A guide to adapting your new tech venture successfully for the Chinese Market.

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Best Practices for New Tech
Ventures in China
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• July 2011 population:
1.343 billion
• Major cities include:
• Shanghai (16.575 million)
• Beijing (12.214 million)
• Chongqing (9.401 million)
• Land covers 9,596,967sq km
• Fourth largest country in
the world
Source: The World Fact Book
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Age
0-14: 17.6%
15-64: 73.6%
65+: 8.9%
Source: Moi
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4. + China Overview:
Economy
• China has the third largest GDP at $11.29 trillion
• Labor sectors:
• 28.7% is based on industry
• 43.6% is based on services
• 34.6% is based on agriculture
• Labor force of 795.5 million
• 13.4% live in poverty
• 128 million Chinese earn under RMB 2,300 (USD $363)
Source: The World Fact Book
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5. + China Overview:
Education
• 92% Literacy rate
•Male-96% Female-88.5%
• 9 years of compulsory school
• 20million students study in 2,263 higher
learning institutions
•Enrollment rate 23.3% of those who applied to
take the National College Entrance Examination
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• Administrative
• 23 provinces
• 5 autonomous region
• 4 municipalities
• Communist State
• Chief of State
• President Hu Jintao
• Vice President Xi Jinping
Source: The World Fact Book
credit: Access China 6

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• Life expectancy at birth : 73 years
• Population using improved
drinking water sources: 89%
• Population using improved
sanitation facilities: 55%
• Total health expenditure as % of
GDP (2009) : 4.2
Sources: WHO Health Profile
UNICEF
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Source: KPMG
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 Social responsibility is important in Asian countries, it affects
how people feel about and see a company
 Companies have to show people that they are not only profit
hungry, but that they also contribute to the common social good
 The purpose of social responsibility is not to encourage
consumers to increase revenue, but to built a good brand and
enterprise image
 Coca Cola China, Starbucks China, and Sony China are great
examples. Each has a social responsibility section in its menu
bar
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 Coca Cola provides a detailed explanation on its
website about how it contributes to society
 Social responsibility can be divided into three parts
◦ Commitment
◦ Social Activities
◦ Annual Report
 The following slides are snapshots from Coke’s
website
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CEO Muhtar Kent talks about Coca Cola’s social responsibility concept
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Coca Cola contributes to Education, Environment Protection,
Health Care, AIDS research, and more.
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Coca Cola also provides a detailed annual report available for download
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Coca Cola’s Japanese website Starbucks’ Japanese website
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 QR codes are very common and popular in Japan.
 They can be used to direct mobile phone users to
special websites to download brand ads, ringtones,
character logos, viral videos, branded Flash games,
and more.
 Implementation : QR codes can be used on company
websites, blogs, flyers, and business cards.
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Poster Drink Cup
Snack food packaging Building guide
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T-shirt tag Magazine
Boarding Passes Billboard
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 China is a communist state
 The government blocks outside sources of information and
controls the media. It fears that its people will not blindly
accept the media’s stories, and instead base decisions on free
information.
 China’s government blocks foreign websites such as Facebook,
Twitter, Youtube, etc.
 Rather than eliminating social media, restrictions on foreign
websites and social media have resulted in a flourishing,
home-grown, state-approved ecosystem in which Chinese-
owned properties thrive.
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 Rather than short videos of cute animals or silly domestic mishaps
that may be popular among YouTube watchers, Youku and Tudou are
filled with longer form content, up to 70 percent of which is
professionally produced.
 Users in China spend up to an hour per day on the sites, compared
with less than 15 minutes spent by Americans on YouTube.
 In the way they present programs, the Chinese sites seem more like
online television stations, or a replacement for digital video recorders.
 Much of this content consists of foreign programs pirated, subtitled,
and uploaded hours after broadcasting in the United States.
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◦ Launched in 2009, just about three years after Twitter, Sina
Weibo is by far the most popular micro-blogging platform in
China.
◦ Similar to Twitter, Sina Weibo allows users to post 140-
character messages, and users can follow friends and find
interesting comments posted by others.
◦ Small, but important, differences in the platform have made
some say it is a Twitter clone, but better. For example, unlike
Twitter, Sina Weibo allows users to post videos, comment on
other people’s updates, and easily add comments when re-
posting a friend’s message.
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◦ A more specialized social networking site,
attracts art students and those passionate about
books, cinema, culture, and music.
◦ Users connect according to their interests and
often hold offline activities, such as trips to local
art exhibitions.
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◦ a platform designed for a more mature audience
of young professionals, has a membership that is
heavily dominated by white collar workers in
Beijing; Guangzhou, Guangdong; Shanghai; and
second-tier cities.
◦ Users do not upload personal content, but rather
share information they find elsewhere, often
relating to health, relationships, and professional
advancement.
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◦ the platform in China most similar to Facebook, attracts
university students who use it to connect and interact with
classmates.
◦ The site is organized around users’ school and graduation
class. Many users upload videos and photos of their
activities.
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◦ Unlike Facebook, Mixi users do not use a real picture of
themselves for their profile
◦ Mixi users also tend to not disclose their real name and
often keep their profile/diaries/pictures private to the
first degree of friendship
 Reasons why Japanese don’t use Facebook
◦ Facebook launched Japanese version in 2008, but Mixi
was already popular in that time
◦ Japanese don’t like to use real name on social media,
but Facebook has to register by real name
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 Chinese websites must pay attention to font size,
because Chinese characters are more complicated
than English letters. If the font size is too small, it
will be very hard to read.
 The last slide is good for comparison. The 9px-
11px characters are hardly legible. Therefore, the
appropriate size for Chinese characters is12px-
17px. These are the most comfortable sizes for
readers.
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 Chinese characters are not intended to be italicized
 Using italic style function for characters will make
them appear saw-toothed
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 Chinesecharacters have a smaller spacing
than English words
 Large
amounts of texts tend to look cluttered
on Chinese websites
 The next slide shows an example
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Huge amounts of information on the website cause clutter and strain the
reader’s eyesight
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•Use lighter color
•Don’t use shadow
•Less words
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 By using different pictures in flash, companies can
create unique brand images and personalities
 P&G, Dell, and IBM are good examples
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With appropriate pictures and a simple slogan, P&G clearly delivers its
positioning message to consumers
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 Don’t just translate word for word. Adapt a message
to meet different needs in different countries
 P&G is a good example
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 Global companies usually have a Chinese name to
help local people remember it easily
 It’s good to have a Chinese name, because English
brand names because it is difficult for non-English
speakers to pronounce
 Some examples:
◦ P&G 宝
◦ Coca Cola可口可
◦ Sony 索尼
◦ Appconomy 艾帕卡納米
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Chinese calligraphy has been deeply rooted in the culture for
thousands of years. Using it can help build a stronger connection
to China.
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You can create your own mascot for your product,
in order to help build your brand.
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 Avoid using colors, styles, and layouts similar to competitors
 Create a clear and unique brand image for customers
If two logos look too similar, it’s confusing to consumers.
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49. + DOING BUSINESS IN CHINA –
COMMON MISTAKES
‣ Do your homework
o A lack of research and adaptation led to Google’s struggle in
China. Competitor Baidu offers a search box better suited to
Chinese characters as well as free music downloads - a
major attraction
o Developers say Apple’s App Store is hampered in China
because of language and payment restrictions. The interface
is in English and users must have credit cards that work for
both dollar and Yuan transactions to set up an iTunes
account. Only 14% of Chinese even own a credit card.
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‣ Being hazy on the legal structure
o Partnerships are often structured as WFOE (wholly
foreign-owned enterprises, or “woofies”,
representative offices, or Joint Ventures.
o The ownership/tax/implications of each vary
widely.
o “Leaving that stuff to the lawyers” in China can
lead to severe implications later on, particularly
as most foreign enterprises in China have a
strong local ownership component.
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 Allowing time differences and distance to affect
management and communications
o Distance does make some disconnects inevitable, but
foreigners spending too little time on the ground could
cause the Chinese-based staff to become disgruntled
and feel like second-class partners.
o Being committed to doing phone calls in the evening US
time / morning China time shows that you are willing to
be accommodating.
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 Lack of clarity surrounding IP / Security
◦ Relates back to the importance of understanding the
precise legal structure and constraints you are working
with, such that the risks undertaken are well
understood by both parties.
◦ Why it matters: There’s a tension here. Agreements
that treat these topics vaguely can leave parties
dissatisfied later on. At the same time, it is customary
for Chinese MOUs to be high-level in nature, so
pressing for very specific details on how issues of IP
will be handled could be seen as odd by a Chinese
partner.
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 Rushing to put cross-Pacific coordinating staff in
place, instead of vetting them thoroughly
 Exit Strategy
◦ Having a contingency/exit plan if something goes
awry is important. Again, this is why having
excellent Chinese lawyers becomes key.
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54.  Chinese Business Etiquette
◦ Chinese Business Etiquette Video 1
◦ Chinese Business Etiquette Video 2
 Lessons Learned
◦ Wall Street Journal
◦ Lessons From Troubled Partnerships
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55. Shanghai Headquarters Austin Headquarters
Bridge 8, Building 9, Unit 9605 No. 1300 Guadalupe St., Ste. 201
25 Jianguo Middle Rd., Luwan District Austin, TX 78701
200000 Shanghai, China
For more information please contact:
info@appconomy.com
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