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The MOX MD and SOSV Partner explains the issue faced by Asian companies in competing in international market, and what they can do about it

The second day of Echelon Asia Summit 2016 began with a shocking statement by William Bao Bean at the CREATE stage.

“What I’m afraid of is that we won’t have any Mark Zuckerberg from Asia,” the MOX MD and SOSV Partner stated.

“If you look at recent million dollar funds raised lately, all of them are going to ads, transferred to Google and Facebook,” he further elaborated.

This happens because in mobile first markets such as China, user acquisition and retention are very different with how it is in US and Europe.

“The problem with China is that there is very little virality. If you’re a game developer in the US, you need at least 500,000 users [then you can get] your product out there,” he said.

“We see the China market as walled gardens. The route to acquire users is closed and you have to pay. It’s easy to start up today, but as VC, all my money goes to marketing and it’s silly,” he explained.

The situation led to the conclusion that startups require stronger network and bigger funds to succeed in China, compared to in the US where even big companies can begin the dormitory of a campus.

Also Read: In China, you’ll need a great product, capital and friends: William Bao Bean

When it comes to China, the numbers are fantastic.

Being the largest mobile market in the world, Bean pointed out that two out of five top Internet companies in the world are from China.

Even 70 per cent of P2P lending companies are in China (“because the banking system sucks,” said Bean) and five out of 10 most downloaded Android apps in the world are made in China.

“But you don’t read about them because they don’t get picked up by US press,” he said.

The major money drivers in China are gaming and e-commerce.

Interestingly, many of these companies are relying on local market, such as Tencent and Alibaba.

“Tencent is divided into product groups that grow independently, with its own CEO and budgets, and these groups actually compete with each other,” Bean explained.

“WeChat is worth US$83 billion in market cap within four years, with 43 per cent year-on-year growth,” he elaborated further.

If there is anything that China is falling behind other markets is digital advertising.

“They are very controlling and yes, they do manipulate clicks. They are also unwilling to pay for softwares,” Bean explained.

Also Read: William Bao Bean steams up the startup scene

Back into the topic of winning competition: So what model can Asian startups use in order to survive a tough competition?

What SOSV has been doing might serve as a great lesson.

“So we created the Shanzai market model,” Bean said.

“We took the Xiaomi model, which builds an ecosystem based on hardware, but without the hardware. Hopefully this can be the way Southeast Asia companies compete with China,” he closed.

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