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Archive for the ‘China’ Category

May 18th, 2008

Hong Kong Red Cross Website Sucks

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Written by Dominic Lee

Topics: China, Internet Marketing, Non-profits, Politics

It seems like we’re in an era of natural disasters. The US is still recovering from Katrina, while these past two weeks we’ve seen tornadoes all across the Midwest, a huge cyclone in Myanmar (Burma) and a devastating earthquake in Sichuan, China. It’s sad to see so many people lose their lives, and so many people have theirs disrupted.

In addition to making me sad, these type of events inspire me to help out other people. I’m a successful entrepreneur, and I consider myself a Continue Reading »

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October 23rd, 2007

Why You Don’t Want To Be Market Pioneer In The Digital Age

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Written by Dominic Lee

Topics: Business Opportunities, China, Ecommerce, General Business, Internet Marketing, Retailing

In my last post, I talked about how it is not the right time to get into ecommerce in China. And a lot of people asked me, “As an entrepreneur, aren’t you supposed to solve those problems?”

Yes, entrepreneurs are supposed to solve problems. But not if the cost is too big.

Here’s why you don’t want to be a market pioneer in the digital age:

1. Exponentially higher development cost - in the industrial age, where productions rely on machineries and physical infracstructures, the development cost of market followers are not that much lower than the pioneer. The reason is developing and producing a machinery requires component and parts which cost money. For example, if it costs $10M to produce the first automatic cleaning machine, it will still cost $3-4M to reproduce it.

However, in the digital age, when what businesses need are more information technology, online services, and software programs, there is an exponentially higher cost of development for the market pioneer. For example, while if it costs $10M to custom made a software, the cost to reproduct it? Almost zero.

2. Less customer loyalty - in the digital age, when one store to another just barely a click away, it is becoming harder to build up customer loyalty. That means even if you company’s market share is 30% this year, it may very well be much less than that next year. Because of this lack of customer loyalty, the benefit of being the first one to enter a marketplace has significantly reduced.

Combining higher initial risk and lower potential reward, I hope you see why you no longer want to be a market pioneer in the digital age.

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October 20th, 2007

China’s E-commerce Opportunities

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Written by Dominic Lee

Topics: Business Opportunities, China, Ecommerce, General Business, Internet Marketing, Retailing

When I was in Hong Kong this summer, a lot of people asked me if I will try to setup some sort of presence in China for my ecommerce company. And I will always tell them no.

Here’re the problems I see associated with doing ecommerce in China or Hong Kong at this moment (in order of importance):

1. Lack of supporting industries - the supporting industries of ecommerce is pretty well developed in North America and in Europe. E-commerce’s supporting industries include shopping cart system, fulfillment centers, payment processors, inventory management, marketing venues… Without these supporting industries, enterprises have to build these infrastructures or programs from ground up, and it is very costly to do. I’ll elaborate more on this point later.

2. Problem with financial infrastructure and logistics - do you know it is STILL a pain in the back to pay online using credit card or Paypal in China? It is even harder for them to take out money from Paypal, not to mention the exuberant fees. This alone can deter a lot of online shopping activites. Besides, the postal service and logistics are far behind in China than in North America. If you think USPS is bad? Think again. Some areas in China don’t even have roads or addresses.

3. Can they afford spending that much yet? - While there’re more and more high income families and a surge in the no. of middle income households, the spending ability in China is still relatively low compared with Europe, N. America, Australia, Japan, and Korea. The avg. income are about USD$500/month. Without the kind of profit margin we achieve elsewhere, it is hard to justify going into China.

4. New Rich Mentallity - Many people tries to bring up the point that, “But there’re more and more rich Chinese families”. That is true. But you have you understand that because they are new rich, they prefer going OUT to shop to show their wealth, NOT hiding at home and purchase things online.

5. Denser Population - The population of China is concentrated in the coastal area, in particular the higher income group. With denser population and denser cities, offline shopping is often preferred with more convenience and wide enough selection of choices.

6. Internet is about widening, not narrowing - another problem with setting up an ecommerce website in China is that you’re limiting yourself with Chinese reading population. When I setup a website in English, not only am I selling to all native English speakers but everyone else from other countries who are able to read English. O and the cost of setting up a web presence is the same everywhere.

Now I’m not saying that ecommerce is not going to be a huge business opportunity in China sometime down the road, but at least not now, and not for the next 3-4 years to come.

Another question I get a lot is - “So why can’t you be the first one to solve those problems? That’s what an entreprenuer does.” I’ll explain to you in my next post why I believe it is no longer beneficial to be the market pioneer in the digital age.

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May 27th, 2007

Can India maintain edge in outsourcing?

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Written by Dominic Lee

Topics: China, Outsourcing

Minister of State for Labour Oscar Fernandes said India will loose its outsourcing share to China and others if it does not continue with low costs.

“If outsourcing is favouring India today, it does not mean it will always be in favour of India,” he said, adding “the time any country provides labour even for a rupee cheaper than us, outsourcing will move to them”.

When asked about who these countries could be, he said that presently “China is the biggest threat”.

He also stated that China is ahead in the technology sector.

“India has a reservoir of highly technically qualified professionals,” he said at a workshop on ‘the role of trade unions in globalized economy’.

As a company that relies heavily on outsourcing, I’d have to disagree with Mr. Fernandes. I almost NEVER work with Chinese companies because Indian outsourcers have much better English than Chinese, the time it takes us to educate our vendors is 3-5 times less than when we teach the Chinese vendors. While the rate of China maybe cheaper, the language of India will allow it to maintain an edge in the outsourcing market.

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