Wealth

The Rise of the Chinese Global Entrepreneur: From “Going Out” to Shaping the World

Should a day of such import dawn in the future, Chinese entrepreneurs shall envisage the world as their ultimate market from the inception of their endeavors; venture investors shall no longer perceive “venturing abroad” as a distinct industry; and the emergence of multinational corporations bearing Chinese DNA shall cease to astonish the populace. Thus, the genesis of this cognitive metamorphosis ought to be traced back to the bygone year of 2023.

TEMU, an appellation derived from the amalgamation of “TeamUp, PriceDown”, has instigated this tide of globalization. This transnational e-commerce platform, nurtured by Pinduoduo, burgeoned within a mere span of 18 months subsequent to its launch in the United States in September 2022. It has expanded its operations to 47 countries/regions, amassing a user base of 200 million individuals, thereby garnering recognition within the international e-commerce sphere. Analysts hail it as “the swiftest-growing e-commerce platform in recorded history.”

Throughout the year 2023, China’s cross-border e-commerce “Four Little Dragons” – TEMU, SHEIN, AliExpress, and TikTok – vied with one another, swiftly infiltrating the global market, commencing from North America. Data indicates that these four entities collectively dispatch more than 10,000 tons of merchandise overseas each day, a quantity akin to the cargo capacity of 108 Boeing cargo planes.

Conversely, there ensued the global debut of Chinese automobiles. In July 2023, China’s semi-annual automobile exports surpassed those of Japan for the first time, claiming the pinnacle globally. China’s burgeoning and established automotive enterprises adopted a multi-pronged strategy, penetrating markets across Southeast Asia, the Middle East, Australia, and Europe. Particularly in the realm of electric vehicles, China stands as an indisputable emerging force. In Europe, one in every ten new energy vehicles originates from China. Both Jikrypton and Xpeng have ventured into Israel to expand their footprint; over 86% of pure electric vehicles in Australia hail from China; BYD’s Atto 3 reigns as the top-selling model of electric vehicles in Malaysia. Concurrently, numerous leading Chinese industrial conglomerates and smaller manufacturing champions have also emerged onto the global stage.

Entertainment and consumer goods, indispensable facets of daily life, have also played a pivotal role in this global exodus. TikTok, ubiquitous across the globe, Yalla, reigning supreme in the Middle East, alongside Mixue Ice City, Heytea, Haidilao, and others, wield considerable influence in facilitating the global expansion of Chinese enterprises.

The transformation within this wave of globalization primarily stems from: (1) The domestic supply chain attaining a stage of relative maturity after years of development; (2) The internet nurturing domestic entrepreneurial teams over two decades, equipping them to navigate diverse complex scenarios and orchestrate managerial prowess; (3) The proliferation of higher education and the evolution of the domestic business landscape culminating in the accumulation of a cadre of individuals endowed with foundational literacy, business acumen, and technical expertise.

Reflecting upon the annals of Chinese enterprises’ foray onto the global stage, one discerns an evolutionary trajectory from the exportation of “goods” to the dissemination of “people”, and from online to offline channels—

Since the 1990s, commencing with sectors such as home appliances, China embarked upon exporting its wares overseas. The predominant modus operandi involved Chinese enterprises enlisting local agents to market their products abroad, with the primary impetus being augmenting revenue through exportation.

Subsequent to the ascent of the internet in the early 2000s, internet-based tools and games developed by domestic teams commenced venturing abroad in search of niche markets. Concurrently, cross-border e-commerce vendors peddled Chinese-manufactured goods across borders via platforms such as Ebay, Wish, Amazon, and independent websites. These two principal business models circumvented direct interaction with overseas consumers, instead, servicing remote locales via online advertising, virtual customer service, and local partnerships.

Post-2010, with an increasing number of Chinese expatriates deployed by companies overseas, some among them discerned business opportunities abroad owing to their stints of residence and employment overseas, particularly leveraging the rapid developmental strides witnessed across diverse sectors in China. They embarked upon entrepreneurial endeavors across various sectors, initially gravitating towards internet-related industries such as e-commerce, fintech, and entertainment, before expanding into broader consumer-oriented industries.

Around 2015, pioneers from the preceding waves, buoyed by their triumphs in the initial phases, set their sights upon broader global vistas, aspiring to emerge as influential global entities. Simultaneously, an increasing number of founders recognized that globalization necessitated not only internationalizing products and services but also proactive measures encompassing the recruitment of international talent, transnational management frameworks, and optimal resource allocation on a global scale.

Though the aforementioned four stages of Chinese enterprises’ globalization unfolded successively, they shall undoubtedly coexist for the foreseeable future.

In the past year, venture capital practitioners described the globalization of Chinese companies as one of the biggest opportunities that have emerged in recent years. But when Chinese entrepreneurs and investors really want to seize this opportunity, they will find that it presents complexities that are difficult to outline. “Undercurrent Waves” interviews investors who focus on different markets and summarizes the following trends according to different regions:

(1) Chinese companies in North America present a new, new generation of Chinese DNA multinational companies in the two core directions of cross-border e-commerce and AI+hardware;

(2) The Japanese market in the consumer field and the Latin American market in the fintech, consumer retail and other directions are mainly the continuation of the copy from China logic;

(3) The European market mainly focuses on the ultimate cost-effectiveness of Chinese products and brands in the new energy vehicle industry chain and consumer fields;

(4) The Middle East market has the strongest demand to proactively seek localization from external companies.

The “time machine model” also works in many areas. However, going overseas is a complicated and intertwined process: due to the differences between countries and regions around the world, there are actually completely different multi-line narratives behind the general direction of going overseas. How to deal with these connections with local history and social context will also determine the future of Chinese enterprises in different corners of the world.

At the beginning of 2024, “Undercurrent Waves” interviewed more than ten investors who are on the front line of global investment. Most of them have been deeply involved in one market for many years, or are the first “crab eaters” in emerging markets, or are interested in Chinese companies in a niche field have sufficient investment experience in going global. During the communication with them, we summarized the past and current market characteristics, regulatory environment, and visible investment opportunities and challenges in different regions around the world, and tried to form a “Global Investment Guide for Chinese Enterprises.”

What needs to be emphasized is that in this round of globalization, financial investment or primary market institutions may not be the most critical players. More players come from mature large companies, and a considerable number of players have transformed the world since day one. transformation as a vision for startups. Therefore, the investors who appear in the text, in addition to their investment duties, are more regarded by us as observers of the local market.

Next, “Undercurrent Waves” will continue to publish first-line observations from practitioners in the global market. Stay tuned.

North America

> Still No. 1 in faults

North America has always been the first choice for Chinese VCs to invest in overseas companies. According to IT Orange data, in the past seven years, China has invested in more than 50 overseas countries. Although the number of investments has fluctuated, its “number one” position in North America has never changed.

Among them are the advantages of the North American market itself. For the whole of 2023, the U.S. GDP growth rate reached 2.5%, further improving year-on-year. In the fourth quarter report card, personal consumption expenditures, which account for about 70% of the U.S. economy, grew by 2.8%. It can be said that it is the resilience of consumers that has shattered expectations of a recession in the U.S. economy, which remains the world’s largest consumer market.

But in addition, perhaps the most essential point is that the return of venture capital needs to be supported by projects with high odds. High odds mean that the market must be large enough, the founders are strong enough, the market capital is intensive enough, etc. After counting more than 50 countries around the world, we finally found that the only markets suitable for large-scale venture capital investment are China and the United States.

The first round of competition between China’s cross-border e-commerce “four little dragons” took place in North America.

In February 2023, Temu spent US$14 million to attend the Super Bowl of the “American Spring Festival Gala” and captured the hearts of 100 million American viewers with the phrase “Shop like a Billionaire”. In the third quarter of that year, Temu’s GMV exceeded US$5 billion. So far, this Chinese e-commerce dark horse from Pinduoduo has emerged. In the past year, Temu has been downloaded more than 320 million times worldwide.

SHEIN is the fastest growing e-commerce platform in North America in 2022. TikTok has launched the TikTok Shop service based on its terrifying 1 billion monthly active users, and Alibaba’s AliExpress is also catching up. There is a specific data that can show the size of the Four Tigers. According to the latest data released by the freight consulting company Cargo Facts, Temu ships 4,000 tons per day, SHEIN ships 5,000 tons per day, AliExpress ships 1,000 tons per day, and TikTok 800 tons are shipped every day.

However, behind the flowers are the scrolls cooked by burning fire.

The difficulty is that although the U.S. market has huge potential, the market share left for Chinese e-commerce is not as large as imagined. According to Morgan Stanley statistics, even if it is as strong as Temu, its full-year GMV only accounts for less than 1% of the market share. But Amazon is 40%.

The volume also belongs to start-up practitioners. For start-ups, the emergence of phenomenal platforms may not be good news. Source Code Capital Zhang Genghua told “Undercurrent Waves”: This is because the “fully managed” model of platforms that only require sellers to provide goods seems to be the general trend. But while it is simple and convenient, it also allows the platform to replace the role of entrepreneurs. The platform can directly connect with factories, eliminating the need for “middlemen to make the difference.”

In the new cross-border overseas market, it has gradually become a monopoly of large manufacturers, which has caused domestic investors to lose many “nugget” opportunities. As an institution that “only invests in cross-border overseas markets”, Skyline Ventures founder Liang Jie told “Undercurrent Waves” that he has observed a “disconnect” among cross-border e-commerce entrepreneurs in North America: “Now we can see companies like Pinduoduo Businesses worth hundreds of billions of dollars can also be seen in low-key small businesses in the United States, but there are very few companies with billions or tens of billions of dollars in the middle. North America is still in urgent need of entrepreneurs.” And the companies with billions of dollars in the middle are Opportunities for VCs.

For VCs, there is another opportunity in North America: AI hardware.

For Liang Jie, what he is most concerned about at the moment is China’s AI hardware opportunities under the AI ​​trend, rather than the industry application opportunities generally considered in the market. Its judgment is based on confidence in the advantages of China’s manufacturing supply chain.

At the beginning of 2024, the “Technology Spring Festival Gala” CES was held in Las Vegas, and almost all VCs looking to overseas arrived at the scene. In the field of AI+ hardware, Yushu Technology, which has just completed 1 billion in financing, sold 4 sets of its humanoid robots as exhibits on the spot. You must know that Yushu’s H1 product is priced at around US$90,000. There is also Rabbit, a new company founded by Lu Cheng, the founder of Chinese Raven Technology, which released a new product, the handheld AI hardware Rabbit R1, priced at US$199, and sold 10,000 on the first day of the first round of pre-sales. tower.

This can give a glimpse of the new trend in China’s consumer electronics, which is moving towards high-end. Compared with two years ago, most of the labels from Chinese manufacturers were “highly cost-effective”, but this year these Chinese products are not cheap. Behind this is the entry of Southeast Asia, which is developing manufacturing throughout the country, which has squeezed China’s profit margins in the low-price market. But at the same time, another group of manufacturers saw the possibility of injecting AI into hardware, which was a new opportunity to enter the high-end market in North America.

For investors, what are the pain points and opportunities in the North American market in the future?

Rabbit R1 is a negative case. Despite its amazing sales, it still faces a lot of doubts on the consumer side. This just illustrates the investment logic represented by Liang Jie: invest in the upstream of the supply chain, rather than downstream applications that are too uncertain. This is also the difference between the investment styles of overseas investments in North America and local local institutions. Zhang Genghua pointed out: Comparing the investment tendencies at home and abroad, while China invests heavily in the hard technology track, overseas investment institutions, especially those represented by North America, are becoming more and more “out of touch”. “Real to virtual”, preferring some soft technology-related start-ups, such as AI software. Because they also found that their advantages over China are not obvious in terms of hardware mass production and supply chain facilities.

Latin America

> The wolf is really coming

For overseas venture capital circles, Latin America was once a corner further away than Africa, a lost world that was almost forgotten. The magical realism picture of Latin America depicted in “One Hundred Years of Solitude” is depressing, and economists have repeatedly used the “Latin American trap” to warn countries on the edge of modernization.

Different from “South America” ​​in the geographical sense, Latin America is a cultural regional concept, including parts of the American continent under the influence of Spain and Portugal, and Spanish is dominant. In terms of population, size and per capita GDP, the top four markets are Brazil, Mexico, Colombia and Argentina.

Among them, Mexico, one of the largest economies in Latin America, experienced a rapid development for more than 30 years (1950-1981). After more than 30 years of rapid development (1950-1981), the debt crisis took a turn for the worse, ending the second “golden age” of Latin American economic growth (the first golden age). It was 1870-1930). Although the North American Trade Agreement was later signed in 1994, it was still unable to get out of the predicament for a long time.

Mexico has missed opportunities, but great changes are taking place at this moment: this country with a population of about 130 million has seen the rise of manufacturing in the past two years, and Internet e-commerce and financial technology have become popular. Not only has it become the focus of Latin America’s venture capital center, it is also considered ” The fastest growing emerging market in the world.”

A representative data is that according to statistics from the Mexican Ministry of Economy, the amount of foreign direct investment in Mexico hit a record high of US$36.058 billion in 2023, an increase of 27% from the previous year, 50% of which was concentrated in manufacturing.

The rise of Mexico’s manufacturing industry has benefited from changes in the international situation and the opportunities brought by policies. On the one hand, the increase in cross-border freight costs caused by the new crown has forced companies around the world to consider shortening supply chains. On the other hand, countries led by the United States have gradually changed their original “offshore outsourcing” strategy and turned to “nearshore outsourcing” and “friendly “Onshoring” (specifically refers to enterprises in more advanced countries outsourcing their business to neighboring countries with similar geography, culture, and language to complete their work and services).

Mexico, which is adjacent to the United States, has naturally become the manufacturing center for the United States to reshape its supply chain, especially Mexico’s largest export product, automobiles.

The passage of the North American Free Trade Agreement in 1994 was undoubtedly a milestone event for Mexico’s automotive industry. In July 2020, the United States, Mexico and Canada signed a new free trade agreement, the United States-Mexico-Canada Agreement, which clearly stipulates that cars or trucks with at least 75% of their components produced in the United States, Mexico or Canada can be sold at zero tariffs. This is an increase of 12.5% ​​from the 62.5% required by the North American Free Trade Agreement that came into effect in 1994.

This means that in the past, products that were slightly assembled in Mexico and then sold to the United States and enjoyed zero tariffs are no longer available. Chinese car companies and parts companies have to consider building factories in Mexico to enter the U.S. market. So far, more than 10 Chinese automakers have announced their entry into Mexico. But the biggest variable is Tesla. In March 2023, Musk said that he would build his first factory in Latin America in Mexico, and the Mexican factory will become Tesla’s largest production base. One stone stirred up a thousand waves, and many domestic supporting parts companies accelerated the layout of their Mexican factories and bet on Tesla.

The take-off of the manufacturing industry is creating incremental growth for Mexico and also bringing more new economic opportunities. “The manufacturing industry will bring a wave of new middle class, and the new middle class will generate new economic needs. These needs are exactly the mobile Internet application opportunities that have occurred in China.” Zhao Penglan, a partner of BAI Capital, invested in Mexico in 2019. Once a project begins, it continues to cultivate the local area.

“The stage that Mexico is in now is similar to China around 2014 and 2015.” Zhao Penglan told us. At the same time, BAI Capital has recently introduced two venture partners to focus on exploring and empowering the Mexican market. “There is pent-up demand for new software and mobile services, opportunities are ripe for innovation in key industries, and FDI (international direct investment) investment is increasing,” one of the partners said of the Mexican market.

If we follow China’s development path, Mexico will most likely experience a process from simple to complex: starting from e-commerce, consumer retail industry and the “infrastructure” of the new economy (especially financial technology and logistics), and then to SAAS digitalization. Finally, it transitions to hard technology industries that require strong technical strength. This logic is easy to understand, and you can get a glimpse of it from the appearance of the first batch of listed companies in Latin America – most of which are consumer retail and financial technology companies (such as Meikeduo and dLocal).

In fact, there have been two small peaks in venture capital in Latin America’s history.

The first time was in 2014, when Sequoia invested in Latin America for the first time and selected Nubank, a Brazilian mobile virtual credit card company that had just been established. With its simple application process, extremely low annual interest rate and no annual fees, Nubank quickly became Brazil’s leading credit card company. Internet financial company. Almost at the same time, Latin American e-commerce platform Linio (similar to Lazada acquired by Alibaba in Southeast Asia) received huge financing; food delivery application HelloFood successively acquired competitors such as YaY, SeMeAntoja and Superantojo; taxi-hailing software EasyTaxi, which originated in Brazil, also began to expand globally. But in just one year, this small peak came to an abrupt end.

The peak period of the second venture capital investment began with the rise of Rappi, an on-demand errand service company. Rappi is the first Latin American company a16z invested in. It participated in the YC incubator in 2016 and received financing. The investors in the Pre-A round are already Andreessen Horowitz, Sequoia Capital, and DST Global. In September 2018, Rappi received a new round of financing of US$200 million, with a valuation exceeding US$1 billion, becoming the second unicorn in Latin America.

Of course, there are also Chinese giants participating in this wave of investment in Latin America: In January 2018, Didi Chuxing acquired a Brazilian shared travel company with a valuation of US$1 billion99. This is Didi’s first overseas merger and acquisition, launching a direct war in São Paulo, Brazil, Uber’s largest market in the world. 2017 was a year of significant growth for Latin American venture capital, reaching a record high of US$1.1 billion.

Today, Latin America is experiencing its third peak. The cause is related to Shein and Temu.

Zhao Penglan told “Undercurrent Waves” that before the entry of Shein and Temu, Mexico’s e-commerce market developed slowly. Only Amazon and Meikeduo covered the top customers. First, because logistics was not spread, and second, mobile payment was not mature enough. More than 80% of the entire consumption is still cash transactions. Starting in 2021, Shein and Temu became two catfish, which quickly increased the penetration rate of e-commerce and accelerated infrastructure construction. “Tiktok will also enter the market soon. These three companies + AliExpress (1688) will definitely bring Latin America to the forefront.” As the e-commerce market rolls up, there will be many new economic opportunities that we are familiar with.”

A set of data compiled by RockFlow Research Institute can also illustrate the problem: from 2019 to 2022, a total of 21 large-scale financing events (over US$200 million) occurred in Latin America, including 10 in the e-commerce field, 10 in the financial technology field, 1 in the software field. The most frequent investors were SoftBank 7 times, Tiger Global 3 times, and Tencent 2 times.

But obviously, such seemingly abundant opportunities will not be seized by most people. As far as we know, very few Chinese funds have systematically explored the Latin American primary market. According to Zhao Penglan’s observation, Mexico is in a thin VC ecosystem. There are no more than 20 local VCs, and no more than 10 with capital under management exceeding US$100 million. Moreover, they can only invest in Series A and earlier, while American mega funds are more willing to When it comes to investing in later stages such as Series C, “Series B with an investment of US$15-20 million is a huge vacuum.”

But A16Z is making its mark in Latin America. It bet on Rappi in 2017 and is now preparing to enter the early stage investment field in Latin America, especially in the financial technology and medical technology tracks.

The layout of domestic Internet giants in Latin America is also worth mentioning. The large-scale mergers and acquisitions that have occurred in Latin America since 2018 range in size from US$118 to US$650 million, and the important acquirers involved include Okta, Uber, Didi, StoneCo, Etsy, etc. Tencent’s first bet in Brazil was Nubank. After that, it jointly invested US$350 million with SoftBank in the Argentine mobile banking service application Ualá in 2021, and jointly invested with SoftBank in the Brazilian freight management platform Frete.com; Ant Financial also invested in Brazil in 2018 Financial technology company StoneCo invests US$100 million.

In recent years, TOC companies such as Huawei, Xiaomi, Didi, and Miniso have dominated the Latin American market, and there are even prototypes of Dingdong Grocery, Meicai, and Xingsheng Youxuan. It has been verified that the absolute volume of the Latin American market occupied by these companies is much smaller than that of China, but their gross profit margin is much higher than that of China. However, due to the natural physical distance, very few Chinese founders are willing to stay there. Although local founders are good, they are still lacking in aspects such as execution, operation, and product design.

For U.S. dollar investors from a Chinese perspective, purely localized projects are obviously not the best place to start. Zhao Penglan told us, “We need to find the natural connection and comparison with China from the perspective of Chinese founder and China model, and then we help the invested companies empower them from the localization direction.” BAI Capital invested in Stori in 2019, and in 2021 After investing in Trubit, both financial technology companies have achieved explosive growth. Stori became Mexico’s latest unicorn company in 2022, and Trubit’s business volume has also increased nearly 50 times in just 2 years.

Mexico will not be an ideal investment destination for everyone. One of the major pain points facing Mexico when going overseas is local security issues, followed by instability in the political situation and trade policies.

But no matter what, there are always lone brave men.

Middle East

> Don’t just look at “Go Out”, please also pay attention to “Come In”

The most popular sector in the past year is undoubtedly the Middle East. Gulf countries, represented by the United Arab Emirates and Saudi Arabia, are rapidly becoming the “eye of the storm”, especially Saudi Arabia.

Hundreds of investment institutions have visited Saudi Arabia in 2023, and Chinese investors and startups have continued to organize groups to go to the Middle East. It was once jokingly called the new “Hundred Regiments War.” Unfortunately, except for a few companies that fit the local development plan and received investment, most people – especially investment institutions, almost no one has actually raised money.

We once pointed out in the article “Trek to Riyadh” that compared with the sovereign funds of the United Arab Emirates, Kuwait, and Qatar, the Saudi Sovereign Wealth Fund (PIF) is the most difficult to raise money. For the Chinese industry, funds from the United Arab Emirates, Qatar and other countries have long been Old Money. In the early years, several major sovereign funds began to enter China and had their own offices. But it has only been seven years since Saudi Arabia’s huge capital was opened to the outside world. At the same time, because of the historical particularity of Saudi Arabia, the national capital that undertakes strategic missions is destined to serve the country’s future development plan.

A local Saudi investor said that whether it is Saudi government capital or private institutions, their theme is more focused on localized investment. Even if it is a global investment, it is hoped to attract overseas advanced technology, high-end talents and even entertainment IP to Saudi Arabia. “Compared to the UAE, most of Saudi Arabia’s investment is in exchange for the revitalization of the country and nation.”

A domestic dual-currency fund investor gave up after intensively exploring the Middle East for a period of time. He believed that “the Middle East is more focused on the capital side of the market, not the asset side of the market. The Middle East needs to use a large amount of foreign investment to replace traditional tourism and entertainment. industry, infrastructure, etc., it is not an endogenous growth.”

On the other hand, compared with attracting foreign investment to the Middle East, Middle Eastern capital represented by the United Arab Emirates and Saudi Arabia is more active in overseas investment, especially in China.

IT Orange shows that in 2023, there will be more than 10 incidents of Middle Eastern capital investing in Chinese companies, with investment and financing incidents involving more than 20 billion yuan, and many investment incidents are huge investments. Different from countries such as Singapore, which prefer investment in start-up companies, Middle East capital prefers growth-oriented and mature companies. Based on this, although there is a gap in investment quantity between Middle Eastern capital and Singapore, Japan and other countries, the probability of investing in unicorns is much higher than that of the above-mentioned countries.

In December 2023, Abu Dhabi investment institution CYVN announced a 15.7 billion yuan investment in NIO, directly pushing this round of “Middle East wealthy fever” to its peak. In fact, Middle Eastern capital also made intensive investments in the primary market last year, such as Drip, cross-border e-commerce giant SHEIN, JD Industrial Products, and mobile e-sports operator “Hero Sports VSPN” (which acquired Savvy Games, a subsidiary of Saudi Arabia’s sovereign wealth fund). Group’s exclusive investment of US$265 million set a record for a single investment in the domestic sports industry in the past two years).

When Middle East sovereign wealth funds discuss investment cooperation with Chinese local governments, they focus on local advantageous industries. One of the dimensions they consider is what benefits investment in this industry can bring to the country. The current layout of Middle Eastern capital in China is, on the one hand, in the resource field, which is dominated by petrochemical projects and new energy projects, and on the other hand, it includes industries such as biomedicine, the Internet, and high-end equipment.

In 2024, the Middle East’s first investment in China was in biomedicine: Hulian Technology announced a US$63.3 million financing, led by Prosperity7 Ventures, a fund of Saudi Aramco Ventures. It is worth mentioning that the last investment by Middle East funds in China at the end of 2023 was also made by Prosperity7 Ventures: it led the investment in Juhe Biotechnology’s Series B round of financing exceeding 100 million yuan.

According to public information, Saudi Aramco’s investment in all projects in China in 2023 alone will exceed US$30 billion. According to incomplete statistics, at least seven Middle Eastern investment institutions have invested in Chinese biopharmaceutical companies. In addition, the sudden purchase of Chinese new energy vehicles by Middle Eastern consortiums also left a deep impression on the market. NIO alone raised more than 20 billion yuan from the Middle East last year.

An investor based in the Middle East told “Undercurrent Waves” that the Middle East is more suitable for proven mature products and services. Domestic to B/to G products are more suitable for development in the Middle East. To C opportunities are mainly concentrated in consumer goods and Games and other entertainment products. Compared with the European and American markets, which also have high unit prices, the Middle East has no major discrimination or barriers against Chinese products. In addition, the business model going overseas in the Middle East requires a relatively strong localization gene, and it is difficult to land a pure air force when going overseas.

In 2023, Huang Mingming, founding partner of Mingshi Capital, led the Mingshi Capital team and more than ten invested companies to the Middle East twice, visiting local officials, investment institutions and Chinese technology companies such as Huawei that have been deeply involved in the Middle East for many years. At that time, he was deeply It is felt that a huge change is taking place in the Middle East. “The Middle East is in a very important position in the future changes in the world. It has the opportunity to become an important level in the global third pole. It is also a key foothold and starting point for Chinese technology companies that are interested in globalization. Click.” Huang Mingming said.

In fact, if globalization is “just selling products or services to one or two foreign markets,” then most of China’s overseas entrepreneurs have already achieved it. But if it means truly reaching global influence like Coca-Cola, Chinese companies still have a long way to go. At present, there are still only a handful of Chinese companies that are well-known and in-depth in various markets around the world. It is also very good for startups to localize in 1-2 markets.

At present, the biggest difficulty in the globalization of Chinese enterprises is still talent and global management. An investor based in the Middle East said frankly that compared with the relatively rich talent pool in Europe and the United States, talents in other emerging markets are still being cultivated and trained. The recruitment and management of talents for multinational operations are far more complex and difficult than in a single domestic market. A company’s success in one market may not necessarily be reproduced in another market, and the methodology is difficult to replicate in batches.

As for the Middle East market, Huang Mingming believes that only founders can make truly long-term decisions and investments. Therefore, founders must make up their minds to go overseas, and currently the best destination for going overseas is the Middle East.

Japan

> Out of the “lost thirty years”, virtual consumption takes the lead

The Japanese stock market is booming. Just after the beginning of 2024, it even broke the 34-year historical high record, rising above 40,000 points.

An investor told “Undercurrent Waves” that project valuations in Japan have begun to become more expensive. A series of changes have made people re-examine this neighboring country across the sea. After getting out of the “loss”, what challenges and opportunities will the world’s third largest economy contain?

“Japan, which grew up in the disaster, has once again entered the fourth era of consumption.” Japanese writer Miura Shu, who once wrote “Upper Society”, concluded in his new book “The Fourth Era of Consumption”. The fourth era of consumption refers to that after experiencing the full development of consumer society, people begin to pursue simplicity and focus on interpersonal relationships.

The first wave of Chinese brands going global in Japan was initiated by major commercial and consumer brands such as Haier, Hisense, and Lenovo. In recent years, the Chinese catering industry represented by Haidilao, Mixue Bingcheng, and Nayuki’s Tea The representative tea brands and domestic cosmetics brands such as Hua Xizi and Hua Zhizhi have also penetrated deeply into the Japanese market.

Going to sea in Japan, we are taking advantage of the east wind. On the one hand, considering the yen’s global currency advantage, the proportion of rent costs and labor costs in Japan is weakening. In addition, thanks to the previous efforts of many brands, domestic products are no longer synonymous with shoddy manufacturing.

In the observation of Zhao Penglan, a partner at BAI Capital, investment opportunities in Japan mainly lie in two major tracks. One is the new energy industry guided by the will of the state, and the other is the long-term solidified business structure that is beginning to loosen and new economic opportunities brought by mass entrepreneurship.

The popularity of new energy mainly appeared after the Japanese government’s subsidy policy. As early as 2009, Japan issued a subsidy policy for the purchase of new energy vehicles. From 2020 to 2022, the intensity will continue to double. The Japanese car market has always been known as one of the most difficult markets to enter. Toyota’s monopoly position makes foreign car companies quite fearful. However, when it comes to electric vehicles, penetration has always been in the single digits, and the attitude of leading Japanese car companies has never been positive. is one of the reasons, but it also gives opportunities to Chinese car companies such as BYD. In 2023, China’s automobile exports will surpass Japan for the first time and become the world’s largest automobile exporter, and Japan may become the next stop.

As the fourth largest e-commerce market in the world, Japan’s per capita annual online shopping consumption is US$1,164, which is equivalent to twice China’s per capita consumption and exceeds the per capita consumption of the United States.

With the support of purchasing power, Japan’s e-commerce has huge potential. In recent years, Japan’s e-commerce rate has increased year by year. In the three years from 2021 to 2023, Japan’s average e-commerce growth rate will be 12.4%, according to predictions from Japan’s Fuji Economic Research Institute , Japan’s B2C e-commerce market will grow by about 4.5% in 2023, presenting broad growth prospects for domestic brands.

The first domestically produced cosmetics product to make a splash.

The first stop for most domestic cosmetics brands to go abroad is Southeast Asia. Around 2020, emerging domestic beauty brands such as Perfect Diary, Colorkey, and Y.O.U collectively went to Southeast Asia through Shopee, Tik Tok stores and other online stores. The business platform has achieved brand and market accumulation, and has successively won the first place in multiple category rankings. However, what follows is the serious problem of homogeneity, making it difficult to differentiate. Therefore, after sweeping across Southeast Asia, the Japanese and Korean markets with their cultural and geographical advantages have become the next battleground for domestic cosmetics eager to save themselves. Among them, the Japanese battlefield was the most intense. In the first half of 2023, Japan’s imports of cosmetics products from China increased by about 45% year-on-year to about 6.1 billion yen.

Moreover, cosmetics brands do not only have female audiences. Huang Hai, a consumer investor who just returned from a study tour in Japan, discovered that the penetration rate of male cosmetics (including skin care products) in Japan has reached an astonishing 50%.

In addition to cosmetics, Huang Hai also discovered some industries that are growing against the trend:

Consumption related to the “virtual world” constitutes a huge business opportunity in Japan. There are two derived business models in the current IP industry: One possibility is to start from the diversification of content forms and derive the expression of IP into movies, TV series, dramas, dance dramas and even musicals, etc. The commercialization efficiency of games is the highest.

As we all know, Japan has a developed game industry and is also the third largest mobile application market in the world. The average single download payment of mobile games has exceeded 21 US dollars, ranking first in the world. This figure is more than 4 times that of the United States and 1.5 times that of China. The application market and consumption habits that Japan has cultivated over the years have also provided natural soil for overseas entrants. In the past few years, many games produced by China’s Tencent and MiHoYo have achieved good results. In the non-game field, the Chinese team’s social application weplay and live broadcast application Bigo Live are both on the list.

South Korea, which also belongs to the East Asian cultural circle, is also a market that those who want to export games must pay attention to. South Korea has been vigorously cultivating the game industry and is the only country in the world that has established a “Game Business Law” for games. But in terms of market size, South Korea cannot compete with Japan.

The other model focuses on derivatives, manufacturing IP into toys, figures, models, cards and other products. In China, the representative case of this model is Bubble Mart.

In Huang Hai’s view, today’s physical entrepreneurial opportunities in Japan are far less than those in China, but the Japanese still need a place to place their ambitions and dreams. When there are fewer and fewer opportunities for physical entrepreneurship in a society, there may be more and more opportunities for virtual consumption.

Outside of the virtual world, another very developed industry in Japan is healthcare. According to Amazon data, silver-haired people who have money and leisure are an online shopping group worthy of attention. They invest seven times more in fitness than young people.

Compared with China, Japan is a highly mature, highly developed and large consumer market. Its offline channels account for a very large proportion, and there is no closed-loop e-commerce control by giant APPs online. According to data, the e-commerce penetration rate in Japanese society has been less than 10% for a long time. Therefore, Japanese companies are not very firm in their investment and determination in e-commerce business, and their operational capabilities and experience are relatively lacking. To a certain extent, this is left to Chinese companies. There is still room for “dimensionality reduction strikes”.

However, Japan, which has experienced the pain of the “lost thirty years”, and China, which has just ended its new consumption boom, still need to overcome all aspects of acclimatization problems for brands accustomed to the domestic market. For example, Chinese brands benefit from the highly developed domestic e-commerce market and are accustomed to “fast”. If they do not experience explosive growth in a few months, the brand is likely to want to quit. Nayuki, who went to Japan but failed to return, is a case in point.

Of course, for new consumer brands still in China, how to be “slow” is also a required course.

Southeast Asia

>Abandoned? Consumer retail boom

Warm Southeast Asia is losing its enthusiasm for venture capital.

The 2023 Southeast Asia Internet Report jointly released by Google, Temasek, and Bain pointed out that the amount of financing in Southeast Asia in 2023 has dropped to the lowest point in six years, and 88% of investors believe that they are facing a more difficult exit. environment. Specifically, in just one year, the total amount of seed and Series A financing dropped by 68%, and the total amount of D+ Series financing dropped by 77%.

The withdrawal of international hot money seems to be an irreversible trend in the Southeast Asian market. Looking back eight years ago, Southeast Asia was almost the first choice for Chinese venture capital overseas: around 2015, many Chinese investment institutions imitated Son’s time machine theory and came to Southeast Asia to make gold, trying to copy China’s mature business models to emerging markets.

At that time, there was almost no local venture capital, and early entrepreneurs focused more on B2C models such as shared travel, e-commerce, and games. The business models were relatively straightforward and proven, and were generally localized versions of successful international startup companies. After 2018, thanks to the popularity of mobile devices and consumers’ rapid application of new technologies, B2B and B2B2C business models began to emerge.

But the vast majority of institutions betting on Southeast Asia ultimately failed.

Since Sea, known as the “Little Tencent in Southeast Asia”, laid off about 7,000 employees in September 2022, Sea’s stock price has shrunk by nearly 90% from its peak of US$202.6 billion after its listing. In June 2023, Grab, the Southeast Asian online ride-hailing giant, announced the layoffs of more than 1,000 employees, accounting for 11% of its total employees. GoTo, Indonesia’s largest technology company, will suffer a net loss of over 50% in 2022 and lay off 1,300 people.

Yu Lu, managing partner of Zero One Venture Capital, told us that Zero One started looking at Southeast Asia around 2016. At that time, it brought many entrepreneurs and people from large companies to inspect the market, and also invested in many early stage founders in various directions. people. But later I discovered that this didn’t work, “because these people are not founders in nature (they were forced out by us).”

At that time, Yu Lu had a saying: “Don’t get excited the first time you go there. Go three times first to see if you are still excited. In fact, many people don’t want to go there again after going there three times. You will find that after going to many places, There was no chance because the chain wasn’t up.”

Yu Lu believes that each overseas area has its own characteristics. For example, what Saudi Arabia needs most is infrastructure and equipment, and it may not be e-commerce and the Internet at all. Another important point is that companies must follow the lead of big manufacturers, such as how CATL and BYD build overseas factories, or even how milk tea brands expand, and follow this chain.

Facing a rapidly changing Southeast Asia that is showing more opportunities, it may be difficult for investors to make a relatively long-term answer to some unanswered questions.

However, many investors said that 2024 may be a year for Southeast Asia to inherit the past and usher in the future: after the mass migration of technology industry personnel caused by the wave of layoffs, Southeast Asia has ushered in new incremental opportunities in offline retail consumption and manufacturing transformation.

Zhang Weijie, who previously invested locally in Vietnam and joined a Singaporean family office last year, told us that when investing in Southeast Asia, we cannot have the same expectations of scale as China and the United States. We might as well change the traditional valuation idea into a business idea – the capital does not need to withdraw, but It is to exchange part of the cash flow or equity profit dividends from the income of the invested project to repay the initial investment cost.

According to Zhang Weijie’s observation, Southeast Asia at the moment is more suitable for business-minded projects. “This is caused by differences in consumption habits. We must recognize the reality. China’s business style is special in the world and cannot be copied completely.” Zhang Weijie believes that the current Southeast Asian market does not offer so many opportunities for VCs and early investors. Big, because the scale of a single market is very small, and there is no disruptive innovation. It is difficult to fight for bigness with small things, “but there are opportunities for strategic investment (industrial investment) and PE.”

One case is the investment in Pizza 4P’s by Mekong Capital, a PE company that is deeply involved in Vietnam and focuses on consumption. The latter is a chain of pizza restaurants opened in Vietnam by a Japanese couple. It combines Japanese concepts and provides unbelievably good service. After opening 8 stores in 2018, Mekong Capital invested and expanded it to 27 stores in 2022 before successfully exiting. Pizza 4P’s after-tax profit will be US$3.5 million in 2022, and Cool Japan Fund in Tokyo, Japan, has invested US$10 million to take over the business.

It is understood that Mekong Capital does not invest in franchises, only direct operations, and is completely focused on Vietnam. Its founder is from Chicago and went to Vietnam in 1996. It was the first to invest in some import and export companies, which is very different from the Chinese capital’s style of play.

Mixue Bingcheng is currently one of the brands with the deepest roots in the Southeast Asian market, with nearly 4,000 stores. Almost at the same time as Mixue Bingcheng, Overlord Cha Ji also went to sea. According to official data, Bawang Chaji currently has close to 100 overseas stores, distributed in Malaysia, Singapore and Thailand. Among them, there are more than 50 stores in Malaysia, and it is already regarded as the leading tea brand in the country. Heytea will also land in Malaysia in the second half of 2023, and Naixue’s tea will also re-enter the Southeast Asian market and open its first store in Thailand.

In addition to offline consumer retail, the e-commerce platforms of major Internet companies seem to have never thought about withdrawing from the Southeast Asian market, or even further expanding their markets. As a result, we can see that Shopee, Lazada and TikTok e-commerce have formed a “three-legged” situation, and Temu is also working hard to join.

On the other hand, in recent years, affected by factors such as China’s weakening demographic dividend, rising labor costs, and industrial upgrading, the world’s major terminal manufacturers have set up factories in Southeast Asia. These international companies are gradually moving their production capabilities in China to Southeast Asia because costs are lower there. In the automotive field, a group of automotive companies represented by Tesla and BYD have continued to increase investment in Southeast Asian countries.

Vietnam is the biggest beneficiary of manufacturing migration from China. Not only does it have Samsung’s largest production base in the world, but Apple’s number of supply chain companies in Vietnam has also increased since 2018. Currently, many electronic component production bases such as Foxconn and Compal Computer are gathered here. The expansion of electronics manufacturing has made Vietnam the fastest-growing economy in Southeast Asia.

European

> The road ahead is difficult, but you must learn to make slow money

For many Chinese companies going abroad, this ancient market in Europe is still a highland for product standards, technological innovation, market and brand, and it has a rich pool of high-quality talents composed of overseas Chinese and overseas students. “Battleground”.

However, further observation from the perspective of regional markets shows that the four major regions of Northern Europe, Western Europe, Southern Europe and Central and Eastern Europe are actually quite different in terms of regional economy, income level, population quality and other dimensions.

“Although the European market is considered a very mature market, in terms of culture and characteristics, it is large and fragmented. Although the EU is integrated, the countries are relatively loose and have different cultures and Habit.” Zhao Jing, a partner at Cathay Capital, told “Undercurrent Waves”.

Zhao Jing holds an engineer degree and a doctoral degree in chemical engineering from the Ecole Nationale Supérieure de Chemistry in France. She has lived in Europe for 15 years from school to work. Before joining Cathay Capital in 2019, Zhao Jing worked at Total Energy in Europe for nearly ten years. In his view, the differences between regions within Europe have provided a large number of small and medium-sized brands with market segments and track opportunities to go overseas, and the diversity between regions itself may also be a business opportunity.

The most typical example is PingPong, a cross-border payment platform headquartered in Hangzhou, Zhejiang. Since 29 currencies are used in 50 countries across Europe, coupled with different payment and financial laws and regulations between different countries and regions, companies operating in Europe will inevitably face a complex payment environment, additional fees and currency risk. In 2017, PingPong obtained the Payment Institution license issued by Luxembourg CSSF to provide cross-border collection and local payment services for cross-border merchants. In 2020, it was upgraded to an Electronic Money Institution license with electronic currency storage and more functions. It obtained the British EMI license in 2023 and achieved compliance in 28 countries in Europe. PingPong has also become one of the cross-border payment companies with the widest range of licensed operations in European countries.

Specifically, the development level of Northern Europe (Sweden, Norway, Denmark, Finland, Iceland) and Western Europe (Britain, France, Germany and other countries) is at the top of the European pyramid, mainly relying on industry and industries such as trade, transportation, communications and finance. Service industry; Southern Europe (Italy, Spain, Greece, etc.) is in the middle, with tourism and agriculture strangulating the lifeline of its economy, and lack of growth momentum; Central and Eastern Europe (Hungary, Poland, Czech Republic, etc.) although most of their predecessors were Warsaw Pact countries , the economic foundation is relatively weak, but in recent years it has been vigorously promoting “de-agriculturalization” and embracing new energy industries.

There are also certain differences in the income levels of residents in different regions. The per capita GDP in Northern and Western Europe is generally more than 40,000 US dollars, especially in Ireland, where high-tech output accounts for 40% of the total GDP. This figure has reached 103,000 US dollars, so prices are higher; in Southern Europe The per capita GDP is around US$20,000 to US$30,000. Due to poor economic risk resistance, few high value-added industries, and heavy government debt, the middle class prefers cost-effective products; the per capita GDP of Central and Eastern European countries ranges from US$10,000 to US$20,000. Price levels are low, and the purchase unit prices of local discount supermarket chains such as Lidl and Aldi are already lower than those in second- and third-tier cities in China.

“European consumers are generally considered to have relatively high purchasing power. On the one hand, they pay more attention to product experience, personalization and customization of services; on the other hand, once they recognize a brand, they will show relatively high loyalty. ”

This kind of user portrait determines that European consumers and companies not only care about the quality of the products they purchase, but also pay great attention to post-purchase services and experience. Zhao Jing has observed during the boom in going overseas in the past two years that major Chinese companies going overseas in Europe still adhere to the logic of “overcapacity in manufacturing and bringing extremely cost-effective goods to Europe.” However, it is still at a relatively early stage when it comes to after-sales, personalized customization, and sustainable operations.

“Going overseas in the European market must be a long-term process, not just a one-time deal to sell products. The loyalty of European users to the brand is actually a double-edged sword. If the product + service is good, the brand It will get better and better and add more value. On the contrary, once problems occur, the negative effects in the European market may be greater than in other markets.”

This observation is consistent with the high-end and customized characteristics of Chinese products sold to Europe in the past two years. For example, in 2018, Haier acquired the Italian company Candy, and Hisense acquired the European white goods company Gorenje. Originally, Japanese, Korean, European and American companies occupied a share of the European high-end home appliance market. With the improvement of product and brand power of Chinese companies and the increase in market penetration, they have now become a new force in the European high-end home appliance market. Zhao Jing particularly mentioned Europe’s status as the “commanding heights of global ESG”. “Most of the new international trade policies related to dual carbon are led by Europe. This is essentially a reflection of the European market’s long-term focus.”

Due to the strong regulatory environment in the European market, which is not friendly to local start-ups, the financing costs of small and medium-sized enterprises are relatively high, which provides space for new technology business models that have been proven in China. Among them, the new energy vehicle industry chain is taking the biggest action.

For the European market, leading companies in the Chinese enterprise industry chain have continued to take measures: in July 2023, SAIC Group stated that it had decided to build a factory in Europe; in December, BYD announced the construction of a new energy vehicle production base in Hungary; with CATL, Power battery manufacturers represented by Honeycomb Energy, Envision Energy, and Guoxuan High-tech announced the establishment of production bases in Germany, Spain and other countries a few years ago; new car-making forces represented by NIO also announced in October 2022 that they would establish production bases in Germany, Spain and other countries. Countries such as Germany and the Netherlands have opened direct-operated stores to enter the European market. According to data cited by European Commission President von der Leyen in his State of the Union address last year, China’s electric vehicle market share in Europe has risen to 8%, and it is expected that China’s electric vehicle market share in the EU will increase to 15% in 2025.

However, for Europe, which is home to traditional car companies, the threat posed by these measures is even stronger, and the characteristics of strong policy influence throughout Europe are reflected. At the beginning of 2023, Turkey proposed to impose a 40% tariff on pure electric vehicles produced in China, while imposing a 10% tariff on other countries. At the end of the year, it proposed that “new energy vehicles declared imported from overseas must obtain additional license documents.” “Enter” and other additional conditions; on September 13, European Commission President von der Leyen announced in the European Parliament’s State of the Union address that the European Commission was launching a countervailing investigation into electric vehicles from China. The smart hardware and financial technology industries will face the EU’s strict privacy laws (such as GDPR) and big data regulatory systems.

Judging from the current solutions of Chinese enterprises, reverse joint ventures and building factories overseas are a possibility to hedge political risks. For example, Stellantis Group is planning to introduce Leapmotor’s electric model production line at its Mirafiori factory in Turin, Italy, through its joint venture with Leapmotor, Leapmotor International. After the production line is opened, while avoiding possible tariffs, localized production in Europe also means that the subsidy rules for carbon footprint points will no longer be an obstacle. The all-European local supply chain has laid the foundation for exporting to the North American market.

In addition, many companies have chosen to find local service providers as partners, or directly acquire local companies to integrate resources and form local teams on the spot. For example, when Alibaba Cloud launched its first data center in Europe in Germany, it reached a strategic cooperation with communications operator giant Vodafone.

Africa

> There is a future, but it’s not here yet

Africa is also known as the last billion-level Internet market in the world, and for Chinese investors, it seems to be the “time machine” that travels back to the golden age of China’s Internet.

There are many African countries, with a population of nearly 1.4 billion, of which more than 60% are under the age of 25. The average age is much lower than that of Europe (43) and China (37), which are seriously aging. It is expected that Africa’s labor force will reach 1.1 billion in 2034, and the demographic dividend will be released in the process of industrialization.

However, due to the constraints of infrastructure and other factors, the regional characteristics of Africa are very obvious. The areas usually targeted when going overseas are “Black Africa” ​​south of the Sahara, including Kenya, Ethiopia and Tanzania in East Africa, Nigeria, Cote d’Ivoire, Ghana, Cameroon, etc. in West Africa. Venture capital is most active in Nigeria and Kenya.

Nigeria and Kenya are the leaders in economic development in Africa. The former has become the most populous country in Africa with the same population as Shanghai. The King of Africa “Transmission” made this place the first stop of its expedition to Africa. The latter is the “entrance” for many capitals and enterprises to enter Africa. Many financial institutions will choose Kenya as the first stop to enter Africa, or set up their regional headquarters here. This is because Kenya is relatively friendly to overseas capital politically, and also It has a certain influence in East Africa. In addition, Kenya’s technological development level is also in a leading position in East Africa. Its telecommunications industry developed earlier and it owns Safaricom, the largest telecommunications company in East Africa. Based on this, Kenya launched the mobile payment system MPA before 2010, and thus won the ” Prairie Silicon Valley” reputation.

However, infrastructure, technology and economic development are only prerequisites for venture capital to take root. Just like in China 20 years ago, a plane from the United States could be filled with all venture investors interested in the future of the Chinese market. Zhang Lingxiu, a partner at Roselake Ventures, once concluded: In Africa, the secondary market and late-stage investment have a relatively long history, but venture capital can only be considered in its infancy. Venture capital institutions, as well as large-scale and professional investments were all in the past. It took five years to form.

According to data from the African Private Equity and Venture Capital Association, in the third quarter of 2023, venture capital funds’ investment in Africa reached US$895 million, an increase of 28% from the same period in 2022, and an increase of approximately 20 times from five years ago. It is worth mentioning that in the third quarter, when investment and financing were weak, Africa was the only region in the world to achieve double-digit growth.

Although the venture capital ecology in Africa lags far behind the development stage in China, compared with Southeast Asia, it is only about four to five years behind. Judging from the data of VC financing amount, the overall scale of Southeast Asia will exceed more than 10 billion US dollars in 2022, and the scale of Africa during the same period is equivalent to 2/3 of Southeast Asia. In addition to rapid growth, the fintech track has developed rapidly in the past five years. Among the dozen unicorn companies in Africa, fintech accounts for 8. Nigeria, as the home base, has 6 fintech unicorns. Including Flutterwave, Interswitch, Opay, etc.

In addition to Fintech, e-commerce in Africa is also growing rapidly. It is expected that regional e-commerce transactions will grow by 50% by 2025, and online shopping consumers will increase from 334 million in 2021 to 519 million in 2025, with a growth rate of more than 56 %, and 89% of these light industrial products come from China.

One of the most significant results is that Shein, a cross-border e-commerce company from China, has surpassed Walmart and Amazon to become the most downloaded shopping app on Google Play in South Africa.

Africa has become a fertile ground for cross-border e-commerce, and the industry chain surrounding e-commerce, such as e-commerce logistics and SaaS, has also entered the fast track. In Africa, in addition to Shein and Amazon, there is also the e-commerce platform Jumia, Africa’s first unicorn listed in the United States, as well as the local e-commerce zando.co.za it acquired, as well as some online ordering platforms for traditional supermarkets. .

The success of “King of Africa” ​​Transsion has also given Chinese e-commerce companies confidence. Facts have proved that as long as the price range is accurately positioned, Africa can also develop a booming consumer market. In recent years, short drama apps, wigs and even nail art have gradually become big businesses.

In addition, green technology represented by new energy, such as electric vehicles for travel, is also developing rapidly. Citing the observation of the well-known clean energy media Cleantechnica, in Ethiopia, a large number of Chinese-made Volkswagen ID. models appear in dealer showrooms and on the road, and have become one of the mainstream products in the local electric vehicle market; in Ghana, several companies and start-up companies Provide more than 20 Chinese-made electric vehicles to the local area; in Rwanda, GoKabisa has brought Geely’s Geometry E pure electric SUV to the local area; the only new electric trucks available in Zimbabwe and Kenya are provided by BYD; SAIC Maxus delivery3 and Dongfeng Xiaokang EC3 has become a star product in the South African market, with sales increasing year by year.

However, the road conditions in Africa are poor, and it is still too far away to leapfrog the era of fuel vehicles and jump directly into the era of electric vehicles. Africa is still in the initial stage of introducing electric vehicles.

In the eyes of many investors, infrastructure problems are still the biggest obstacle to their overseas expansion in Africa. A VC partner told “Undercurrent Waves” that he had also researched and invested in projects in Africa, but ultimately found that the infrastructure was so poor that “it would be useless even if Wang Xing and Zhang Yiming came.”

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