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Tuesday, October 03, 2006

China trip report!

Apologies in advance for a long blog post!

I returned last Wed from a 2+ week trip to Beijing, Shanghai, Guangzhou, and Hong Kong. This is my 4th trip to China during the past 12 months and I continue to feel that China presents great business opportunities everywhere you look, but also presents huge execution challenges, especially for foreign companies and investors. With Google continuing to bleed market share (reported on CNet Asia here) and rumors of Ebay's exit/sale of Ebay/Eachnet (to Hutchinson Whampoa?), I think the road to success is littered with a lot of dead bodies...

I've been focusing on 3 themes related to China.

Automotive Services Market
My Shanghai team (Min and Jean) and I were serving a US client, Cross Country Group, a $400 mm revenue provider of roadside assistance services in the US, with over 70% automotive OEM market share and 70 mm customers under management in North America. We attended a conference hosted by AutoFans (in Chinese), aka Cheyoo, a Sinopec subsidiary. The conference focused on automotive associations (aka 汽车俱乐部) and enthusiast clubs (车友会).We even got some press coverage here, here, and here (all in Chinese).

Unlike automotive manufacturing (OEM), automotive services is very lightly regulated and relatively undeveloped so far. Some of the big aggregators include: UAA (earlier client of Ng Ventures and Ymer Ventures), BitAuto, ChinaCars. We also met some of the more focused tow operators: CAA, SYAA. I can't blog further on what we found because its confidential. :)

Global Trading and B2B
The second theme is around the area of global trading and B2B information.

We met with Jason Wan, CEO of BusyTrade. They just completed an angel bridge round (that I missed out on because I was on paternity leave), and are getting some great traffic (see Alexa ranking). I am convinced that there is serious growth opportunities in this area and that Alibaba is not going to be the only successful company in this space.

I also met with several other companies in this space, including Diane Wang, CEO of DHGate, providing wholesale marketplace services to Chinese suppliers and global buyers. There is another Shanghai-based, stealth-mode start-up that is more focused on the China domestic market.

I've also got some proprietary ideas about how to tackle this market but need to find the right partners to move these ideas a bit further along, possibly through incubating a start-up team to execute on these ideas. More on this later.

Marketing Services and Membership Programs

Met for the 2nd time with a company called Yacol, creating a membership club program across a network of merchants. I can't say a lot about what we discussed, but I can say that I'm excited about their traction so far and their future direction. Super smart team!

Also had dinner with Grace Liang, CEO of SkyLinkage, a marketing services provider to the financial services industry. This was also a confidential conversation, but I think this company is worth watching too.

I met with numerous loyalty marketing companies. I don't have an advisory relationship with any, but am happy to share advice on a non-exclusive basis to help as many of these companies be successful. My latest insight into loyalty marketing comes from the game design industry. As I blogged before, I really like Amy Jo Kim's formula for game addictiveness, boiled down into 5 key factors:

1. collecting
2. points
3. feedback
4. exchanges
5. customization

Here's her pitch from an earlier conference:

OK, sorry for the long post. Thanks again for the exciting conversations with some very talented Chinese entrepreneurs, and I'd be excited to help in whatever way I can.

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