Last Friday I was able to attend a new kind of networking association called “Emerging China”, hosted by some great, experienced dot com era veterans who are back to make some new networking and connections happen! William invited me personally and I was extremely flattered, even able to travel from Shenzhen with the speakers and other organizers!
There were 2 speakers, Basillio Chen from Evotech capital about Chinese overseas M&A and then Jack Lau from tencent Wechat talking overseas expansion strategy for wechat.
I took some notes while sitting there, and hope this can help those who may have missed but want to catch what it was all about.
My personal notes from Basilio at Evotech Capital
Hong Kong holding company with a WFOE in China that then buys a local company that is newly registered and transfers the old Chinese company you are acquiring into this new local Chinese company (complicated I know!)
Chinese companies are getting Chinese government support for overseas expansion, and need to do these 4 parts when evaluating a company to acquire:
- Identification – a process to find the right acquisition targets. Do they fit the right profile, will they mesh well with your current Chinese company culture?
- Due Diligence (DD) – did you audit their books, did you evaluate their IP, their business processes?
- Financing – How will you acquire them, what methods, cash, equity, leveraging debt?
- Integrate – Its better to let the business you acquire run independently for 2 years and learn how it operates well before trying to rush into integrating operations.
Valuating What a Western Manager Can Bring
Attending to the overseas company’s local culture. Their ability to think global. Impose controls and reviews of the Western business you’re acquiring. And management! The big objective.
In USA, The Early Bird Gets The Worm, In China – They Starve
In America, or in the West rather, innovation and creativity and being first to market is embraced and supported – while in China – the first to market usually starves, and by the time they find a good market fit, they are stomped on by those waiting until the market acceptance has happened. Be aware of this.
When to know market acceptance…Its a tough call, but you should balance and account for this in your business strategy.
Mike’s Notes from Jack Lau at Wechat (Tencent)
Tencent has 13 years experience and history in social media / chatting with its famous QQ chat. But Tencent has only been doing overseas business for 4 years. Tencent has been waiting for the right product, and they really believe Wechat is this product. Therefore they have the experience coupled with the confidence to grow an international product.
Wechat came to market in January 2011, and within 1 year had 100 million users, by September 2012 they had doubled to 200 million. Earlier in 2013 they reached over 300 million users. Jack isn’t allowed to tell the current user numbers, but he says its exceeding current growth trends.
People nearby function was disabled for the USA market – Wechat adapted for it locally – as it wasn’t working in that culture.
Monetization, Tencent Wechat is waiting, Line (a competitor) sells emicotions, but Wechat will earn money with its gaming platform. That is how Tencent monetizes its products, but having gaming on top of its userbase.
Tencent expands internationally sometimes through acquiring local partners (where they have the right product. They always focus on C (consumer) vs B (business) but may add business/enterprise features in the future.
Below is the full information I received about the event, more photos and this information can be found on http://www.emergingchinanetwork.com/8-30-hk-outbound-investment-mixer
On Friday, August 30th from 6:30 p.m. to 8:30 p.m., Emerging China and Angelvest Group will hold a cocktail with speakers from Tencent (Developer of QQ and WeChat) and Evotech Capital.
Mr Basillio Chen, author of M&A in the US for Chinese Companies will give an overview of recent trends in Chinese outbound investments and Jack Lau, Head of Tencent’s Mobile International Business, will share some of Tencent’s global expansion experience.
Cocktails and Networking begin at 6:30pm and Discussions at 7:15 p.m.
Date/Time: 6:30 – 8:30 p.m., Friday August 30th, 2013
Venue: The Hive, 21st Floor, The Phoenix Building, No. 23 Luard Rd., Wanchai, Hong Kong. see: Location.
Cost: HKD 200 per person* (cash only, pay at entrance) *Two beverages and finger food
Emerging China is a non-profit organization focused on nurturing the healthy expansion of Chinese companies globally. We do so by providing our members the resources and knowledge necessary for effective execution of overseas markets development.
AngelVest Group was launched in 2007 and has become Greater China’s largest organized and most active angel investment group. The mission of AngelVest is to help its members identify and invest in compelling China-related early-stage businesses. AngelVest also aims to provide mentorship and other value-added help to its invested companies.
That’s it for now, Emerging China plans to host its meetings every 1 – 2 months, and may expand in Shenzhen and Beijing – currently they are hosting in Shanghai and Hong Kong.