Team name: China United Team

2015/10/22

1、How entrepreneurs in emerging market create their

business institution and culture environment?

2、What differences between entrepreneurs in Silcom Valley

and emerging market?

Background*

• know the knowledge of comprehensive environment. Especially politics ,money and people.

Industry

• analyst the industry you concerned with. Find out the special factors of opportunity and challenge.

Position

• find the right position in the target market by SWOT model with your idea.

Operation

• plan to build brand and explore the market continually.

Politics: Support or Restrict——In China, the government can make policy to

influence the industry development.

Support: <Made in China 2025 plan > :A roadmap for the future of manufacturing in China. The plan focus on about 10 future industries： （1）New Generation Information Technology、（2）High-end equipment、（3）New material、（4）Biological medicine、（5）Agricultural machinery equipment、（6）Electric power equipment、（7）High end NC robot、（8）Aerospace equipment、（9）Marine engineering equipment & High tech ship、（10）Advanced rail transportation equipment。

Restrict: according to the<Opinion on the implementation of the negative list system

of market access >&< Catalogue of foreign investment industries (2015

revision)>, government has listed the industries that has restriction. Some

industries is not open to Private enterprise or foreign company, you may

have to cooperate with State-owned enterprise.

Money: Investment environment、Interest rate & Exchange rate .

Pre A Round A Round B Round C Round

200,000+ 800,000+ 1,800,000+ 8,000,000

The average amount of financing in Chinese internet industry: USdollar

Many entrepreneur have experienced

the period Pre A to C in 1 year.

• The rate of interest and exchange changed between 2006-2015.

4

4.5

5

5.5

6

6.5

7

7.5

8

2006 2007 2008 2010 2011 2012 2014 2015

lendingrate of RMB in China（%）

less 1 year 1year-5year more than 5 year

• Chinese capital market have a seasonal rhythm, it is easier to find the capital support in spring and

autumn. The magnet is changing every year , 2010-2012 Social Media, 2013 Mobile Game , after 2014 is O2O.

0.12

0.13

0.14

0.15

0.16

0.17

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Exchange rate: RMB/USD

USD/RMB

Human resources(Skilled employee、R&D personal)

40%

25%

25%

10%

Channels for worker

Fellow introduction Direct recruitment

Emplovment office other

Customer: revenue and Expenditure

75%

20%

5%Channels for White collar

Recruitment website Job fair other

Chinese R&D personal in 2012

Region Total(thousand)

National Total 288.3

Eastern China 193.2

Middle China 59.5

Western China 35.6

31%

23%12%

11%

8%

7%

6%

2%

Expenditure accounting in 2013

food&drink

living

Communications andtransportationeducation、culture&entertainmentclothes

health care

basic goods andservicesother

Average Salary in China (USD/1year)

3000

4000

5000

6000

7000

8000

9000

2006 2007 2008 2009 2010 2011 2012 2013

Average wages of urban workers

（USD/1 year）

$5,363

$3,943$3,470

0

1000

2000

3000

4000

5000

6000

Eastern China Middle China Western China

FOCUS ON THE CHANGE

AND GRASP THE TREND

1990s 2000s 2010s 2020s

Micro industry: period of Development

Material Manufactuer E-commercial

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Macro industry: Proportion of industrial employment

primary industry second industry service sector

The Primary Industry is in recession (but still

undeveloped), the labor is flow to the second industry

and service sector.

The Manufacturing Industry: grow fast during the

1990-2010,then suffer a decline after 2013.

The Service sector and other High tech industry

grow fast after 2000, especially after 2010.

Potential

entrantsSubstitute

SUPPLIER CUSTEMER

COMPETITOR

Opportunity

Challenge

INNOVATION AND STRAGETGY CHOICE

CROSS DISCIPLINE

Cross domain

INDUSTRIAL

EVOLUATION

breaker

NON INNOVATIONSCOPE INNOVATION

Better\cheaper\faster

BUSSINESS MODLE

AND PROCESS

Technology

W-O S-O

W-T S-T

It is suitable to be a finder if you are a

beginner in Consumer market . Subversive

innovation is effective in china .

It is suitable to be a seeker if you already have

the foundation in the industry, especially the

Manufacturing industry.

RIGHT POSITION & BRAND

Formation of company -good location good beginning

• Define their company's market position, then choose a birthplace where it is easy to

gain resources and less competition .

• eg. The founder of Venustech , Miss Yan Wangjia, seize the current gaps in the

market, positioning itself for the Internet security company and located in Beijing.

Because Beijing is the center of China's Internet market, It is much more close to

customers.

Build brand - create a simple local name and promote online

• A simple, memorable name wins the hearts and minds of customers

• eg. Dianping.com. The name in chinese means everyone can published and share

reviews on that website . Taobao.com means search lot of funny goods on the website.

• 70% Chinese consumers are linked with mobile internet, It is very important to

promote the brand online, especially in common or social media like Baidu、Dianping.

CHANNEL INTEGRATION AND

MARKET EXPANSION

Channel management - Channel integration and platform construction

•Many chinese market are less concentration. Levels of channel development differ from

regions, local suppliers are strong in the local area. entrepreneurs have to do channel

integration.

•Online platform like B2C \B2B can overcome many barriers of the traditional channels,

but need high requirements for logistics management.

Market expansion – deal with Opportunities and Challenges

• The best time to expand market when there are challenges. It is better to combine your

business with traditional and necessary needs or cooperate with other industry.

• eg.Wechat Payment VS Alipay. Wechat payment expand 400 billion by the function of

“red packets (お年玉)“and cooperate with DiDi, Alipay resolved challenge by explore 0.3

billion offline stores , consumer will pay by Ali APP when shopping everywhere.

IMPROVE THE RELATIONSHIP WITH

YOUR EMPLOYEE & CUSTOMER

Team Building-build up a relation ship with your employee

• Combining the characteristics of Chinese culture with company,enhance the sense of belonging and give them room for improvement.

• Example： Huawei.

• “Employee stock ownership”\ wolf culture

Customer service -create more added value to customers and listening to customer feedback

• eg.IBM has become a services provider in china；

• eg.Haier,Three Squirrels.