Bridging the World’s Largest Economies
Conversation with Jen Loong of C Ventures
The last decade saw the Chinese economy overtake that of the US to become the largest in terms of purchasing power parity, for the first time (2014). Since then, it has also been the main source of global economic growth. This prosperity has fueled a consumer movement in China, which along with the allure of the large population size has led to prominent western brands expanding to this part of the world.
I had the opportunity to speak to Jen Loong who has been at the centre of this consumer movement since the beginning of this decade, acting as a bridge between the East and the West with a focus on creating an impact. Jen started her career with Groupon in 2011 and scaled the Hong Kong office from a team of 20 to 110+. She then led the launch of Lululemon and TOMS in China, and the launch of Alipay in the US. She also founded her own startup before joining HYPE Asia as a Managing Director for the Greater China region, where she led the cross-border expansion of startups like Carousell, StartupCare and GOAT. She is currently the Head of Portfolio Management at C Ventures.
Given Jen’s vast experience and curiosity with cross-border expansion she is also a travel enthusiast, having travelled to 50+ countries. One of those countries includes North Korea where she participated in the first Pyongyang International Marathon. In this interview she discusses the key factors that companies should consider while entering China as well as, trends she’s bullish on in the coming years, before sharing her experience in North Korea and its correlation with her journey in the venture capital/venture builder space.
So let’s start with the story behind your career trajectory and what your thought process was behind selecting the brands that you worked with?
I grew up into a lens that bridged the East and the West. Growing up between Hong Kong, Shanghai and Canada, much of my learning education and understanding was always trying to bridge both the Asian lens and the Western lens. And so in my career, it became a very natural progression to go for opportunities where that East meets West lens was relevant, leading me to build out certain companies in Asia for Western brands. The impact aspect became ever more important as a value purely out of the idea that if we spent more time working than spending it with our family or on ourselves, why wouldn’t we try to at least create some sort of positive impact for society. Borrowing ideas from Ikigai, the Japanese way of life- do what you love, do what the world needs, and do what you’re good at. And the “do what the world needs” very much fits into this piece about impact.
In terms of my thought process behind selecting brands to work with, I can unpack that to the first layer at the beginning of my career, where the most important metric was just ability to learn in an environment where I was pulled up by certain mentors and coaches. And in that, I would go after different opportunities based on what I think I needed to learn and where my gaps were. Coming out of college, I went into Groupon purely because I felt like my degree did not teach me as much as I need on what it means to sell, and to do business development. And from that lens, I thought of opportunities where I could learn door to door sales from. From there I thought of my gaps with the mindset that I’m weak in China operations so I sought out opportunities in order to work on that gap. Thereafter, it was thinking about filling in my gaps on building a brand and creating a new consumer movement in social impact. And so I always look out for what’s next, not purely by the role or the company, but more inwardly by identifying my gaps and trying to fill those in.
And what did China look like back then, compared to what it looks like now?
Recently, there are Facebook groups that have popped up for people who have since long left Beijing and Shanghai, started by folks who used to be very active in those communities. And it’s just such a wonderful way to walk down memory lane. When you’re in the experience year to year, you lose track of just how different things can be but with these groups popping up, the changes both visually and anecdotally seem like night and day.
If I were to capture a few- the first would be around freedom of mobility to the extent that even as a foreigner, there were a lot of different pockets of societies you could create communities in. These could include a bar street, an entertainment area or a small business. There were just so many opportunities because of China being such a big market and the market craving for a lot of these Western innovations that made it a really exciting time for anyone who was entrepreneurial, regardless of whether they were in tech or not.
Secondly - because of that environment, it attracted the kind of alpha type who would want to go there even if they may not speak the language or may not know anyone. They would land into that area with an entrepreneurial spirit to make something happen. Those kind of people make for very fast friends, and great partners to start initiatives with. It adds a lot of colour to what day to day life looks like living up there.
Thirdly - more trivially when we were building Lululemon I remember, it was strange to wear spandex and run along the streets of Shanghai on a jog, while carrying an expensive phone that connects to your music. Those were all things that would catch eyeballs, people would take pictures of or were just purely unsafe. And so to think of now, the movements that have since come forth with personal fitness being such a big industry and seeing thousand person Zumba or Yoga events, it’s incredible to think that all that happened in less than a decade.
What are some important factors for companies to keep in mind when launching a consumer brand in China?
There’s quite a few that I’ll reflect on based on the macroeconomic climate now. The foremost top layer is tied to the political factors that are relevant in that industry or that country of origin. Regulations are fast changing around what are the prerequisites for let’s say a beauty brand entering into China or there are other factors like certain economic zones that benefit ecommerce brands if their operations or manufacturing are based overseas. So first and foremost, I cannot underpin the importance of political factors as part of that go-to-market consideration.
One layer underneath that would be if the overall environment is positive to your company or solution coming to the market, then what’s the ultimate goal to establish in China. Is it one of wanting to serve a bigger population size or is it purely a commercial reasoning with GMV sold and number of dollars contracts signed. Getting clarity on what that goal is, just helps to align internally why China is a priority or is not a priority, and that internal alignment is not always necessarily fully executed before diving into such a heavy resource initiative.
And the third layer underneath that is having a realistic assessment of the resources required to achieve those goals. China is a pay-to-play market for the most part. If you’re a traditional DTC brand looking to set up into China, even before you sell the first unit of goods and make that first unit of GMV, you’re probably looking at pretty substantial licencing fees, setting up your IP address, and setting up your accounts on Tmall, JD.com and WeChat, all of which have an overhead fixed cost. Then even with those costs built-in, you’re looking at 30–50% of sales as your marketing budget just to get traffic by awareness in these heavily trafficked channels.
One layer below that is around team building. There’s so many stories on how difficult it is to find local talent whom you can trust and who speak to your cultural values. But more than that, I think it’s how you find that talent and hire that talent based on local jurisdictions and expectations, retain them in a very competitive job market, and incentivize them in a way to become your long term partner on the ground. You have other options if employees is not the way to go such as- franchising, licencing or finding a JV partner. And in Western markets there may be less variety but that shouldn’t be an excuse for not exploring that variety and going to China.
And the last layer is not to assume that your offering is that unique in China. Chances are if you’re very successful overseas, there may or may not be local versions or alternatives to what you’re doing in the local market that has significant local traction. So it is important to align if your offering needs to be in the market or how it needs to change to come into the market more compellingly. There were periods of time in recent history where being a Western brand meant certain positive values such as innovations, pricing, quality or experiences that local brands could not deliver. But I don’t think that correlation is as strong now or it’s just more scrutinised with Chinese consumers becoming more diligent to really understand what kind of brand you are and what kind of team you are to bring your product to China.
Those are the five steps that I typically would like the teams or the companies to really have an honest dialogue around before expanding into China.
How do you view China’s growth in the next few years and what are some trends you’re bullish on in the region?
Selecting a few, the first one around industry specifically is the diversification of solutions and public-private partnerships in the healthcare space with the backdrop of COVID-19 accelerating it. These partnerships range from tracking to equipment distribution, information distribution, testing, processing patients into clinics, private clinics, public clinics, with the whole funnel being an array of opportunities and a celebrated innovation. Currently there are also groups who are solving for building academies to train more doctors outside of the traditional schooling system. And so being able to examine that entire value chain in healthcare, that can be done in a public private partnership way is a really unique enterprise opportunity in China in this generation that is much needed.
The second observation might be more around, given recent changes to the US-China relationship, an influx of Chinese nationals who were overseas coming home due to visa changes. These people bring with them their network, their wealth of resources and their experiences from places like New York and Silicon Valley. And I think this will help to upgrade professional operations and really start to benefit Chinese organisations, as well as the companies that these people may start when they come home. So what that means when you have this quality pool of talent flooding back into the market is the overall upgrade of skills, product offering and innovation.
Thirdly, given geopolitical changes, I think you’d see more Chinese companies looking to expand their offering not so much to the US, but to the Middle East, Africa and Southeast Asia. And so for folks who speak languages that can broker both sides of those borders, it will be an increasingly desired asset and talent.
Lastly, zooming out of China, what was your experience in North Korea like and what are some lessons that you took from your time there?
So this was about five years ago and I must caveat that any sharing in this capacity is not by any means representative of the real experience on the ground. I went into the country with a high degree of curiosity as one of the first group of Pyongyang International Marathon runners, without knowing what to expect. Before starting our race in the stadium, you could hear the chants and thumping of the ground because there were thousands and thousands of citizens sitting inside of the stadium clapping, and you’re standing outside of the stadium thinking I’m about to do a lot of walkthrough of a stadium that I know nothing about. And there was some confusion around whether or not we were allowed audio players for music and confusion around if the audio players could be phones because they didn’t consider that phones then could already play music. And then they didn’t allow phones on the tracks because they didn’t want you to take pictures along the way. So there were just so many of these kinds of grey uncertainties, but we rolled with the punches.
What I would say is if I landed into North Korea uncertain, I left with even more uncertainty. And when you realise the vastness of how much you don’t know, it’s actually a bit scary. So I left not really sure what I saw was intended or serendipitous. I left not really sure what was true or wasn’t. I left being confused by the rhetoric that was shared inside but understanding also, that if I’ve probably never heard anything else I would also be brainwashed by the rhetoric. And I think I could compare all that I saw, to what I imagined Beijing may have been at one point in time. It was just a surreal visual and intellectual experience.
Five years later, I can’t say that I sought out a lot of the answers to my questions. But what I would say is, it’s just one of those places that does injustice for you to make a comment or make a judgement without having gone in. And it’s tiny moments like, at one point, I was running through an underpass tunnel and it was just me on the street and there was one North Korean boy not too far in front of me, and I could see him by his jersey and he was running in the tunnel as well. It was just him and I and you could tell he ran with the purpose, while I was probably more leisurely jogging. And out of nowhere, through this tunnel a motorbike came behind us and on this motorbike was his mom, or who I might gather to be this boy’s mom and she was yelling at him (I’m guessing) something along the lines of run faster. And to see how similar the parenting experience might be in a lot of Asian households like mine, and him and I, in that moment in time didn’t have too much of a difference. We were both coming from similar family dynamics and structure but the only difference in experience is our passport and our place of birth.
And so being able to have those kind of just moments of humanity, people may not walk away with very deep lessons and resolutions of what we can do, but not passing judgement or comments of what this place is/isn’t until you’ve experienced is probably a recommended way to experience a place whether that’s North Korea or anywhere else. It humbles you to learn the vastness of what you don’t know and when you realise that, it pushes you to wanna learn more, find out more and speak to more people. And that pure curiosity may be the driving force behind wanting to work in the VC space or the venture building space because at the end of the day we’re just curious people who want to figure things out.
