In the field of IT, the United States is considered a pioneer since most business models take their origin from there. Moreover, US clients have higher standards for services provided and are willing to pay more. By contrast, Asian purchasers are not as wealthy but the fervent hope to be a part of the Asian market is kept alive by every IT company because this region leads the world in terms of population or more precisely consumer numbers.
Asian markets have become leaders in terms of increasing population and growth rates, particularly in the field of mobile Internet. This opens numerous doors to entrepreneurs who are developing online solutions. Could you name the main differences between the Asian and the US market?
The competition in the US is fiercer comparing to any other region and clients are much more demanding. You need to be ready to work with a smart clientele, which also means that it will be willing to pay more than in any other region.
The competition in the Asian market is not as fierce yet as it is in the US, also, the purchasing power is lower. Nevertheless, this region attracts with its consumer rate. The user figures for smartphones are highest in China. In other words, the Asian market attracts with its volume rather than huge cheques.
Another interesting aspect is the difference in culture between the two regions. The Chinese technology giants such as Alibaba or Tencent are seeking to invest heavily in emerging US companies in the hope of bringing the lacking innovations back to China, e.g., Alibaba invested 200 million dollars in Snapchat. Whilst emerging technology companies rely on new talents from Asia.
One of your business partners is from Hong Kong. Tell us about the potential that lies in having partners from Asia?
The first thing which springs to my mind when thinking about China, Hong Kong and Singapore is the local people’s or so called huacjao (Chinese who moved to another country) enormous capacity for work. Once they have understood their task, they will work without rest. However, regarding the partners from Southeast Asia, their mentality is slightly different and their attitude can be described as follows: if there is money, it is fine, if not – also fine. But if you manage to fascinate them and inspire with your idea, they will not give up and let you go. Working with Asians can be hard however, it is extremely interesting to get to know their perception of the world, daily life and business. You can comprehend and learn a lot from them but the main benefit from this relationship is connections. Now, it is me talking like an Asian… (laughing).
In the age of mobile applications and Internet, extensive market study and knowledge of global activities within the technology sector are certainly of a great value. The possibility to access the cognitions from all over the world can increase competitiveness of any company.
It is often said that in Asia, it is hard to protect intellectual property. How do you deal with this problem?
Intellectual property protection is not an easy task. A good example is Apple and Samsung, which are constantly fighting for their rights to use one or another design, technology or engineering solution. I can advise investing resources in consistent development and innovations. Such approach will help you to stay on top.
Let us talk about your employees in Asia. Asians are followers of the Confucius tradition, which implies a strict hierarchy, respect towards older people etc. Does not that act as an impediment to creation of excellent ideas? Is there any difference between the countries?
It is important to understand that Asians differ one from another. For example, Chinese and Hongkongers, they might seem so similar, but they are not. Our collaboration with Chinese partners is long-standing and we have managed to adopt in order to achieve common goals. I am aware of the fact that it is important not to lose face. Actually, it is extremely important. They can lose money or profit however, they will fulfil commitments without losing face. But there is the other side of the coin. In order not to lose face, they never say no. At the beginning, it caused many communication problems and it was hard to define aims and tasks.
However, Hongkongers are more like Europeans or Americans of Asian origin. They also respect traditions but they have developed a different value system and they speak a language we understand.
There are things they have in common: love and capacity for work. Among them, it is not commonly accepted to take time off from work. This is what I have in common with them (laughing).
How does your Asian and European clients’ profile on meeting portals differ?
The audience of our project resembles. Each user can chose what he/she finds familiar or interesting. What draws most attention to this Asian project is the possibility to communicate with users who respect family values and centuries-long traditions. Would it be necessary to add that Asian women have a distinctive natural beauty? Many underline Asians’ kind soul and friendliness, ability to quickly establish contact and find a soulmate. This is what we lack in today’s world, particularly in the Occident.
What is the attitude in Asia towards European entrepreneurs?
A worker who knows Chinese will be a key to success in China. If an entrepreneur has such a worker or interpreter, the attitude will more favourable. It will be even more favourable if entrepreneur himself knows the language. This helps to establish contact faster. Now, the doors to Hong Kong are open and Hongkongers are more likely to corporate with their European counterparts than Asian ones.
What is your advice to Latvian IT companies? When is the perfect moment to penetrate the Asian marker?
If we are talking about a specific moment of the year, I would not suggest starting business on the eve of Chinese New Year. In Asia, it is extremely important to respect local traditions of celebrations, e.g., Chinese New Year, the anniversary of the King of Thailand etc. In this period, you will not find anyone who will be willing to collaborate with you. In addition, it is important to have a local contact person or guangxi (link). This will help you to find all the necessary information regarding the actual market price or even a lower one and get to the right authorities in the period of company registration.
The best moment for conquering Asia is when you understand that you are particularly interested in Asian consumer markets and you have all the necessary resources to penetrate them, i.e., finances and sufficient local network.
Should entrepreneur first find financial resources to penetrate the market or is it better to conquer the chosen market alone, be established and only then find money?
It is necessary to remind the importance of contacts. If nobody introduces you to a person who will be willing to assess financing possibilities, act on your own. It is even better because in order to create a positive image, you need a good office space, visit cards, dinner invitations. This is the way to obtain potential sponsor’s or partner’s fidelity. That all depends on the financial resources of your company. If there are not enough finances in order to penetrate the market in Asia, it is advisable to create a financial cushion. If there are enough finances for establishing your company, you can manage without any external financing source the first 3 to 6 months before starting to search for new financial sources. It is up to each company to choose the size of the financial cushion.
Where to open an office? In China where the resources, clients are or Singapore, Hong Kong – places with a persistent business environment?
In order to open an office in China, one needs a good employee who masters Chinese. However, even if entrepreneur has one, it is advisable to start business in Honk Kong because it will be better considered in Continental China. Regarding Singapore, it is advisable to work there if you choose to collaborate with Southeast Asia. We consider that company should pick the region they wish to focus on. In case of Southeast Asia, the best option is Singapore, if China – Hong Kong or Shanghai.
Maybe you have heard – the stock prices in Shanghai and Beijing plummeted. Chinese experts state that the value of the Chinese yuan depends largely on the value of the Russian rouble. When searching for a business environment, I would focus on Hong Kong and Singapore.
China has major talent resources however, their business environment is limited. If you are planning to design a product for the Chinese market, it would be more pertinent to open an office there. However, Singapore and Hong Kong are technology and innovation leaders. It is where important technology conferences and exhibitions are taking place making them Asia’s technology hub.