#4 The adventure of a Chinese entrepreneur in the Belt & Road countries

About Today’s Episode

In today's episode, we have a very special guest, my friend Yipeng, a seasoned entrepreneur from China. He has built an impressive global business. His incredible 15 years of journey, perfectly reflect the evolution of China's business community in the past decades.

* Yipeng started his entrepreneurial journey in Beijing, right when Premier Li Keqiang's Massive Entrepreneurial and Massive Innovation initiative was gaining momentum.

* From there, he ventured into the bustling city of New York, along with countless other investors. finding Investment opportunities during the peak of Sino-US relationship.

* But Yipeng's story didn't end there, he made a strategic return to China. And led a remarkable buyout of a publicly listed company.

* And in the past couple of years, he has set his site on new horizons, south east Asia, Africa and central Asia.

Today we're going to dive deep into Yipeng's mindset and explore the reason behind his strategic shift. Why did he choose these regions over advanced economies?Yipeng's journey is not just his own. It represents the stories of countless Chinese entrepreneurs who have embarked on global adventurous. Today, we have the privilege of unveiling the remarkable thinking behind these entrepreneurs.

Full transcript

[00:01:27] Yipeng: My experience expanding from investor, venture investor, startup owner, and we call it entrepreneur, but it's more like a businessman in different area, I have been in social network, early stage venture capital, consumer product, and right now I am in automotive business.

[00:01:50] So it's kind of very disconnected. In my different stage of business experience, it's actually my philosophy, we just need to find the right product market fit and apply your knowledge and know how to organize a bunch of people to deliver something.

[00:02:08] I have been in China, being in US now, being in Singapore and been in Africa. The market is so different. That actually give me a very full span of understanding of different markets and different business sectors.

[00:02:23] Mu: I met you 10 years ago in New York, that's when you finish your first ventures. I think you time it very, pretty perfectly. It's a chronicle of how China's business in general move. You're riding on, from my point of view, you're riding on the macro trend? First of all, there was this massive startup culture that was promoted by previous premier, Li Keqiang, Wang Zhongchuanye, that's where you got into the social media startups.

[00:02:53] And then there was wave of Chinese investor going to the States at the peak of Sino U. S. relationship, to find investment opportunities that's actually prior to CFIUS. After that, you come back to China, that's when the Chinese company becoming mature and some of the public company wanted to do something different.

[00:03:16] Recently because of various reasons, you know many of the Chinese company entrepreneurs are going overseas and seeking new opportunities across different countries. That point you started to base in Singapore. Let's jump to the recent years first, because I think that's where most of our readers care more about.

[00:03:37] There's saying about Chinese going overseas reactively, but it could be a proactive initiative, maybe driven by new opportunities overseas, maybe driven by the Belt and Road initiatives. So Southeast Asia, can you share about what you're seeing on the Chinese entrepreneurs doing business there especially the recent generation of Chinese entrepreneur.

[00:03:59] Yipeng: So before I answer this question, I do echo about your summaries about my experience, like so in the rear view, it's like I'm riding a macro train, but there are three major shift of my, from China to us, from us to China. Then, I go from China to Singapore. In among those like three major shifts, I think only one is actually macro-driven. I do some proactive analysis. I do some prediction. Then I follow through. I go to U. S., go back from U. S. to China, it's all personally-driven. That's just like a coincidence or lucky. I fit in that kind of like good old days of China U. S. relationship. It's equipped me with the international background, international thinking of those stuff.

[00:04:45] But the last one, the Southeast Asia, the last one is actually quite macro driven. I decide I need to, given the current situation of the international macro environment, I want to put most of my attention in outside of China market and luckily I have a Singapore base before that.

[00:05:07] Mu: You have done some macro research and then you decide to move to Singapore. How have you been doing? I remember you have moved there during COVID.

[00:05:15] During COVID, yes. So that's two to three years already.

[00:05:18] Yipeng: Yeah almost one year, one year, one, one half.

[00:05:21] Mu: You have successfully established a very robust entrepreneurial network in Singapore and surrounding countries. And you have seen a lot because you also were a partner of a leading investment funds. You've got access to a lot of startups and companies. So can you share some of the insight you see there?

[00:05:40] Yipeng: If we focus on the Chinese entrepreneur in Southeast Asia, it's a very comfortable first stop for those Chinese entrepreneurs. Because like Southeast Asia is really like a backyard of China, backyard of Ethnic Chinese.

[00:05:56] We have a bunch of already very successful Chinese entrepreneurs, even Chinese state owned enterprises, Chinese other companies they already have their footprints all over the Southeast Asia. So for the newest wave of Chinese entrepreneurs going outside of China, Southeast Asia can be a greyscale of moving out of China.

[00:06:21] It's more like they're moving to a 0. 5 outside of China. It's not a totally outside of China. They can still doing business with a very large and extensive Chinese dominated business community. When I say Chinese, it's more like ethnically Chinese. They can rely on a Chinese dominated sales channels. All those big tycoon, their family are kind of like ethnic Chinese. They understand China. Yeah. They can speak Chinese. It's like doing something with a bunch of other Chinese group. Right. This can be a very useful and efficient 0 to 1 strategy for those newest wave of Chinese entrepreneurs.

[00:07:03] So that's my observation. For example, in Singapore, I think I don't need to describe how Singapore is Chinese friendly. You can see it like, it's kind of a Chinese city, very easy to live even for like Chinese only speaking communities, and it's very robust and very convenient like any Chinese city.

[00:07:26] When you don't have a full understanding of how outside of China works, you go to Southeast Asia. That's much easier. That's globalization. That's a step stone for a real globalization, and other than this, the local market, their living condition, their economic stage their culture, is very similar to China for you to apply some of your Chinese know how to local market. Whether it's Thailand, Vietnam, Indonesia, many Chinese business model can work and even you are traveling, it's really like a time machine. You can see in Vietnam, it's really like 15 years ago of China.

[00:08:14] In Indonesia, it's like 20 years ago of China. And many knowhow you can just copy from China. That's a, That's an easier way to apply your Chinese business model. And to get a sense of how to manage your multinational business.

[00:08:35] Basically, that's two takeaways. One is local Chinese can help you. The second is the local market is much similar to Chinese market. Much more similar than... Even Japan, South Korea, then, of course, even more similar than Europe and U. S. market, let alone those, like Latin American, African, Middle East market.

[00:09:00] Mu: Did you see a increase of Chinese entrepreneurs going to Southeast Asia in recent years? Two to three years.

[00:09:08] Yipeng: Of course, for sure.

[00:09:10] Mu: So you have explained how new Chinese entrepreneurial find out footings in Southeast Asia. We also know that once they settle down, They started to evolve into an ecosystem similar to PayPal mafia. One of the typical case was Oppo Vivo Group. The head of Indonesia for the group spun off to create J&T Logistics which is in the pipeline for iPO and then some of the members of J&T logistics spun off to do something else. It's quite different from last generation of Chinese entrepreneur who came to Southeast Asia and run things on their own.

[00:09:49] Yipeng: I think For what you mentioned specifically for those like JITU, or we call it Oppo/Vivo Gang. They reapply their knowhow in Oppo/Vivo. What's the real know how of Oppo/Vivo is how do you manage a local franchise network? How do you manage lots of like distributors? In the local market and in different actually in a different international market. How do you manage those extensive network of distributors, sales and after service?

[00:10:19] When those entrepreneurs finish their kind of learning from Oppo/Vivo and J&T, they start to do new business. It's still in that arena. You can see like many consumer products startups. What they are doing is still trying to establish a quite massive distributed network, and because they have the management experience, they have trained labor force or management managers to manage like very large franchise network across the whole country.

[00:10:50] Mu: That's a breakthrough of cross country integrations in terms of logistics. Previously Shopee have broken through on the front end. Establish a network to target different countries. And there's Grab, there's Tokopedia. There's gojek to integrate across different countries. Now, the integration of underlying logistics has been broken through by J&T that's actually in line with what the ASEAN government is trying to do which is the integration of the ASEAN countries.

[00:11:15] So Concurrently, you also have business in Africa, in Nigeria.

[00:11:21] Yipeng: That's a much more interesting topic for me.

[00:11:23] Mu: Okay, so, can you tell us more about that one? As well as the Chinese community in Nigeria and Africa.

[00:11:31] Yipeng: Although I'm living in Southeast Asia, I'm more confident to... Talk about Africa, than Southeast Asia, because in Southeast Asia, like I don't have real business going on in Southeast Asia, other than living there. I think like and comparing to Africa, Southeast Asia is much more crowded for Chinese already. We don't call it an emerging market, it's kind of already mature in some sense.

[00:11:55] Yeah. But, for Africa, it's still a frontier market for most of the Chinese and for like even those like already doing cross border business, already doing overseas business of Chinese entrepreneurs, it's still a frontier market, emerging market for them. So when we talk about Africa, we need to know Africa is a very large geographical concept.

[00:12:19] Usually when we talk about Africa, it's actually about the Sub Saharan Africa. It's not including the North Africa, which including countries like Egypt, Libya. Morocco recently had a very terrible earthquake. Those countries are North Africa area. They are more economically connected. They are all around the Mediterranean sea. When we talk about Africa, it's it's actually Sub Saharan Africa, within Sub Saharan Africa, there are East Africa, West Africa, and Southern Africa, including South Africa and other Southern Africa countries. And there are middle Africa, people talk less because, economically, it's less developed.

[00:13:07] My business is more on West Africa and the largest country is Nigeria. At the same time, Nigeria is the largest African country in terms of population and in terms of economic size. Nigeria alone has 220 million population. It's one of the youngest countries in the world. The median age is around 18 something. It's 10 years younger than Vietnam. The GDP per capita is around like 2000 USD. It's at a middle 90s level of China. If you are like a post 80s, you can still remember your childrenhood, economic, social situation of China, you can kind of echo what it looks now .What's difference is... it's not a socialist country for sure. So the let's say the wealth distribution is much unequal. Much more unequal than what you remember about China. So what we do there, we actually serve, we call like a high income people of local market.

[00:14:10] We sell cars to the local market, but with the relatively higher price, it's over 30,000 USD. It's not cheaper, even in China, but we are enjoying a very high purchase power from that group in that market. I give you a general understanding of the west African market. Its income level is very diverse. And you can choose what income level you want to go in, you want to serve. And there's no real Chinese community there. It's far away from China. Even in the big city, Lagos, they have 21 million people living there. I think the Chinese community is less than 100k, including many Chinese state owned infrastructure companies. All those big Chinese construction companies. They are more in infrastructure part. It's not usually integrated local market. It's in government projects. So for the real market oriented sector, it's even less. The biggest outside business community is actually from India, from the Middle East. They're much more active than Chinese entrepreneurs, Chinese businesses there.

[00:15:24] Mu: So you have established a car dealership there, actually it's been very successful, right? I remember at some point you tell me there's 40 to 50 distribution points across the country of Nigeria, right? You're growing 100 percent per year. When you go there how did you set up the business and what were the challenges?

[00:15:45] Yipeng: Let Me talk about less about the micro thing, what we do. I'll give you some, like, understanding of the macro thing, why we can do that.

[00:15:53] Basically the market is kind of like our sell side market. Mm-hmm. , it's not only about cars. Many basic consumer product. It's a sell side market. product. It's a sell side market. It's shortage of goods. Mm-hmm. , if you can provide something cheaper, and distributed more efficiently, you can easily gain customers. You can easily sell your product. For many investor or entrepreneur from China or from U.S., you are more used to think about the demand side. You need to think more about "how we streamline our operations to reach the customer?" "How do we use some high tech to increase my distribution efficiency or to reach the customer more efficiently? "That's [how] past 10 years, 20 years, the Chinese environment trained you because the Chinese market We have at least abundance of goods, abundance of capacity.

[00:16:49] We have overcapacity in major industrial outputs, in major consumer products. But in Nigeria, in most African countries, it's a shortage of goods. We need to mainly consider the supply side. How do we find something affordable, affordable enough to distribute it to the market or to organize local labor force to manufacture it locally.

[00:17:17] Our major attention right now is still within the supply side. So you asked me, how do we set up? Basically, you have the guts to go there. You have the basic know how. To sourcing what you want to sell in that market. You have the basic resource to deliver it to the local market. Then you can do it. So there's really no barrier for you to enter into the market.

[00:17:45] If there is some kind of like a barrier, it's more like operation level. Like how do I set up a company? How do I find the right guy to help me getting through the kind of like obscure legal system, obscure business environment. But it's more in a tactical level. If you want to sell like, let's say, instant food, you go there, set up a company. Trying to source it from China or even like India, you can do it. You want to sell, like, clothing, garments, you want to sell, like, electronics, go there, sell it. Have the guts to set up a company there, to live there at least like six months a year.

[00:18:21] You can do it. There's no real barrier.

[00:18:24] Mu: When you say that there's no real barrier, the biggest barrier is the determination, right, to move kind of, kind of so far away. So what's the composition of the startup team or your team or other Chinese companies team in terms of local talent versus Chinese talent?

[00:18:41] It sounds like it's very hard to recruit chinese talents, but meanwhile, you also need some of the know how from these Chinese talents that they have acquired in China. What was that the team and talents composition and how do you think around it?

[00:18:58] Yipeng: We have been there like for three years at the first stage is Really like bringing enough Chinese managers Chinese talents here But right now we are shifting our strategy trying to train more local Not only those like blue collar workers, we're trying to look to train more local managers.

[00:19:21] The key is whether it's from a local empowerment perspective, or it's from our own profit driven perspective. You go to those low income countries. If you can arrange to organize those like local workers, local managers, it gives you a cost saving effect. Honestly, it's much cheaper to use local people.

[00:19:47] If we have to bring Chinese talent, Chinese managers, or US talents to the local market, the cost is much higher. So our mentality is like, if we do it again, at day one, we want to focus on training more local managers, local talent teams. That's our mentality.

[00:20:07] Mu: Did you see a cultural difference?

[00:20:10] Yipeng: Definitely, yes.

[00:20:11] Mu: What was that? What would be some of the cases?

[00:20:14] Yipeng: What I can see is definitely not the stereotype many Chinese people have. There's some stereotype. Chinese think about, oh, African people, they, maybe they don't work hard enough.

[00:20:25] They are more enjoying their life. For sure, yes. But I think it's more economic reasons. than kind of like cultural reasons. If you give like enough incentive, at least in our team, they're working very hard. They can still like work six days a week. They follow the deadline you give them.

[00:20:48] So, the major cultural gap is as a Chinese, you have to overcome your stereotype to understand the subtle difference between their culture and your culture, but, you can implement some like modern management theory on them.

[00:21:09] You need to overcome your own kind of cultural bias to the local people.

[00:21:15] Mu: I can echo with you. Within China, there's the stereotype sometime can go to

[00:21:19] extreme and we can consider it as racist thinking. That's also a lack of information exchange and, and, because it's somewhat Africa community used to be.

[00:21:32] Under the influence of, you know, Europe and Western world, and there's less information flowing to China and now you have established a foothold in Nigeria.

[00:21:43] Recently, you told me that you're thinking about, you know, expanding or doing some business is in Central Asia. A few months ago, you went to Central Asia. Mm hmm.

[00:21:52] Where did you go?

[00:21:54] Yipeng: Kazakhstan.

[00:21:55] Mu: So, what was the thinking around that?

[00:21:57] Yipeng: What we do is related to used cars. We like to look around for all those use the car dominant market. I mean, dominant means used car is much bigger than new cars.

[00:22:08] So Central Asia is in that category. So we go there. That's my reason. And some macro reason is from my friend's cycle, and from my readings, and all the news feeding to me the Central Asia is in a major shifting from a more closed economy to a more open up economy and from a more monopoly dominant local market to a more market driven market. There are some like political reasons. But the major reason is Central Asia. Let's say the whole middle, middle Euro Asia area, Central Asia and the Middle East, are getting more and more important in current international relationships.

[00:22:59] Yeah. Later along those a Ukraine war create a kind of like disruption to the sub supply chain. The opportunity Yeah. For Central Asia countries to have a more weight. The international supply chain logistics. So that's my reason to go to Central Asia.

[00:23:15] I want to know what happening there.

[00:23:17] Mu: What's your plan for establishing business in Central Asia?

[00:23:20] Yipeng: We actually already I go with another startup they already started, start operation there. Yeah. So my goal is, of course, trying to do something there and especially the auto market is quite booming.

[00:23:32] Mu: Got it. You went to Southeast Asia, Africa, central Asia, but you didn't mention advanced countries.

[00:23:41] Yipeng: Yeah, that's not my interest anymore. Why? Let alone the political and the international relationships. We cannot think long term, really long term. Let's see in US market, even TikTok, don't know what's next day will happen. We are smaller business, how can we think really long term? It's not that stable anymore. Maybe there's some bias in it, but that's my kind of like prediction.

[00:24:07] We cannot think really long term in those markets. That's one reason.

[00:24:10] The second reason is we need to find a somewhere really lead us like as a Chinese, we have a strongest industrial supply chain in the world. China has kind of a redundancy already. For European, for US, all the... International supply chain used to rotate around those markets. They don't have like the lack of goods, really the industrial outputs. Even it's from China, from Mexico, from South Asia. They have a very established channel going to European and the US market.

[00:24:49] They have very strong local player. I mean demand side player, like distributors trading firms, very strong local, local business community. They are doing it very well. They have like the best company in the world. It's not an underserved market. It's over served market, like China, in different ways. So what I'm trying to identify is really underserved market. From a business perspective, it's much easier to do business, much easier to start a business at least.

[00:25:21] From a social perspective, it's created more value. Like you sell someone already have iPhone. You try to promote a new iPhone accessory or try to give her or him another choice of iPhone. It creates some value. But if you're trying to sell someone never have a phone, you provide a phone for them affordably, that's quite a much more value to their life. So, basically that's a, that's my, what I'm really interested in right now.

[00:25:56] Mu: That's the thinking of a Chinese entrepreneur. And the biggest takeaway is that you are now riding on the redundancy of supply in China domestically. And trying to find areas where core demand are not met and can be met by Chinese supplies, right? And you identify those regions. That's a big takeaway I have.

[00:26:20] Thank you, Yipeng for sharing today. Good luck for your business. I will talk to you soon.

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