Matthieu David interviews Vincent Djen, Director of Cheng Kung Garments and CEO of REMAKEHUB. The textile industry has consistently been a labor-intensive industry. In this episode, we explore what the future hold for the garment industry and how a circular economy fits into that. Are Chinese consumers already requesting fashion products made from recycled materials? Can textile factories be digitalized yet or is there still a long way to go before that happens? Find out the answers to these questions and more in this new China Paradigm interview.

• 0:00 Guest introduction
• 5:59 How did the current outbreak affect the garment industry?
• 7:51 Is the winter collection delayed as a result of the coronavirus outbreak?
• 8:17 The story behind Cheng Kung Garments
• 10:31 How and why did Vincent Djen decide to take over the family business?
• 13:28 Cheng Kung Garments – the current size of business
• 14:27 What are the highs and lows of a season in the garment industry?
• 17:05 How much of Cheng Kung Garments’ production is in-house and how much is outsourced?
• 20:53 Is China still the best place for the textile industry?
• 24:31 Why is the textile industry still so labor intensive?
• 26:39 What are the costs of using robotics for manufacturing instead of people?
• 28:56 What are the initial costs for entrepreneurs who would want to get into the textile industry?
• 33:01 Is there support from the Chinese government to make factories more innovative?
• 37:03 How is 3D printing helping the textile industry?
• 41:09 How does Recycling fit into the day to day activities of the Cheng Kung Garments factory?
• 44:06 Mechanical vs Chemical Recycling – how many times can a product be recycled?
• 46:42 REMAKEHUB – what and why have specific products been picked for recycling?
• 48:12 Why was adding traceability for waste products recycled by REMAKEHUB important?
• 49:42 REMAKEHUB – following the “Cradle to cradle” design concept
• 50:50 Do big fashion companies already use recycled products?
• 52:50 Is it easy to tell if a finished product is made from recycled materials or not?
• 54:03 Is recycling mandatory for companies or is it still an optional feature?
• 56:18 Are consumers already buying products because they come from recycled materials?
• 57:51 What are the challenges of creating a brand in the fashion industry?
• 1:00:26 What is Vincent Djen’s greatest business goal?
• 1:01:28 What books have inspired Vincent Djen in his entrepreneurial journey?
• 1:02:43 What does Vincent Djen read to stay up to date with China?
• 1:05:24 What productivity tool does Vincent Djen use to run his business?
• 1:08:25 What unexpected business success or failure has Vincent Djen witnessed in China?

One relevant episode

We believe, that China, with 20% of world population and as the second world economy, is impacting every single business, small to big. That is why it is a new paradigm. How does China impact your business is the ultimate question we will answer through those podcasts.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

This article China Paradigm 116: Contributing to the Chinese circular economy is the first one to appear on Daxue Consulting - Market Research China.

Matthieu David interviews Nathan Siy Founder and CEO at Evoke Motorcycles. The company aims to be a market leader in the transition from gas to electric propulsion motorcycles. There is no doubt that going electric is the future and Evoke’s electric motorcycles seem to be the right type of products for this emerging market in China. Making a strong partnership in terms of manufacturing, how Evoke Motorcycles approach product development, and how do they compare with what Tesla is currently doing in the automotive business – all these topics and more are discussed in this new China Paradigm interview.

• 0:00 Guest introduction
• 3:00 Evoke Motorcycles – current position on the Chinese market
• 5:56 What is the pricing policy of Evoke Motorcycles?
• 8:06 What was the initial investment for Evoke Motorcycles?
• 10:58 Guanxi – how important is it to build trust before establishing a business relationship in China?
• 12:52 Working with Foxconn – how was Evoke Motorcycles able to make that happen?
• 17:38 At what stage was Evoke Motorcycles before partnering with Foxconn?
• 19:36 How did Foxconn impact Evoke Motorcycles’ business strategy?
• 20:57 Riding the Industry 4.0 wave – how Foxconn is able to pivot so fast
• 25:25 Building the product – how does that process look like?
• 29:21 How did Nathan Siy decide to build electric motorcycles?
• 33:03 Software – does Evoke Motorcycles have a software development team?
• 34:06 Who are Evoke Motorcycles’ clients?
• 40:19 How hard was it for Evoke Motorcycles to obtain proper certification to be able to sell their products on the Chinese market?
• 44:51 Is Evoke Motorcycles’ development process a client-focused or a product-focused one?
• 47:15 How does Nathan Siy see sustainability evolving in China?
• 50:59 What is the core feature of an Evoke motorcycle that would be aligned with the concept of sustainability?
• 52:37 Why is Tesla not building electric motorcycles?
• 54:28 What books have inspired Nathan Siy in his entrepreneurial journey?
• 57:21 What productivity tools does Nathan Siy use to manage his company?
• 58:51 Should he have extra time what other business would Nathan Siy like to pursue?
• 1:01:22 What unexpected success and failure has Nathan Siy witnessed in China?

One relevant episode

We believe, that China, with 20% of world population and as the second world economy, is impacting every single business, small to big. That is why it is a new paradigm. How does China impact your business is the ultimate question we will answer through those podcasts.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

This article China Paradigm 115: Learn how this hardware start-up partnered with Foxconn to create a product-lead vision is the first one to appear on Daxue Consulting - Market Research China.

Full transcript below:

Welcome to China Paradigm, a show powered by Daxue Consulting where we interview season entrepreneurs and experienced managers in China about their business and experience in the country.

Matthieu David: Hi everyone. I am Matthieu David, the founder of Daxue Consulting and its’ podcast, China Paradigm. Joining me today is Philippe Ricard, the founder and still CEO of the restaurant called La Creperie. For those who have lived in Shanghai and now, in Hong Kong, and Vietnam as well, they all know La Creperie. That’s kind of the restaurant which we can call an institution because they have been in place for 13 years and, you know, when a restaurant becomes an institution when other restaurants around them have changed, when the Greek restaurants become French restaurants in front of you and all the restaurants are closing and opening again and they have different names, but they are still here. That is why I am calling those restaurants an institution and I went yesterday to your place in Dong Ping Lu to check the reopening a restaurant after the Coronavirus’s crisis. The restaurant, but also the people inside and how the place was. It is still the same; very nice lighting, very nice environment, a lot of decoration, music just at the right level in terms of volume and very welcoming staff. The only difference I could see is that change in opening hours and the fact that you insist on the fact that everyone has a green code in Shanghai, that they have this green card code. Anyway, I am not going into too much detail. Thanks for being with us. I am very happy to have you here and as I said before, La Creperie is for me a little bit like a well-known place like Starbucks because I can tell someone, “Let’s go to La Creperie.” I don’t have to send the address; I don’t have to tell them where it is. They know it and that’s why I am calling it an institution. Thanks for being with us again, Philippe and so what is the situation of the restaurants now?

Philippe Ricard: Thank you for all the nice words about La Creperie. It’s true that we’ve been in Shanghai for more than 13 years. It is also pleasant to hear that we are kind of an institution. At least we try to really do our best to always provide quality in terms of products and service that is very stable, and I think that’s what we have been recognized for and I think this is what makes us successful today in running a crepe restaurant in Shanghai. I am not here to pretend to be something that we are not like fine dining, but what we try to do is to provide a food experience, as we say to our customers. It goes to a lot of details like the music, like the small salt and pepper you would find on the tables and so that’s what we are trying to do. We are trying to make people travel when they come to our restaurant with the food and the environment.

Matthieu David: Could you tell us now, more about the number of restaurants you have? I didn’t say precisely how many restaurants you have and what kinds of restaurants you have. As far as I understand, you have your first one in Shanghai; two with this specificity of crepes, which is like small pancakes, for people who know French food and for people who don’t know, I will explain. It is very light pancakes from Britany, and you can eat them for breakfast, lunch, and dinner inside different ingredients. You have two of them; one is in Dong Ping Lu, one is in the city center and you have La Cabane, which is more kind of food from the Alps if I understand correctly, with fondue and so on and then you have one in Hong Kong and one in Vietnam as well. Is that correct?

Philippe Ricard: Yes, that’s right. Three restaurants in Shanghai and two La Creperie and La Cabane, which is like a restaurant that specializes in food from Savoy; so, the French Alps. We have one restaurant in Hong Kong now. We had two and we had to close one last January, but we were kicked out by the building because they were renovating the whole thing. So, we are now looking for some new opportunities. Other, we have one restaurant in the city, but that has been open already for many years. We opened in December 2008.

Matthieu David: And you are living in Hong Kong?

Philippe Ricard: Yes. In fact, I’ve been based in Shanghai for 14 years. I have been in Hong Kong for two years. It is also nice to see the city from the inside.

Matthieu David: Today is the 20^th of April 2020 and everyone is thinking about one thing, which is the crisis sparked by the virus and the first businesses which have been impacted are restaurants, coffee shops, places where you have to go to consume something, even though you can deliver more and more. I got some statistics. If we look at the restaurants in China, it is about two-thirds of them that were closed and about coffee shops, it is about 80% (learn more about the post-lockdown situation for restaurants in China). The right statistic is I think 85 or 88%. Anyway, it is massive.  That has lasted for some time, for weeks, and even when you went back, I understood form actually what your restaurants’ information that you open only for lunch or only for dinner. How was the situation for you, more in detail? How has it been financially speaking, because I believe that what happened to you can very instructive for people currently in the West? In France, Europe in the U.S; they have to know how to react, what to do when reopening a restaurant after the Coronavirus’s crisis, and how to soften the loss maybe with online delivery or maybe by readjusting and doing different things (learn more about the delivery sector during the outbreak in China)?

Philippe Ricard: Yes indeed. It has been a terrible time. Mostly for restaurants, it has been a really challenging time to find ways to survive, but I think somehow we are lucky because our restaurant has been in Shanghai for so many years. So, we have a cash flow that helps us to survive this time. Also, we have a good team and I am very happy and proud of them because when the time came when we had to close and to shut down the restaurant for a few weeks, it was not easy and until we started again, they all agreed, for example, to risk the time they would be working on the salary that they would get in proportion and this is something that helps our business. So, it is everybody’s effort that makes the difference in the end. This is something that is going to help us to rebuild and to face the situation.

Matthieu David: What was your first reaction when you knew you had to close down? Was it that you would you go to contact someone to see how you could deliver more food, was it that you would send an e-mail to all your past clients? I am not sure if it would be possible to contact them all on WeChat or whatever to tell them, “We can deliver to you” or you had to close down the whole kitchen? What were your first actions?

Philippe Ricard: In fact, we didn’t have a choice. We had to close everything. The kitchen had to be closed. We couldn’t do any delivery for a long time and then finally, when we could reopen the restaurant after the Coronavirus’s crisis , that is one of the main changes that we decided to operate, is that we wanted to push even more the delivery because that is one way to also increase our sales and making possible the fact that we are going to cover all the fixed costs, I would say. It’s working. We have done the same in others, where we faced the same situation and where delivery is becoming more and more popular. There are many restaurants I know who didn’t do deliveries before who has started to do it now. In La Creperie we have always been very cautious with delivery because we wanted to make sure that we keep quality in our products that is really at the highest and when you do deliveries, sometimes when you do control, it means that at the end at the customer’s place, it could be different, but we are taking this time to rework our recipes, our presentation, our packaging to make sure that the product at the end is still the same. The feedback we get at the moment is very good. So, we are going to push even more this possibility of delivery.

Matthieu David: Actually, very interesting to see how you thought about deliveries, not only by delivering just the product you eat but also the packaging and surroundings. Would you mind sharing how you could actually give a similar experience to people who go to your restaurant because they don’t only go to your restaurant for your food? There’s such a beautiful environment. When you go to La Creperie, you feel Brittany. When you go to La Cabane, you feel you are in the French Alps. You have paintings and you feel you are in the French Alps. Have you thought about how to convey still this feeling in some way, also through delivery?

Philippe Ricard: That’s a very good question. That is very challenging when running a crepe restaurant in Shanghai. I don’t know honestly how I could make this option, but I think that is part of the deal when you go to the restaurant you come for a real experience, and I am not sure we could find a way to make it the same at your place. What we do I beside delivery, if the people really want to have the full experience is that we do catering and it means that we can go to a person’s place with our machines and a chef and then we would make the crepes at their place.

Matthieu David: This is new or post-virus?

Philippe Ricard: It is not new, but this is something that we have been doing in the past sometimes, and now we are also pushing it, let’s say because of some people like the city experience and of course we are not going to do it for one or two people. That would be too costly for them, I guess, but if there is a group offer of let’s say 30, 40 people gathering, which becomes possible now I think it’s something that many people could be interested in because what the people like is that they can order on the spot and we do the crepes on the spot in front of them and so there is like illumination. So, if there is like a birthday party, for example, or any kind of celebrations, people would be very happy and then t is not only a question of serving the food there, but we can also allow the people to try to make the crepes, which is also fun. The people really enjoy that.

Matthieu David: True. So, we talked about the time during the crisis and you had a spot where you can compare three different locations; Shanghai, Hong Kong, HCMC and how do you feel the crisis was managed differently from different cities and what tips do you get from those cities that could be useful for people now in Europe or in the U.S while looking at the time when people will come back or things will go to a new normal because we know it’s not going to go back to normal. There is a new normal.

Philippe Ricard: Yeah, I think that is a very complicated question to answer. I think the visibility today on the market is still not clear. The markets are different between Hong Kong and Shanghai, even in terms of response from governments on the restrictions. In Shanghai, it’s been very effective because we had to shut down. In Hong Kong, we didn’t have to shut down, but we can still do deliveres and takeaways.  In Hong Kong, we didn’t have to shut down. We could have some customers come in, but of course many just didn’t want to go out. So, the business was very little. Now, in Hong Kong, the restriction makes it that we cannot have more than 50% of our restaurant full. So, it means that 50% of the tables are unoccupied and so it makes the business very complicated because of course, the sales are still not high enough to cover all the costs.

Matthieu David: How many people do you need in your restaurant to cover the costs or to be two-thirds full or what is the level?

Philippe Ricard: I think it’s that we need to be almost full because the cost is so high for the rent. In Hong Kong, if you don’t have a business that is really working very well, it is very hard to adapt and to keep alive, so you need to be good at rent negotiation in China. So, yes so, we just hope that it is going to come back soon. There is a good sign and there are good signs. Last weekend, for example, and this weekend it was very good. We had many people come in and so it shows that we are in the right direction. We just hope that there won’t be a whole new wave of cases coming after reopening a restaurant after the Coronavirus’s crisis . That’s always the risk. We have to live with it. In Shanghai, we see that it’s already one step ahead, compared to Hong Kong. From the feedback I have because I have in fact, not been to Shanghai for several weeks now, but the feedback from my team shows that more and more people are coming back to the reopening the restaurant after the Coronavirus’s crisis . People are willing to react and enjoy it a bit more. They feel less at risk. I understood also that the westerners maybe are keener on going out than the locals who are more cautious. We believe that it’s going to come back probably not as like a big after a crisis, but probably something more progressive, but it is coming back. I think there is a trend and I am not so convinced like many people are saying, “Well, things would be very different.” I think most of the things will be the same as before because people have a tendency to forget about the problems, which is a good thing because there are so many problems happening. If we have to remember all of them all the time, that would be terrible. So, I think in a country like China where the economy is still good at developing where I think everybody is still enjoying a better life the following year. I think things will come back to what it was before. That is my opinion. Of course, there will be some little changes happening, but it is not going to affect the global change in the economy of the country. Of course, there are problems, but China is strong. It is not going to be a big problem, in the long run, let’s say.

Matthieu David: You make me feel that China is following a V curve like when it is down and coming up and Hong Kong is like a W curb because it had problems two months ago, then things went back. I was in Hong Kong a year and a half ago and things were pretty okay, actually. People were going to the gym and everything, like normal and then now it is still more strict again. So, indeed we see a few different perspectives from Hong Kong as well as China. I’d like to go back to the beginning because that is not the first crisis you went through when running a crepe restaurant in Shanghai. In 2008, just as you started actually. 2010 was not that good either. So, you went through different crises, but I would like to go to the start. You had no experience in the restaurant in 2007 and you actually worked before in optics and glasses. Would you mind telling us what was in your mind at the beginning to running a crepe restaurant in Shanghai? Was it opportunistic, was it something you planned for some time and then you were able to put everything together? How was the beginning?

Philippe Ricard: In fact, yes, I am not from the business at the beginning. I was in the optical business. I was sent by my company in France to open a subsidiary in Shanghai in 2004. I was in charge of all the regions of Asia Pacific and so some subsidiaries and some distributors. In fact, I was even before that, I was traveling a lot because I was a director of this company. I think at some point in time, I wanted to stop traveling so much and still meet people because this is what I love and one of the ideas I had was that maybe I should just settle in Shanghai, stop traveling all around and make a business where the people will come to me and rather than me going to see them. I studied different projects and very naturally I would say, one that really popped up was running a crepe restaurant in Shanghai because I am originally from Brittany and Brittany is the region in France where we do all these kinds of crepes and I knew at that time there were a lot of people missing this food in Shanghai. So, I decided to change my life. I went on to be a new entrepreneur, but I did it with knowing a lot of people already in Shanghai who could really support me in running a crepe restaurant in Shanghai.  I think that is something that was really important at that time because I had already been in Shanghai for several years. So, I had some network. I had already opened a business and so I knew how to do it, but yeah after I had two neighbors and that was also quite a challenge, but it was really a passion and since then I never give up on this.

Matthieu David: What are the other ideas you were looking at and how did you compare to them?

Philippe Ricard: Well, the first idea I had was to open a bakery because at that time there were not so many people talking about bakeries; French bakeries and I learned that there was probably at the time a big French baker coming to Shanghai with big money and the will to invest and develop. So, a few people I knew at that time told me, “Maybe it’s not a good idea right now because it would be too competitive for you.” I decided to quit even though my grandfather was a baker. It was not easy to forget that idea. Then I had the second idea, which was to open a fine grocery. So, in fact, there was also no fine grocery in China at that time. So, I went to France to find a lot of products, but also there I had some friends in the logistics and they told me, “Well Philippe it is not easy to import products in China. Many times, they will be stuck in the past tense and then if you have perishable goods, then for sure it is very dangerous. You have a big risk that you are going to lose everything.” The rules change very often too. So, finally, I decided to also give up on that project. So, the shared project was La Creperie and I said, “Okay I am not giving up on this one. I am going to go to the end of running a crepe restaurant in Shanghai.” That was the beginning of that story.

Matthieu David: Got it and how did it evolve, the businesses from 2007 until now? I see a couple of evolutions in your sector and tell me if I am correct or not. One is clients, many foreigners, many French who maybe have two-thirds of Chinese now. I went to your restaurant yesterday at Dong Ping Lu and I think it was like a strong half of Chinese. You have 4/5 people eating alone, actually and Chinese and then you have two or three couples of friends eating, and you have a French family. So, it was quite mixed, but it was a strong half of Chinese people. La Cabane was similar; strong half or two-thirds of Chinese. I believe that is one and the second element is that when we talk about 2008, we all think about the crisis, but in China, for food and beverage, it was another crisis. When this scandal happened in China, then China became much stricter on food and food safety, controlling much more. That started in 2008 and that’s another evolution as well on how to running a crepe restaurant in Shanghai to have a much stricter rule than in the beginning (learn more about the 2008 food crisis). Can you tell us your perception of what is the evolution of running a crepe restaurant in Shanghai from 2007 up until now?

Philippe Ricard: Yes, it’s true that there has been ups and downs because of the crisis, but I think what our strengths were, was that we were able to adapt quite quickly to our environment because we remained a small business. So even I opened all the restaurants, I try to manage my business with a lot of flexibility in trying to adapt very fast. I think that’s the main key. I have also tried to do all the time is we are always focusing on quality and quality is not about only the things that you see in the surveys or in your dish. It is also what is behind in terms of process and in terms of groups, in terms of knowledge of our staff, of training. I think it is very, very important that all the things that the customer doesn’t see are also very well organized and controlled when running a crepe restaurant in Shanghai. I think this is very important for me because I come from a background and a big experience in Johnsons & Johnsons, for example. It is very house oriented. It is a company with a lot of ethics, and I think this is something that for me is very important. It is not only superficial. I think what we try to do is even in the back office, I would say, in the kitchen everything we do, we try to make it very clean, we try to make it well done as probably what a customer is expecting it to be. So, after I was also lucky to have people with me who are very strong, who are very competent, who are in different fields and that, of course, is helping a lot for the scaling up a restaurant chain in Asia. It is not Philippe alone. It is Philippe and his team. Without a strong team, it would be also very difficult to scale up a restaurant chain in Asia.

Matthieu David: How have the clients evolved? Is it true to say that it was mainly foreigners and now it is much more mixed with Chinese and what is the perception of your restaurants towards Chinese because I am not sure if it is very well known La Cabane from Brittany is in China, right? So, you have to talk about it to explain it. What image do they have of your restaurant?

Philippe Ricard: I think we have a very good mix now of customers; foreigners and locals in every city where we work and it’s really true in Shanghai. At the very beginning yes, we had mostly French people come in and then more and more foreigners and then locals. We can even see now that in one of the restaurants it is like 50/50 maybe. It took some time for sure to make the people know about our products, but I think with the time I think we were able to gain more confidence, more I’d say people get to know our place from friends. There are many, for example, French families or French companies who are bringing their staff or their friends to our place and that makes our place more known from the locals. That’s for sure. Something that I really enjoy is that when they come to our restaurant, we have a big map on the wall and many people; whether they are from Brittany or they would know Brittany because they go there for their holidays in France, they love to show to their Chinese friends, “Oh, this is Brittany.” They tell a lot of stories about it and it is really nice because this is why I opened this restaurant. There is a big culture behind it and there are many stories to tell about this region of Brittany and the culture.

Matthieu David: You found something in your box to deliver and it came with a map to Brittany. Another question I had is, I feel that the scaling up a restaurant chain in Asia is not easy, but you did it with three restaurants and actually, you did it internationally with Vietnam and Hong Kong. How do you scale up a restaurant chain in Asia because I feel you need to restart again? You need to find new clients; you need to find a new place. The only thing you get from your experience in Shanghai is intuition, you have the sourcing of food and material because also one thing that people may not know if they have not been in your restaurant, it is very well decorated and since I know the restaurant; the chairs are the same. They are the same style. I believe you have to replace some of them, but that’s such a style and as you said, the paper is very Brittany and so on. So, you have those assets, but that’s it. You don’t have more skill. When you sell a product, you can sell it everywhere. You just have to export it to go through the borders and so how do you scale up a restaurant chain in Asia? What is the use of scaling?

Philippe Ricard: Yes, there are many people who told me in the past, “Philippe, why don’t you centralize a certain number of services or open central kitchens” or this kind of thing, but I have never been much into this because I think it increases the cost a lot and before you do this, I think you need to have a lot of restaurants open to making it really efficient. I think when you work in different countries it is even more difficult. So, we don’t make much savings because of the scale, I would say. We have to restart a bit from scratch; everything in every restaurant or every city. We are quite strong anyway at controlling our cost. The experience from the first restaurants is at first, rent negotiation in China, for our products, with our suppliers and we know also better where we can get the quality we need. We sell a lot of cider; apple cider because this is the main drink in our restaurant. I have suppliers in France from whom I order directly because of the volume that we do; we are bound to get some good prices. So, that is one thing you can do.

Matthieu David: I’d like to stop on one thing. You said you learned how to do rent negotiation in China. I think that’s a topic that would interest a lot of people. How do you negotiate with a landlord in Shanghai? To give a bit of an idea, we did some research on the cost of renting restaurants and when we look at another restaurant; an Italian restaurant, it is about 88 000 NMB for 100 square meters, per month and it represents something like 16-20% of the revenues. That is something I have and it’s about 15-20% of the revenues in the rent and that is much more than New York, for instance, but on the other hand, the labor cost is lower. Could you tell us how you do rent negotiation in China? Do you sign a contract for 10 years or is it stable with an increase every year or what is the way of negotiating?

Philippe Ricard: I think it’s a very complex strategy to get the best from the landlords. It will depend a lot on the locations and on the size of the place. One chance we have is that we have quite a unique concept and so it happens also regularly that some locations are asking us to come or if we are competing with some other restaurants or other shops, other brands; we have them because first, we are not new on the market. We have some experience and we can show that our business is profitable and then it means that we can pay our rent. Also, we are stable in the timing. So, that is what some landlords are looking for because we are not a challenge for them. We don’t pay late. They don’t need to find another tenant. We can show this. Also, I think I have also a background from business and so, of course, one of my duties, when I was in other companies, was to negotiate and so I have probably some skills from that experience. For every landlord it would be a different rent negotiation in China, I guess.

Matthieu David: Did you get a discount because of the crisis (learn about the government measures during the oubreak)?

Philippe Ricard: With some of them I would say, yes. With some of them, not that easy, but yes globally, we can manage.

Matthieu David: I interviewed a lawyer in another podcast we have called Daxue Talks. It’s another format where he told me that some people got one month rent for free when they were renting through the government or places owned by the government like for the month of February it was for free. Offices got a 20-30% discount on their rent for the rest of the year. So, is it something similar you are experiencing lie one month for free, one month, or lower rent for the rest of the year?

Philippe Ricard: Yes, in fact, again it depends on the locations. There are locations where we could get one month free. There are locations who say they will give something, but we are still waiting. Some gave some detail about what they would offer. We are still negotiating and still waiting for some feedback on this. We got some confirmation already, but we need more. I think it is very, very important. I think that the fight is everywhere the same for the tenants. If the economy, the environment is falling apart for some time, all the tenants need some support from their landlords because it is just impossible to survive, otherwise. In Hong Kong, we were lucky to have some subsidies from the government also, and so that is really helpful.

Matthieu David: Was money given to you, was a loan given to you? What was it?

Philippe Ricard: It was money given by the government in a very short time after the application It was really, really good. We were also lucky to have someone like Li Ka-shing, who is one of the richest men in Hong Kong who was also helping at some point in time the F&B business (learn more on how Li Ka-shing has helped the local F&B industry). So that is really good for us. Every small thing is welcome. In Shanghai, I know we also have some support from the government with postponing some payments. I guess they are also pushing the landlords to give some support and it is true that as the government in China is controlling a lot of real estates, then it is also quite easy for them to push it. So yes, we need all this help, for sure.

Matthieu David: You mentioned something I am very interested in. You said that some department stores and malls are asking you to join. They are calling you because you have been the place for some time, and they recognize you as a brand? So, that is something I had the feeling you have built a brand. What was your idea of building this brand? It was structured in your mind, initially or it came, it happened naturally that it was recognized as a brand?

Philippe Ricard: No, it came after. I think what I really wanted at the beginning was to build my restaurant and really enjoy the contact with all my customers. Many of them have become friends. That is what I really had in mind at the time, to enjoy the work, even becoming a waiter, a bartender. All the jokes in the restaurant, I just didn’t touch on the kitchen too much because I think it was better to have a real pro to take care of it. I was so much interested in being on the floor and talking with my customers and that is where I wanted to be. After I think it came quite naturally later on that I developed from the time when I opened the second restaurant in 2010 in Hong Kong. We were very successful from the beginning, there. Then we decided to open another one. Then one more and then it is true with the fact that I really wanted something different from one restaurant to another in terms of the image because I wanted the people to experience the same thing. I wanted them to really feel like they go to Brittany when they come to our place. So, of course, I tried to design a lot of things that would make the people travel and feel the same, even if they are in Shanghai or in Hong Kong and that’s the way naturally the bone came together.

Matthieu David: Did you get the trademark La Creperie in all those countries? I believe when something has lasted for some time and you are successful, you get copied with a similar name or the same name.

Philippe Ricard: Yes, La Creperie is a registered trademark. To copy is not only a question of making crepes. It is a full concept. I think people can easily recognize if it is a real one or a fake one because there are many details that people can see when they are in the restaurant and it is true that when they come to Shanghai or Hong Kong or the other, they would immediately feel the same spirit. They will see the quality of the dish. There are some brown, some ciders that we use and that is where we have some exclusivity and I think it is easy to recognize our brand.

Matthieu David: When you opened in Vietnam was it because you had someone over there who maybe worked with you in Shanghai and had to go to Vietnam or is it because you had the idea that the French community was big enough to start also in Vietnam? What was in your mind because it is far and complicated to run a crepe restaurant in Shanghai and in other locations. You have three countries to manage. You have different legislations, too. It is a very different way of managing the business.

Philippe Ricard: Yes, that’s right. I think I developed my business a lot at the beginning with opportunities, meaning that I had someone coming to my restaurant in Shanghai who loved La Creperie in Shanghai and he was not living in Shanghai. He lived in France, but his wife was Vietnamese. He had a son in the F&B business in France. Then he told me, “Okay Philippe, you know I love your restaurant. My wife and my kid would love to go back to Vietnam to work there and so do you think we could do something together?” That’s the way we approached that market. We made the study and thought, yes, indeed there were a lot of French people living there (learn more about our market research methods in China). It as a dynamic city. So, we thought it could be great. There is good potential in that city.

Matthieu David: What stopped you from franchising because that is a bit of what you did in Vietnam sort of franchising with your branding. When you do a franchise, you bring the branding. You bring the sourcing very often and the way to easily decorate your restaurant.

Philippe Ricard: Yes, so far it has been a kind of franchise. It works like a franchise even though I have some shares in every restaurant. I think what is important for me is beyond the franchise system is although the process that goes with that, I try to bring also in all my restaurants and that is something that is very important for me, is that every restaurant, even its… you can recognize La Creperie. They all have their own soul brought by their team, their manager, by the partners because I don’t want to just make a copy and paste. I think it is… I see the soul of the restaurant and that is very important. We are not fast food; we are not fine dining. We are a bit in the middle. We are a traditional restaurant and I think the contact with the manager or the team or the chef with the customers is very important. It creates a relationship that we love.

Matthieu David: Because you invested money and time into it, even if you may share the equity, what would convince you if someone comes to you to give him your branding, give him your knowledge and actually give him some money to start as well?

Philippe Ricard: There are several things which are important. I think the main point to scale up a restaurant chain in Asia is, to feel good with the person I have in front of me. When you start a business, it is going to be for many years. So, the money is, of course, important, but it is far from being everything. Money comes and goes. The person you have in front of you is going to stay there for a while and he is not going to change that much. So, it’s super important for me to have someone I can talk with, with very open and easy to talk to. Not everything is positive, I would say in business life and so there are some very complicated decisions to take sometimes and we need to be able to talk about them so we can move on in good conditions.

Matthieu David: You are talking about personalities. You talk a lot about the personality, but what makes you believe that a business plan is going to work, that it is going to be successful at some point, I understand that it may be for years, but at some point, it has to be successful otherwise it’s a waste of time and money. Do you come up with numbers, do you do research on how many French people are in the city? What would you look at? What are your criteria?

Philippe Ricard: I would say now it depends on where I am open. There are places that I know quite well because I have been living in this place for many years, like Shanghai or Hong Kong. Saigon, I know also a bit less. So, of course, we need a study and we need to understand what is going on in the district, in the city, but I think it is like marketing. You can put on the paper a lot of things about what’s going on. On marketing, it just helps you ask a lot of questions for the market study, but it could also bring you to the time where there is no end to these questions. I mean, also because the answer is changing all the time. So, I think for me now, what is very important is to have a good knowledge of what is happening, but also not to think too much long term to scaling up a restaurant chain in Asia. I think it is very important today to control the fixed cost because you never know. The virus, the protest in Hong Kong; you don’t know what is going to happen in 3, 4 years from today. If you were not able to control your fixed cost, then it is going to kill you, for sure. Today the main idea I keep in my mind from this experience, having inner flexibility in your business to be able to survive the bad times.

Matthieu David: We are close to one hour of talking. You have sustained for one hour. Before we started, we were saying how long do you have to survive. It is like already an hour. You have survived. I have a few questions I ask in the talk, usually. The first one is about the books; the books which have inspired you in business as an entrepreneur. Would you mind sharing a few resources? It could be a book and it could be also other sources like newspapers or others like blogs.

Philippe Ricard: Okay it is a bit difficult for me to talk about some specific books or reviews. In fact, I try to diversify a lot of the things I read. So, it’s, of course, there is part of the business, but business is mostly about the economy. I would say what is happening; like for sure today I think everybody is focusing on when is the COVID going to disappear so we can finally come back to normal life? Even for this, I mean I try to follow different sources to compare to get a better understanding. For example, I read something on the Washington Post.  I would read some notes from the government and I would also read some articles from different newspapers; non-diplomatic even. I get also a lot of insight from my Chinese wife. I don’t read Chinese, so she can then help me with that. It is good to have different points of view.

Matthieu David: Do you work together with your wife?

Philippe Ricard: No, she is not working in the restaurant. So yes, I think it is good also to escape from work. It is also something I love to do is to really read some what we call in France like travel experience from different people around the world. That’s for me important. That is what I like to do in my restaurants. I also need it myself.

Matthieu David: I see you are really from Brittany. People from Brittany love to travel all over the world. They are the strongest community of French all over the world. I would like to end with two last questions, but I will ask them at the same time. What success have you witnessed in China and what failure have you witnessed in China? Not about yourself, but about what you have seen that was surprising to you? Why I am asking this question is because when you look at the success which was surprising, very often you give an idea of what is changing. It’s a signal of a bigger picture of something that is changing. I arrived in China a few years ago and people were paying cash when they get deliveries and now it is like, middle ages. You pay with WeChat and Alipay. That is a success I would not have expected. What about you? What success or failure did you see that you did not expect?

Philippe Ricard: I think there is one thing that I could mention. It was in 2010, during the international expo (learn more about the 2010 expo in China). I experienced that time in Shanghai and I must say that I was very impressed with the way China is able to organize events and make very successful experiences for people. I think this event had a lot of Shanghai to really open. It was already open to foreigners, but I think at that time it made it even more open. For me, I mean I would think I would speak more globally. I think I am very amazed by the way China is moving on. It is very fast. Of course, nothing is perfect anywhere, even in France. I think the way that they are doing it in China is incredible. Managing one billion, 300 million people is certainly not the simplest thing, but they do it. Everybody is moving. We all know that there might be some big challenges ahead for them because of the economy, but still, I think they have this power to build and this power to bounce back, which is very strong. I think that is what I like in China. There is this dynamic. People are very different here in China or even mini Hong Kong or Vietnam. Everybody has their specificities and for me, I am almost more international than French today because I have been living here a lot and traveling a lot. Of course, I love my routes, but I love to see the difference between the countries, the people and I see everybody is doing well in China, compared to all the problems that we are facing and I think China is particularly doing well when we look at all the problems they have to face because of such a big community.

Matthieu David: What do you think about when you shave in the morning because a journalist asked him before and he said, “I am thinking of 1.4 billion feet which are going to touch the ground” and indeed the massive amount of people is something which has been managed. You talked about success, but what about the failure? Some way Paul came with a lot of money and means and didn’t succeed (learn more about the failure of Paul in China). What about a failure in China which has surprised you?

Philippe Ricard: I would say there has been a lot of success and failures. Of course, along the road. In my own company I opened, but I also closed some restaurants.

Matthieu David: How many did you close?

Philippe Ricard: I closed two restaurants for different reasons. One in Taiwan several years ago. It was too early for the market. For the restaurant industry, location is the key point.

Matthieu David: In Taipei?

Philippe Ricard: In Taipei, that’s right. Hong Kong I would say is we had to close, but we had no choice because we were kicked out of the building. Yeah, failure is part of the business. I mean, I think if you don’t lose anything at some point in time, you are very lucky. I don’t many people top who it doesn’t happen. If I need to say one example that I have in mind, then of course it is one that everybody had in mind in Shanghai is the baker. I would not talk about the reason for his failure, but that was a very tough time after a big success for many years. Nobody could have expected this.

Matthieu David: Yeah indeed, to the people who don’t know; Fahen was a very, very successful bakery and it was shut down again it seems from E-chain things and it brought a lot of doubt into the community about managing a business in Shanghai and it was very successful before. Actually, no other case happened since then, that massive and that talked about. Thanks, Philippe, for your time. I hope that things are going to go back to ‘normal’ or new normal as people are using now when we are getting out of this virus. I hope you enjoyed it. I did and I hope everyone enjoyed listening.

Philippe Ricard: Yes, it was very interesting. It was nice to talk to you. Hopefully, your words will help others and I wish all the best to everyone to cross the crisis.

Matthieu David: Thanks, everyone. Bye-bye.

Philippe Ricard: Take care.

This article China Paradigm transcript #103: Running a crepe restaurant in Shanghai in a post-coronavirus context is the first one to appear on Daxue Consulting - Market Research China.

Full transcript below:

Welcome to China Paradigm, a show powered by Daxue Consulting where we interview season entrepreneurs and experienced managers in China about their business experience in the country.

Matthieu David: Hello everyone. I am Matthieu David, the founder of Daxue Consulting and its podcast, China Paradigm. Joining me today is Yoann Delwarde. You are the co-founder of Infinity Growth and what you are doing or what you have written on LinkedIn or well, that will be one of the questions that we have. You are helping B2B companies that need to scale up and sell more with integrity. The word “integrity” is something I’d like to know more about and why you insist on it. You do B2B sales coaching, sales training in Shanghai, and consulting and you have been in China for – from my calculations – for at least 7 years. It may be actually more. So, it is a sizeable amount of time that you have been in China.

You have been working in a company and you started your company and you are also on the side, very active by lecturing, mentoring, and something that for me, firmly defines you for some time, which is Toastmasters. You are very involved in Toastmasters clubs in China. I feel along with Chinese communities because Chinese communities are also very involved in Toastmasters here in Shanghai. Thanks, Yoann for being with us. I am very happy to have you here. So, what do you do with your company now, Infinity Growth?

Yoann Delwarde: Thank you, Matthieu, for the introduction, amazing. So, actually, at Infinity Growth, we are helping B2B clients, as you mentioned to get the service they deserve. So, this is really the one-liner, “Get the service you deserve”. We help them to scale up, as you said, so to increase B2B sales in China and also selling with integrity. We’ll come back to the word integrity later in this conversation because I believe, now, that’s what people want to buy. They don’t want to be sold. They want to buy something they believe has integrity. So, this is what we do, basically.

Matthieu David: Tell us more about what kind of teaching you give to your clients? Do you have products; meaning like specific teaching and segmented or everything is adapted based on what you think they need, or it is both of them?

Yoann Delwarde: So, that is a very good question. If I take you as a potential client, you are the CEO of your company and I am sure you want to be a successful CEO. You are already and if you want to be even more successful one thing is to have more sales and one of the prime’s of this year is that we are in a recession. So, you may feel stuck or you may feel pressured and so actually at Infinity Growth what we do first is, we really understand you because we have privacy executives and so that’s really the key. Why I can say that is because actually we got 90% of our clients by referrals.

So, we don’t just care about numbers. We really care about you and how we usually do it is, first, we start by getting an assessment of how you do the sizing of your company today, and then based on this assessment, we build a plan together and then execute this plan with passion and with great care and enthusiasm to increase B2B sales in China.

So, usually, if you want to have the rhyme, we say, “We meet up. We team up and we raise our glasses up.” So that is how usually I introduce myself. So, coming back to your question on how we practically do it. We have a series of methodologies and tools because I believe that sales is a science. We have the mindset, the methodology or behavior of the way to talk, the way to ask and I think that this is no further than that. That is why it is a mix between methodologies, processing tools and processes; sales processes, and also about the mindset and the behavior.

That is how I would maybe put an umbrella on everything we do and as you said, we already have lectures or courses and we also have trainings and so we already have our set, but actually, 80% of what we do is really customized or tailor-made because everyone has different challenges. So, we look at different situations and we identify what could be the weak parts because each situation has a strong and weakest link and then we work on that with different sprints and methodologies of scanning everyone in our niche. Every quarter we have a sprint and we grow.

Matthieu David: Are you a member of EO? Are you a member of the ChinaAccelerator or EO because scaling up is a book that is used a lot about by EO; Entrepreneurial Organisation, which is for people listening to us who may not know, which is a big organisation in the U.S.? They have entrepreneurs, which are mentoring and teaching other entrepreneurs on how to scale up. So, we have four chapters.  One is about cash, one is about money, one is about; I don’t remember actually all four of them, but you certainly know them and it is very, very organised and to the opposite to what you can release in podcasts, books, whatever success is not random. I think that the basis of the thinking is that success is a methodology, success is a habit, like the Rockefeller habit (learn more about the Rockfeller habits[MOU1] ) also that they communicate on. So, are you a member of EO and do you inspire yourself from this organisation?

Yoann Delwarde: Actually, this is interesting because of why I started this company; the main reason is because of ChinaAccelerator and so I am extremely grateful for this organization. I have wonderful friends there and now I am a mentor since 2018 and actually, they inspired me because my first client was one start-up from ChinaAccelerator who basically asked me to charge them because they were loving what I was doing when they received it.

Matthieu David: We interviewed them as well in the podcast.

Yoann Delwarde: Fantastic and so actually when I started in ChinaAccelerator I realized that I was very successful in my previous company, however, if you want to have… because they have a star-up every 6 months. So, if you want to have ten start-ups all in different fields, you’d better have tools, you’d better have a process, you better have habits because it is not bout experience-sharing anymore. Because they have all different industries and all different challenges; the size of the plans. So, you really have to go one level deeper and for three years, I realized that ChinaAccelerator batch after batch, challenge after challenge, success after success and also failure after failure, because a start-ups’ failure rate is very high, even for ChinaAccelerator. So, that really forced me to find the methodologies and tools and as you mentioned also about EO; actually, I have many clients from EO.

I am not a member yet, but I know very well their committee and actually, we are thinking to register EOP this year because they are changing their criteria. Before, if you wanted to enter as 1 million dollars as revenue, but now they are more flexible and actually I am even thinking to join faster. I was thinking next year, but maybe I will start this year.

Yesterday I had a phone call that was fantastic and that’s why I am so happy today, with Jack Daly and actually, he is one of the sales guru’s and I had such a nice phone call with him and he shared with me the experience that when he started his business during the first 3 years he was spending so much time with EO, PO and global CO because they are for him, the center of influence. That’s where he got most of his leads and clients.

I am doing the same methodology with the American Chamber of Commerce, with ChinaAccelerator, with EO and soon with other organizations through my panel who is contact also maybe with the more businesswomen in China (learn more about how businesswomen are changing the corporate culture in China). This is definitely a big plus for our business, and this is where I believe we can find the people who are most coachable and who are really willing to change and have sales training in Shanghai, and that’s the clients we love to work with.

Matthieu David: Let’s try to be specific. You mentioned tools to increase B2B sales in China. Would you mind being more specific about the tools? Are they digital tools? Is it something like Trello, CRM that you are using, or are there tools that are more conceptual that you are using, like Lean Canvas or other elements? Would you mind being specific on the tools you may use?

Yoann Delwarde: Of course, so before we talk about the tools, I want to talk about the funnel because maybe for some people in this phone call, that would be a good introduction. So, I believe there are six steps of the funnel. They actually mention 5, but I believe there are 6. So, the first one is targeting when you have to choose who your ideal clients are and who you want to work with, and then it is the interaction.

How can we communicate with them to understand the needs that they have and then it is the proposition stage; how can you set up the value proposition and then you mentioned business Lean Canvas. That is a great framework. Then there is the closing stage where basically you need to close, you need to sign, you need to shake hands and then there’s the stage of exceeding expectation where you need to deliver or over-deliver and then there is the last stage, which is growth.

This is about key accounts, cross-selling and renewal, and also referrals. So, each stage has different tools, methodologies, and principles. So, if I take an example, for the interaction; the product you are selling is the mindset when you ask questions so that you can dig into some clients’ needs and then you use the embassy for you to understand them, you use the authority to explain who are the clients you are working with and so all of that can be framed in a one-page strategy with a graph and then, of course, it needs to be executed through the different tools and checklists, for example of questions.

Through recording with the CRM; Customer Relationship Management system and again, the tools for me are not the most important because when the people use the tool and they don’t know why they don’t use the tool well (listen to another episode on CRM in China).

So, first, we focus on the why and we make role play because actually role play is a key for us. It’s like CRT share and you have a competition and you send your students, or you send your sports team to the match. Of course, they will lose if they don’t train before, right? This is the same for salespeople. Not only about the process itself. It is really about the ecosystem that you can build around at each step of the funnel. Is that helping you to visualize more?

Matthieu David: Yeah, 6 steps, very clear and we talk about B2B so, it is very clear. Talking about how you support this sales training in Shanghai and this transformation, do you interact with them with an initial understanding of who they are and what they do and their challenges, but then how do you work on the transformation with them? Every step you organize a workshop every week, every month, or is it… could you give us ait more of an idea so that you can project yourself in how you interact with the companies you are coaching, mentoring, and supporting?

Yoann Delwarde: So, the first “F” is Focus, the second one is Fun and the third one is Follow-up. So, focus means actually every week we have a clear focus and I usually spend one or two hours coaching, with the executive; sales executive. So, actually, at the beginning of the quarter we have a plan for 3 months and then every week we have something specific following this plan and also, we have some time to sit with the challenges. So, that is usually how we do it. We have the coaching and then if we see the team needs something specific, we set up a one-day training or two-day training. So, this is a mix between coaching and training however, most of the time what I realize is that people don’t need theoretical knowledge.

They need advice and they need to reflect, and they need to ask questions because they don’t know who to ask and so that is basically what we do; 80% of what we do. It is practical. So, they have a closing and how to close. They are talking to this client in an industry they have never approached before; how to do it. They are trying to expand into a client. They have so many businesses. They don’t know where to start. So, that is really practical.

Matthieu David: When they have questions, that is something I am always wondering. When we have a question for more clients on Daxue Consulting, we have to do research (learn more about the research methods at Daxue Consulting). We have to collect data. We need to interview people. When your clients have questions, you are talking about one specific topic. Daxue covers a lot of topics, so we have to update ourselves and so on. You have one topic. Does it require you to dig into the industry, to go further, or basically you have most of the concepts in mind and so you able to answer them? Or does it require you to take one day at home to work on your training, to go back one week later with answers to the questions they have raised?

Yoann Delwarde: For sales training in Shanghai, there are two key roles. The first one is sales; that’s my passion and the second one is coaching. Actually, there is the spirit of coaching, which is we believe that the coachee; the person we are coaching, has the answer already. So, the key is not about the answer that I can give. It is about the question I can ask to make them realize what they know and what they don’t know and then, how can we ask questions so we can know what they don’t know and most of the time in sales, this is not about them. It is about what the client wants; their needs, their motivation, their political agenda.

Once we know that, the sales race because actually, I believe sales is a transfer of trust. So, maybe my goal with the salespeople is, how can they build trust with their clients and how can I give them the confidence to ask the question in a proper way and so that I really a lot about changing the way they act with the clients.

I thought sometimes you would have to go back for some research, but most of the time there is no need because first of all, it is urgent. They need to apply right now and second of all, it is most of the time based on the behavior and they already know. It’s just they don’t execute it in the proper way or sometimes they forget or sometimes they have the stress of all the things going around and they don’t take the time to focus on one thing.

Matthieu David: I see. You said that sales is a science and then you said a bit later it is an art. You know, the word of Peter saying entrepreneurship is neither a science nor an art. It is a practice. If we look at the word, science art, and practice, how do you articulate them because you used two of them and I believe the practice is not to overlook neither in sales.

So, how do you feel about those three? If it is a science, then it can be taught at university, it can be lectured and after that, you are done. You know how to do it. If it is an art, then it needs talent. Not everyone can do it. Science everyone can learn, right with some time and investment. If it’s a practice, it requires time. You have no choice. You just have to spend time. So, how do you articulate those?

Yoann Delwarde: Actually, I use those because they are opposite and now it is true that if you bring practice it makes it look like a triangle and this makes me think of the three from Aristotle. Credibility, logic, and motion. It is the same for me. These three need to be combined with each other and if you only have one, you will be just okay sales, if you have 22 you will be a good sale, if you have 3, you will be the great sales. So, this is what I believe about those three and if I make an example, starting with practice when I don’t practice sales, I lose my saleability. It is like when you don’t work out for 2 months, your body just cannot forget.

Of course, it is easier to keep up if you were a previous athlete or you are used to doing sport every day, but still, you are using your physical abilities and it is the same in sales. If you don’t close every week, you lose your ability to close. Or if you don’t make a phone call every day, you lose your ability to make phone calls. It’s like public speaking, basically.

I gave 500 speeches in the last 5 years, and I can feel it. I am not as good as before because I don’t speak as much as before. That’s it. It’s simple. The second one is about art. Why is it art? Because you can really see who the most successful salespeople are. They are usually not the ones with the highest IQ. They have the highest EQ (learn more about the importance of IQ and EQ for salespeople).

So, they are really the ones who can adapt to the environment and to the person they are facing and make them feel good, make them want to hear what they want to hear and help them and support them in a way, but at the same time, if you are just an artist, but you don’t have the science or you don’t have the process, how can you build a team? How can you scale up because that’s actually does one of the great sales of the funder? They sell a lot and then when they recruit their team, they don’t know how to share the knowledge.

So, actually, for me, these three are really inter-dependant and this is a triangle and if you have a triangle you are extremely strong. So, what we do is we are trying to understand for each part, what each client could develop because everyone has already their strengths so that they can become more systematic and they can scale up and be something that is sustainable.

Matthieu David: You just anticipated one of the questions I had, which is what are the main failures or mistakes that you see among the people you are coaching, and one of them, you just mentioned is that funder can be good at sales. He can be good at a lot of things, but he has to be good at sales otherwise his business won’t take off. So, he is good at increasing B2B sales in China, but he doesn’t know how to get more salespeople and I have seen that. I have seen that a lot. The struggle to actually get people to sell something valuable. That is one mistake or difficulty you are seeing. What other difficulties are you seeing in B2B sales around you?

Yoann Delwarde: If I make categorize, as you said from 0-1, I would say 0-1, 1-10, 10-100, 100-1 billion. I have those 4 categories in mind. From 0-1; this is about the funder and as you said, if the funder is not able to sell, his company will never grow, or if you don’t have a co-founder or someone on your team that is good to sell. All the start-ups that fail for me, most of them is because they don’t have the right sales mindset.

They think about their product, they think about their features, but they don’t think about the benefits if I could summarise. So, that is really the most important challenge for me. From 1-10 it’s about training, coaching the 3-10 salespeople that can help you to sell more than only yourself. So, it is really about giving your knowledge because if you are in a small company you need really to explain how you did in the past and then if you want to go from 10-100 it is about the departments. It is more about the culture. I’m thinking about the incentives, about the rules, how can you make them collaborate and not compete.

Then, when you go from 100-1 billion, it’s more about the strategy and so it is more about the vision and the direction. I am not saying that the vision or direction is not important from 0-1. I believe it is less important if you make the priority. So, depending on different stages, you have different challenges, different failures and that’s actually why I think some companies have some bottlenecks in the kind of numbers of employees and I think ion scaling up, we both read the book talking about it because there is something to do and they don’t really know why they don’t really know what and they need some external point of view to help them to go to the next stage.

Matthieu David: We talked about it already. You said that you are helping companies to increase B2B sales in China to let’s say the right formulation; which needs to scale up and sell more with integrity. How do you feel that it was important to mention you with integrity? When you think about salespeople, we think about aggressive people, we think about people who are going to make big money to sell as much as possible. Integrity is a basis, but it is not seen as something like a tag line. It is more to have hyper-growth. People will say, “I helped you to reach hyper-growth.” You say selling with integrity. Would you mind sharing with us why you use integrity?

Yoann Delwarde: Actually, that is interesting because I come from very modest family background. I am the first one who got a high degree diploma, I am the first one who got an engineering diploma and I am the first one who is starting a business. So, in my family, the culture is not really about entrepreneurship and I have to say I have some challenges to start with sales because I was like you. I was thinking basically sales are not really honest people.

They are just trying to take benefits or take advantage of you, but the thing that I realized is that actually, we can really build a high level of trust when you are not selling when you are helping and here, I have a clear example. In my career, I told my potential client, “Listen, I don’t think I am the right one for you. I know someone else who can do better at a cheaper price.

That is what I can do”. Doing so, I got so many more customers because this one was trusting me and he was seeing me as a trusted advisor and then he referred me to the people who would really need me, eventually. That’s when I started to realize that selling with integrity and honesty can play a very big role. In all the sales guru’s I would say, or all the salespeople who are successful entrepreneurs, they all have this mindset. They are not trying to cheat people.

They have a higher value behind it. Why integrity right now is very important for our business is because actually, my co-founder is involved in many sustainability projects (learn more about the “green industry” in China).

She is helping people in need, etc. and we discussed a lot and we realized that actually, we can have so many companies. So why not choosing the one that really has a higher value, that take care of their employees who want to have a positive impact on society, on the environment because if we help them; I know it is a small contribution and I know it may be a dream, but in the book that we are writing, if we take, for example, these nice companies, then it will inspire more people to believe that actually they can do something great and it is not because they are making money, that they are doing something wrong.

So, that is the mindset behind it and that is why we are so passionate about this key role. Just yesterday I was with a client and he was telling me maybe I should fire our sales guy and I asked him this question. I said, “Have you tried your best with this sales guy or not yet?” He paused for 5 seconds and he said, “It is true. I didn’t try” and I say, “Why didn’t you try?” That is how we do it every day.

Matthieu David: I remember I was part of EO for some time and I remember that one of the coaches said for the values you choose, choose the values that will really resonate with who you are. He took the example of; I don’t know if you remember at the end of ’99, beginning of 2000; before the crisis in 2001. This company or one of its values was selling with integrity.

They cheated their investors and accounts and accounting and so on. They could have said, “My value is growth, whatever it takes.” That could have been a valuable line. He was in some way cheating the investors because it’s growing whatever it takes, but then use integrity, which was not adequate, actually. So, you are talking about B2B, but you are also talking about digital because you do sales training in Shanghai on LinkedIn on how to increase B2B sales in China. Would you mind sharing with us, what the learning is that you have to use LinkedIn to increase B2B sales in China?

That’s my first question and the second question is about China. Is LinkedIn a digital way to sell in China? The learning that we got in the past 10 years is that Baidu is a good channel to increase B2B sales in China. It is not a good channel to increase B2B sales in China. LinkedIn is a good channel for B2B all over the world, but in China still, not all the professionals are on LinkedIn (learn more about LinkedIn in China). You may not find all the contacts on LinkedIn. So, would you mind sharing more about LinkedIn and digital in China?

Yoann Delwarde: Yes, that is actually a great question and I want to make a small remark. I use LinkedIn a lot and I advise my clients to use LinkedIn a lot related to the stage targeting. When they want to get some people in the organization that they are targeting and then interacting. However, once you interact then for me it is to increase B2B sales in China and LinkedIn is actually not so useful. So, this is how I use LinkedIn because in sales, to have the leads you really have 4 ways. The first one is through SU and you mentioned it; Baidu, when people type a keyword and the second one is inbound marketing, copyrighters, and marketing agencies. The third one is outbound, where you send a lot of e-mails and the 4th one is targeting where you are more precise.

So, I use LinkedIn for the targeting part, so just to make it clear. The content marketing one; there are people who would advise you much better than what I can do, so I prefer to stay in my circle of expertise and actually what I realized with LinkedIn is as you said, not everyone is there. However, in most of the companies now, there are at least 5-10 people.

At least in the biggest companies and actually, when you interact with them and when you really take the time to listen to them, they can introduce you because you have two ways; bottom-up, bottom down. On LinkedIn it is very easy to do bottom-up, then from the top-down, what I realize in China is that there are many of what we call the center of influence and the center of influence; they are connected through the whole industry. You are one of the centers of influence because you have interviewed more than 100 people already.

So, for someone that is willing to have access to the circle, if he or she would contact you and make a good level of trust with you, you could probably introduce him/her to that network. In China it is working a lot like that because in every industry you have some I would say a key opinion reader, who can really connect you and this is actually what I realized, as I was really hopeful for my clients to help them to detect who could be those centers of influence that are not competing with their business.

Because, of course, your competitor doesn’t work and then how together you can create a partnership so that you support each other and you create an ecosystem where you can actually really support the people who are our clients. If you have a client who wants to improve their sales, now you interview me and if I am meeting the clients that need your service, I would love to do a podcast I would have introduced you as well. So, this is I think a way that could really work to increase B2B sales in China.

Matthieu David: On a more technical side of using LinkedIn, what you are mentioning is that when you create your own connections on LinkedIn, then you will do the hashtags, the hashtag of those people to mention them on your post. So, actually, we gain visibility with their feed and with the people they are connected with and will give them visibility as well to the people you are connected to within your feed. You also give strength to the algorithm of LinkedIn because you are doing hashtag the name and that is why you are mentioning partnering because the word ‘partnering’ or to partner with someone is so much overused that sometimes we don’t know what it means and in this case, you are meaning the mentioning, the liking, you are mentioning, sharing and commenting on those people you are actually posting.

Yoann Delwarde: Exactly. That is a really good example. That I something that we are doing a lot of recently, especially this year because now most of the people are at home. So, I think it’s also about creating content, but thus far, again I am not the expert. As you said to interact with the people, so they like, comment and add them, try to create some value together, and again, this is not a sales approach. This is more of a conversational approach, where you try to build trust, you know each other and that doesn’t mean that they will be your direct line, but one of the networks could be, as you said.

Matthieu David: On LinkedIn, when you contact someone it is an e-mail. There is a mailbox on LinkedIn, and you send an e-mail. I found out over time that a good e-mail can be very powerful. A good e-mail… I have some theory on it, and I have some thinking about it, but I’m pretty sure you thought a lot about it, and you have a lot of practice in it. What would be some of the key elements to remember when you write an e-mail? Would you mind sharing that? I have some tips from myself, but I am not as organized as you are or as conceptual as you are. What would you advise people to do?

Yoann Delwarde: That’s a question that all my clients ask. So, now I have a very standard reply. I use the triangle of Aristotle; credibility, logic, and motion. So, I always start with credibility and so I always start with the fact that actually people love, love stories, and also when you are talking about them, so I always start from them.

So, I would say, “Hi Matthieu. I saw that you are a CEO at Daxue Consulting.” So, you know that I know about you. I am not just randomly writing one thousand e-mails, right? And then I will mention your credibility. So, who am I already with that you know, or who could give me the authority so that you would want to reply to me and in this case, if I say, “I know that you are doing a lot of podcasts and I know that you interviewed Sophie from ChinaAccelerator and I saw that she is amazing in a lot of your podcasts” the credibility is there.

So, you know that I know Sophie and since you interviewed Sophie, you believe this could be interesting, right? So now you have more interest to look at my profile. Then the last one is about logic. So, it is to give them a clear next action. So, the next action could be, “How about we have a 5-minute discussion so we can know more about each other? I would love to share more stories with you and to see what we can do together. I wish you a wonderful day.” That’s it; 5 lines and he will probably reply.

Matthieu David: My experience is that I am very careful with e-mails within the team. I try to also have a high standard because indeed, you can receive some very bad e-mails sometimes and good e-mails, which are adapted. I would have one thing as a comment, is that I saw some bad experience mentioning people we don’t know, or mentioning people we know, sorry, but we don’t know the relationship with this person and I know it was not by e-mail, but it was by speaking. I mentioned, “I know this one. You also know this one” and actually, they hate each other, and actually, it was not a good mentioning and I realized that I had to stop to say that we know someone in common. So, there is a bit of risk in mentioning someone in common that we know.

Yoann Delwarde: That’s true and that’s why I usually mention companies. In your case, I wanted it to be adapted for the people who listen to the podcast, so I mentioned someone who was in the podcast that I know and she also knows me, but usually, I mention companies because companies, as you said, you cannot hate a company, right? If you hate the company, you need to explain to me how you can hate a company. So, I usually mention the company, but the key there is about credibility. Why should they listen to you; because you are a big company that is similar to them and so they want to know more about you.

Matthieu David: The concept, the knowledge you have got; you mentioned one book which is scaling up or scale-up. What other books would you recommend for people, specifically on sales, on learning about increase B2B sales in China, if you can narrow it down to B2B?

Yoann Delwarde: I have a list of 15 books that I can send you later on because it is also a question that I often get. I have to say that I have read many sales books. Actually, I have a belief. I don’t choose a book; the book chooses me. So, when I go to the library, I look at all the titles and there is always a challenge that I like two books and I open them and go through the agenda, table of contents. If there is one thing I like, I open it, I read it quickly and if I like it, I buy it. So, that’s how I do it.

Matthieu David: Interesting, so you go to a bookstore to find books you don’t even know. You don’t go online to check what people say and so on. You would go to a bookstore and look at the title and then you would go inside to see what’s inside?

Yoann Delwarde: Exactly and also every time there is someone that I trust who read a book that liked it, I ask them what they learned and if I liked it, then I just go and buy it online. I have two ways to buy books. My library is full. I think I need one hundred years to finish all the books, but that’s okay because I know if one day, I need something I can go find it there in a book. That gives me a lot of feeling of enthusiasm and I also bring books with me. I have a book that I am reading actually, every day which is called the Sales play Book by Jack Daly, the person that I had the chance to talk with yesterday.

That is my new Bible. That was alive before I met this book and it is alive after I made this book. This book is gold because most of the time a sales book is full of stories which is amazing because you remember stories, but there is nothing conceptual behind it. For me, there are stories that are very structured. I really like it because when I have a chance I go back and I also have some videos from him, and he makes me reflect. So, that is really the book I would suggest and also, I will send you the fifteen books that you can also refer to.

Matthieu David: Last question before we go to the usual questions I ask at the end of the interview and you already answered some of them. It is about Toastmasters. You have been with Toastmasters clubs in China for a long time. Chinese people are very involved in Toastmasters clubs in China, more than French people. I am French. You are French and you are French, right?

Yoann Delwarde: I am.

Matthieu David: I am not sure because we speak French in different countries, so we were not that involved in France with Toastmasters. I think that China is very involved in it and you are too. Would you mind mentioning what you got from Toastmasters clubs in China and what Chinese you feel they get? I have a sense that they are looking for English learning or English classes, some of them more than public speaking learning.

Yoann Delwarde: Toastmasters is one of my passions. I discovered it 5 years ago actually by chance. It is actually 6 years ago now. What I got through it is the confidence to do public speaking in China, because actually, public speaking is the biggest fear in the world. People fear to do public speaking in China more than spiders or death, just to let you know how strong the fear is of public speaking.

Matthieu David: Sorry to interrupt, but there is an anecdote; Warren Buffett was scared about public speaking and he learned from decalogy, I think and he had his diploma in his office and actually I think he doesn’t show his diploma degree. It helped him to learn how to speak in public and that changed his life and changed the business he was to create.

Yoann Delwarde: I fully agree and what I can tell you is that there was a life before Toastmasters and there is life after Toastmasters. I feel more comfortable to do public speaking in China in front of 100 people than to speak to you now because I got used to it. I got stressed if I talked… what is Matthieu going to ask me? If I stand in front of 100 people, I feel more natural. It is kind of a new feeling.

The thing is, if you can speak to 100 people and 100 potential clients, you save so much time because if I have to speak to all of the people in China, but if we organize a conference; no matter online or offline and there are hundreds of people listening to my speech, there will be at least one or two that will come to me at the end of the speech to say, “I love what you said. I need you. Let’s have a talk.”

Matthieu David: To be more specific, what did you learn at Toastmasters clubs in China? I understand the one thing you get is practice. That is clear. For people who don’t know Toastmasters, we didn’t say what it is but is I the regular meeting where you give a speech to an audience within your community. It could be your university, a district and I don’t know how long the speech should be, but after there are some discussions and feedback from the audience on the speech, but you are going to tell us more about it.

Yoann Delwarde: What is the goal of Toastmasters? So, it was created more than 90 years ago and now we have more than 170 000 members across the world in almost every country and this is NGO. So, a non-governmental organization, so a non-profit organization and in China, in the district that we are we have east district and east district has more than ten thousand members and as you said, that is getting more and more trendy and the goal of Toastmasters is to help people improve their communication skills and leadership skills and actually the leadership skills is something that people don’t really know, but that is where I learned the most. I was leading a team and I was helping actually; in my last project, I was helping 80 people to run a project that had an impact on 5000 people within a year.

So, this is really a strong leadership common line there. For communication, as you said, there are 6 steps. The first step is you have the objective of the speech and so, what is the goal for you to make the speech? It is not just to speak. You have a key objective and it could be about body language, it could be about coaching, it could be about sales. You have the objective before the speech and then you do the speech and after the speech, you get an evaluation; an evaluation that is very constructive and empowering where they tell you what you have done well on and where you can improve.

Actually, it is like a step by step process because you start from scratch, and then at the end, you can become a keynote speaker and then we even have some certification for public speaking that we are doing at every year in the international conference. That should happen in Paris actually, but due to the situation maybe we do it online, but again actually that is one thing that I got from Toastmasters is the network.

In 2017 I was in Canada and I had the great chance to meet Tony Buzan, the inventor of the mind map; one of maybe the top ten most famous people in the world. He was there and I had the chance to spend the whole night with him because we went out with some friends, because actually he happened to know one of my Chinese friends and there are so many people like that in Toastmasters.

They are willing to share and that you can reach out to them, shake their hands, and get their book. So honestly, I really advise everyone to go there. That’s just amazing. More than 90% of the fortune 500, have a Toastmasters clip. So, most of these are extremely encouraging and so I would not be surprised that Bill Clinton was a member. I am not sure I had the chance to meet him yet, but if I meet him, I will ask him.

Matthieu David: I think he was. So, the last question I usually ask, and I may not ask all of them because you answered already some of them about the books. What do you read to stay up to date about China because you have specifically coaching, mentoring, and helping companies in China? So, you have your concepts, but you need to implement them in China. What do you read to stay up to date?

Yoann Delwarde: I will be very frank with you. I believe that even if I read all the books, as soon as they go out, they are outdated. So, what I really do, I talk to people because I believe that every ordinary person, they have extraordinary stories to tell and I ask them questions. I am a very aggressive listener.

When I listen, I really listen. I even mute myself and when I am not sure about something, I try to ask 5-10 people in my network, “Okay I have this challenge. This is what I am thinking. What do you think?” or, “You hav some experience in that, how do you think they will react?”  If all of them tell me, “Yoann, you are going through the wall.” I back off. If they tell me, “Yoann, that could be good, but think about that.” Most of the time this is something that helps me and so I read a lot. I meditate a lot and reflect a lot, but also, I talk to people even more. I think that now, again, most of the challenge is you need to ask people how they would react because they are all complex.

Matthieu David: Yeah, you begin by saying, “Can I be honest,” but actually that is certainly a swirl that many people mention is to… I would not say to meet and talk is to refer to their contact. It could be WeChat, it could be LinkedIn, it could be Talk, but it seems that a lot of the people get information from WeChat and LinkedIn and so on. Do you have anything you read? I read from the New York Times and The Morning Post to know what is going on in China. Would you have some sources you would like to share?

Yoann Delwarde: What I am trying to do is I am always trying to have different sources of information and so I like Frog, for example. I like the New York Times and also, I read some newspapers from China. What I am always trying to do is to cross the different information because obviously when you only read one newspaper or one book from one nationality, you are biased.

So, I am really trying to see different angles and different perspectives, but I have to say the really good books are written in Chines, which I cannot read yet so I really rely on my Chinese friends and my Chinese partner. When there is something trending in China, I’d rather ask and I am thinking about the new social selling communities, I am thinking for Alibaba, etc. I just go and ask because if I read a book written in English, I lose so much information already because of the translation, etc. So, I prefer to ask people who read Chinese books.

Matthieu David: I feel you are someone who can think a lot about productivity and productivity tools. What productivity tools do you like most?

Yoann Delwarde: I am trained from GTD; Get Things Done and I did two training’s and so I really like this methodology by David Allen and this really helps me to be effective. I don’t believe inefficiency. That’s actually what I say to most of my clients. If you want to be more efficient, you will get a 5-10% growth every year and I don’t want to work with you. I want you to be effective. So, I want you to get 50% or 100% growth every year. So, it is really about mindset shift and not about 5-10% saving every day.

Matthieu David: Is there a specific tool or software you really like? We may use simply sometimes a calendar or notes on I-Phone. That is something I use a lot. Will you have some tips to share about software tools?

Yoann Delwarde: Actually, it’s funny because I have a buddy. We are coaching each other every month. He is an extremely organized guy. The thing is that it doesn’t work for me. So, what works for me is a very simple Excel file, I have a book and I reflect every week what I have done, what I want to do the next week. I am a bit old school in that, but I have seen people who are using their phones, but for me, I still like pen and paper. What is really important is about the mindset and no matter the tool, it doesn’t matter.

What matters is first, you collect, your mindset, or everything in your mind, you write it down. Then you organize into the next action and then you prioritize and then you have your yearly plan, your quarterly plan, your monthly plan, and your weekly plan. Just make it happen. So, first is, you plan, you do, and do something I that plan. I try to decrease the doing something in the plan and actually it doesn’t really matter. I plan and I do what I plan and when I do what I plan, I am present and mindful.

Matthieu David: There are two questions that I ask at the end of the interview, which comes from Peter Drucker. You can assess innovation when you look at a success that was unexpected or a failure that was unexpected. So, it gives you an idea of what is going on in the market. An example I often use is carpooling leaving China, which is unexpected and it shows that e-commerce is taking over the economy.

What would you be able to share from your observation over 8 years in China? Something the company; events or something in society that has been successful or a failure that you were surprised and it shows something bigger happening in the society or the economy.

Yoann Delwarde: This is very interesting, because when you asked me this question, I had the same discussion with my parents last weekend, and actually I told them that China was already advanced and actually this outbreak of Covid-19 is just a catalyst that makes China even more advanced. Why do I say that; because everything that is happening online right now is just amazing. I mean the fact that you could stay at home when people could not go out and you could still get your food.

When I talked with my friend in Europe they were just out of the blue like, “Wow. How can you do that?” And about the robots, about the drones, I see even the healthcare how they can improve and then again I say that as purely when I look at the business, the way they are trying to speed and I am not talking about the values because this is something that I think many people are getting emotional about. The speed that they have and the vision that they have is tremendous and yeah., I think this is just a catalyst. I think they are already advanced on many topics. It’s not that I’m surprised. For me, it is no surprise. It is just that I think it is just making it happen, fast.

Matthieu David: Yeah and in some way, we are all more aware now that China has reached a level of development, which is in some aspect more advanced than the so-called…

Yoann Delwarde: I am talking about technology here.

Matthieu David: What about failure? What failure have you witnessed that was a surprise to you and shows that something is going on?

Yoann Delwarde: Well, actually the last one that I saw because I have one client at FNB and I heard the news by a local coffee and I was surprised because the way they started, I mean 3 years ago you see no drinking coffee, right and now you see drinking coffee everywhere, even more than Starbucks. I was thinking, “Wow, they must be super successful” and the way they were approached at the beginning, they were trying to learn from Starbucks the ideal plan, etc. Go to the building and target the best clients and also to have cheap prices seems to be working and then when you see it dropping and them falling behind, you realize, “Hey, sometimes it looks good, but actually behind it is not so good.” So that was a good reminder.

Matthieu David: What’s even more surprising is they could have said fake things to so many people and so many investors and that they could have worked its way. I feel that that is a failure we need to learn from.

Yoann Delwarde: Actually, it is more related to the start-up community because I am in this one and I can clearly see. There is a bobo and there is a bobo especially in China that is exploding now. So many start-up’s fail because it was built on nothing, especially the ones that were purely Chinese on and Chinese invested, especially from grants from the government which has no sales behind, no business model behind and it is just going to poof and so I think this was good because it was like Internet bobo in early 2000. I think it is the same now for start-up technology. Only the one that really has something tangible and a good business model will survive. All the rest will be out within a year.

Matthieu David: Thank you, Yoann for your time. You took your morning for us and I really, really appreciate it. Congratulations on what you did. I’ve known you for a long time; 6 years I think because we organized together with a forum with SME and big French groups and actually when we look at them, some have left or some have changed or some have grown and some have left.  So, this landscape has changed, but yeah, thank you very much. Congratulations on what you did for the foundation of Infinity Growth. It’s such a good name, by the way. I don’t know how you got it and I don’t know what domain name you have. I’d like to check that and I hope you enjoyed it. I hope everyone enjoyed as well the talk and thank you to everyone for listening.

Yoann Delwarde: Thank you and if you want to reach out to me just add me on LinkedIn and I will be happy to talk to you. Thanks, Matthieu for the interview. That was perfect.

Matthieu David: E-mail; do you want to share your e-mail?

Yoann Delwarde: You can just add me and you can see my profile and then you can write to me. That is much better.

Matthieu David: Okay at least they know that now they need to write a good e-mail.

Yoann Delwarde: They can say they listened to the podcast and I will add them directly. Matthieu David: Thank you Yoann, for your time. Good-bye, everyone.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

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This article China Paradigm transcript #102: The way forward to increase B2B sales in China is the first one to appear on Daxue Consulting - Market Research China.

Full transcript below:

Matthieu David: Hello everyone, I’m Matthieu David, the founder of Daxue consulting and its China marketing podcast, China paradigms and today I am with someone I’m very impressed by when I looked at their resume, Dr. Renata Thiébaut. You are a partner and head of the business intelligence of Web2Asia since 2013. On the side, you’re a researcher at Harvard University and you have a Ph.D. from Jiao Tong University in Law. So that’s why I’m saying that I’ve been very impressed by your resume.

But we are here to talk about Web2Asia. Web2Asia is a TP – so Taobao partner or Alibaba TMall partner agency– you will tell me which formula we need to use, which is an official name for companies that are able to represent companies and sell on their behalf and manage marketing budget and media buying on Alibaba. So, you need to be accepted by Alibaba to get this name to be an Alibaba Tmall partner agency. Size of business, you started in 2006, it’s about 200 people now. You can work in eleven languages and you have worked for companies like Marks & Spencer, Esprit, Bausch, Swarovski, Intersport and one I’m very interested in – Metro, Aldi, and JellyCat which you won a reward for by Alibaba, and I hope that’s something we can talk about. Thanks, Renata, for being with us, and could you tell us more about Web2Asia?

Renata Thiebaut: Thank you Matthieu for welcoming me today. Web2Asia is a full e-commerce service provider in China, so we have three different core services. The first one is the market entry strategy for foreign brands that want to open an online shop in China. The second service is the e-commerce operations in China and sales. As you said, we have around 200 staff that take care of the design of the shop, also customer service and company preparations. So, we have the whole ecosystem to offer to our clients, especially foreign clients that want to come to China. And the last service, as an e-commerce service provider in China, is digital marketing, because it goes hand in hand with e-commerce to leverage the sales.

We’ve been in the market since 2005 and we were doing more marketing at that time. Around 8 years ago we switched to do more e-commerce operations in China and we were one of the first ones to do cross-border e-commerce in China. So, let’s say we have very deep expertise, especially in cross-border e-commerce in China, since the beginning that everything was manual – we need to collect ID cards manually. It was a bit complicated in the beginning but now we narrowed down the whole process. And we’ve been awarded a couple of prizes from Alibaba group. The latest one was with Aldi and we won the innovation prize from ele.me which is Alibaba’s food app, and most of our clients are from Europe, are from North America so we focus more on foreign clients that want to come to China.

Matthieu David: For all the revenues, could you share a bit an idea of number of clients, revenues, some idea of where you are now? 200 people is not small, so I believe you are a sizeable business now.

Renata Thiebaut: Yeah it is very interesting that when we started we had roughly 15 people right, so we had a very start-up mindset and a do it yourself – we had a lot of struggles in the past but because of our positioning as one of the few foreign owned TP’s in China – also our management is all done by foreigners, myself and other partners as well, so we could tackle better different foreign markets, especially Europe right. So, we have many German clients, many British clients because of our background. So, it was a matter of positioning, of having a clear strategy of how to position our business and define where we want to go to, and I think 5 years ago we started growing a lot. Now we have clients either for consulting or e-commerce operations in China and we have more than 30 fixed clients let’s say.

Matthieu David: About 30 clients now you manage operations for?

Renata Thiebaut: Yeah for operations only for TMall but we have other services as well.

Matthieu David: I see, that’s something I’d like to know more about is that you mention a lot TMall, you mention a lot TP – that’s something I’d like to understand if Pinduoduo or WeChat is part of your work as well, but let’s go back – let’s talk about this later. So, what you are doing is to mainly manage – you started in 2003 when Taobao just started. I think TMall was not existing, just to think about it – it was pre-iPhone – the iPhone is 2008. 2003 I think Taobao started, Alibaba was started in 1999 – it was a B2B marketplace and they had no C2C, and Taobao was C2C, then TMall appeared much later (read about setting up a Taobao shop). You seem to talk about the beginning as if you were at the beginning, but I think you joined later. So at the beginning what was the vision? Was it about selling on Taobao which like eBay or like the C2C platform? What was the vision initially?

Renata Thiebaut: Well the vision was purely C2C platform and I was working at that time with Taobao, so I have a Ph.D. in law and I was doing a lot of IT protection, so my role was to shut down all of the stores on Taobao that were selling fake products. So at that time, it was very interesting because there were no rules or regulations to tackle this issue and we had to do everything manually, we had to do mystery shopping and contacting the store to ask them to close. So, my first big client for this type of service was Swarovski. There was a very good finding actually that most of the products were actually not fake. They were original. So, there is a big problem with the supply chain that the factories leak the products. The products are original from the factory.

So, there are many situations like these that China has this problem with in the past, but it has improved a lot. So yeah – at that time Taobao was clearly C2C but now you can even have some brands opening on Taobao, a store on Taobao. Miranda Kerr – the Australian model for example, she opened her brand first on Taobao and then she migrated to TMall Global. So, this is a tendency actually from all of these platforms. They do not only adopt one business model; they try to follow consumers and see the tendencies to shift their business and it happens quite often.

Matthieu David: Initially, so Taobao is a C2C platform that’s maybe where some people would sell products, some Chinese companies would sell products, but at that time in 2003 I don’t believe there were many European and American companies which wanted someone to help to sell on Taobao, so initially when Web2Asia was started – what was the vision? Was it to be a TP? It could not be because it was not even existing. Once TMall was created the word TP emerged. So, what was the vision initially – it was to create websites? To be in the digital space? And then it evolved into a TP? Is this the story?

Renata Thiebaut: Yes, this is the story. At that time, we were doing more websites and more marketing on Baidu for example, and then we had to shift our business model because we saw e-commerce was booming and there would be many opportunities in this industry. So, we became Alibaba certified Tmall Partner agency when e-commerce started in China basically and now, we are one of the top three TP’s from Alibaba, so most of our clients are referred by Alibaba. We have a very close relationship with Alibaba, because they are the marketplace and we do the store operations. So, there is a lot of coordination we have to do on a daily basis.

Matthieu David: So let’s talk about some of the rewards you got from Alibaba – one of them is of course attracting the eyes of everyone, reading your presentation which is JellyCat.  Would you mind sharing a bit more about what you did for them as a case study for those who don’t know JellyCat, it’s a British toy, but in China it seems that what you have done is that you’ve found a different market in China. You a massive amount of the product on TMall, I read in your presentation double digit million USD if it’s correct, within a year I believe, and you have been rewarded by Alibaba for those campaigns’ management of this shop. Would you mind telling us some more about what you did and how it was successful?

Renata Thiebaut: I think JellyCat is our biggest store – biggest successful case actually, because it is a small brand out of the UK and when they started in China back in 2015, they had no awareness in China- yet their price point is a bit higher compared to other local products. So, we had to position ourselves very well to have a very strong storytelling to prove to consumers they should pay around 300 RMB for that instead of 50. So, we used a lot of UK related elements to show the product was premium and to create a storytelling, and the royal family was the theme that we used at that time. We could use also some pictures because some Hollywood actors or actresses, they give JellyCat to their kids, and also the royal family itself, they use JellyCat toys. So, we could use all of this materials to show to consumers that for foreign people and for famous people as well they all love JellyCat.

So, Alibaba created a video for us, we were featured in one of the best case studies of Alibaba group, and the video was very interesting because the story was all of the JellyCat were coming from the UK to visit shanghai. So again, content was the key for JellyCat to be successful here and they have cute products. Chinese culture is a cute culture – so the product is good. Sometimes of course we cannot make miracles if customers do not really like a product or if it’s not suitable for the Chinese market, but JellyCat we could adapt the content, we could create new content, we are very flexible about that. Also every year we launch the animal of the year, that is related to the Chinese zodiac and this is very important, this localisation to the Chinese market. So, within one year we became the top one plush toy in the Chinese market and we keep winning awards for JellyCat, expanding their business here in China, so now they sell on different platforms and also, we are going offline with them. So JellyCat I think for me is the best successful case because it’s a very small company. So, if you have limited budget and if you are not well-known, it’s much more difficult to develop your brand in China, which was the case – so that’s why I like sharing JellyCat’s story.

Matthieu David: And Alibaba like it too – they share it and they gave you a reward. May I summarise and see the key point is that the royal family is using JellyCat, was it the key point? I feel it is something when you have an endorsement from a very famous and very respected people, Chinese would tend to buy it. Second question you said in your presentation that it’s not used as a toy, would you mind sharing then what it’s used for?

Renata Thiebaut: So, we even had a Chinese artist using JellyCat. We never paid for any KOL for any artist to showcase the plush toy. It was purely because of its cuteness. So, we had for example Angelababy, the Chinese Kim Kardashian – she was holding a JellyCat in one of her TV shows, so of course it was a free PR for us.

Matthieu David: Incredible, it’s incredible. For people who are listening and may not know China very well, she’s one of the most famous person – KOL I would say – people would love to have, would give millions of USD to have her as a KOL.

Renata Thiebaut: Yes, so as soon as they like a product, they can do some free advertisement and we were not even aware of that and we got a lot of feedback from consumers and we were like – oh what’s going on! So, we found out that she was with a JellyCat in one of her shows. So, it happened quite often in China actually, not only with her, but even with some others. So, we could grab all of these materials and use as a marketing material to promote our brand, without having any extra cost.

Matthieu David: The thing which is surprising and in some way it’s something – it looks random. The way you talk about it, it looks that by chance you were successful, but I don’t think that’s the case, I think it requires a lot of work and a lot of thinking. So, what’s the strategy behind it and the tactics which were not costly, but made a big effect?

Renata Thiebaut: The first thing that I believe was the key milestone for JellyCat in China was data. We saw in the beginning that our approach was wrong. Our strategy was wrong. So, within 6 months we had to re-shift and to re-strategize the brand, because like you said – we thought it would be a toy for a kid, but in the end most of our consumers were 25 years old plus. Young women going to work and they had the need because they work so hard, they had the need to be with a JellyCat either inside of the bags, to bring their JellyCat around, to go to a coffee shop, or also go to work with a JellyCat. And this is so true because most of my colleagues they have a JellyCat on their desks and they work holding the JellyCat.

So, we positioned ourselves at that time – we had to change our mind-set and also our strategy to show that JellyCat is a fashionable accessory. So, you have these smaller ones that you can carry around, put inside of your bag. So, if you go to a coffee shop or if you go to work and also of course we cannot just eliminate the case that it’s a good gifting for new-borns. So, we had to differentiate different audience and to work in a different communication message to these different audiences to show that the product is 100% safe, you not have allergy with the product. So content was the second thing that we really, really worked hard on to position JellyCat at the top plush toy in China.

Matthieu David: How did you find out that you had to change the positioning, because you were targeting children and it seems that it was not working, so you found out that the few sales you had were actually more 25 year old and from that – with the few sales you had, because I believe it was not many – you tried to differentiate and started a campaign targeting them and that worked. And then you scaled that and you put even more investment into it because you saw there was a momentum – is that correct?

Renata Thiebaut: It is correct – so in the first 3 months sales were very low, but we saw this tendency that most of the buyers and the visitors of the shop for example – the ones who would put the product in the basket but not convert — were 25 year old plus. I think the most important factor that year in the first year was 11/11 – we were definitely not prepared for the campaign.

Matthieu David: Which year was it?

Renata Thiebaut: It was in 2015. So the first 11/11 we sold so much more than we expected, let’s say 10 times more, 15 times more and the warehouse of JellyCat in the UK they were shipping the products 24/7. So you know in Europe usually people do not work on weekends right, you have restrictions with even transportation, trucks are not allowed to transport during the weekend and especially on Sundays. So, it was very stressful but we managed to deliver all of the products we had and from that time on, the first 11/11 on, we became the top one plush toy brand in China. So, I want to say that – 11/11 was very helpful for us as well.

Matthieu David: As I’m listening to you I understand that the shop is managing the cross-border e-commerce in China, so it is TMall Global right – and the warehouse – for people listening to us who are maybe not very familiar with TMall and the ecosystem of e-commerce in China — you can sell in China when you have a warehouse outside of China, and this is called TMall Global, JD is doing the same, JD Global, and you don’t need to have the registered company in China – you ship from the warehouse which actually could be a free trade zone as well in Shanghai, maybe as what you do now, with the free trade zone in shanghai or in Hong Kong to ship, and at that time it was UK.

Renata Thiebaut: Yeah, so that time it was the UK – we are using Alibaba’s logistic network which is called Cainiao to ship the products out of the UK to the final Chinese consumers, but then we were only on TMall global at that time. So JellyCat started expanding. And this is what I tell all of my clients, I do not think it’s a good strategy for you to come to a new market like China and have many sales channels for example. Sometimes they want to open on JD, on TMall and on different platforms like Kaola, The Little Red Book – it’s always good for you to start slowly, to choose first the best platform and then you do a trial in the market – if the product is not good you can adjust or the communication because you need to select a hero product for you to push the brand in the Chinese market.

So, we started first with TMall global shipping out of the UK but as soon as we expanded our business and we opened a JD store, then we open on TMall domestic that business model was no longer valid. We needed to again re-strategize. So, this is the message I think with JellyCat we always needed to rethink your strategy and think fast actually because e-commerce is so dynamic in China.

Matthieu David: It took you about 3 months before changing – as the sales were not good, 3 or 6 months I don’t remember how many months. Initially when you have a new product –and let’s take JellyCat as an example, how do you get clients? It is said by many people that when you need to get a client and you’re not known – and JellyCat was not known at that time in China I believe, you have to spend a lot of money in marketing, and you said this was a small company that did not have a lot of money to spend, so how did you get your traffic on your TMall? Was it still on Baidu what you were doing initially? Was it purely on Alibaba platforms? Could you tell us more about how you drive traffic and the specifications of JellyCat?

Renata Thiebaut: The best way for you to drive traffic to your online shop when you have a limited budget is to focus on the marketplace. You have a banner display, you have keywords, you have many different ways of driving paid traffic to your store, plus all of the free traffic that you can also have if you join a campaign for example if you do corporation with other brands. So, there are many ways for you to drive traffic.

So, I do not think Baidu would be a good strategy in the beginning if you have a limited budget because you might not convert. So, the focus should be to do marketing within the platform. As a rule of thumb, we suggest a marketing budget of around 20% compared to your sales target to be invested within the platform. So, it is a bit high but as soon as you gain more free traffic, you can drop it to let’s say 15%.

Matthieu David: I see, I think the next question for someone listening to us and who would like to have his shop on TMall is – yes, I’m spending 20% but then do I have the data, or is it owned by Alibaba, and can I retarget them? I believe you can retarget through Alibaba platforms and everything which is owned by Alibaba, including ele.me and so on, but I don’t believe you can really drive your traffic and convert them through WeChat or email because I believe it’s still the ownership of Alibaba. Would you mind sharing about this investment that companies do – 20% as you said of sales – it’s sizeable, and then do they own the data?

Renata Thiebaut: The company does have access to the data. If you have an online shop, you have access to the industry data and also to your shop’s data. So, you need to be able how to use this data for you to understand what is wrong and what is right in terms of strategy. So that’s why we are 100% data-driven and especially myself, I am in the business intelligence unit of Web2asia so my role is really to take data and strategize the business or re-strategize the business of our clients.

I can give you a very clear example of what I did with Aldi. We are selling milk – fresh milk and UHT milk of 1 liter in China. Sales were good but we noticed that we are not selling as well as other brands, especially European brands and I tracked all of the attributes of this type of product in the industry and also the top-selling brands or Chinese brands as well, and we saw a trend that Chinese consumers would prefer two different types of milk. One was 250ml instead of 1 liter, and the second one was milk with enhanced calcium for kids.

So, if you do not have this data, you are not able to understand the consumer’s behavior, right.

Matthieu David: I’m sorry to interrupt but you got this data through the fact that TMall or Alibaba is sharing with you industry data because you have a shop on TMall. When you have a shop on TMall you have access to data on the industry – but you cannot access all the industry but only your own industry. One thing I’d like to add about Aldi – people may be surprised by listening to us that Aldi is selling through a platform – a marketplace. Like Aldi is not selling on amazon or – but TMall is a place where you open a shop. It’s like a street. It’s like a department store and you open a shop. So, you find out the data on TMall which helps you to reallocate your effort and maybe redesign the product?

Renata Thiebaut: Yes, we needed to redesign the product, we needed to be able to follow all of these trends and see what the Chinese consumers want. We localize a lot of products as well. Aldi is a German supermarket so we are very, very strong in Europe, but European food consumption is very different from China. So, in China, we sell hotpot for example, that we do not sell back in Europe. So, we need to do this – whenever you go to a different market, you need to have a certain level of adaptation and localization of the product as well.

Matthieu David: My understanding is that the key advantage of Aldi is the ability to source European products which are more qualitative and maybe at a discount price because Aldi has a bit of image of discount in Europe if I’m correct, and the ability to actually bring in a hotpot – European vegetables, European products would be the asset – that’s what you concluded?

Renata Thiebaut: Yes, so we adopt a very different strategy in China, we wanted to be very competitive with lower prices just like in Europe, but also offer products that Chinese consumers are used to, like hotpot, or noodles. Chinese noodles. We ship from Australia because of the cost. It’s much cheaper to ship from Australia than Europe, but then our Aldi started procuring within the Chinese market as well, but with European standards. So, for the Chinese consumer, food trust is the key. So, you can manage to leverage what you do in Europe, cheap products but very high quality, and to adapt to the Chinese market as well. Because there were many food scandals recently in China, so this is very important. And Aldi like you said, they started with a TMall Global shop. I think this is their standard strategy so you can test the market first. Then you move to TMall domestic, then you start opening your own shops. So our first store was launched in June last year in Shanghai, and right now we have a few of them in shanghai, around 5 and we plan to expand to other cities as well, for a couple of thousand shops within the next 3 years.

Matthieu David: Yeah, for people not to be confused when you’re saying shop now – you’re saying offline shops.

Renata Thiebaut: Yes, simple shops.

Matthieu David: Yeah and it started with the TMall global and then they had a beautiful shop actually – very well designed – are you managing them at all?

Renata Thiebaut: We manage the shops and we integrated our system with the physical shops and the online shops as well on ele.me or on TMall, for example, because we also need to understand the consumers, if they were repeated buyers – how we could target these offline consumers to drive traffic to our online stores and vice versa. And, our key strategy for Aldi is O2O, online to offline (more on O2O in China here). With the integration of this data, from all of the sources that we have of the sales channel from physical stores, online stores to also social media on WeChat, Little Red Book – that’s what we use to strategize the business.

To give you a concrete example – we were expecting to grow around 23% this year, it was our very let’s say, simplistic way of thinking last year to take things slowly and really use data to grow the business more in China. But because of the corona virus I think our projections are off and they are going to expand much faster and much, much more than this. Only in February and in March we saw that the sales grew 20 times more than the average.

Matthieu David: So, the crisis was beneficial to Aldi because people were delivering home.

Renata Thiebaut: Extremely beneficial. For some industries we could see an impact of let’s say 40-50% in their sales. Fashion industry – perhaps a bit less, and shoes for hiking for example – we saw a drop of 40-50% in sales. As for other mummy and baby products and also food related products, there was a big increase. So, in Aldi’s case I can tell you, it was around 20 times more than our standard sales.

Matthieu David: Interesting. What about now, the post coronavirus because – people who may listen to us who are in Europe or in the US may not know, but in Shanghai now we are going out, bars are open, even night clubs are open, everybody’s wearing masks but everything is working. Is it back to normal or people keep their habits?

Renata Thiebaut: Right now, we’re still very, very up because not being the whole of China is normal. So big cities like Shanghai are slowly going back to normal. Even though it’s not 20 times more than the usual sales, it’s going to be much higher because you gain awareness, so people who did not shop from Aldi before now know Aldi, and they’ll probably keep shopping from Aldi. That’s why it was also beneficial in the sense that the brand will gain awareness and also more buyers. Our delivery is very fast, it’s up to 30 minutes in Shanghai for example if you’re nearby. Since we are going to expand to other cities in China, this will spread all over the country. So, we’ll keep these 30 minutes – our consumers should be comfortable. If they either want to shop online and receive their products in their office or at home or if they want to pick up offline.

Matthieu David: How did TMall react to the fact that you opened offline shops? Because in some way you are driving traffic out of their shop, I mean you are getting your independence which is something that I think Alibaba tries to avoid, even working with JD, they may try to avoid that their brands work with JD.

Renata Thiebaut: Now I do not think that the market places are as concerned as before for two reasons. One is we are facing a new era of new retail. So, this is the trend, even Alibaba is doing the same with Hema for example. So, we needed to change the mentality that offline compete with online. It really goes hand to hand, because the more people know your brand, they can also go and shop online, so you can leverage also the data you have from offline to convert to online. So there are many ways to do this, if you offer QR codes with coupon discounts for example or when you do an online campaign you can have offline events to drive traffic to your online shops so you really need to be creative when you do O2O when you have different sales channels instead of thinking that it will hurt your online business, but actually it will create more awareness to drive more traffic and business to your online shop.

Matthieu David: How do you organize your team? That’s one thing I’m curious about – you seem to expand in very different directions and to do a lot of different things. Managing a TMall shop is not only setting up technically speaking the TMall shop – it’s creating banners, it’s about managing PPC, managing media buying, it’s about also doing brand reputation on Baidu and it’s listed on your presentation, for instance, social media, and now offline shops! How do you organize your team to have the talents? Could you help us understand do you have designers’ insight or do you actually partner with other company’s?

Renata Thiebaut: We do mostly in-house, and actually we did a change management implementation in the company. Before it would be a very up-down model that we had in the company and let’s say you had a director – an account director, then you had the manager and you had different people like a designer, customer service representative to do different tasks and nobody would be aware of what the other ones are doing, which is not too good for e-commerce because we all need to speak the same language and to be 100% aligned to grow the sales and avoid returns or problems that may arise with e-commerce.

So, two years ago we changed our management structure to be more project-based and it is called flat management. We divide the teams by different projects and they only take care of projects that are in similar categories, so they can have more expertise. For example, if you have a food client, all of the team members will take care of food-related clients, or mum and baby, or fashion, because if you do food and fashion at the same time, you cannot really focus and have a concise strategy because it’s completely different. So that’s how we work. Even though we have people to do different tasks, all of them need to be aware of what they are doing.

Matthieu David: In terms of talents and functions, how is a campaign organized? You have a creative person, who is going to design the campaign, then you have some people who activate the campaign? Would you mind describing a little bit the different steps of a campaign and the different people involved in it? It seems to be a lot of different talents and resources.

Renata Thiebaut: Yeah it requires a lot of resources. I’ll just say between 7 – 10 people per project because customer service is so important in China to not only upsell the product but for crisis management as well if the product is broken to avoid bad reviews. So, we start with customer service and you need to train them, they really need to understand the brand and all of the characteristics of the product. Because they are the face of the brand – they really represent the brand.

Then it goes to design, you cannot write the wrong price on a design for example to set up the wrong price within the shop. So, you always need a double to triple layers of double-checking, because the campaign period is so stressful that you need to have everything in place before midnight. Right. If the campaign starts at midnight. So, you need to allocate one project manager who will coordinate with all of these different people in the team.

So we divided the campaigns to give you a concrete example into stock first, we do the stock preparations and also the pricing strategy. And then you have the pre-warming campaign, so only a few selected products will be part of this pre-warming campaign. Consumers pay a deposit and they get extra discount or they get a special gift, limited editions, and things like that, and then you have the campaign day which might have another set of discounts, another set of gifting. So, you need to prepare the campaign through different phases and to be ready before the campaign starts.

It was very funny actually – well, of course, it was interesting, very stressful, but thinking back at the beginning, especially cross-border e-commerce in China, or even e-commerce in China, the campaigns they were so stressful, when a lot of manual work that we had to do and the system – like the marketplace system would freeze for a couple of minutes and you would not be able to buy the product and then by the time the product was online, it was sold out. So, these were the type of issues we would have before with the campaigns but every year it becomes much better. I would say around 6-7 years ago, the system would freeze for about 30 minutes, so each year it was less and less. 20 minutes, I remember 2 years ago it was only 3 to 5 minutes. So, this 11/11 in 2019 it was nearly perfect.

Matthieu David: Yeah, you’re talking specifically about Double 11 campaigns which are nationwide campaigns (learn more about the online record-breaking sales “Singles Day”).

Renata Thiebaut: Well 11/11 is the world’s largest campaign. So, we are talking about trillions that are sold within these one-month long campaigns. But it is not the main campaign. For some industries, you sell much more in other campaigns than 11/11 itself.

Matthieu David: Which one would you emphasise, there is 9/9 for one, there is 12/12 – which one do you think is interesting and not well understood?

Renata Thiebaut: The main campaigns in China are mainly for the Queens Day which is March 8^th, then you have 6/18 – then you have 11/11 and Chinese New Year, but Chinese new year campaign is very good for food and beverage, for example, it’s not too good for other industries, so we see sales really down in that month for different industries, and very high for food and beverage. So, these are the main campaigns, and then you have the smaller ones, like Black Friday type of campaign, 12/12 and then you have Chinese Valentine’s Day. Back to School is a very good campaign for kids for example, not only for backpacks or products that you usually buy for your kid to go to school, but also shoes and clothing for kids. So you need to think also that your campaign is not only 11/11 driven – so there are many campaigns, let’s say once a month or even more, that you need to consider, and Flash Sales as well that you can be a part of, it drives a lot of traffic for your brand. So, when I talk about preparing for a campaign, it’s not only 11/11 – it’s pretty much every month you need to have everything ready before a campaign starts.

Matthieu David: Does it mean that it isn’t worth making a campaign on your own, does it mean that you have to target those moments? Doesn’t exist some independent campaign – you want to celebrate? Maybe the brand is from the UK and they want to celebrate the UK’s day and then you do a campaign on your own. Is that something which is existing or it’s something you don’t even have to care about, you have to focus on those big days organised by Alibaba?

Renata Thiebaut: No it really exists, you can do your own internal campaign. Especially if you have a CRM system in place, you can target your silver, gold, platinum members and you can offer different discounts but it is not as big as being part of an official campaign because you are going to get all of the traffic from a bigger campaign. So, this is the difference – traffic-wise, and being part of an official campaign will give you much more visibility within the marketplace than just doing on your own.

Matthieu David: To share one data on Metro, one of your clients, and again the same as Aldi. People will be surprised that Metro has a shop on TMall. That’s very common, so you go through another distributor to sell and within one day in your presentation, it was 11/11, Metro sold 17 million renminbi, if I understand the graph correctly, because next week you put TMall, which is 91 billion and we were thinking, you made 91 billion! And then I saw it was TMall. So Metro did like 2 -3 million USD within one day, for 11/11.

Renata Thiebaut: I think it was within one hour, because usually what shops do for 11/11 are much more than these, let’s say 50 million or 20 million, depending on shops like Zara, Uniqlo, it’s nearly 1 billion renminbi.

Matthieu David: Yeah, I don’t understand then the graph correctly, it should be more you say – or maybe it’s in USD I don’t know.

Renata Thiebaut: Yeah it should be in USD because the campaign starts one month before, so it is not a one-day campaign. So the way that TMall does is, you need to have the pre-warming part. Let’s say 11/11 starts around October 20, so people start putting products in the basket, or they pay the deposit, and then before the campaign starts you have another round of the pre-campaign phase, and the official campaign starts at midnight of 11/11 and it will last 24 hours. So, from midnight to 1 AM, we have a huge peak of sales, and then it goes down a lot so around 1 AM, who paid the deposit will have to pay the remaining one at 1 AM. So, this will be much less – we’ll have fewer sales at 1 AM than at midnight and then again – sales will slow down and in the morning around 10 AM, you’ll have another peak and before the campaign starts around 8 PM or 9 PM, we’ll have another peak. So, we’ll have let’s say different peaks of sales throughout the campaign, but the main one that you have most of the sales, most of the traffic is at midnight.

Matthieu David: We talked a lot about TMall, we talked a lot about Alibaba, but now JD has emerged, I think it’s been already 8-9 years that JD was created. WeChat is selling; you have also Pinduoduo; you may have Douyin preparing something to sell online. What’s your take on those other platforms? JD is very similar to TMall, but what about WeChat, Pinduoduo and other platforms?

Renata Thiebaut: The best platforms in China are the ones that are more relevant but you need to consider also your type of product. So, if you compare TMall global and JD worldwide in terms of let’s say health supplements, for example, TMall global is much stronger than JD worldwide. So then when a brand wants to select a platform, they would prefer TMall global because there you have more exposure.

So, you need to see that JD is very good with electronics, I actually think they can be better than TMall for this, even though TMall is trying to catch up, JD is very good I think with logistics, first of all, and also with electronics and house appliance. There are other platforms that are doing super well in China, one of them is Kaola, especially for cross-border e-commerce in China.

Matthieu David: Owned by Alibaba now. I didn’t mention it because it has been bought by Alibaba at the end of the day, I wanted to talk about other platforms, but let’s talk about Kaola because it has been recently bought by Alibaba.

Renata Thiebaut: Yes, so Kaola is a very good example, they are out of the Tencent, JD, Alibaba ecosystem, and they are from NetEase which is their traditional business model is to have the search engine and online games. So Kaola adopted a direct import business model to sell foreign products, especially beauty products and supplements, and they started growing a lot. So that’s why they got acquired by Alibaba, but only their cross-border business branch got acquired by Alibaba, especially because they were doing very well.

And the same happened to The Little Red Book, it is a social media app, or it was a social media app, but now its social commerce. You can also open your e-commerce website within The Little Red Book, but it’s very good only right now for beauty products or health supplements. It’s not good for house appliances or other products. So, you need to see these categorizations (find the ultimate guide to leading digital platforms in China). Some platforms are better for some types of products and others are not. So, Alibaba also acquired Little Red Book –

Matthieu David: Oh really? I didn’t know that. Very, recently right?

Renata Thiebaut: Yes.

Matthieu David: So, what you are saying is that platforms are segmented now. The maturity of the internet in China makes it possible to segment with JD, with its origin in electronics, to keep this identity into electronics, maybe male-oriented. TMall is a lot of fashion and so on and there is a platform for health supplements. Is it what you’re saying?

Renata Thiebaut: This is what happens in the industry, especially because of JD’s background, they were purely an electronics platform before, but this is not what they intend to do. JD really wants to grow their business to fashion and to cosmetics, to beauty. They are doing a big push also to expand their categorization, so people do not think that JD is very electronic-driven and it is happening very often with many marketplaces in China. Suning was also very electronic-driven with home appliances, then you have Yihaodian, which was very food-related before, a top food seller marketplace in China, but now they sell everything as well. So they really want to adapt and move very fast to cover different categories.

Matthieu David: It’s evolving fast. We are at the end of the interview and I’d like to ask you more personal questions. My team found out that at Harvard you published some papers, how do you find the time to cover topics like an analysis of the US-China trade war, how the section 301 China intellectual property case may impact new directives to promote the Made in China 2025. Seems so technical, how do you find the time? How do you organize your days?

Renata Thiebaut: I know that e-commerce customers are a lot of work and also energy from my side, but I am at that stage of my life let’s say that I really want to pass the knowledge I acquired as being one of the first ones to do, especially cross-border e-commerce in China. And I do believe that this is very helpful for business in other regions as well. So, whenever I publish something, either a book – I have published a book with them and I just finished the second book, our second series and I really try to be very practical.

Matthieu David: What’s the name of the book?

Renata Thiebaut: The book is about the digital supermarket, One Belt One Road, how we can bring cross-border e-commerce in China show to this area. So everything is related to my work, which makes it very easy because I want to write about something very practical, like how governments and how companies can learn from China and what we have done in terms of cross-border e-commerce in China strategies, for them to also grow their domestic business to disrupt technology in their countries. So, this is for me more of a contribution to the students and governments to learn from China and apply these strategies or business models back home.

Matthieu David: It’s interesting and I do the same. You are saying, we are Chinese, and I do the same with Chinese people living overseas and they say, why do you say “we”? Do you consider yourself as Chinese?

Renata Thiebaut: Well, I’ve been in China for 14 years, so I am very proud of being half Chinese, let’s say, I do not look Chinese but I really consider myself as a local and I am very proud of being able to represent China somehow in my own way.

Matthieu David: I have a few last questions. You have been contacted within my team and we sent you the usual questions that I ask interviewees, what books inspired you the most in your China journey and entrepreneur journey?

Renata Thiebaut: I like a lot of philosophical books, for example, Sun Tzu was the very first book I read about China.

Matthieu David: Art of the War?

Renata Thiebaut: Yeah. So, I really try to take the main meanings and the main teachings to my career, so this is a very good book, The Art of the War, to how you strategize your business and also your career plans, your goals.

Matthieu David: What would you like to share, what did you learn from The Art of the War?

Renata Thiebaut: You should not compare yourself to your competitors, for example. So, I think this is very good learning, even at Alibaba, Jack Ma repeats this, I do not want to be like Amazon, right. So we need not copy each other’s business model, but also try to innovate and to bring different perspectives, different offerings to consumers. Everything is about the consumers, right. If you are stuck at being like your competitors, you’re not going to provide the best you can to your consumers. So, I think this is the meaning I got from the book, that even though he does not directly say like this, but this is how I translated this into my business and into my career. I keep pushing hard in terms of data, for example, to really innovate what we currently do.

Matthieu David: I remember a conference I attended where the founder of 360 was saying — I kept looking at Baidu because at that time 360 was also a search engine and it failed, it was actually just an anti-virus software at the end because it was too much focusing on the competitor. We have this actual feedback from Chinese entrepreneurs as well. What do you read to stay up to date about China?

Renata Thiebaut: We need to read daily, right, all of the news about e-commerce, regulations. Well, I have a lot of background, I really need to actually know all of the new regulations, the new laws regarding e-commerce and cross-border e-commerce in China, advertisement law. So there are some good sources. Some good websites like TechNode, even your reports from Daxue Consulting – I read them a lot with consumer trends. So, I would suggest your reports, for example, McKinsey, PwC like the ones that we can trust. Because you see so many things online, sometimes they are not necessarily a good source for you to be inspired by. You need to be very careful when you read things and the things you can really trust and take that as learning as well.

Matthieu David: What book on China you would recommend to someone who wants to know more about China? Maybe it’s not a book, maybe it’s a movie or something else, but what would you recommend to read, to watch, to do, to learn more about China?

Renata Thiebaut: There is one very good book about AI and China in the US – so I would suggest this book because it is about the future.

Matthieu David: AI Superpower by Lee Kai Fu?

Renata Thiebaut: Yes, AI Superpower, it is a very good book for you to understand the future and how to adapt your business to the future as well, because many businesses – you know, you need to go tech. you need to implement AI for you too – let’s say, survive in the business. You cannot just keep˙ having the same traditional type of business as before.

Matthieu David: Yeah, I was speaking to someone on the podcast mentioning this book and it has been really a very best – it’s a bestseller right, has been very successful.

The two last questions I would be very interested in your answer because you have been in China for 14 years and you have been in a spot where you could witness a lot of things and see a lot of evolutions. What unexpected success and unexpected failure have you witnessed in China which was a surprise to you? As an example, I always use Carrefour. When I arrived in China it was successful, they were all over the place,˙ and then they left. They sold to Suning and I was crossing Carrefour there were two logos, that was so surprising to see the two logos.

Renata Thiebaut: I think failures can inspire us more because we have to avoid committing the same mistake, and mostly it’s the same mistake that they do. They do not understand the Chinese market, so most of these foreign companies, especially the big ones, when they come to China, they adopt the same business model as in Europe or in other countries or in the US. Marks and Spencer, they had a very wrong strategy for China. We worked with Marks and Spencer before with the social media, for their content, but the thing is, if you are not willing to adapt to Chinese consumers, you are prone to fail and that’s what happened – they had to leave China.

Matthieu David: Yeah, they had an offline shop as well close to People’s Square in Shanghai right? And, what’s surprising you actually is that even though big companies who are making so much efforts to succeed don’t make the efforts to actually really understand the Chinese market.

Renata Thiebaut: Yes, this is true, plus the competition. So, you are competing for price with other Chinese brands as well. If you do not want to change your style because Chinese consumers, they do not exactly dress the same as British consumers. So, they were very classic, everything was black or grey or white, so nothing different that they could buy from Taobao for a cheaper price or nothing that it would strike the eyes for the Chinese consumers to buy. So that’s why they didn’t adapt, plus price point – that’s why they failed in China.

Matthieu David: And the opposite, what success has been surprising to you in China? I’m asking this question because the thinker and consultant Peter Drucker was looking at unexpected success, unexpected failure, to assess innovation. I think your perspective is very interesting to that concern, to see what success you have not seen coming and which came?

Renata Thiebaut: I will say Intersport is a very good example, because they resell other brands, like Nike and Adidas, and this is a very difficult thing for you to be a reseller in China, especially if the brands you are reselling, they have established business in the market. Nike, Adidas is very well established in the Chinese market. So, what Intersport did to be the first one sports brand in China or retail in China was to focus on limited editions for example, or products that Nike and Adidas official stores would not have. Also, they did a partnership with Alibaba to implement technology and to give a better consumer experience to the buyers. For example, in Beijing, they have a big screen that is automated, so whenever you pass by, let’s say it’s a woman that is passing, they offer women related products and you can see the products. Then you enter the store, in which everything is touch base, you can try on the products, you can shop online, you scan the QR code; so this is very AR driven. They use a lot of technology to leverage their business in China to be more competitive and to be more well known. So usually consumers could buy from Intersport instead of the brand itself.

Matthieu David: Intersport was a success you were not expecting initially to be as big as it is?

Renata Thiebaut: I would not expect because they resell other brands. That’s the reason. So, I worked with them for this consulting strategy on O2O and how to leverage their brand. We had to do product selection, push different products, and then they signed this agreement with Alibaba to do special technology to leverage their brand in China. I think they are doing very well, it’s a very cool brand, a very cool case, let’s say, that we could learn from.

Matthieu David: Thank you very much, was very, very instructive, was very interesting. I have to say – I was a bit nervous before interviewing you because of everything you did and you do and you are doctor, you have time to write papers, you are a researcher at Harvard and you work on e-commerce in China, managing a business. That’s very, very impressive. Thank you for spending time with us and I hope that you enjoyed it and I hope everyone listening to us also enjoyed it.

Renata Thiebaut: Thank you very much, it was my pleasure.

Matthieu David: Bye – bye everyone.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

Do not hesitate to reach out our project managers at dx@daxue-consulting.com to get all answers to your questions

This article China Paradigm transcript #101: Managing cross-border e-commerce operations in China: Successes and failures is the first one to appear on Daxue Consulting - Market Research China.

Matthieu David interviews Carole Gabay, Analytics Manager & Market analytics consultant. Insightful market analysis is really important in order to accurately determine consumer behavior and make solid market strategies. Carole Gabay has been doing market analysis for 25 years and her skills in this field have been honed and perfected based on a strong professional experience. Her latest project is called covidminute.com What exactly does this project shed light on and how did it come to be? How is the approach to market analysis different for China compared to the rest of the world? Find out the answers to these questions and more in this new China Paradigm interview.

• 0:00 Guest introduction
• 2:21 What projects is Carole Gabay working on currently and how does she describe the term “market analytics capabilities”?
• 7:23 What insightful tool does Carole Gabay use for market analysis?
• 10:51 How is market analysis different for China compared to the rest of the world?
• 14:04 The China drug market – worth tracking of healthcare insurance agencies come to the market
• 16:15 How did covidminute.com came to be?
• 20:14 How did Carole Gabay approach the COVID-19 impact analysis?
• 23:34 The COVID-19 epidemic – quantitative analysis vs qualitative analysis
• 29:13 Testing – an important variable to take into account when analyzing the COVID-19 epidemic on a global scale
• 31:55 How does weather impact the coronavirus spread?
• 36:05 Lockdown policy – easier to enforce in some countries and harder in others
• 39:47 COVID-19 spread in Israel – a brief case study
• 41:33 covidminute.com – choosing the everyday topic
• 43:18 Learning from mistakes – refining collected data on the coronavirus is crucial for research institutes
• 44:43 What books gave inspired Carole Gabay in her professional journey?
• 46:35 What does Carole Gabay read to stay up to date on China?
• 47:41 What book about China would Carole Gabay recommend?
• 51:45 What success or failure has Carole Gabay witnessed in China that could have an impact on Chinese society?
• 55:50 Outro

The relevant episodes

We believe, that China, with 20% of world population and as the second world economy, is impacting every single business, small to big. That is why it is a new paradigm. How does China impact your business is the ultimate question we will answer through those podcasts.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

This article China Paradigm 111: Using analytics to make data relevant in China is the first one to appear on Daxue Consulting - Market Research China.

Matthieu David interviews Josh Gardner, CEO at Kung Fu Data. The e-commerce sector has never been more relevant and richer in China than the present and Kung Fu Data is a big reason why businesses succeed in this field. Gathering the right data combined with having the right business relationships and taking advantage of present opportunities has made Kung Fu Data a force to be reckoned with in the e-commerce business. Find out why in this new China Paradigm podcast.

• 0:15 Guest introduction and Kung Fu Data’s history
• 6:48 Current company size and workflow – pre and post COVID-19
• 17:13 The quality of the shopping experience – is it changing?
• 19:55 Calculation of conversion rates during a live stream – the new way of shopping
• 25:23 What other changes might occur as a result of the coronavirus outbreak?
• 28:50 Owning the marketing strategy – shopping platforms are integrating with social media platforms in China
• 31:51 Learning about e-commerce – how did Kung Fu Data come to be?
• 39:41 Rigging the Game – building strong professional relationships makes long term sense
• 47:46 How does Kung Fu Data gain it’s clients’ trust?
• 53:39 Valuable Intel – sacrificing a year to learn the market
• 58:57 Kung Fu Data strategies for optimizing e-commerce marketing
• 1:06:49 The smallest details matter – a Kung Fu Data approach to e-commerce today
• 1:13:48 What books about China has inspired Josh Gardner the most in his entrepreneurial journey?
• 1:23:47 What surprising success or failure has Josh Gardner witnessed in terms of business in China?

 China Paradigm website

One relevant episode

We believe, that China, with 20% of world population and as the second world economy, is impacting every single business, small to big. That is why it is a new paradigm. How does China impact your business is the ultimate question we will answer through those podcasts.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

This article China Paradigm 110: How to score a 1.5 million RMB sales day through live-streaming twice is the first one to appear on Daxue Consulting - Market Research China.

Matthieu David interviews Alex Duncan, Co-founder and Product Lead, and Alex Li, VP at KAWO Head of Brand and Agency Partnerships. If you are a big brand trying to establish yourself on the Chinese market you’re going to need a strong social media presence. Thus, we decided to arrange this interview to get the answers directly from experts and explore social media management platform, since KAWO offers support for foreign brands across all the major Chinese social media platforms. How hard was it to build this business? What were the challenges the team face when deciding their pricing model and what did they learn about how to handle the ever-changing algorithms of the Chinese social media platforms? Find out the answers to these questions and many more by listening to this interview.

• 0:15 Guest introduction and KAWO’s history
• 6:11 KAWO is always implementing new features based on user feedback 8:50 Present company size and user base
• 13:26 How did the coronavirus outbreak impacted KAWO’s functioning
• 15:24 The early days – how did KAWO come to be?
• 19:24 How hard is pricing the service in the SaaS industry?
• 23:25 More about pricing – how adaptable does the pricing model need to be for KAWO?
• 28:02 How does KAWO handle pricing for multiple account users?
• 32:26 Planning and Reporting – very important features for KAWO users
• 37:32 Does planning mean just pushing messages or is there more to it on KAWO?
• 39:06 How difficult is it to build a software service based on APIs of existing Chinese social media platforms?
• 43:15 How is KAWO’s API leveraged by their clients?
• 45:15 Beside timing what makes a post great by KAWO’s standards?
• 49:13 WeChat subscription accounts are the safe bet for tailored content
• 52:04 How hard is it to be viral on Wechat?
• 53:52 Post frequency on Weibo – avoiding diminishing returns
• 55:13 Catering content to your niche is the key to success on Wechat
• 55:58 What books have most inspired Alex in his entrepreneurial journey?
• 58:54 What do you read to stay up to date on China?
• 1:01:22 What unexpected failure and success have Alex witnessed in China?

 China Paradigm website

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We believe, that China, with 20% of world population and as the second world economy, is impacting every single business, small to big. That is why it is a new paradigm. How does China impact your business is the ultimate question we will answer through those podcasts.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

This article China Paradigm 109: Building a SaaS in the Wechat, Weibo & Douyin ecosystems is the first one to appear on Daxue Consulting - Market Research China.

Matthieu David interviews Steve Mushero, CTO of China MSP YunChang (the fist internet cloud company in China). The cloud internet service is fairly new to China and Steve Mushero’s company has been one of the pioneers on the Chinese market. In 2015 he managed to raise 9 million USD to fund his business, but how embracing is the Chinese market for this type of service? How easy is it to reach Chinese IT investors and what are the main differences between the internet cloud service market in China vs the West? Find out the answers to these questions and more in this new China Paradigm podcast.

• 0:15 Guest introduction
• 2:54 The niches that an internet cloud service company can take advantage of
• 6:07 Company size and a brief history of funding
• 7:29 Being part of the club – how hard was it to function on the Chinese market
• 9:58 How does YunChang cater to the international businesses that want to operate in China?
• 11:17 How does YunChang handle the competition?
• 12:58 Does YunChang provide client-tailored services?
• 14:14 Has the Coronavirus brought change to the time people spend online?
• 16:01 Has the market normalized yet?
• 16:53 What actions did YunChang take to cope with the lockdown period?
• 18:48 What are the main differences between China and the West regarding the way the IT industry functions?
• 26:37 Why is the software market so small in China?
• 33:27 How were the 9 million USD raised in 2015 by Steve Mushero used for?
• 35:37 The differences between financing an internet cloud service business in China vs the West
• 38:06 How easy is it to have access to investors in China?
• 41:37 What books have inspired Steve Mushero in building his business?
• 43:48 What book, publication or movie about China can Steve Mushero recommend?
• 47:04 What productivity tools does Steve Mushero like to use in China to run his business?
• 48:07 Should he have extra time, what other business would Steve Mushero pursue?
• 51:08 Is AI replacing the human workforce a worry?
• 54:03 What unexpected business success and failure has Steve Mushero witnessed in China?
• 56:33 A few details about Steve Mushero’s blog

 China Paradigm website

One relevant episode

We believe, that China, with 20% of the world population and as the second world economy, is impacting every single business, small to big. That is why it is a new paradigm. How does China impact your business is the ultimate question we will answer through those podcasts.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

This article China Paradigm 108: Meet the founder of the fist internet cloud company in China is the first one to appear on Daxue Consulting - Market Research China.

• 0:15 Guest introduction and Spa Solutions’ history
• 6:12 Why does 19% of revenue comes from Spa retail sales?
• 7:16 Personalization and protocol – the two factors for running a successful spa
• 9:53 Why is the quality of the spa service in Asia better than in the West?
• 13:06 How is the coronavirus outbreak impacting the spa industry short term and long term?
• 18:43 The spa market segmentation – a brief analysis
• 20:50 What equipment could raise the efficiency of spa businesses?
• 23:58 Other examples of the spa business segmentation
• 27:36 The hotel spa pricing system
• 30:06 The spa market in China – big chain spas vs stand-alone spas
• 32:43 How are the independent spa chains impact the spa Chinese market?
• 38:30 How does a spa service business structure look like?
• 40:48 Are there other streams of revenue for spas expect treatment and retail?
• 43:06 The top spa businesses in terms of capital
• 44:04 A few key features a spa needs to have to survive in China
• 49:43 Does it make more sense to view the spa business as a retail business rather than a treatment business?
• 51:35 About the geographical segmentation of the spa business
• 56:25 Getting spa sales improved by 70% – a Spa Solutions quick fix
• 58:49 Spa products retail prices – higher or similar to getting them from another specialized store
• 1:00:21 About problems that need to be addressed in the spa industry
• 1:02:07 Is formal training by cosmetic brands required for spas in order for them to sell their cosmetic products?
• 1:05:28 What training does Spa Solutions offer big brands in terms of integration with spa services?
• 1:07:14 How does technology help the spa industry?
• 1:09:31 How does a profile of a typical premium hotel spa or medical spa look like?
• 1:12:16 Are spas adapting their offers based on the different weather climates existing in different geographical areas in China?
• 1:15:35 Outro

 China Paradigm website

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We believe, that China, with 20% of world population and as the second world economy, is impacting every single business, small to big. That is why it is a new paradigm. How does China impact your business is the ultimate question we will answer through those podcasts.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

This article China Paradigm 107: All you need to know about the spa business in China is the first one to appear on Daxue Consulting - Market Research China.