Entrepreneur’s mission to tempt online shoppers back into malls
Hong Kong-raised, US-educated Jason Chau describes trials and tribulations of bringing a new product and service to the mainland
The e-commerce boom in mainland Chinese has propelled a new way of life in which customers can shop for just about anything at their fingertips, but it is an innovation also poses a threat to traditional retail stories. Jason Chau, 33, a Hong Kong entrepreneur who relocated to Beijing two years ago with as an app developer and startup entrepreneur, aims to bring online shoppers back to the high street and rediscover the pleasures of real window shopping.
His app “Yue Guang”, or “”Joyful shopping”, uses satellite navigation and Bluetooth technology to track and record users’ shopping habits, such as which malls and stores they visit, how long they stay there and how much they spend. The information is shared with retail clients and in return shoppers can collect points from the stores for gifts and discounts. The app now has about 100,000 users. He spoke to Catherine Wong.
What motivated you to design the app and start the business?
We want people to enjoy the physical experience of shopping. The things that people buy from [internet site] Taobao are generally at a lower price point, but if you want to buy clothes from Zara or H&M, you still go to the physical shops to try them on. We hope that with our app we can make a traditional shopping experience more fun.
Why did you choose to start in Beijing instead of staying in Hong Kong?
I worked at a real estate investment firm before I started my own business two years ago. I visited cities like Beijing or Guangzhou once every two or three months. Three years ago, the retail business in Hong Kong was booming. We initially wanted to launch this app for malls in Hong Kong, but the reality was that the big developers would not cooperate with us when we did not have a portfolio or past record in the business. I thought that since mainland China was a much bigger market it would be easier to find someone who was willing to invest and cooperate with us. So I started approaching business contacts from my previous job.
What was the most difficult moment for your business?
Around December last year our company was struggling to survive and almost ran out of capital. In hindsight, we were a bit blind in our judgement. Everything was happening very fast in the market and we would hear about how easy it was to attract investors to pour funds into the business. The bubble of the start-up boom peaked about a year ago when Premier Li Keqiang called for everyone to start their own businesses. The competition gets tougher when too many people are joining the market. Now it’s getting much more difficult to get investors if you don’t have a solid business model with a clear revenue target.
Why did you expand from developing apps to providing tech services to shopping malls?
At first we insisted that we should develop a product that everyone knew about, but the environment has changed. Two years ago, if you were able to accumulate a big number of users, like Didi and Uber, you would be able to monopolise the market. But now, even when you have a million users, you may not be able to attract investors if you cannot make a profit. So about six months ago we made the transition to business-to-business servicing – to provide tailor-made digital loyalty systems to our clients. We were able to identify a new market opportunity when we found that most shopping malls want to digitalise their customer service systems. But not every shopping mall owner wants to open a new department and spend half a million yuan developing their own app. So we provide a service where we design and operate their WeChat public accounts. We can also share with them access to the information of our existing 100,000 Yue Guang users, and help analyse the behaviour patterns of customers.
How does the environment for start-ups in Hong Kong compare with the mainland?
Companies in Hong Kong are less willing to take risks. Companies in the mainland are more open to new technology and ideas because there new things are coming out every day here. The mall owners we approached here, even if they are in the 40s or 50s and are not very tech-savvy, are more open to new ideas. That’s why new tech-based companies like Didi are able to burst onto the scene. In contrast, we are still using the Octopus card in Hong Kong.
Is it more difficult to set up a business in Hong Kong?
It’s not about the amount of policy support. It’s the immense pressure of struggling to make a living on top of the high rents and prices. The environment makes you less daring to try. I feel that the Hong Kong government wants to encourage entrepreneurship by streamlining procedures and I know that there are some policies in place, but you will be forced to face reality when you have to struggle to pay the rent. How can you set up a business when you have to pay HK$7,000 every month to rent just one seat in an office? To be honest, though, the rents in Beijing are also getting more expensive. We are hoping that we may expand into other cities like Wuhan and Chengdu where costs are much lower.
What are the biggest advantages and disadvantages for a Hongkonger doing business on the mainland?
Because I am not a local here and have studied in the US, it was more difficult for me to understand the local culture and sell our products using Putonghua. Most of my clients have not worked with a Hongkonger before and may think I am not professional enough when they speak too fast and I don’t quite catch their meaning. It was an uphill battle. The political situation has made some people in Hong Kong resistant to the idea of working in the mainland. But, in fact, the people I met here are generally very nice. Some of my clients may have a better impression of me because I am from Hong Kong, but the lack of business contacts here is a major disadvantage. The environment may be more encouraging for start-ups, but just because it’s a vibrant market doesn’t necessarily mean that you will automatically capture the market and make a profit. We’ve just made that transition six months ago and there are already at least three to four companies providing similar services. But because we have an existing product and the skills to develop our app, we have the advantage.