GGV Jiyuan Capital Management Partner Tong Shihao: After China, where is the next billion market?


In November, the series of salons FOUNDERS+LEADERS sponsored by GGV Jiyuan Capital (hereinafter referred to as GGV) was held in Beijing.Photo source: GGV Photo courtesy This event aims to show the direction of the overseas team and the overseas team who come to China by sharing the growth experience and experience of the head companies and veterans.Born out of China’s leading new business media 36氪, 36氪海 (ID: wow36krchuhai) always pays attention to overseas emerging markets, providing one-stop front-end information, professional reports, in-depth interpretation for partners who focus on Chinese business opportunities.Sea community service.As the only cooperative media of GGV’s event, 36氪 went to the sea to attend the event.During the event, Hans Tung (Hans Tung, managing partner of GGV Jiyuan Capital) and the guests on the spot shared the direction of GGV’s investment in the next ten years; Annabel Lin, vice president of Google ChinaHereinafter referred to as Annabel), with the theme of globalization, we shared with Google’s growth experience and how to help Chinese companies achieve globalization.In addition, Ms. Zhong Yin, the managing director (host) of Silicon Valley Bank, and Vivienne Gong (hereinafter referred to as Vivienne), the founding member of Tik Tok, and the head of the global strategic cooperation & marketing department.Talk.Around this event, 36 氪 will go out to launch a series of articles to sort out the dry goods we have absorbed.The first part of the series will introduce the “next billion user market” in the eyes of GGV.This article contains an overview of the market conditions, developments, and future opportunities of GGV Jiyuan Capital Management Partner Hans, as well as representative head companies and founders in emerging markets.Image source: GGV Photo courtesy The following is the content of Hans’ speech. After 36 years of preparation: the development and opportunities of emerging markets from 2000 to 2019, the number of Internet users in the Chinese market has increased from several million to nearly one billion.This growth has created a group of listed companies and unicorns.It is reported that China now has more than 130 unicorn companies.Where is the next big emerging market in the future?We want to share a few data with you first.2009 is the first time for the “Double Eleven” to go online.At that time, Alibaba Group’s GMV was $8 million, and this year’s data is more than $38 billion.In 10 years, the GMV during the “Double Eleven” period has increased by more than 4,000 times.In the United States, the GMV of “Black Friday” and “Online Shopping Monday” increased from $2 billion to $8 billion in 10 years.Although it has also increased, it is incomparable to the growth of the “Double Eleven”.During this period, the number of Internet users in China has only increased by a factor of two.Therefore, it can be seen that the user’s consumption habits have changed.So, when we look at the next new 1 billion user opportunity, what we need to understand is how will their consumer behavior change?What kind of service can make their offline life more efficient and better?According to several reports from the US mobile market, the number of users accessing the Internet in 2018 is about 3 billion.This number will grow to nearly 3.8 billion in 2021.Two-thirds of the users will come from India, Southeast Asia and Latin America.Users from India account for the largest proportion, and will exceed 600 million.Nearly half of these users are under the age of 24.They live in the information age and have been familiar with a variety of electronic products since childhood.70% of them are surfing the Internet via their mobile phones.Because using ADSL to access the Internet can only be in a fixed place, such as home and company.More and more people want to be able to access the Internet at any time, so the demand for mobile devices is growing.In India, the popularity of 4G has reduced people’s Internet access costs.Speaking about the environment and popularity of the Internet.Former Alibaba Executive Vice President Cai Chongxin said in an interview: “China’s per capita GDP has reached 4,000 US dollars, and e-commerce can flourish in the country.”In 2009, China’s per capita GDP was about $3,800. Indonesia’s per capita GDP is now approaching $4,000, and Internet penetration has reached 53%. In Brazil, although per capita GDP has reached $8,900 and Internet penetration has reached 70%, Brazil.In the past ten years, the economy has not grown and even declined. In this context, whether or not IT is better developed through the maturity of the mobile Internet is a topic of concern for Brazilian entrepreneurs and VCs.GDP is low, only 2,000 US dollars, and the Internet penetration rate is 41%. But the per capita GDP of the head of 200 million people can be compared with Indonesia. Therefore, when investing in India at this stage, the company investing in 2C mode may not beThe best time is to wait for per capita GDP to become higher. Let us look at the development space of emerging markets and VC investment opportunities. In 2018, VC invested a total of 8 billion US dollars in the Indian market and 2 billion US dollars in Latin America.And investing 11 billion US dollars in Southeast Asia. Regarding the Indian market, because the public is generally optimistic about the future development of the Indian market, (more and more investorsSo the Indian market) so the valuation of the country’s enterprises will be relatively high. The number of unicorns that will be produced is relatively large, there are currently 19. There are 7 unicorns in Latin America and Southeast Asia.New York is a comparison. New York’s investment in 2018 is $14 billion, but there are only 20 unicorns. The countries will be increasingly invested in the future. The world’s larger funds, such as the Tiger Fund andWe, in these countries, especially India, will inject more and more funds. APP’s “overseas printing” we compare the APPs in various fields in China, the United States, India, Indonesia and Brazil.Whether it is transportation, takeaway, payment or e-commerce shopping, different countries can find similar apps. We also find that many overseas entrepreneurs are familiar with Chinese companies. For example, in the field of payment in China, AliAlipay and WeChat payment can be seen all over the world, and companies from different markets are thinking about how to apply the experience of WeChat and Alipay to the local market.Different from the market development, we need to consider how to integrate the model into the local market and meet the local needs. For example, in China, because the bank card is very popular, all payments can be tied to the bank card.In Southeast Asia, India, and South America, there are many users in the local area who do not even have a bank card. Therefore, what kind of methods can be used to allow users in these areas to accept mobile payment products is a problem that we need to spend time researching, not just applyingChina’s model. APP rankings in emerging markets Let’s take a look at the rankings of US, Chinese and local apps. According to the Google Play APP 2019 (as of November 2019), the top 100 rankings show that in India, the United StatesThe team developed the largest proportion of APPs, with 24%, and China APP and India-based apps each accounting for 19% and 18%.As can be seen from the data, the Chinese team has a competitive advantage in India.But if you analyze the development team behind the APP, it is mainly Alibaba’s UC, YY, and the headline group.The products of these three companies are relatively more diversified and their performance overseas is also better.In addition, the performance of the Chinese team in Indonesia is also remarkable. In the top 100 rankings, the app developed by the Chinese team accounted for 28%.APPs developed in the United States and Indonesia each accounted for 17% and 8%.In Brazil, among the top 100 apps, China has the least share of APPs, only 9%, the highest in the US, 22%, and 17% in Brazil.Distance is one of the reasons.It takes 25 hours to fly from Beijing to Sao Paulo, and there are no direct flights.Under the unicorn company and the “outstanding young people” behind me, I would like to introduce more interesting and representative companies and their teams in the local area.Loggi, Brazil: Loggi is a logistics startup in Brazil.In Brazil, the size of the company is already larger than FedEx and UPS combined.The company’s founder is Fabien Mendez from France.Loggi is his third venture.After living in Brazil for 10 years, after experiencing two entrepreneurial failures, he has an in-depth understanding of what entrepreneurial opportunities exist in Brazil.As a local logistics company, Loggi’s business includes take-out, document distribution, and delivery of goods to e-commerce.Singapore Grab: Grab, Southeast Asian Unicorn, is also one of the “super apps.”The business involves online car, mobile payment, takeaway, express delivery, insurance and other fields, and covers Southeast Asian countries such as Singapore, Malaysia, Indonesia, Thailand, Vietnam, Cambodia, the Philippines and Myanmar.The founder of Grab is Anthony Tan, who graduated from Harvard University.The opportunity to talk about entrepreneurship is said to be because he was worried that he could not inherit his family business, so he decided to start a business.We invested in him in the 2014 B round.In fact, Grab not only got our investment, but also got support from Softbank and reached a cooperation agreement with Uber.Now it has become the largest network car operator in Southeast Asia.Singapore Shopee: Singapore’s head e-commerce platform Shopee, its founder is Stanford graduated Li Xiaodong.Although Li Xiaodong and his team are both Chinese, the time spent living in Southeast Asia has increased for more than 40 years, so they have a very good understanding of the Southeast Asian market.They found that the fastest growing market for game companies is Latin America, because Latin America has only two languages, Portuguese and Spanish.In the future, the market space in Latin America may be larger than in Southeast Asia.Tokopedia, Indonesia: Tokopedia is the Indonesian head e-commerce platform supported by Ali, with a valuation of 7 billion.The founder of the company, William Tanuwijaya, is the third generation of Chinese in Indonesia.Before starting a business, he worked in software development.Tokopedia is a B2C platform that focuses on improving the user experience.The company has received investments in Ali and Softbank.Bukalapak, Indonesia: As a competitor to Tokopedia, Bukalapak, the second-ranked player, is second only to Tokopedia and is the fourth unicorn in Indonesia.Its founder is Achmad Zaky, who graduated from MIT Indonesia.It is reported that Bukalapak focuses on SME companies and has made many attempts to improve the user experience of the seller.Traveloka, Indonesia: Traveloka, which is known as the “Canadian version of Ctrip”, provides one-stop online travel services such as air tickets and hotel reservations for customers in six Southeast Asian countries including Indonesia, Thailand, Vietnam, Malaysia, Singapore and the Philippines.Traveloka’s founder, Ferry Unardi, a graduate of Harvard University, founded Traveloka in 2012.Traveloka’s rival is Tiketcom, a platform that is smaller than its focus on travel.They were acquired two years ago by Indonesia’s largest Chinese family group Djarum.India Udaan: B2B e-commerce platform Udaan, established only two years ago, has become a unicorn.The platform focuses on SMEs in India (especially mom and pop stores) and aims to streamline the supply process and remove or flatten the middlemen.When it comes to entrepreneurial reasons, Udaan co-founder Sujeet Kumar said: “When I was working at Flipkart, I sent couriers to 500 cities, and my hometown was not.” Indian urbanization is slower than China, their own hometown.They are not served by their own company.The difference between Udaan is that India’s husband and wife stores are available nationwide, so Udaan serves the whole country.Snapdeal, India: Snapdeal, India’s top three e-commerce platform, is a company I personally invested in in 2012.The company was founded in 2010 by Kunal Bahl and his high school classmate Rohit Bansal.When they came to China in 2012, they followed the group buying model. Later, after we talked about Jingdong, Tmall, and Taobao, they chose to do the Tmall mode.But because Tmall is relatively only for the head user, Taobao’s model can target 200 million users, so they are now making adjustments.It is reported that more than 80% of Snapdeal users are from small towns in India. They are not fluent in English and do not have brand awareness.But the two founders believe that the buyers of the 400 million potential second- and third-tier cities will be the fastest growing segment of India’s future e-commerce market.BlackBuck, India: BlackBuck, India’s largest trucking company, has similarities with Manchu.The company was founded less than three years ago and has a point in Eastern Europe, and the gross profit is 10 times that of India.Because India’s market per capita GDP is low, there is limited room for development.So the company used Poland as a new base in Europe, moved the Indian model, started doing business there, and found that the gross profit was higher.Xiaomi India: The talent formation of the team is very difficult.Therefore, if they can absorb the participation of local teams, they can play a huge role.At this point, Xiaomi is a typical example.In the three years after entering India, Xiaomi has become the number one smartphone brand.The global vice president of Xiaomi Company, and the general manager of Xiaomi India Branch, Manu, has 30,000 people liked every photo.If you have a CEO who knows the local conditions well, he can naturally let a product fall.Manu knows what is right for the user, so emotionally, Xiaomi is a local company in India.The first place to do it is not the product.My own summary is that when American companies go out to sea, because of their advantages and the maturity of innovation in Silicon Valley, the US team has a competitive advantage in countries and regions with high quality of life.But if it is like a market with a long working time, the American team will be harder.Local teams in emerging countries are very hard at work.Opportunities for changes in the Internet industry throughout the market exist.If a team is willing to go to markets such as Europe, there are opportunities for development.The GDP of the European market is high enough, and the local team is relatively lacking in capacity.Like our LIME in the US, the entire European market is their largest single market, and the market space may be more than the US.The team also found a lot of people from Uber to join them.In fact, the overseas market is very big. If you can overcome the cultural differences, you will recruit different talents to join the company.These local teams will play an important role.With regard to the next billion-dollar insight, we have several insights into the next billion-user market: the next one billion user market will be dominated by the mass market; compared to the scale expansion and development speed, the scale is bigger than the current one.More important; as super-applications continue to emerge, new unicorns will be born; there will be new opportunities to transform offline consumption habits into online consumption; Chinese companies will have great opportunities andPotential, but must have a unique ability; 36 氪 sea to the second article of this series will share with you the content of “Google Globalization” by Ms. Lin Yuzhen, Vice President of Google China.Please stay tuned.Text | Yunxiao @36氪出海编 | Zhao Xiaochun @36氪海图 | GGV for the picture.