Find here the China Paradigm 92 and experience the Chinese gig economy with Hammer Guan and his application for freelancers in China, Youbangxin.
Full transcript below:
Hello everyone. This is China Paradigm where we, Daxue Consulting, interview season entrepreneurs in China.
Sofya Bakhta: Hello everyone, I am Sofya Bakhta a marketing strategy analyst at Daxue consulting, a China-based market research company and this is China Paradigm, a business-oriented podcast. Today I’m with Hammer Guan. In 2016, Hammer founded Youbangxin – Youbangxin is an application for freelancers in China aiming to gather professionals from different fields to allow them to share skills and knowledge. In other words, Youbangxin is the freelance platform in the Chinese market where you can find professionals from several sectors in China to meet your needs. Hammer, it is a great pleasure to interview you on the China paradigm show, so thank you for being with us and let’s start.
Hammer Guan: Thanks Sofya, how are you? I am pleased to have this interview with you and share information about my company, my application for freelancers in China and the gig economy in China with online friends.
Sofya Bakhta: Thank you very much. So, can you please explain what is Youbangxin in a more detailed way? What problems does this platform solve?
Hammer Guan: Okay, Youbangxin is a mobile application platform that allows people to share and sell their skills, knowledge or time value to those who need it. Youbangxinis an application for freelancers in China – we call ti Youbang app –, is a platform featured with one-stop full social features. The effectiveness of your transaction is going up, the cost of your transaction is going down. Both are provided and users benefit from this model and this freelance platform in the Chinese market.
Sofya Bakhta: That’s clear, thank you, and what is the size of your business? It would be nice to know some figures such as revenue, number of employees, number of users, etc. For example, how many people downloaded this app in November or anything which could help us to understand your business better?
Hammer Guan: So far, my application for freelancers in China is at the start to go live, so the platform started to operate for about half a year in the gig economy in China. The business size is about 10.000 USD per month. So far, it’s a small size but registered users are about 55.000. There are about 300.000 people that have downloaded the Youbang app. The downloads amount to about 10,000 in November. This is a creative platform for all people that want to directly and most effectively share their own personal value, their skills, knowledge and time without any agent and institution in the middle as well as people that want to hire a freelancer in China. It’s a newly-centralized and real sharing economy model for both skills providers who we call talent and for the other users of the app who simply want to hire a freelancer in China.
Sofya Bakhta: I see where are you coming from. What is Youbangxin’s business model? I want to understand better how it works! Are you taking a commission on each transaction?
Hammer Guan: That is a good question. Youbang is a very useful tool and a powerful application for freelancers in China for people that want to easily and effectively share and sell their personal valuable skills, knowledge and time. It helps talent to make money and help customers that want to hire a freelancer in China to save more money because it is an agent and middle-layer free. This is the business model for our freelance platform in the Chinese market.
Sofya Bakhta: Are you taking a commission on each transaction or how do you monetize this platform?
Sofya Bakhta: I see exactly what you mean. What are the unique features of the customer to the customer business model in China? What are the opportunities and limitations of this business model? What do you think, Hammer?
Hammer Guan: You know China has a very mature online payment and online transaction customer base. Many young customers use tools like online shopping. So, this is a habit, a habit from the customer side that is very mature when it comes to the gig economy in China. There are dominant applications – we call it sharing economy model in the – like the one used for public transportation site, or business models like Uber – Uber you know it’s very common. The credibility and safety in the payment and the service delivery fees are quite crucial and the reason why customers are often worried. So, I think for a C2C model in China, the business model limitation is only how to build trust with customers to gain credibility on our service. We need to make the customers feel safe while they are doing a transaction online like when they hire a freelancer in China. So, the credibility and the safety in payment and the service delivery, the service delivery phase is crucial for our application for freelancers in China.
Sofya Bakhta: I see, and how about limitations? Does this business model have any limitations?
Hammer Guan: One of them is customer habit. How to transform customers traditional habit to buy the services offline to online? This is the habit transformation. Another limitation is how to keep or how to ensure safety and credit for both sides? You need to build up your credibility and safety around your platform for them. Maybe these are the main challenges or limitations of the gig economy in China. We need to build up the whole environment and the customer habit for its market. Youbang is a creative startup company, so, we should get through this burden and move forward with our application for freelancers in China.
Sofya Bakhta: Right, that makes sense. I was surprised when I did a research about you. After more than 15 years of experience, mainly as a sales manager and director in major companies in the technology industry, why did you decide to go back to school, graduate from a master’s degree and found your own company? Is it a completely different life now?
Hammer Guan: Yes, thank you very much for your research on myself. At the end of this year, I will have about 27 years’ experience in the IT industry. I am experienced. I have experience from the IT industry growing from 1992, from the traditional IT market to internet development and to mobile internet development from this stage. My career is about 25 years in major or main IT companies. Now, I think I have the ability and also the dream to build up a great company, to help people to share their value with other people and more markets. I also think this is a trend for the future. You know, the internet’s development is making the company boundary wider. So, I think more and more professionals will adopt the freelancer’s working model in the future. It is an efficient and effective model for personal and where a country builds its value to society and the market. So, I make up my mind to start my own company, to develop the platform for talented people and for more people to work as freelancers and help people to hire a freelancer in China. I think this platform will help talented people to work effectively and it will result in more value in the market thanks to the gig economy in China.
Sofya Bakhta: That’s an amazing career path.
Hammer Guan: Thank you.
Sofya Bakhta: Talking about Youbangxin, how do you tell people about this platform and expand your customer base? Is it by doing various marketing campaigns or communicate on WeChat or other platforms, or, how do you promote your business?
Hammer Guan: In the very beginning we accumulated some seed customers and talented people. We shared the app and Youbang’s win, win, win. It was a three-wins mechanism for seed customers and talented people. It provides them with Youbang’s pattern mechanism and a more effective and powerful tool. We also did some marketing campaigns and broadcasting on WeChat and other related media such as Weibo and WeChat to promote our application for freelancers in China. So, we make some marketing campaigns and we accumulated seed customers to start the operation in the gig economy in China.
Sofya Bakhta: What do you do to let freelancers learn about your platform and start using it?
Hammer Guan: In the very beginning we let some seeding freelancers understand the Youbang and try to use Youbang. We are not only an application for freelancers in China but also a powerful tool to empower the freelancers to demonstrate, share and broadcast their own skills on different platforms or WeChat groups. There is no barrier between Youbang and the third-party platform. Weibo, Qiuqiu, Facebook, Twitter are seeking freelancers to expand further and so, it helps a lot to grow users for Youbang and other people to hire a freelancer in China.
Sofya Bakhta: I see. Also, I would like to know, how do you attract professionals who want to promote their service through your platform?
Hammer Guan: So, on our app, we provide professionals with the best tools for the to demonstrate their skills and help them set up their personal IP and branding. In the end, talented people can better demonstrate their profile and demonstrate their abilities and also make connections based on their location. It makes the task to meet those who need their skills easy. It’s very easy on our freelance platform in the Chinese market to connect talented people and their potential customers.
Sofya Bakhta: Let’s imagine that I’m a freelancer and I would like to sell my service somewhere. So, I’m looking for a convenient platform, where I’m able to find you, as a freelancer?
Hammer Guan: So, you open our application for freelancers in China and then you can find talented people around you since our freelance platform in the Chinese market is featured based on your location. This is the first meet point when you want to hire a freelancer in China. The second and the upside of our application is that it’s easy to search the people you need. There is a search box where you can write what or who you are looking for in case you want to hire a freelancer in China. Our system can respond to your request and find talented people who have the skills that meet your needs. This is the second way.
The third way is you can pick on our area channels and related channels. If you like music, for instance, you can access the related channel. So, this is the third way.
The fourth way is through the use of AI technology that automatically makes you and talented people match intelligently. We can provide more talented people’s profiles when you view a page on our application for freelancers in China.
Sofya Bakhta: Right. Let’s move on. How do you describe the individual traits of your business? What makes you different from competitors in the market?
Hammer Guan: I think our freelance platform in the Chinese market is unique. It is the first to integrate mobile applications into one platform. You can share your moment on our platform, you can share your skills by a live broadcast, live video. You can share your knowledge on the Youbang app with video. You can demonstrate your personal profile on our platform and meet new customers in your residence community and in your location when you’re in some business district. So anytime, anywhere you can share your personal value and benefit from the gig economy in China. I call it a one-stop platform. You can sell your personal time you set your price online. It is also possible to make a real-time internet video call or voice call with your customer. We integrate all the features, all the functions into the Youbang app. So, you can use the Youbang app as a one-stop tool, as a one-stop platform to make your value, share your value and sell your value to the market.
Sofya Bakhta: Fair enough, one-stop platform sounds fair.
Hammer Guan: Yes, this is also different from competitors. We can make talented people and customers having real-time interactions and online payment and online service delivery through our application for freelancers in China.
Sofya Bakhta: I see exactly what you mean. I read somewhere that Youbangxin’s aim is to be fully transparent. I would like to know what you mean exactly by that? How do you manage to achieve this goal?
Hammer Guan: You know, when we use the platform, our talented people can set their prices and others simply try to hire a freelancer in China. It is their own price that is directly and transparently shown on our platform. For the service charge, we also set 10% on each transaction which is also transparent. For the rating and the comments after a transaction is also transparent. So, on the platform, we insist on two principals. One is credibility – it is our core value. The other principle is professionalism. We must consolidate our freelance platform in the Chinese market with more talented people that provide professional service to our customers. You know the reputation is very important for a platform to operate and to make sure that people want to hire a freelancer in China.
Sofya Bakhta: People are looking for experts from different fields on Youbangxin. So, let’s imagine that I want to find a professional photographer. How can I be sure that this is a real professional? Do you have any validation process before people get to your platform? For instance, is it possible to see the portfolio of his previous work for example?
Hammer Guan: For a professional like a photographer, he first needs to register as a talent to sell his skills online. So, he must go through a validation process to become a certified “talented person” on our freelance platform in the Chinese market. He needs to provide his own ID Card information, make it online or send it. Then, as a second step, he needs to upload his own profile and work such as his portfolio on the platform. Then, we validate this. When someone is looking for a professional, firstly he can see the professional’s profile. He can make a judgment. Secondly, he can see his work as a photographer. Thirdly, he can make an online voice call or video call with the professional, make an online interview.
As a fourth step, if he is interested in this person, he can meet him, make an appointment. If he cannot make an appointment, he can start to chat online via our platform. So, customers can validate a talent thanks to their profile, their portfolio, an online interview or even offline meeting or appointment. And then the fifth step, you can make take your decision to hire a freelancer in China.
So, this is before you choose talented people. Even if you buy the services from the talent online, you know our payment method, after service delivery, the payment goes to the talented people. The customer can’t rate or comment on a talented person before that. So, for a transaction both sides may make a comment on each other, so, both sides cherish their own credibility and reputation. This is their personal establishment and is really important for the gig economy in China.
Sofya Bakhta: I got it and I assume that comments and ratings from previous users help to choose a specialist, but how do you make sure that comments or ratings are real? Have you ever faced fraud or a situation of beefing up the ratings and how to deal with this?
Hammer Guan: You know, comments and ratings from a previous user help choose a specialist and hire a freelancer in China. This is only the first step. Skilled people or talented people are not offering standard service. It’s the features of skill and a talent transaction. It’s not standard and personalized. It is not like Uber. For the latest, you simply order a taxi and generally don’t care who is the driver. The criteria are different and change from one customer to another for the gig economy in China. So, we make reference to the talented people profiles, talented people’s previous transaction records, the transaction comments, and the ratings sets the reference. The most important point is they make judgments based on this presales search. When you think this is the proper talent for you to choose, you can go to the second step to have an online call or online video call to make real-time contact.
Maybe after the first session or first class, you can make an offline meeting or appointment so the three steps may be the best fit for you. So, I think, this makes comprehensive decision-making to hire a freelancer in China. There is not only one factor to make a decision. With more and more records from previous ratings and comments, you can make a more adequate, more suitable choice because there is enough information to help you to make a judgment and take the decision to take part in the gig economy in China. This is not based on a single factor.
Sofya Bakhta: Yeah, I see exactly what you mean.
Hammer Guan: Another point is that all the ratings and comments are based on the real transaction or after the transaction, so making a comment gives status to both sides.
Sofya Bakhta: That makes sense. Youbangxin takes place in what we call the sharing economy and gig economy in China. Why did you decide to go to this sector?
Hammer Guan: Youbang takes people’s intelligence and value sharing economy model. I decided to go to this sector because I think that people can be powered and enabled by the new mobile technology or mobile application. People can be powered with the sharing economy and application for freelancers in China. You know in the traditional way, we cannot meet near your location. You mainly need to make use of your network or go to an offline institution or even work with a company to find talented people. By using the sharing economy model, we can enable people to share their personal values and intelligence online. Anytime, anywhere you can easily and directly, effectively share everyone’s value and intelligence under a professional setting. I think this model opens a huge market for everyone.
Sofya Bakhta: Definitely, and it can be noticed that China’s sharing economy is growing at a very fast pace and the local government, as far as I know, encourages it. I’m wondering to know if there is any help from the Chinese government to develop a company in this industry and if you have, for example, financial help or another kind of support from the authorities?
Hammer Guan: This is a good question. So far, you know that the sharing economy is growing at a very fast pace. The government encourages business innovation and they encourage more people to launch their business in the past four years, but they cannot cover each company. No found can cover each and every company. So far, we are working hard with my team on our goal to improve our application for freelancers in China. Our goal is to help more freelancers, more professionals to work easily and share value directly. So, I think in the future maybe we can get the local government’s attention to the gig economy in China.
There is no agent-free or institution free model. So, one company established our platform to operate. Like Youbang’s model, I think this is real. The real sharing economy, agent-free enables both sides to be a service provider to market to customers directly. There, they set the price freely, based on the market situation. So, no more transaction cost. I think this is a real sharing economy and it is perfect for the gig economy in China. I call it sharing economy model version two or version three.
Sofya Bakhta: That’s a good point. Nice theory.
Hammer Guan: You understand?
Sofya Bakhta: Yeah, I do understand.
Hammer Guan: Yeah, so both sides can make the transaction without any middle layer. No middle layer. It’s a powerful tool. Our powerful platform helps both sides making transactions, talking, meeting or easily.
Sofya Bakhta: I think this sharing economy is a very trendy concept now and many companies would like to be a part of it. What are the most important things to consider before starting to work within the sharing economy? And, what difficulties can a beginner’s face? Can you share with us some tips?
Hammer Guan: The sharing economy is a very popular model and also a very trendy concept. In some sectors like traditional sectors, there are several companies and some of them are very famous. You know Uber, you know Airbnb, these are different sectors the serving economy model. The main thing to consider before starting to work on a platform is, I think, that it needs to take creative thinking and innovative ways for a specific sector.
I think the sharing economy model should go to the next stage like our application for freelancers in China. The next stage should be agent-free. This starts to make the information easy to share. So, the transaction costs are not going down, because you have a big operation cost. You have to expand the market, get users and this also costs a lot.
So, if you want to make a breakthrough, you must consider how to improve the effectiveness of a business like the one of the gig economies in China. You need to consider how to reduce the costs of transactions for both sides. This is the key. You must also develop a good platform that costs a lot of money and takes time. You must have good relations with capital companies, VC companies. You need to testify your business to the capital VC company. Get their endorsement. I also think that competition is fierce in this sector. So, you need to have enough confidence and work to get ready for a start. That is what we are doing with our freelance platform in the Chinese market.
Sofya Bakhta: I see, that’s a good tip. Based on the research I’ve done, currently, knowledge and skills are a small part of China’s sharing economy. With only 8% of the market share in 2018, but it has a huge potential. Do you feel there’s growth?
Hammer Guan: Yes, for figures on the sharing economy of skills and knowledge is relatively low, around 8% like you said in the market share in 2018. The market treats the trend for growth. This is the nature of the people to have their transactions more effective and more efficient to save time, save costs. This is the advantage of sharing economy models.
Secondly, maybe this is due to the habits of people. In the offline market, there is a huge demand, a huge number of transactions. T volume of transactions is big when we look at offline channels. For the people’s habit and for the traditional business model it thinks it will soon be replaced by online options. So, this sector will grow rapidly in the future.
Sofya Bakhta: How do you think this industry is going to evolve in the next few years?
Hammer Guan: The last report from our national information center on the sharing economy model for the service sector mentions an added volume of about 3000 billion RMB. For the traditional offline market, I think it is over 10 times higher or maybe three times 3000 billion.
Sofya Bakhta: I’m sorry, I’m not sure I follow you. About what index are we talking about? You said 3000 billion, but I’m not sure I understand correctly what index we are talking about. what are these 3000 billion?
Hammer Guan: This is the value of the sharing economy volume. The report was officially published by our national information center. Our national information center announces the annual report for sharing economy business market in March.
Sofya Bakhta: This is sizeable. Very impressive numbers.
Sofya Bakhta: Concluding our interview, let me ask you one question – which books about China would you recommend reading?
Hammer Guan: Okay, I recommended one book called ‘The Road to Serfdom’ do you know this?
Sofya Bakhta: No, to tell the truth, I don’t.
Hammer Guan: This is a very famous economist called Hayek. He is an Austrian economist and the book’s name is “Road to Serfdom”
Sofya Bakhta: The name of the book is “The Road to Serfdom” right?
Hammer Guan: Yes. Yes, very famous. I think I like this book that mainly describes the free marketing model.
Sofya Bakhta: Thank you very much for your advice and for your time. I believe that it was an interesting and useful hour together, have a good day.
Hammer Guan: Yeah, thank you very much. Sorry that my English is not fluent. Sofya Bakhta: Don’t worry Hammer, everything was great and have a good day and bye, everyone.
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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