Podcast transcript #2: How to reach 6 million USD sales without initial investment in the real estate industry in China
Find here the full transcript of China paradigm episode 2. Learn more about J.X Paulin’s story in China and find all the details and additional links below.
Matthieu David: Hi Everyone, I’m Matthieu David, and I’m running this China marketing podcast, China paradigm. I’m learning today with J.X. Paulin. J.X has been in China for 25 years. If I calculate right since 1992 and you have been funding the company DBX in interior design, with about…. What’s the number like 250,000 square meters delivered over the last 12 years, and DBX according to your website was founded in 1958. So you have to explain something on that because you don’t seem that old. I’d like to run this interview and to understand better about what it is about starting a business in China, especially when you have been in China since 1992.
Very few foreigners were in China at the time, three years back from 1992, a lot of foreigners traveled to China, and also I discovered that you had a lot to teach us. You came to my office like I thought a month ago, and I thought I knew what you were doing. I thought I knew what you did before, and then so much more. I found out that you have several expenses, several lives in China, which are very intense and I got you on the phone recently for my own office because I needed advice, and I was amazed by your ability to find the right way of talking to me. Welcome to the show J.X and thanks for participating in this China Business podcast!
J.X. Paulin: Thanks for having me here. Actually you were not right on the date. Let me put it this way. First the history of DBX International, the full story is related to my family. My grandad was in construction, my mom was in construction and back in the days you had company, and they were doing construction and architecture. My mom came to China in 92, for a project, and then she basically she let me come to China in 94. Okay. Myself I came in 94, and basically I was not interested in running any kind of architecture or any kind of construction business. As you mentioned, I had many lives. I worked in an entertainment business, managing the biggest club in Shanghai, back in the days, was a fantastic experience. I’ve seen things that few foreigners have seen and few Chinese have seen, and it was a great time, and then I moved to consulting, marketing consulting and management consulting, as you see that was my strong point. Then I became a chief representative for a French company that was also into the market entry for French small enterprises based in western France, and then in 2002, I was offered a position in the top three design and build company in Shanghai. And honestly, I moved in because he wanted a deputy general manager, and I was put in management. I moved in, and I get called by, I would say my family spirits ago, in 2004 and I have to go before I created DBX International.
What my mom said, “Listen, you know what, we going to buy your business back with my partner, I would name your name, and it turned out that we didn’t even use our money, so we created this, but it was important for the Chinese to understand that this company was not just created in 2004, 2005, it was important to say, “Okay” then again, when you come to our new work site now that we have 12 years history, I don’t see you have any mention of it.
Matthieu David: Okay. Yes I went through the website through Linkedin so that I could find, and yes it was 1958, which is surprising and yes, can help to begin the conversation, so, interesting point, so why did you leverage from your most rental assets? Was it purely for branding to other Chinese clients or did you leverage something?
J.X. Paulin: It was purely branding to our Chinese clients, we didn’t use any assets basically, because it was not adapted to change market. That’s it. We really started a business in China with my partner, my Chinese partner, carrying your bags, and you’re around meetings, and luckily for me, I had a good network at the time of recent agent. I had a good network of clients, so we started the company in China with our clients already. Many clients follow me, and that’s it. But when we met a new client, new Chinese client, it was important for them to think that okay, we didn’t just pop up on the marketplace. So, it was in a way to reassure them.
Matthieu David: Okay, I usually begin with a question about the size of a company and metrics on the company. What was the metric actually to be founded in 1958, so can you share with us some metrics about company like the turnover, the number of people, a number of projects, I get when you review some of the guideline, 250,000 square meters delivered about 15 designers, and 100 workers, if the numbers are still correct on the website. Could you give us numbers of revenues first?
J.X. Paulin: Okay. So, basically the numbers are still correct. What we did is, when I worked before in the previous company called CTN, when I was a deputy general manager, this company was huge. We had 200 full-time workers. We had 70 staff, and when I created DBX International, when I found my Chinese partner, and we told ourselves, “Listen, we’ll never be that big because it was just not logical to be that big. We have a different way of managing people. The most important thing was to ensure the clients quality and design quality. So, we had a tight team of designers like special forces. Each designer could do everything, from concept, to design, to trading, to photos of each site, each project, and we build on this kind of management. We had a team of 15 employees at the most. Some years, we have 8, 10, 15, and then what we had, we had hundreds of workers, sometimes, even more, working for us. So the beauty of it was because we were busy, because we had good business, and we still have, they were not on the payroll, but they were only mainly doing a project.
So that allows us to basically have more revenue in terms of net profits instead of my own old companies that were just like that’s what going on there, like 200 employees onto the workers. So what we did in 2008, we did our best year. We did 6 million US dollars, and we look at it for 15 seconds. It was like we manage our team; it was really internal controls. So, each designer had its own freedom of doing the project. Of course, I was the one who led the project, but he had his own freedom. He could do within a certain time frame, but he could basically go on site or go and have a coffee with friends, but as long as the job was done, it was great.
Matthieu David: Okay, I see. You were founded in 2004 and five years after you reached 60 million US revenues.
J.X. Paulin: We almost double our turnover issue. It was great. 2005 we did great, 2006 good, 2007 was good, 2008 was the peak. We took heat during the financial crisis like everyone, but even though we only felt the heat until 2010, and because we diversify, we went into a light industrial project. DBX was mainly built to answer office demand. Office designer demand, and then what I did is go into light industrial, so it’s 10,000 square meter project, and then, of course, I expanded into Africa.
Matthieu David: Okay. We will go back on Africa. First, I’m very interested to understand the beginning because I always felt that it’s very rare to a foreigner involve in a real estate business in China. I feel it’s a very local business for every country; it’s very local for every country should local players into real estate, into this managing workers, right. One of the workers, well, suddenly don’t speak a word in English or may have the first foreigners in the industry. How did you manage it? What were the difficulties? How did you find difficulties? Or it was pretty easy for you? Could you tell us more about it?
J.X. Paulin: Well, first of all, you do have foreigners for any industry, China. There were plenty of foreigners in 2014; I would say you had a princess of real estate. For instance, you have guys who were really famous in doing this job, all these great guys who are in real estate businesses in Shanghai, Anthony Cos, etc. Anthony Cos is a managing director. This guy work in real estate. Now, when it comes to design and built, and as you mentioned construction, you indeed a few foreigners, a few Westerners in this field. We have Singaporean, we have Hongkonese of course, maybe, but we have few foreigners. Back in 2003. I went through a course in law and safety. It was mandatory for occupying my position to do it, and I was indeed the only foreigner, only westerners in this course of 40 people. We had Singaporean, we had Hongkonese, so we’re owners or PN, but I was the only westerner, taking Chinese course on the law and safety. As I had a previous background in a diverse industry, managing workers was not a shock. It was just like, interesting, challenging, and once again I had a good project manager with me for many years, and he was doing the management, I was managing him, and he was managing the rest. It was great years. The biggest challenge for me was to ensure the quality of the clients. That’s the integrity of the brand and the integrity of the project. That’s it.
Matthieu David: So, how would you ensure it?
J.X. Paulin: Being there every day on site! No, what happens is that, when you manage workers, when you work on site, at the end of the day you have to be on site, because for any construction worker, you’re telling, “Oh, you doing a project for Microsoft.” Who doesn’t know Microsoft? So the only ways he understands that this project is important for the company if he or she sees his boss on site, that’s it. You have a commitment toward your company, you have a commitment towards your clients, to be on site, and to show the workers “You know what? You have to care about it because I care about,”. It’s okay, right in the morning, I would time my team meeting with my staff, working as a project, looking at the critical line, what happened, what might happen, and meet some suppliers, some real estate agent, and during the afternoon, taking my car, traveling around Shanghai, and just like visiting sites.
Matthieu David: You mentioned timing. You mentioned like the availability to visit sites and to be, I would say a bit intense on work. I think that’s what you want to convey on the website; the contact form is saying that you are available until 6:00 PM and more if needed, I know we can if needed. Is it part of what you sell? The constant, constant availability and that you’re very intense on the product.
J.X. Paulin: Well, it is. I don’t think China is so challenging. It’s a market that is still changing. I don’t think that you can succeed if you’re not available for your clients, period. You have to, especially back in the days when the real estate was at its peak. We had no weekends. You have to answer a pitch, you have to answer on Monday, and it’s given to you on Friday. You’ll have to work during the weekend. I don’t think we can consider a weekend. It’s more project based. That’s a way I trained my team, to see this. It’s project based. It’s not time-based. It’s not a job from nine to six. We have a mission to complete. We have a project to complete, and that’s it. So, basically, if it requires us to come on Sunday, we’ll come on Sunday if it requires us to wake up at 9.
Matthieu David: So, to come back at what DBX is doing, you are not looking for office space, so I have to find a reason that, that was for the office space. Once I found that in the office space or different office spaces I like, then I go to you and I ask you if you can design it and again, what I found out in your book on the website, in your sales process, is that you are offering your free consultation.
The free consultation consist in: I provide to you the information for you to give us advice on how to organize a place or if it’s a good place for us or not, and then I can sign the lease, because if you’re confident that you can do the work and you can rearrange it, and with the price you would have given to me. Is it what you do in terms of the sales process and then once we signed with you, you’ll take in charge of construction, or even take in charge the phone lines and so on. When did you stop? You don’t help people find the office, and then you keep the key to your clients to use the office on their one redesign then, right? Am I correct? Can you tell us more about what does it take? When did you stop your services, until where it goes?
J.X. Paulin: Well, basically it’s like I have been North in China for 23 years and having a company for 40 years. Basically, when do we stop? We stopped basically when typically it’s, as you mentioned, it’s when you have the location, then you contact us. What we could do and what we do often is, once you think about moving out, you better call us. Why? Because honestly, you have, a few business owners have a clear idea of how much space you really need. Okay, first of all. Do we have to think about what is the new workplace strategy that you need to apply? How you need to seek your business in the next five years, that’s what you used to see before. And then again, of course, because we had a really good knowledge of each building in Shanghai, we can tell you okay, you can go to these firms, the rent might be cheaper, but in fact you might face a more expensive price of fitting out or more specific cost of renovating the air conditioner for instance. So, that’s the thing.
We really come as a consultant on this part, but we do not want to step on the real estate in China or the agent footstep, but we come here to tell you, ‘you know what, we don’t really care where you’re going, we just tell you’… Because we’ve got so many projects in grade A, grade B, grade B- and super great offices. We also know what you are in terms of industry and what maybe you should look at. We also understand what the new employees, what’s the willingness of them, , because, at the end of the day, we also want to design a place for them. We said, basically Matthew, ‘okay, your team will need more space, more ceiling, you might want to come closer to the subway to forget about grade A, think of grade B, but because you will have fewer costs when it comes to renovating, or change the air conditioning, blah blah blah. We design, we fill out, and we put everything we have, we do order fire, air conditioning, IT installation, security, furniture, of course, plantation. We also help you with your move basically, and when we’re done, we give you a budget. It’s a bit of a plug and play.
Matthieu David: Okay. I see, and you know all the regulations for fire, you know all the regulations you have to comply to. I understand. What is Fill out by the way, on your website? What do you mean?
J.X. Paulin: Basically, what we do when we call to fill out if you know this, we take a bear show, like a concrete bear showplace and we build the interior. We have plenty of carpets, so we built a wall, the seating, the lights, that’s what we call Fill Out.
Matthieu David: I see. Could you give a case you’re on, especially, you think would be very interesting for people listening to us to, that could help them understand your business and how maybe some of the challenges is that some of the clients may have faced, so a case study that would be an example to visualize.
J.X. Paulin: We have many cases. The first one will be for the same time you’re working, what we could secure environments, for example, the locals of the French consulate in Shanghai, and we have been working with them for six years. It’s hard to create a secure environment, and of course, it comes to requirements. That was interesting; we work with of course the French chamber of commerce, we’ve been there to support the design since 2006 until now. With the French chamber of commerce, what happened? For instance, I don’t remember when I think it was 2012. When the director of the French chamber of commerce in Shanghai they had some problems of water with the neighbor upstairs.
Basically, it was a 1,400 centimeters water problem. When you send me first. Generally, we sit down with them, we just talk about how we’re going to do? How long would it take us? How we can come out to meet the space so people can still work when we renovate the space, and this is what we do. Okay. I like to say that DBX international is a bespoke designer and built. We were never built to be like a mother, but what we do is that bespoke tailor. We design and build spaces that fits you, and it’s the same. Any kind of requirements. When we get fact to read at the same, when you come to see us to suit factories, we’ll not say, “Let’s see how much money you’re going to make.” We’re going to sit down and say, “Okay, let’s see what is practical? What should we do? What shouldn’t you do? Unless I think is the best practice. What is your budget? Let’s work around your budget, to make sure that you can operate.
Matthieu David: Yeah, I saw on your website, you mentioned your budget in China. You mentioned your budget is unique, which is a surprising, interesting way to mention that actually you can indeed find something which can fit within the budget of your clients. Okay, I understand.
J.X. Paulin: Let me come back to this. When I say the budget is unique and it’s true. Your budget at Daxue Consulting will never be the same as all the Bank of Rothschild. That’s the thing, but our job is to make sure that we cut up to your business, we give you the best of what you can afford, and if we cannot, we don’t want you to be sorry for it. It’s okay. We want you and your team to be comfortable to have such well-being and to operate perfectly in your space, and when we say that each project is unique, that’s real.
Matthieu David: Yeah. Interesting, can you tell us more about your association with your Chinese? We have seen in China a lot of companies failing because of partnership or misunderstanding because of partnership. I can’t really state when you look at the hotels which cannot own the building, that can only manage it. There are always some tensions between the guy who owns the building and the guy who manage the building; I guess real estate in China has been an example of failing partnerships. It depends. We just picked up real estate as a big industry. Could you tell us more about how you make successful, about finding a Chinese partner?
J.X. Paulin: It’s something really interesting because many people will know when I meet people and say, “Oh, you know, when you work with Chinese, you have to send the contract. You have to make sure blah, blah, blah.” I started DBX out of a handshake with my Chinese business partner. You just shook hand and you know we’re going to work for 10 years or more, and we’re going to create what we become: top one design brief French company for real estate, and we, from the beginning, really split our role, she was in charge of the finance and she was in charge of making sure that we have the best price for a supplier, and I was in charge of the rest: operation, design, construction, quotation, and everything. It made the work so easily. It also was like, we had no issue, no legal issue, or whatever because we were working towards the same goal. Look, right, because it made a solution.
Matthieu David: How did you meet, how did you find your Chinese partner, because, you did that on a handshake?
J.X. Paulin: Yeah. Basically, we’ve met at a Chinese company. We met working together for a previous owner.
Matthieu David: Okay, and when you were working together? What did the person that you had, you enjoyed the most working with? Was it a person you trusted most? Was, is a person who actually you felt was the most ambitious? What made you think she was the right partner?
J.X. Paulin: What makes me think she was the right partner actually, before that, nothing. I mean, she was the one convincing toward to open DBX.
Matthieu David: I understand. Your revenues, so you were basically so involved in the company before that you knew everything about this company, you were managing it, and she saw you as the one who could bring business, and she doesn’t know how to bring business, but she knows how to manage it. So, then she thought it was complimentary, and she told you as a local Chinese that we dream of let’s start a business in China. How is it in the type of structure? That’s something which is very often asked. I mean, is it purely Chinese company against the State? I’ve got to be a lot of workers, how is it organized?
J.X. Paulin: They’re a purely Chinese company.
Matthieu David: Okay. So, you trusted her that she would meet your agreement?
J.X. Paulin: Yeah.
Matthieu David: Okay, for people who are very aware of this, you had in China differences between Chinese Equity company, foreign equity company, and when both of them are now emerging, it’s called a joint venture, and it’s got a bigger work. And some industries are forbidden like foreign businesses in China. Aren’t you into a design firm, right? Could you have started it on your own?
J.X. Paulin: No, we couldn’t have. We could have started the new design firm only but not in construction.
Matthieu David: I see, and you didn’t think about having two businesses?
J.X. Paulin: No. Honestly, we get caught into action. We started really fast, and believe me though when you’re busy building your business, you’re never really busy release your paperwork. And you have to keep in mind something, and that’s something that I advise I give anybody that wants to start a business in China, finding a Chinese partner. What you have to make sure, you have to make sure that at the end of the month or end of two months, you don’t leave too much money on the bank account, because at the end of the quotation moves your partnership. That is safe, but when you have nothing to steal from, not that much money on the bank account, that will be of course, if you had like, or if you had 10 million running on the bank account something might happen.
Matthieu David: Okay. Okay. So, you are not the owner of the company a bit like other people who buy shares of Baidu on the Nasdaq actually they don’t want the company in China because the from the default, for education and teaching is operator for foreigners, because they just own the contract which started VIP and that’s what you did, but you have some way balance of power. It’s more like checks and balances, and the company can run without you, or there is a deal between your two partners. Did you sleep well?
J.X. Paulin: Yes, I did. You know, basically, we have to put everything into perspective. I was the one who owns maybe 85% of all businesses, so I agree with that if something would occur, I could leave the company and open one with an ex-associate and still make money, so, it was not an issue. Now, you have to be confident on what you have and to make sure once again that you don’t leave that much money on the bank account, on the company bank account. Otherwise, you might end up with nightmares. But once again my Chinese partner was really trustworthy. You have to work your way. Of course, we had clashes. We disagreed. We are like brothers and sisters, and that’s it. That we run the company together, and we headstrong, we’re stressing. That’s life.
Matthieu David: You were speaking to each other in English or Chinese right away?
J.X. Paulin: Chinese.
Matthieu David: Okay. You’re not afraid to misunderstand things from her, to misunderstand things, to over-interpret your Chinese was good enough, or you couldn’t understand fine what she was saying and not be scared to misunderstand. Because some aspects may be very technical, right. Like payment terms, like construction, the risk to maintain part of the construction, insurance and so on and maybe technical.
J.X. Paulin: You have to remember that I moved to China in 94. At that time, few Chinese spoke English or French, so I had to speak Chinese. I had to learn Chinese. And in my first job when I was working in business, no staff was speaking English, so my Chinese was still back in the early ‘99, you see I was dreaming in Chinese already. So I’ve always been working in a purely Chinese environment because the only people that I spoke in English were my foreign workers.
Matthieu: Okay. You learn Chinese on your own, or you took the classes?
J.X. Paulin: I went to university and then after that masters.
Matthieu David: Three months and then after on your own. Okay. You’re not typing, right?
J.X. Paulin: I speak, and I type, yeah.
Matthieu David: That’s more difficult to write, okay. I understand. So, I went on your website and looked at the code and see if you were using digital tools to get clients and so on. I’ve seen some interesting tools you’re using that optimize your website. You have a Facebook pixel, but I don’t see a lot of what you’re doing online. How do you get your clients? I get this stuff online, maybe offline, right.
J.X. Paulin: I must admit that on DBX, we aren’t big on digital, why? Because we are already into the Chinese market, and it’s more like a referral. Real estate marketing in China works like that. People will give us a referral. Like you, if I go to your office, Matthieu, you’re going to introduce me to somebody else. We’ve only worked with real estate agents; we work with lawyers. We could use of course internet digital tools to drive more clients. To drive more traffic to our site, because then the game we’re doing it abroad would not make sense. We have to do it for China, on Baidu and everything, and I don’t see it will create more traffic because, at the end of the day, this is really a training square of syncing like you always say. So, like, let’s see if I call your director of human resource and start giving a DBX International if I”d say that okay, I’ve been introduced by a friend. Okay, that’s it — the funny thing, more men that we had barely go and seen our website.
Matthieu David: Okay. I thought you are using your website as a brochure; you can send to them? This is what our work cases are. This is what we did before, but no actually, it’s with email, not with paper. Okay. I understand. I think you are a very social person. Did you learn that somewhere? Or did you just like practicing, and because of your business needed you to be or it’s your character?
J.X. Paulin: I think it’s a character.
Matthieu David: Because some people have to learn about it. Learning about negotiation, learning how to behave with people, reading a lot of books actually written mainly by American authors about how to behave and so on and they have patterns, the same patterns. Have you find some patterns on how to convert a referral you get. Do you have a set process of following? Or is it on intuition and feeling during meetings?
J.X. Paulin: I will not say intuition, it’s just what we say, it’s everyone trial. Of course, we have to have some behavior analytics and to analyze behavior and with that being said, I will always tell my team, “Okay, this is what I’ve done. It hasn’t worked, but maybe work on you.” Means that nothing is covered installed. That when they are free to try something else, but of course when you look at how we approach clients, nothing is systematic, how we do, how to win the applause or maybe present things, when you do presentation, the order of the slide, when you want to show it’s based on human behavior.
Matthieu David: You’re saying it’s not systematic. You have not systematized too much of business. Even the approach of client, you’re going to prepare for specific clients, specific foundation, like what you’re telling me, right?
J.X. Paulin: Yeah, because each client is different. We work with great names. Basically, it doesn’t care to go, that you want to run a big real estate company in China. Doesn’t care that you’re not the greater, the bigger firm in China. What he wants to see if you’ve done some luxury brand before, period, and so, that still we have to work on a different approach. We have to show them different things.
What is systematic is what we show to the client, the approach. It’s going to be based on these requirements on this DNA, and his industry DNA, or even on where or he or she comes from. Because once again, if I meet an American and tell you, “Oh, we found a French consultancy.” Okay, good, go on, but if I tell you, “oh, you know, it’s been the biggest real estate, industrial real estate in the US, you would say, “Oh, great.” I have this example. Once I was at the gym, and I was talking to a guy coming from Singapore, and we were talking and I said I work for design and build firms. “Which one is it?” I say, “DBX,.” He didn’t know. We’ve done Air France, we’ve done Blah, blah, blah, and I’ve tried to really call which Korean company we’ve done, I say, “Oh, we’ve done PSA.” PSA, Singapore, Port Authority. Huge, and then again look at me saying“Wow, you must be so good.” Because it was like, to me it was a small three harvest a project where that, but for the Singaporean guy, it was like a name and we’ve done many Singapore company, like a huge name, like we’ve done NCS, whatever, but each if you’re attending to a French guy or a French lady, she will ring a bell, but to a Singaporean it was like, “Wow, you must be so good at this.”
Matthieu David: Sure. It’s a cultural understanding. It’s contextualization. You contextualize the speech for each client. I see, but is it your team can do it, or you are the one who does a lot?
J.X. Paulin: They can do. I’ve learned this approach even in China as I say when you do a product for Microsoft or Apple, and the worker doesn’t care. You have to build into the basic, to make it more understanding, become understand into our own concept, and once you applied, assume you need to apply in many aspects when you meet people, to make people understand. And so once you teach your team to do it, they can do it perfectly. It’s normal.
Matthieu David: Okay, because I see a lot of businesses in China which rely a lot on the founders, the founder of the founders, and I feel that dealing with your clients is a lot about a memory about the past, all right? I thought that the best person who could talk about the best project it’s yourself, so that was my question about. Have you found a way that your team can talk about the project you did before or you still have to supervise and mentioned civil product? Are you work still on projects?
J.X. Paulin: I have to be in town, when it comes to concept, or managing big projects or managing complex projects, because you see a profession gets better with age, when you’re an architect or interior designer, consultant, we get better with age, because we’ve seen so many things. We can basically say, “You know what, don’t do this because you’ll have more impact on this one.” We can– When I see a layout, I can tell you, “Okay, well you shouldn’t do it because this doesn’t make sense,” because I can project your company in five years time, so to say, and it takes experience to do so, not because I was the greatest architect, I’m the greatest, I’m the smartest man in our earth, it’s just because I’ve done so many projects before, so it continues and actually in the next five years, you’ll see a lot more like this, even in the next two years.
Matthieu David: Yeah, the projects. That’s why it’s the value of the company is yourself. It’s sometimes difficult to disconnect value of your company and the value of yourself, and that’s something you wanted to, to disconnect the fact, yours and self because you’ve got into the company so they can sometimes go, right? So, is it the case?
J.X. Paulin: Yeah. Yes, it is, but as soon as you make some compromise. You know as I told you, I ventured to Africa in 2010, and some things that time I stopped to try more and more, and my business took a hit in China because I was no longer more important, but you see, I believe in putting my team into the dirt were like, “You know what? You have to be able to handle this challenge.” I’m going to give you this; I’m going to try to tell me this is like not, and do it. In China, there’s a lot of learning by doing, and of course they’ve done mistakes, and when they’ve done great things, I’m sure that it’s a greater achievement that they have done in a way, until they learn their own way, but truly once again when it comes to complex or high profile clients, I have to be answered.
Matthieu David: How many projects were it in this year when you reached 6 million dollars? What’s the average size?
J.X. Paulin: We used to do like 20,000 square meters a year, and as soon as the average size, maybe 1,005, and also we’re talking about what, 10, like 15 projects.
Matthieu David: So, when you say the turnover when you’re talking about the turnover, you put also the cost of construction, all the purchase that you have to do for electricity and so on. This is within your turnover, right?
J.X. Paulin: When I’m talking about the turnover it’s how much money you generate.
Matthieu David: It’s over 6 million, and inside this turnover, you’ll have to pay for the workers, for the construction, for the material to build the new office, right? It’s pretty heavy in terms of cost, isn’t it?
J.X. Paulin: Yes, of course, we are looking at the cost that they can grow up to 80% of it.
Matthieu David: Okay, I see. It’s like advertising when we interview when you point out advertising that tells us the budget that they have to give to Weibo and Wechat, and then they get basically the fees on it, but okay, I understand. It seems that’s a topic you want us to talk about since the beginning and I tried to focus on China first. Anyway, how is it about being a foreigner? Living in China as a foreigner, did you feel it help you to do real estate business in China? Do you feel it slowed you to a new world? What’re your feelings like?
J.X. Paulin: I feel like, you know I lived in Beijing for a year. I think they are different cities to live in. Now I moved to Singapore. Shanghai is a great city for foreigners. It’s challenging, but when it comes to business, I will always say that China is a game of rules. We have one set of rules for Chinese and one set of foreigners.
Matthieu David: It’s my feeling as well as the rules are not the same, but you have to know the rules and sometimes can be positive, sometimes can be negative when starting a business in China. I use a word like Chinese tend not to be xenophobic or xenophilic. They react to people differently. You will never be Chinese. I will never be Chinese, and I would be treated differently, but that doesn’t mean bad or not good. Which is something different in France I think because other countries sometimes being a foreigner, they’ll see as negative, and there’s no real, yeah, good sides of being a foreigner, but here in China, that there’s an upside world, and okay so, coming back to our business.
You said that from June 10th you began to investigate to get into Africa. We talked about your interest in IT, and how it influenced the way you managed DBX International. I think it would be a very interesting topic to look at and how you go on, you investigate another domain, another field, and which can influence to your main business, that is to say, real estate in China, but let’s go back on this later on. I don’t want to focus on that. So, about Africa, why did you do that?
J.X. Paulin: Basically, I’m from Togo, and as I was, like as a company was running and I was pretty pleased with what we’ve done. I said, let’s try to go back and see if what I’ve learned could benefit Africa in any way. So, I traveled to Liberia, to Gabon, I traveled to 16 African countries until now, and it was great. The beauty of Africa in a way, it’s like China, at different years.
Matthieu David: You said, in one article, it’s China in 1990th.
J.X. Paulin: Yeah, correct. Yeah, because when you go to, let’s say you go to Accra in Ghana, you will see like Shanghai in 2005. You go to Nairobi in Kenya you will say, “Oh, it was like Shanghai in 2010.” You go to Johannesburg, “It was like Shanghai two years ago.” You go to Liberia; it’s like wow. Liberia is like Shanghai in the 80s. So, it’s different. In terms of real estate, in terms of potential, in terms of youth, it’s incredible. That being said, I think they will not be any other market in China in terms of size, dimension, unity, it’s unique, but Africa definitely there’s huge opportunities, huge opportunities, real estate. It’s difficult. Africa is another beast, but it’s great.
Matthieu David: I try to understand the motivation as well behind it. You say you are from Togo, but you’re French, right?
J.X. Paulin: Yes I am. I’m both.
Matthieu David: Yeah. So, I feel there’s a lot of people who actually have an international background, and they are in some way attracted to go back to the roots. Was it because of China, which was reflecting you those roots? Or was it something you always had into you to go to do something for Africa, to do something in Africa, because you said something interesting, you said, “I want to do something for Africa.” You didn’t say I want to do something in Africa. That means I think that the motivation behind it seems to be beyond business. Is it something that after your successful job in China, you wanted to do something else in Africa? Can you tell us more about the motivation?
J.X. Paulin: Yes it is but you see when I moved to China in 94, I wrote a letter to my mom, and I said, “You know what, Africans have to learn from China.” In 94. It’s like we have to stop looking at Europe as a role model, and we have to learn from China. So to me, after many years in China, I said, “You know what? Well, I’ve learned things. I’ve learned many things when I start my business in China, and I see where to apply it in Africa in many ways,” and it’s true and I’m convinced that the future of Africa will lie in its relationship with Asia.
Matthieu David: Why do you think that the development of Africa will be linked more to Asia than the West?
J.X. Paulin: Because the West sees Africa for its past when Asia sees Africa for its future. You see it’s different. When you go to France, you talk to guys or ladies, they tend to see Africa like as it used to be, and when you speak to a Chinese, you would see that they see Africa as it should become.
Matthieu David: Okay. So let’s get specific on what you did in Africa. What did you do? Did you realize some development? Did you develop?
J.X. Paulin: Yeah, so what we did basically we worked with a different department, with private investors as well and government people to work on the reinstatement of distressed assets like distressed buildings. In Liberia, for instance, it was really interesting how we work out with a design. We design our work on small regional city pending. We work on social housing in Gabon; we work at a university. How to renovate the university in Gabon as well with private investors in Cameroon, in Ouganda. It’s really interesting.
When you come from a Chinese background, and when you have the speed with you, ideas and when you’ve done these jobs so many times, you come with fresh ideas and a fresh way of doing stuff. People might say, “Oh, this is impossible,” as if, of course, it’s possible. You just have to twist it a bit, do this, do that and stop looking for perfection. It doesn’t exist. Be pragmatic.
Matthieu David: I understand you can leverage your experience you have on 20 years or 15 years in build, but do you feel that you can leverage the relationship with China like sourcing materials or sourcing products or it’s more experience.
J.X. Paulin: It’s everything: the experience, general knowledge, the relationships that I have in China, and it’s not what I believe, it’s what I’ve done. I would really leverage my knowledge and my experience and my relationship to export things like electronic goods, and hopefully next year we’ll work more on the projects.
Matthieu David: How do you find a project in Africa? Because you don’t have an office, right?
J.X. Paulin: We opened a company in Gabon, but we had to shut it down because the cost of running was too expensive, and it wasn’t a big market. Basically, how we found the project is just by the network of relationships that I’ve created over there. My friends that refer to us, and at the end of the day, you don’t have that many, black dudes that have successful businesses in China, that come back to Africa.
Matthieu David: You’re unique, and people might talk about you. People may remember you easily because of your story.
J.X. Paulin: I think when you come with the will of doing something. We have many people from the diaspora that come back to Africa and coming from Europe and seeing things, once again as past, but coming from China, even if when you go to Africa, we want to disrupt things, because every day we are facing disruption in China. So, when you come, you come with your ideas, so we don’t have that many people, I would say you don’t have that many Afro Asian as I call myself and a bunch of Africans that have been raised in China, that come back to Africa with the will and the ability to change things, to do things. I will not be so pretentious to say that we’re going to change things, but definitely, we’re going to work together to build new things.
Matthieu David: Talking about the diaspora, China has relied on the diaspora to someway develop part of the economy. But I always feel that there is a part of the diaspora which is, Chinese diaspora, which is very disconnected now to the Chinese economy and they don’t understand China anymore when they come back, especially after one or two generations. And there is the diaspora of Chinese who went abroad to study, and then come back to the country like 10, 15 years after. What do you feel about Africa? Do you feel the same segmentation can make sense or because the situation is different the diaspora can play a different role in Africa?
J.X. Paulin: I see the situation is maybe the same. I believe that we have the eldest generation, people like my Dad that moved to France to study and eventually at the end went back to Africa but didn’t really work or do something. But, now you have, I would say my generation that wants to do something. So they go to France, they study, they really want to do something, and once again you have to understand that there is different Africa.
There is the francophone Africa as a French-speaking Africa, and there is English speaking Africa, which is totally different when we talk about business. In Francophone Africa, people that are 50, 60, the only dream that they had is they wanted to become a minister. People that are in the 30s like you, 40s like me, we want to be businessmen. We want to make business, and so difference lays there. So, we really want to do something, but before there seems “Okay, I want to become a businessman. I want to become a minister.” So the interests are different.
Matthieu David: Yes, I see. You see the segmentation more in terms of age than in terms of what people did before, okay, I see.
J.X. Paulin: Basically, more in terms of age, and when you move to English speaking Africa, most of the diaspora which is there, they are businessmen. They’ve seen the opportunities. They see, okay, what happened you know is, they’re looking at things that their parents would never look at, like agriculture. Their parents would never look at agriculture. You know I met a guy from Zambia, and he had a business in the passion fruit, and he was doing great. So, you see all these kind of things. He was raised in London, but that didn’t stop him from doing agricultural business in Zambia.
Matthieu David: Yeah, I see. Before we close, you went into tech in Africa, and we talked a lot about it, and could you tell us more about what you did and how it influenced your main business? Because I still feel your main business is still DBX, and how this deep dive into tech mobile, the internet probably, changed your perception on DBX International?
J.X. Paulin: Actually, I moved into tech in Africa as a good Chinese. I saw an opportunity, and I just moved into it. My business acumen has been sharpened in China, so as a Chinese businessman. I was working on a design in a big project for the Ministry of Education in Gabon, I saw a huge lack in education, in tools to indicate young Africans and huge needs for it.
I also saw the lack of data, when we talk about data, and data is the new oil that we have, and you don’t know anything about these students, but I got 200 million of them just they will become the next middle class. So I started the social media that were part of giving them the knowledge that they don’t have and also giving them the ability to connect together, and for us because of your way to acquire data. And it was great because it put me in front of the reality of the internet in emerging markets.
When you take, let’s say, Cameroon only has 20% internet penetration. When you put ads on Facebook and hoping to succeed, it doesn’t work like that. So, it really allowed me to see a different approach and to create offline communities which are really interesting, and we know the way we enroll people, and we enroll them by making them filling forms. It’s like, “What?” Yes, it works crazy because they were so huge of filling forms. We were supposed to enroll thousand of them, just filling forms, giving us information on their phone numbers, and mail, and what they like and things like this. So it was great. Real estate marketing is really different there. What it gave me for DBX, it allowed me to move into the tech world, which I was out. I’m techy but I was not into it, and it allowed me actually to push the momentum. You would see next year; we’re working on a new project. We will still be in Africa, it will be heavily of design-build, but it will incorporate tech as well, so it’s going to be fine.
Matthieu David: I feel that moving from one industry to another. Basically, you have worked in two different industries. One which is construction and design-build, and then after what social media, within the social media. It’s different, and in some way, you don’t really leverage your experience. Do you feel it’s good because it opens your eyes or it’s a mistake that still makes you doubt? What’s your take on it? If you have to advise other entrepreneurs who may be felt to be involved with the business and want to get a new momentum with another very, very sexy and very exciting industry?
J.X. Paulin: In a way, if you look at numbers, it was a mistake, because it did slow DBX down because I did really focus for one year. I was managing the team in India, a managing team in Cameroon, overseeing my Chinese team in DBX, it was like a bit of split, and yes, we took a hit. We took a hit on the numbers. That being said, in two years from now, as seeing if it would have been a smart idea for me to move into this state one, because now I know we, last year two of my staff, two of my teammates in DBX International started a tech project that I was overseeing, and we could never have started it if I didn’t have some knowledge on the internet that they required. Now I can talk about tech; I can talk about blockchain, I can talk about things because I know how it works and I know how we can work in emerging markets.
Matthieu David: Okay. Coming to an end, I think it’s one hour already actually. How do you like it? Did you think we missed some part of a business, what’s your feedback?
J.X. Paulin: It’s pretty hard to come back to ask someone about these 24 years, 23 years of life, of progression experience and even for DBX International, it’s like since 2004, it’s really hard, but you did ask good questions, as the only thing for anybody that wants to start a business in China, and since it’s great, it’s never too late, you just have to think if it’s now you have to understand that you will take some hit. It’ll never easy, but it’s feasible.
Matthieu David: Thank you very much. Thank you very much for your time, and I really enjoyed talking to you as always, and I’m looking forward to sending you this China marketing podcast, China Paradigm. Thanks, J.X. 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.