So, if it seems like a good idea, then
very quickly a lot of people will try to
copy that idea.
So, yeah, I would say, I would say the
Chinese entrepreneurs they are very
sensitive towards new trends and once
they trick (sic) … think it's a good trend
everyone would pour into the… to the
market and also there's a pretty
interesting observation when I was doing
business there is that - they like to do
marketing very very heavily. So, they
spend a lot of money trying to acquire
customer. (Right.) It is very different
for… from Hong Kong to China.
I think one of the main reason is
because they… a lot of businesses are
or industries they are actually pretty
new in China and because of the size of
the market, a lot of investors or
entrepreneurs, they would think once they
gain the whole pie of the China market,
they would be very, like… it would be
very profitable. So, they don't mind
spending a lot of money at first to try to
acquire customer and that ends up
basically a for ex… (Killing each other.)
killing each other basically, yeah.
So, so, I think I heard this phenomenon
(Yeah.) in which investors and the
entrepreneur, right, so basically they
look at an industry or a circle of, like,
their influence and then they just keep
burning money, try to build up
customer base. (Yeah.) But but but in
such a way that is actually not profitable
but they keep getting more and more
customer on a not profitable basis and
so essentially just burning investors’
money. (Yeah, they …) But in the
hope… in the hope
that (In the hope they ...) that it will
generate…if they are the ‘last man
standing’, then they will generate
(Yeah.) profit in the future.
So, our example is that we figured out
that our competitors they they spend
around maybe 1,500 RMB to acquire
each car owner to share their car
and then maybe another seven or eight
hundred RMB to acquire like a renter.
So, they basically just give out money,
give out free rentals to every one of them
and the end of the story was that
out of… out of the twelve competitors
there, I think around ten, eleven kind of
died out pretty soon like within a year.
Almost no survivor in fact, right?
Yes, (in that case) yeah.
But this… this is the reality, I mean,
this is how some of the startup in China
are operating and and and even
encouraged by some of the investors.
Yeah, I would say this is actually
pretty… I guess it's the Ch... kind of like
a really cultural thing in China that is
that you (Grab market share.) you want to
grab as fast as possible.
And become the ‘last man standing’.
Yeah, exactly.
But is that changing? I mean surely
I mean you mentioned that, like, twelve
to start with competitors and then ten,
eleven or maybe all twelve have died.
(mhm) Surely the investors must have
learnt their lessons from that.
Well, uh, we stay there for around a
year and a half, and then we kind of
came back to Hong Kong to try to
reposition our business. What I've heard
from is that the investors or the
entrepreneur circle in China is that
investors are now becoming more
conservative because what… one is
because for a lot of platform businesses,
for example, that they basically have
the players already in China and the
players are already getting more,
how to say, getting getting more…
(Getting more established?) Yes, the
players are getting more established.
So, so, in the platform there are already
players… emerging winners.
Yes, so in the platform businesses,
there are already as you said emerging
winners. So, basically the investors
are looking for new trends and and
they become less convinced by em….
grabbing the market...
So, this grab market share fast is
no longer, like, encouraged or believed (Yeah.)
by the investors. (Yes)
Which which means that the market is
getting a little bit more mature, right?
And because that now the market is no
longer that wide open because there's
some emerging winners and so you
either have worked and it's so, therefore,
you are now the market dominant
player or those who are not,
probably have failed on the way.
Yeah, I totally agree on that.
Yeah.
Prof. Dominic ChanAssociate Director, EMBA Program, Associate Professor of Practice in Entrepreneurship, Project Director, Centre for Entrepreneurship
