SaaS B2B market in China
SaaS B2B market in China
by Helena JAVITTE, Innovation Manager at Accuracy and President at French Tech Beijing
On June 9-10, 2022, during the global event focusing on B2B Saas, B2B Rocks and the French Tech Beijing team organized a special session designed to help companies better understand a market that is growing rapidly but is still largely unknown.
1. SaaS in China vs the West
Oskar, who is in charge of the internationalization of Tencent Cloud in the West, explained that the SaaS penetration in China is much lower than in the Western world. But YoY growth is significant and more investment is coming.
There are 2 reasons for this lower penetration:
Reason 1:
Big enterprises either develop their own solutions or look for customized solutions, which goes against the standardized model of SaaS. Therefore, in China, SaaS providers are more flexible than in the West and support different deployment models/development stacks or offer PaaS (Platform as a Service) so that clients can customize their software.
Customization could be about aligning to the local regulation, languages, or user behavior.
But it can also be about the deployment model: if the client wants to host the data on their premises or on a private cloud, which will increase the operation and maintenance costs.
Lastly, some clients would want their SaaS to be integrated with their internal system whether for OA (Office Automation), legal, contracting, or IT, and some want to have basic features such as customer profiling, and logging but without marketing atomization (taking one longer piece of content and strategically breaking it down into smaller focused pieces to target a more specific audience), marketing campaign or any data analytics or Business Intelligence.
Reason 2:
Customer segmentation in China is different: while in the EU, the main SaaS users would be SMBs, in China it is more distributed between large corporates and SMBs.
2. How to localize to the Chinese market?
Orange Business Services is focusing on big multinationals only. They can be either European and American companies who want to develop themselves in China and therefore need a localized cloud solution or even a Chinese solution (relying on Alibaba or Huawei for instance) or a Chinese company that wants to develop itself internationally.
For all OBS clients, the main question is how to be integrated into the local ecosystem.
Florian, in charge of Business Development, explained how foreign companies not only need support to be integrated into the Chinese ecosystem (WeChat vs WhatsApp, Alibaba vs Amazon), but also need to navigate the regulatory Chinese ecosystem.
Example 1:
any data export outside of China requires explicit consent from users. Depending on sectors, cyber security laws are different and more or less restrictive with IP rules or R&D results that need to all be stored and handled locally. Data also needs to be available, and changeable and there is no right to oblivion like in France.
Example 2:
Besides being integrated into the Chinese ecosystem, there is generally a preference for local solutions because some activities are not accessible to foreign companies. For instance, for cloud solutions, hyper scalers such as Amazon or Microsoft are required to go through Chinese companies for their hosting which forces them to create partnerships with Chinese companies.
Another example could be Chinese airline companies who are requested by the Government to use Chinese platforms only, which means that foreign aircraft manufacturers have to use a Chinese platform if they don’t want to take the risk to lose business.
Romain, the General Manager of Gamifly China shared the particular case of the French startup Gamifly.
Who is Gamifly?
Gamifly engages the audience via mini-games during events (sport, e-sport, or fashion). When one person presses “like” during the livestream of a KOL, they are twice as likely to buy. The audience moves from being a “ viewer” to becoming a “player” which would lead to about 30% more time spent on the stream.
The SaaS solution allows for live mini-games to be projected either onto the mobile/computer screen, a Bilibili stream, or on a big screen during an offline event. The audience simply scans a QR code to enter the game. Games for instance could be betting games for which a team would win and receive points or presents in exchange.
Gamifly wants to provide a SaaS B2C for small e-commerce players since the tech giants are not offering solutions at the moment due to potential legal issues. As Gamifly is smaller, it allows them to remain under the related radar to the crackdown on KOL and monetization of gifts.
This means that in terms of competitivity, Gamifly is actually the only player doing audience engagement through gamification because competitors would have been the tech giants but they don’t have consumer acquisition challenges so they don’t develop such solutions for others. They have identified competitors only in Germany, US and Singapore.
From left to right and top to bottom:
Oskar Ablimit (Tencent Cloud Europe), Florian Boyrivent (Orange Business Service China), Helena Javitte (French Tech Beijing – Accuracy), Romain Resse (Gamifly China), Jean-Dominique Séval (French Tech Beijing – Soon Consulting)
Challenges faced by foreign SaaS companies
1) Difficulty to acquire new customers without a well-known brand collaboration.
2) Difficulty to integrate within different SaaS solutions due to the different stacks
3) Lack of clear go-to-marketing strategy
4) Lack of mature IaaS support for scaling.
To tackle those issues, Oskar shared how Tencent Cloud is providing some solutions:
1) A SaaS marketplace where startups integrate their solutions in different forms: SaaS with billing, contracting integration, or just a landing page to increase traffic. Tencent Cloud arranges various joint marketing events to promote the startup’s SaaS to the cloud end users.
2) Integration of the SaaS as one of the application components in WeCom, Tencent’s enterprise workspace
3) SaaS accelerator: Tencent Cloud offers resources ranging from investment, user growth to cloud infrastructure support and provides portfolios to the SaaS startup to grow together. Oskar recommends joining the accelerator for any startup that is targeting China market.
Conclusion:
What advice for foreign companies coming to China?
Florian:
1) Collaborate with a Chinese player
2) Work on a western solution easily deployable to the Chinese market. If the infrastructure is western, need to be aware of how to move from one solution to another, build similar functions, and be ready to adapt to different users’ habits.
Romain:
1) Get an advisor for all data-related questions: to navigate the PIPL, how to orient data, how to present data, how to ask for consent to get the data, share the data, and use the data.
2) Be ready that your business environment might change very quickly. For Gamifly for instance, the crackdown on streaming platforms was really an issue.
B2B Rocks is the #1 SaaS community!
B2B Rocks provides SaaS leaders with direct access to the people and ideas shaping the industry giving international entrepreneurs real insights into how to grow their business. 2022’s B2B Rocks event will be held June 9, 10 and 11 in Montpellier, France. It will bring together 1000 entrepreneurs, investors, and executives with international speakers from around the world and will focus on international growth.
Along with the hubs in San Francisco, Australia, Abidjan, Beirut, Tel Aviv, and Sao Paulo, French Tech Beijing was one of the 10 French Tech hubs abroad sharing insights about the characteristics of the local ecosystem.
The full replay of the event is available for free.
To access it, click on this link and select “join us for free”:
Credits: Helena Javitte (text), Hugo Menzer (editor), Alex Goncalves digital-space.cn (illustration).
