During my time working with Korean startups there has been an almost universal fear of the dangers of entry to the Chinese market. But as Korean founders become more globally minded, and more confident in themselves, fear is being replaced with confidence and success stories are beginning to emerge. In addition, Chinese-Korean relations have never been better, and I expect that in the years to come great opportunities for cross-border opportunity will increase.
Here I look at a few Koren companies that are finding success breaking into the Chinese market.
Malang Studio was the one of the first Korean startups to have made a dent in China and is now helping others through the market entry process. They have developed a popular alarm clock service, Alarm Mon, but hope to become a platform, character and offline business in the long term. They take the example of Rovio as part of their inspiration.
Malang Studio were earlier this year invested by Yello Mobile, a relatively new Korean platform company that has already acquired dozens of startups and plans to build Asia's biggest platform-style mobile company. Their alliance with Yello Mobile perfectly positions Malang Studio to support their fellow alliance members towards building a successful China strategy, one of the core benefits of becoming part of the Yello Mobile family.
Malang are offering 'harmless character based services,' according to a company spokesman, so they are not likely to run into any issues with teh Chinese authorities. Already China is their biggest market, accounting for around 12 million of their 17 million users. While download numbers are impressive, the company is focussing on user retention and are setting up a corporate office in Beijing. Priorities for the Beijing location are a clean work environment, proximity to public transport, and a location that has good eating places and public conveniences for staff. In addition the team has placed a high importance on being co-located with other local startups.
Pikicast has also been making inroads into the Chinese market, and their popular content and news services are gaining traction. This is partly also thanks to the fact that Korean content and fashion is also becoming more popular across China and Asia. Pikicast started life as a Facebook page, but after Facebook shut the service down they have built a more sustainable and scalable news curation service.
The service is still in beta in China, but pikicast has already hired a country manager and set up an R&D hub in Sichuan province. They are also now establishing busiess headquarters in Beijing. As a media service Pikicast will need to tread carefully with local authorities and will probably need a local partner who can smooth the relationship with the government, according to the company.
Michael Hong who is an Angel investor in both Malang Studio and Pikicast said that he is excited by the opportunities presented to his portfolio companies in China. While entry is admittedly difficult, he believes that Korean startups must consider markets closer to home, rather than obsess about making it in Silicon Valley. Geographical proximity and cultural familiarity should not be overlooked when expanding overseas and once initial hurdles to entry are overcome and local market knowledge gained, opportunities can quickly open up.
Michael highlighted that "never before has the relationship between Korea and China been better." Cross-border trade and culture, as well as tourism have never been at a higher level. China is also a major exporter of capital to Korea and company's like tencent are actively investing in Korean startups. Michael went on to explain that China is no longer viewed as a foreign market to Koreans. Chinese people can be seen and heard daily in Seoul, and business relationships are blossoming. ichael concluded by saying that "China is not an option, but a must for many companies these days."
My Real Trip is another startup that is capitalizing on the increased levels of disposable income in China. They have developed a crowd sourced guide service for travelers abroad. While they initially only catered for Korean travelers overseas, they have spotted an opportunity offering their service for Chinese visitors to Korea. Chinese shoppers are now pouring into Korea for luxury goods including fashion and cosmetics, and even cosmetic surgery. My Real Trip would like a piece of this action.
I cought up with Co-Founder, Minseo Baek, who explained that due to the opportunities they have seen in China they have decided to set up a temporary office in Shanghai. This is aimed at testing the market before a more long term comitment is made, and one of their Korean staff member is already in place exploring partnerships and marketing options. The team plans to release thier beta service for the Chinese market this winter.
Famy, a Korean location-tracking app developed by Spacosa, also recently launched their Chinese service, having gained around 800,000 users in Korea over the past year. Famy currently attracts a wide range of users, from parents who want to keep tabs on adventurous children, to children who want to monitor their elderly relatives. The service has even been used by friends to track their drunk buddies.
To enter the Chinese market Spacosa has partnered with Techract, Beijing Corp. who will primarily support marketing activities. The Beijing-based company has already helped introduce more than twenty Korean tech services to China. With Techract's help, Spacosa hopes to attract around 1M users in China by the end of this year.
One of the very unique challenges Famy has faced is the fact that Google doesn't exist in China. Their location tracking service is built on top of Google Maps, so they have had to build a new version of the app that operates with Baidu Maps instead.
New Incubator Supports China Entry
Tribeluga also recently opened in Seoul to support Korean entrepreneurs in entering the Chinese market. They realized the huge opportunity presented to Korean startups in China, but also the stiff barriers to entry. Their incubator will support Korean startups every step of the way, from setting up a local office to providing full business development support. Startups are welcome to apply for the program now through the Tribeluga website.