should have their own world-class brand.

Such an expression is certainly full of grandeur and courage, but at the same time, it is also more or less, unconsciously, added to the undertones of the current times. Israeli investigative journalist Nadav Eyal wrote a non-fiction work "The Age of Counter-current" in 2018, exploring a "counter-current" of "anti-globalization": the "consensus" once established after World War II is gone. The "consensus" that was built after World War II is gone, and in many parts of the world, there is a mood of questioning globalization.

If you believe in "threats", you will naturally build fortresses and strongholds; if you believe in "ideals", you will be able to step out into a flat world. For today's new generation of Chinese founders, what the world's consumers and the times expect is that they will continue to leave behind the idea of copying and migrating to create new businesses that are naturally global.

Going global should never be about one track, one industry, one region. Just as we never define Steve Jobs or Musk as US founders, which market to go to and what business to create is only related to the ambition, vision, and ability of the founder.

In 1405 A.D., Ming Dynasty navigator Zheng He started his era of maritime globetrotting. Compared with Columbus, who set sail more than 80 years later, he was equipped to sail to the West with more than 200 ships, as well as more than four times the displacement capacity. But then, it was the once backward West that took control of the oceans.

In April of this year, Guo Wei, who had not returned to China for a long time, passed by the busiest Highway 101 in Silicon Valley in the evening. He happened to look up and saw a large billboard with two companies densely posted with job announcements, and their helmsmen, both Chinese - no, both entrepreneurs.

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