China has the world’s second largest economy and consumers there are in love with Western goods.
They want everything from tech to luxury goods to western clothing, says Jacqueline Lam, CEO cofounder of a new global startup, Mihaibao, that came out of stealth on Monday, backed by some huge names in China and the UK.
Mihaibao is solving the hard problem of helping Western companies sell their wares to Chinese customers by curating goods, letting Chinese consumers vote on the ones they want, then helping the Western firms import the goods and make the sale.
Most global companies would love to figure out China. Unfortunately, creating sites and mobile apps that appeal to Chinese consumers without making cultural snafus, knowing which items at which prices appeal to Chinese tastes, and handling secure payment/currency exchange — all of that is very difficult to do without firing up a dedicated Chinese office.
And while it’s possible for Western companies to sell wares via ecommerce sites like China’s T-mall, such big sites have a “trust issue,” Lam says. Cheap Chinese knock-offs are often sold side-by-side with the expensive, original brands, she says, making Chinese consumers wary and angering the brands.
Legitmising grey-market shopping agents
The desire for genuine Western goods is so insane, that anytime someone from China travels to the West, they wind up stuffing their suitcases full of goods and sneaking them into the country for their friends and family, Lam says.
She jokes that she recently polled all 13 Mihaibao employees and discovered that “our team alone has made $900,000 in sales” by bringing stuff back to friends and family in this way.
The open secret in China is that there’s an entire “grey market” fuelled by people, known as shopping agents, who make a living slipping Western goods into China and quietly selling them to consumers.
What Mihaibao wants to do is to “legitimise the shopping agents,” she says. She wants them to participate in finding the hot items for Chinese consumers, getting a fee for their shopping expertise.
Taking China “for granted”
One difference between Mihaibao and other ecommerce sites is that Mihaibao site isn’t warehousing any stock.
Instead it’s a portal where Chinese buyers can buy directly from the Western companies. It will handle all the pesky shipping/ecommerce/tax compliance and so on, taking a percentage of the sale.
“I’m determined to change the world’s perception from ‘made in China’ to ‘made for China. Global companies can’t claim they are global if China is not part of their core strategy,” she tells us.
“Too many companies and entrepreneurs are taking China for granted. Just a little reminder, China’s online population is over 2.5 times of the total US population,” she adds.
China’s top angel and Prince William are both investors
Mihaibao is still in beta tests but it’s on everyone’s radar because of the people who participated in its modest $1.6 million seed round.
These include Alibaba’s angel investor and original CTO John Wu Jiong, who is also on the board, and Huddle’s Alastair Mitchell, who invested and agreed to become chairman.
Mitchell tells us he signed on because he was so impressed with Lam. “She’s a force of nature.”
Plus Lam and her cofounders, Dainius Dulinskas and Jonas Simkus, also received investment from the UK Government (UKTI), the UK Royal Family (namely Prince William), PayPal, Draper Fisher Jurvetson China’s Steve Lau, 500 Startups Dave McClure and others.
Dr Catherine Raines, UKTI CEO, explained with the government invested, “In 2015, 25% of worldwide retail e-commerce took place in China — representing a year on growth of 10.1%. We want to inspire 100,000 additional exporters as part of our ‘Exporting is GREAT’ campaign, and we look to continue working with companies who are driving e-exporting growth to make that happen.”