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Find reliable suppliers in China

Podcast transcript #81: An innovative global sourcing solution that helps you to find reliable suppliers in China

Find here the China Paradigm 81 and discover an easy way to find reliable suppliers in China, thanks to an innovative and blockchain-based global sourcing solution in China.

Full transcript below:

Hello everyone, this is China Paradigm where we Daxue Consulting, interview season entrepreneurs in China.

Matthieu David: Hello everyone, I’m Mathieu David, the founder of Daxue consulting and its podcast China Paradigm and today I’m with Milad, Milad Nouri. You are the founder of YOOSourcing and YOOSourcing is as you said on your website, a collaborative and decentralized global sourcing solution in China.

More precisely actually it’s an app, an APP as we say in China, you can download and you have information on suppliers, producers in China, you can find reliable suppliers in China localize them, you can know what other people think about them, you can see their rating. So, basically you are competing or complementing platforms like Alibaba, big platforms, where you’ll find suppliers, you try to find reliable suppliers in China, with different models of how to know why they are reliable.

Could be commented, could be rating, could be certification, so that could be very interesting to understand, how you did it and what business model you have been using it because China’s sourcing industry is a 20-year industry, 20-year industry now, already and you are innovating in it. Thanks for being with us and the first question is, what’s currently the size of YOOSourcing in terms of views, downloads, number of clients or anything you would like to share.

Milad Nouri: Yeah, so just a few words about YOOSourcing, so we call ourselves more as a global sourcing solution in China than a platform because as you said, we actually complete what all the other platforms provide. So, we consider platforms like global sources, Alibaba, google to find reliable suppliers in China. We are more like LinkedIn, TripAdvisor and let’s say, WeChat between suppliers and buyers. So, we bring a layer of collaboration basically between buyers and suppliers. Yeah.

Matthieu David: What is the business model? For people actually to understand how you work and what clients see as value in what you do, because people pay for the value.

Milad Nouri: Yeah, so the business model, we have two versions of our global sourcing solution in China. One is the public version, which is freedom model, so basically people, most of the features they use it for free and there’s limited access if they don’t have a premium account, or as we call in China, VIP account. So that’s mostly the target for this type of solution is mostly SME’s and we also actually have – most of our suppliers today are out of China basically, because we didn’t do so much advertisement yet in China, we’re working on that, but 80% of our users are out of China. We have suppliers from Vietnam, Bangladesh, Indonesia, over the Asian countries, we even have in East Europe and the buyers are basically from all over the world, mostly based in the US and Europe, in terms of buyers.

So to give you some figures, we launched this app two years ago, a year and a half later we have over two hundred thousand companies that are registered in the system and to increase our database we use machine learning to gather information about the specific supplier from all different sources and then that’s also helped us to get in one place all the information about the supplier and also we use this information for the ranking system that we are developing. In terms of – so today what people can do in the – because we are still – every time, every month we have a new version of our app, if you’ve seen the app store, so every month we add new features or we sometimes delete some features to try to fit as best as possible to our clients need.                     

Matthieu David: 200,000 suppliers registered on your platform. That’s not a small amount. How did you get them, is it because you went to forums? Did you go to the exhibitions? Is it because you did a page search? Is it because you’re well ranked on google on some topics? How did you get them?

Milad Nouri: So basically, we did a little bit of all of these things, so we did digital marketing, we did offline marketing by going to trade shows, we also used what I told you, the machine learning. So, we created a bot to actually find – so when we have some products that some people are looking for, our bot goes in all the other platforms, finds reliable suppliers in China or in other countries and tries to attract them to our solution. So that was actually the most effective one because if you do a – like a cold advertisement on whatever – google or something, mostly for suppliers – buyers they’re easier to attract, mostly for suppliers, especially Chinese suppliers, for them, there is only one platform in the world and its Alibaba, so if you go with something new, it’s very difficult to attract them.

So what we do for example you’re looking for headphones and when you do the search, first we show you the results of the suppliers that we have on our platform and at the same time, our bots go in different platforms and tries to find the best-ranked suppliers, to find reliable suppliers in China in all the platforms and then contacts – because we have the contact addresses of the suppliers on the website, we contact them, we send them an email with the inquiry of our buyer. So basically, when they receive our advertisement, it’s basically real inquiry, so that the return rate is very high.

Matthieu David: I see, so initially I saw that you were scrapping the web after a request, then you were putting this data into your platform, but what you do is, not actually put the data in the platform, maybe you do it, but you do more than this, you send an email to the supplier to say – hey we have a request.

Milad Nouri: Yeah, we don’t put the data on our platforms. We send the request to them, they have to sign up, they have to pass the KYC and then they put the information in our global sourcing solution in China. So, we don’t pump information and put on our platform because then there is no interaction. If the supplier is not aware of the inquiry on our platform, if there is a request, nobody is going to reply to that. So, what we do is, to just bring them to the platform and then they have to do their job basically. We don’t do the job for them.

Matthieu David: I see, so people download your app to find reliable suppliers in China or anywhere else, then if you have the supplier, they can contact through your app the supplier, which is rated, you have the location, you have pictures of what they do, and if you don’t have them on the database, then you’re going to scrape the web, send an email to the suppliers, in the hope they are going to register to your solution and then interact with the potential buyer. Do I miss anything in your solution? So, I understand that it’s connecting suppliers with buyers, do we miss something?

Milad Nouri: So basically, our biggest difference is that as we are using a more – we are doing a decentralized process, because today China’s sourcing industry is very much centralized. Centralized by those websites that we just mentioned, centralized by the trade shows, centralized by sourcing officers, it’s a very much centralized process. And the problem is that the cost is getting higher and higher for sourcing, because of the labor, because of not only the manufacturers cost but also the sourcing officers cost, because some big sourcing companies there are few hundred people just doing sourcing and looking for suppliers and their role basically at the end of the day is just to create trust.

That’s basically the role of – okay, obviously they’re going to do some management, some project management, etc., but they’re there to be close to the factories, to communicate with them, to create trust. Okay. So, to decentralize the whole process we’re using blockchain solutions and we are using smart contracts. So that’s actually our biggest let’s say – the advantage of our global sourcing solution in China.

Matthieu David: Sorry I was on mute- so what’s your business model and who is paying you and where do you make your money?

Milad Nouri: Yeah so for the public version there’s a premium, so buyers and suppliers buy premium accounts and then we have the white label solution for sourcing offices. So white label solution is for the – it’s a white label solution that we do for large sourcing companies and it’s based on a SaaS model, so it’s based on a number of users per year.

Matthieu David: For the VIP solution or the premium within the West and in China, we say VIP, what features do we get?

Milad Nouri: So, for the features, some of the most important features that you get for the premium accounts are the ranking of the suppliers based on everything, all the orders that they had in the past with the buyers. That’s very crucial information that they have. Then we have other features that are then unlimited like getting actually – we use machine learning to match buyers and suppliers based on their profile, their geolocation, based on the portfolio of suppliers or clients.

So, we use all this information to do the matching. So basically, you don’t need to use active sourcing search for, you just post whatever you want and we do image recognition to know what’s the product here you’re looking for and using the machine learning and knowing your profile, we’re going to match suppliers with you. So that’s one of the top two features that the premium accounts they get.

Matthieu David: You mentioned a big word which is very trendy now is the word blockchain. It’s always – I feel a bit overused in China now. Even the subway is saying that they are doing a blockchain solution in China. I don’t understand why. So, what in your context is the blockchain? How a decentralized contract makes sense? Does it mean that everyone on the platform would see who is signing with who, to asses that there is a signature and there is a contract, how blockchain is used within your platform?

Milad Nouri: Yeah, you’re right. When we started three years ago, it was the beginning of blockchain booming and we started thinking about the solution, thinking blockchain solution in China. But then we saw that actually the technology that’s still is even today still just emerging, just developing and at that time it was really the beginning. So, then we thought okay, we have to – and also that’s only if you remember, there were so many blockchain companies that were putting blockchain in everything, and even today they raise a lot of money based on white paper and stuff, no product. So, we thought that what we have to do first is to create a product that people are actually using and after that if we see that it’s actually necessary, we bring blockchain technology into it, because we took another approach.

Then we started – so we had two parts, product development that we are doing and research on the blockchain to see if it actually makes sense, because a lot of cases of business models, it’s useless to use blockchain solution in China. It will just bring you more cost, rather than solving your problem. So, after that, I also took an executive course at MIT, only about blockchain and in order to clarify how to use a blockchain with a business solution. So, just to explain to you how we use that, we use smart contracts. We didn’t create our new blockchain solution in China or whatever, we just created – we are writing smart contracts. So basically, we are dividing the process of purchasing in six different stages and at each stage its verified, the stage is verified.

Matthieu David: 16 or 60? Sorry to interrupt.

Milad Nouri: Six. So, then it allows us to trace everything that happened during an order between the buyer and supplier. So, let’s take the scenario of – the buyer placed an order to a supplier in China or wherever else. They sign a smart contract with all the terms of the contract, like delivery time, payments, etc., etc. and at each step for the manufacturing, we verify or some third party companies they verify, for example for quality inspection, most of the times we use quality inspection companies and today what happens is that we contract them, they go to a factory, they say – it is okay or it’s not okay, and that information kind of stays there and if you want to retrieve the information two years after, you have no idea how to retrieve it. But that information is very crucial to know the performance of the supplier. So that information using smart contract privately knowing who actually input that information with blockchain is crucial to trace.

Matthieu David: Sorry to interrupt but I really want to understand, so does it mean that when you say blockchain solution in China, does it mean that you collect information at different steps of the contract and manufacturing process and so on, on your platform, or does it mean that – as I understand blockchain and cryptocurrencies, for instance, that actually every user is going to some way download information or get information and store themselves information, so actually its certain decentralization storage. Where is your block chain active? Is it because you collect every step of the process on your platform and –

Milad Nouri: Blockchain solution in China has many different features. The one that is used in cryptocurrencies which is for me is like 5% of the blockchain technology is cryptocurrency is just to have the decentralized excel file where all the transactions, everybody has a copy of all the transactions, is what blockchain is about and every time there’s a transaction there is an update on the excel file and everybody gets the update. So, these are like public blockchains. So, for our blockchains, private note blockchains, not everybody can become a note, not everybody can have a copy of all the transactions, so we have to select who is going to become a note, understand. So that’s called consortium blockchain.

So in that case what is important is – because, in our industry, the data is very sensitive, is very private right, and we cannot just show for example Carrefour placed order – how many orders to this supplier or whatever, that sort of information is private, so we have to keep the privacy of the blockchain, but one thing about that blockchain – and also something very important to know, we don’t register big data on blockchain yet, we don’t have the capacity.

For example, we cannot register an image on a blockchain solution in China, because it has a lot of transaction cost right. What is registered is a yes or no, it’s a zero or one. That’s why a smart contract makes that analysis of the situation, quality inspection passed or failed? Why, if it passed – if it didn’t pass, what happened? And then that result, only that result is registered on the blockchain. So, it allows having the traceability of everything that happened with that supplier.

Matthieu David: I see, so does it mean that when I go to your platform, I can see for one supplier the different number of contracts he completed, if any issues within the contract there was and so on?

Milad Nouri: Yeah, we’re working on that, we’re working on that but basically that’s what we’re going to have. So it’s not only how many contracts we’re going to have, it has something even better or easier for users, we’re actually using all the smart contracts, plus other data like we have for example a feature called check-in feature, so every time a buyer or inspector goes to a factory, he checks in the geolocation, so we make sure that the factory actually existed.

This is one of the other inputs that we have in our system, so we combine with the comments and the ranking and stuff, we combine all this and we are creating something we call the trust index and actually we call it index, with a Y, so the index is basically going to translate the performance of the manufacturer based on all the contracts and plus – the smart contracts we call them quantitative data and then we have some other qualitative data that is like commenting from the suppliers, how many likes they had, etc., etc., etc. to be able to have this trust index.

So basically, you’re going to see the supplier, you have a trust index, it’s not an index that we are giving to the supplier, it’s a decentralized index.

Matthieu David: It’s crowdsourced and yeah, you have a word for that, you used the word crowding, crowdsourcing somewhere. I interviewed recently, one of the cofounders of the wiki factory and I don’t know if you know them, they’re based in Chengdu and they talk about the internet of production. So not the internet of things, but the internet of production. I feel you are in this field, you are on the internet of production. To help buyers, to help people who do kick-starters, find reliable suppliers in China, for instance, I see that you are checking what Wiki Factory is right now –

Milad Nouri: No, no I actually saw one of their pitch in one event actually so yeah –

Matthieu David: I see, that’s fine. So, in this industry I feel, which is China’s sourcing industry, it looks like it has been the case that it has happened and we have big players, Alibaba, people sometimes don’t remember that Alibaba is firstly a B2B platform. You have also global sourcing solution in China, you have also DHK written somewhere I don’t know, yeah HKDDS yeah, exactly. So, you have different players on your platform, do you feel that there is still an issue of trust? There is still an issue of assessing the quality? Is it still a big topic?

Milad Nouri: Yeah obviously I mean, just to take the case of Alibaba, a few years ago there was a big case of frauds in Alibaba because they were giving fake gold license or – in China’s sourcing industry when you are in there, you know that okay, very often you receive auditors, quality inspectors and as the process is very much not transparent, they basically can do whatever they want to inspect around. We see if maybe some people will close their eyes on some quality issues because for them it doesn’t matter. Who is going to remember that when the production rises, it’s in the market?

So that a big problem, because to find – that’s what we call the cost of verification. The cost of verification today in China’s sourcing industry is very high. For example, you buy a product in the supermarket, it doesn’t work. You bring it back to the supermarket. But then the supermarket they don’t – as the cost is very high and it’s very difficult to find who is actually responsible for that quality issue, that’s just going to be a waste.

Only in the US the waste of quality – products that are returned for consumer goods is over 250 million dollars per year. Just the products that you return and most of the time the retailers just throw it away or they cannot do anything with those. So that’s a big issue because that’s just a loss for all those retailers. So, if we have a system that you can, in a few seconds, and that’s why blockchain, one of the features of blockchain solution in China is to reduce the cost of verification.

Very quickly you know everything, the history of that order. What happened, who actually agreed that that quality issue was not a big issue and it can be skipped out, in a few seconds you can know all this and you cannot cheat that because everybody has to use a private kit to input information. So, you can’t say, oh it wasn’t me, it was someone else.

So that’s very important, that’s going to have a huge impact, because today what happens is that, okay you think you find a reliable supplier in China on Alibaba, they might have a gold or platinum, whatever suppliers, first you question how they got that and then we have – in my other company, because I have a trading company for 13 years now, most of our clients, they come to us because they got cheated by some suppliers that they found, not only in this platform but in many other platforms because there is no transparency.

You find suppliers that they look nice, they have nice videos and pictures, but you don’t know what’s behind, if they are actually good suppliers or not. So that’s a big problem of not only in this industry, like in any other, like in B2B or B2C or even C2C platforms, to have the transparency of exactly what’s happened and I guess you know that a lot of times in Taobao, to have a better ranking they ask a lot of their friends to buy their products and then do a good commenting. Right. So, the authenticity of those comments and ranking is – we can question that.

Matthieu David: So, what you are using actually is crowd verification, that’s the word you are using in your presentation, I was looking for it, not crowdsourcing. So, you have been working in the trading industry for 13 years before you had trading yourself. I feel that your solution is both a solution you use internally for your own work, for sourcing for your client, but also you are actually offering to other agents, to other people, to work with their clients. Am I correct to get this understanding?

Milad Nouri: Yeah you know in our global sourcing solution in China we have three types of users, one is the suppliers, one are the buyers and the other one are service providers. So, service providers are like quality inspection companies, trading companies like my other trading companies, service providers at the end of the day right. So, what we want to create is more – cause the whole tendency of China’s sourcing industry is going towards transparency. HNM on their website, they have the list of all their suppliers with their address, etc. you understand.

So, ten years ago we would all hide our suppliers because we don’t want our competitors to know them, but today, when we talk to them, and I’m very lucky because I’ve talked with all the big players in China’s sourcing industry, from Walmart, going to decathlon and all these big players, the tendency is collaboration and transparency. Because that’s going to bring them a better supply chain, for them to share the good suppliers because if you find a reliable supplier in China and you give him more orders, he can do economies of scale and give you a cheaper price. So that’s a win-win situation for everyone.

Matthieu David: About the VIP solution, the VIP aspect, the premium version, how much do you charge?

Milad Nouri: So we charge 25$ per month per user, but we are still working on that because – again, what we are trying to do now is to analyze what are the features that people are using the most, so we use some tools like flurry or – if you know for example, where are the clicks – so we do a lot of that analysis to know which part of the apps are mostly used and actually to – we didn’t push that much on the premium version, because we are working on the new version of YOOSourcing, that’s going to come out hopefully in a few months, that will be more on the web-based, so the web app, because we already have a web app but the features on the web app, because of some technical issues are less than on the mobile app. So, we’re going to bring more features on the web than on their phones.

So, the new version – that’s why we don’t push much the premium version because we are working now on the new version of YOOSourcing 2.0 and after that now we’re going to really push the premium version.

Matthieu David: I see so what you are saying is you are developing a web-based, and not a native app, native app being where you use either iOS or Android and you use the API and the stack of the different systems which in some ways it’s easier to upload pictures, you take pictures to interact with the phone, but it’s more difficult to develop because you have to develop different apps and you have to test them and so on. So, you are a more web-based app, I understand that.

Milad Nouri: No, we have native apps now and we’re going to stick with native apps, but we’re going to have the web version of the app. Like for example web WhatsApp or web WeChat that we can see or slack for example. So, they are not websites, that is something we call the web app. It’s really like getting the application on a bigger screen basically.

Matthieu David: I see, I see what you mean, so if you have WhatsApp you can have WhatsApp on the computer and the phone, that’s a web app. I see, okay I understand.

I believe that as a beginner you had to make some choices about the sectors to cover, I believe that you cannot have factories doing shoes and at the same time cosmetics and at the same time doing whatever ET’s and you may look for – even medical devices, or something which is food industry. What sectors, what segments have you focused on at the beginning?

Milad Nouri: So at the beginning, we focused on consumer goods, consumer goods is very large right, but for sure something we didn’t focus on was food industry, cause in food industry we don’t change suppliers very often and there is already a good traceability on the suppliers because they already work in the food industry, so they have much-added value. For consumer goods, there are products that you have to find reliable suppliers in China because of the products they change – most of the time a lot of seasonal products.

So, every season you have to find or do new sourcing, etc. so we focus on consumer goods. So, consumer goods are also huge right, so at the beginning, it was mostly on the electronic consumer goods and then we just led it and then we had – we also have suppliers sometimes for machines. We don’t obviously block them to come to the platform, but at some point, where we’re going to see that there are not many requests about that product, then he’s just going to leave the platform right. So, the system is going to automatically be updated and focus on the suppliers on consumer goods.

Matthieu David: I see, are you charging suppliers more for more services, like helping them to get a smart contract, educating them on how to sign a contract with an individual buyer and so on, is it a subject you believe that you could have grown for 11 years?

Milad Nouri: Yeah so we are working on developing some services for suppliers because you know, a lot of suppliers, they still – okay they might have one salesperson who can speak English but they still have a lot of issues in terms of marketing, how to market their company, etc. but we don’t want to become like a service company to help them do their marketing or whatever, it’s another business, but what we are trying to do is creating some tutorials, some bots maybe, something that we don’t have to put people behind that because, otherwise, we would need like a thousand people just to help people to develop their marketing. That’s not our job.

We are using technology to try to help them, to translate another doctor – miss explain to him how to put their product or their company to present it, so we are working on that technology side and also to – some of them that they came to use actually, some suppliers said – oh we have our own brand, so we would like to sell our brand directly to channels like Amazon or eBay in other countries, so we were thinking, okay how we could use the post that they make in our website, with their products and promote their brands to all these different channels. So that’s the premium service that we’re working on for the suppliers because they need that.

Matthieu David: I see and because suppliers actually may have more money or more interest to spend on your global sourcing solution in China to get more clients, to develop their business in China so there is maybe a direct – direct interest when the buyer is more cost-saving on the buy-in purchase, the pricing, the purchases and so on. I’d like to talk about Hangzhou, you are based in Hangzhou?

Milad Nouri: Yes.

Matthieu David: How do you compare Hangzhou to other cities like Shanghai or Guangzhou or Shenzhen? What makes Hangzhou attractive to you?

Milad Nouri: So when I came to China 14 years ago, I lived in Shanghai, I worked for Alcatel as a software engineer, but I was traveling very often on the weekend to Hangzhou cause I had a few friends here, and I’m from Nantes, a small city in France and nature is very important for me, so having a lake in the middle of the city and having a lot of trees and nature was something that really attracted me about this city in terms of culture of life.

The most important part was at that time, 14 years ago, there were a lot of manufacturers here. So for my other company that was a trading company and mostly a service company for servicing and manufacturing of products, it made more sense to be here in Hangzhou than in shanghai to develop my business in China, and also in Shanghai at that time there were already a lot of foreigners doing what I was doing and in Hangzhou not so much, so I could differentiate myself that way.

And then we had this rapid growth of Hangzhou and became the tech – the software and tech hub of China, not only Alibaba because we hear only what Alibaba does, but there are so many other companies, there is NetEase, there are so many different companies here that are very big actually, that most of the time we don’t know them because sometimes they do B2B business, but it became this tech hub and its good for us because we are always aware of what’s happening, new technology and stuff, we can get – I had to put that – we hoped to get more talents because of this ecosystem, but it’s, on the other hand, a little bit challenging because all the talents they will work for these big companies and they come to start-ups, they expect high salaries which is not possible. So, at some points its good, on the other hand, we can get some challenges in this hub, because of these huge companies.

Matthieu David: But the ecosystem in Hangzhou, do you feel you benefit from the ecosystem of Alibaba and NetEase as you mention, which have been created not only on the talents but on other aspects such as the direct contact with them, with those big firms. The fact there is more innovation. Do you feel that you can leverage this ecosystem?

Milad Nouri: Yeah, I mean, we receive also many delegations here and very often we visit these big companies and have contact with them. So, we try to explore some collaboration with Alibaba, and mostly with Ant Financial because they are developing also their own blockchain solution in China, they have their own blockchain solution in China, etc. but, working with these big companies is very complicated because they are huge machines. I have contact with some of the product directors or managers of some departments, but the decision making process is just like amazingly, extremely complex, so it’s very difficult to say – but it’s good to be there and to see what they do and to get inspired and basically if we do well in a couple of years, we will most likely be acquired by one of these companies because we’re going to be here and they know us, they obviously know us and they know us because – actually when we launched YOOSourcing, a couple of months after we had new versions of Alibaba or some other websites that they took really the social aspect of sourcing because we – at the beginning we were almost like a social global sourcing solution in China, kind of platform and they changed their platform to more towards like posts and all these things.

So, we know that they know us and us – it doesn’t matter, but it becomes very competitive. We already have for example three copycats of our solution, one in Imbo, one in Evoo and I don’t know where Is the other one, but the whole ecosystem becomes very competitive. At some point its good because it pushes you to go faster, but at some point, it can be frustrating because you see your app, the copy of your app or solution, maybe even better out somewhere. For us it has been actually an advantage because it keeps us motivated and also my team cause at the beginning we were the only ones doing these kinds of things, this kind of global sourcing solution in China, and my team, but it’s taking time and then we had the copy, oh actually – so it’s not that stupid what we’re doing.  there’s a copy so, kind of we got more motivated to beat them. So that’s actually – we tried to take it as a positive point.

Matthieu David: We’re entering the last part of the talk the interview and that is the ten questions. We may not do all of them but you can tell me which ones you would like to go more in detail on, what books inspired you most as an entrepreneur?

Milad Nouri: There is a book that I also use when I give my lecture, it’s called international entrepreneurship by Robert Hisrich. It’s a book that explains all the challenges of being an international entrepreneur. Not only focused on China but generally speaking, cultural aspects, management, etc. That’s really something that gives you real tools for international entrepreneurs.

Matthieu David: What do you read to stay up to date on China?

Milad Nouri: I don’t have much time to read but I listen to a lot of podcasts, you know, McKinsey and all these different podcasts. News. I try to get as much as different types of channels, but mostly podcasts.

Matthieu David: About China?

Milad Nouri: Yeah.

Matthieu David: Okay, which one do you listen to? McKinsey?

Milad Nouri: Yeah, McKinsey China, it’s very interesting. It’s a pity they don’t do it very often but every time they do one, it’s very interesting.

Matthieu David: What else, what do you have?

Milad Nouri: There is mostly like, not only about China, it’s mostly about business in general, a lot of French podcasts. Mostly about news also, what’s happening in different – because in international trade, we are very much linked to all the geopolitical issues that happen all over the world, so we have to be updated about everything that happens basically to be a practice.

Matthieu David: What book on China would you recommend to read?

Milad Nouri: I wrote a book about entrepreneurship in China, it’s in French. Bienvenue en Chine – Welcome to China, it’s a graphic novel. So basically, I try to tell my story and I give a lot of tips and all that with some funny drawings, so I would recommend that.

Matthieu David: Where can we buy it?

Milad Nourie: So, for now, it’s in French in all the French-speaking countries and it’s going to come to China soon and it’s going to be suited by a French library that is based in shanghai, but otherwise you just search it on amazon – you can find it easily on amazon.

Matthieu David: What tool do you like best when working in China?

Milad Nourie: There is one tool actually that I like it’s called Teambition. Teambition is a shanghai based company that was just acquired by Alibaba group. It’s a very interesting tool, a project management tool, nice design.

Matthieu David: Like Trello, available in China, working in China, right?

Milad Nourie: Yeah, yeah. Teambition, like the team of a company and bition like the end of ambition, it’s a bit surprising name actually, but when we understand how they built it, it’s easy to remember. If you had some extra time, what would you work on? What idea would you like to develop?

Matthieu David: Mostly working on other people’s ideas. Actually I’ve coached some start-ups, because having coaching some start-ups and cofounding other start-ups, yeah, I would like to spend more time coaching start-ups.

Milad Nouri: What is the most surprising experience you could share with the audience in China?

Milad Nouri: Surprising experience, living in china we have surprises every day right, so I could not remember one experience right now, but even after 14 years sometimes I’m just like – walk on the street and I see something and I – in the business situation I get surprised of how Chinese people think, how they do stuff. It’s very pragmatic and they don’t question as much as we might do in France, and they just do it. And that’s always very surprising for me, they take the risk and just do it and then if something happens, we will handle it.

Matthieu David: True. What unexpected success have you witnessed in China, that you would not have guessed, like a few years ago or 10 years ago?

Milad Nouri: So that’s mostly for my first company, when I launched it, with zero investment, with my cofounders and we were at the right time doing the right thing I guess and we’ve met the right people and very quickly in one year – after a year and a half we already had one million dollars revenue and then after 2-3 years, and every year we were like 200 – 300 persons increase and after six years we were doing like 12 million dollars revenue, and that’s – I did not think anywhere else that would be possible and we had a very small team, like 15 people – 15 or 20 people at that time, so that’s I don’t think anywhere else would be possible.

Matthieu David: At the opposite, what unexpected failure, not only on your business but you may have witnessed in the Chinese society, Chinese environment, I’ll share one of them, I felt is that I was surprised to see actually Carrefour had to leave China and when I arrived 10 years ago, Carrefour was a very successful company, still growing and like a very successful French company or international business in China. So, what unexpected failure have you witnessed?

Milad Nouri: There are many cases of these big companies that they didn’t adapt themselves to the Chinese consumers right. But there are many of these examples, but I would mostly like to talk about some foreign startups, foreign entrepreneurs that they started to develop their business in China. For foreign entrepreneurs I think it’s very, very difficult to develop business in China – they can start, but to scale up to something in China, because of many reasons, competition is something, understanding the culture, having Chinese co-founders or partners or shareholders, raising funds, it’s very difficult. I mean you can raise funds for a few hundred thousand RMB or a few hundred thousand dollars, but if you want to do some serious round, we can count in our hands how many start-ups actually did around in China, foreign start-ups. That’s something very, very difficult and I’ve seen a lot of start-ups failing because they couldn’t raise money.

Matthieu David: But do you feel its unexpected because when I think about it, do you know many Chinese entrepreneurs who are raising a round in France or in Europe on the reverse side. I feel actually for entrepreneurs, a lot of them have things in China and sometimes raise money from Chinese and born by Chinese and acquired or partnered with them. Don’t you feel actually that – we are here and we could do more as foreigners, but actually when you look at the Chinese in Europe, it may be more difficult for them?

Milad Nouri: Yeah but it is different because if I take the case of Hangzhou, Hangzhou is saying that they want to become international, they want to attract foreign talents, so they’re creating the whole environment for foreign talents to develop their business in China. So, you attract them sure, then what you’re going to do with them? Just giving free office, that’s fine that’s perfect, nowhere else they give you that, in my company we have three years office for free, we don’t pay taxes, we have even cash from the government, a few hundred thousand renminbi cash for – cost refund from the government. So, these are things that are great, so they want to create that environment okay, so that’s why it’s failing to then raise and pass the cap of starting a business, that’s something that they didn’t – I guess it’s unexpected, that’s why it’s unexpected.

Matthieu David: I understand. That’s true that China is communicating on and not only China as a country but local government, cities, and provinces, on attracting the foreign businesses to develop their business in China, but when they are here after, it’s actually difficult for them to grow and to get financing from another service, like just a bank. To get a loan from a bank it’s nearly impossible. That is also something very surprising to me that the banking system has failed to finance SME. Small and medium businesses.

Milad Nouri: Even for Chinese, so it’s – but for example in Hangzhou, we’ve got something called 50-50 plan, a kind of guarantee for even foreign companies to get a loan. But still, even for visas we still have a lot of issues. If you want an entrance or somebody coming for a few weeks, three weeks or a few months, we had this issue with our designer coming from France for a few months. We had a lot of issues with visas. So, there are still a lot of contradictions, so that’s why I think – I think they’re getting there, they’re going to improve, but right now it’s like – oh! We are international, we want to attract international talent, come here and then – we don’t know what’s going to happen next you know. That I don’t think it’s very reassuring for start-ups because, of course, they don’t know what they’re going to do in their companies and if their business model is going to fail or not, but they’re kind of selling a dream to them and saying oh, we have a lot of investors and we can get you a lot of meetings with them – I do a lot of meetings with investors, but I understand them, they are Chinese investors, I speak Chinese but we still have culture difference and they would invest on a Chinese entrepreneur easier, that I understand, I would do the same thing right. So, there are two worlds – the board of the investors and what the government wants to do and they still didn’t match it.

Matthieu David: Yeah, thank you very much for taking the time today, very interesting and what you’ve built is amazing and you’ve just done it in 15 years. I think I’ve interviewed people who have been 20 years but you are close to the top of the veterans in China.

Thank you again, hope you enjoyed it and hope everyone enjoyed the talk.

Bye, everyone.

Milad Nouri: Thank you. Bye.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

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