Proudly Made in
China
500 TRIPS TO SHENZHEN DEREK KWIK SHARES NEARLY 2 DECADES OF HANDS-ON EXPERIENCE
INSIDER LOOK INTO CHINESE MANUFACTURING FINDING THE RIGHT MANUFACTURER IN CHINA ADVICE OF A LAWYER AVOID 3 CLASSIC STARTUP MISTAKES BUILDING RELATIONSHIPS WITH CHINESE MANUFACTURERS THE CONTRARIAN VIEW AN ALTERNATIVE TO CHINA
SORRY TO BREAK IT TO YOU MAYBE YOU SHOULDN’T BE AN ENTREPRENEUR
ISSUE 16 July/August 2017
A NOTE FROM THE EDITOR
CONTENTS
“Made in China” is a phrase well-known to the world. For big businesses and corporate companies, manufacturing in China is a given. For startups and entrepreneurs, manufacturing in China may feel like a minefield. Given the proximity of Hong Kong to Shenzhen, and the network of startups that have blossomed over the years, Jumpstart has the opportunity to get insider tips from those who are experienced and familiar with the unique Chinese market. In this issue, you will hear from startup CEOs, manufacturing supervisors, factory owners, cooperate business leaders and lawyers on their Chinese Manufacturing 101s. With a little push in the right direction, navigating this road will not be a difficult feat for startups. While the startup community continues to expand, Jumpstart continues to grow. Currently, Jumpstart Media is gaining readership beyond the borders of Hong Kong and will reach into Singapore and selected cities in China. The startup community is a connected global network and Jumpstart is hoping to help you break the geographical barriers. Our next issue, to be released in September, aims to do precisely this. Keep an eye out for our next issue that will feature content from startups in Hong Kong, Singapore, China (Shenzhen, Shanghai, & Beijing) and USA (Silicon Valley & New York!) Thank you for supporting us so far, and we look forward to continuing this journey forward together. Sharon Yuen Guest Editor
Maybe You Shouldn’t Be an Entrepreneur
JUMPSTART TEAM HACKS..................... 7-8 Improve Your Productivity and Memory
MEET OUR TEAM Managing Director: James Kwan Head of Operations and Content Strategy: Kaden Ng Associate Director of Content Development: Chloe Wong Guest Editor: Sharon Yuen Guest Curator: Derek Kwik Director of Community Engagement: Anita Chan
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Contributors: Andrew Yang Bernard Poon Thomas Chou Carly Liao Eddie Lam Simon Tian Min Chen Sam Ameen Christina Dean Kimberly Whiley Zoe Belhomme Divya Samtani
SORRY TO BREAK IT TO YOU...................... 3
Special Thanks: Eugenia Mok John Chew Peach Poon Sherry He Joyce Ngo
500 TRIPS TO SHENZHEN Derek Kwik DUE DILIGENCE: FINDING THE RIGHT MANUFACTURER IN CHINA Andrew Yang ADVICE OF COUNSEL: AVOID THESE 3 CLASSIC MISTAKES GETTING YOUR START-UP OFF THE GROUND Thomas Chou 5 TIPS FOR BUILDING A RELATIONSHIP WITH YOUR CHINESE MANUFACTURER Carly Liao and Eddie Lam THE CONTRARIAN VIEW – AN ALTERNATIVE TO CHINA Andrew Yang FSC.pdf
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FUNDING MILESTONES IN 2017......... 22-23 Hong Kong’s Latest 10 Heavily-Funded Startups
Copyright © 2017 Jumpstart. The contents of the magazine are fully protected by copyright and nothing may be reprinted without permission. The publisher and editors accept no responsibility in respect to any products, goods or services that may be advertised or referred to in this issue or for any errors, omissions, or mistakes in any such advertisements or references. The mention of any specific companies or products in articles or advertisements does not imply that they are endorsed or recommended by this magazine or its publisher in preference to others of a similar nature which are not mentioned or advertised. Published articles do not necessarily represent the views or opinions of Jumpstart Magazine. Printed by Magnum Print Company Limited. 11B E-Tat Factory Building, 4 Heung Yip Road, Wong Chuk Hang, Hong Kong.
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Sorry to Break It to You
* We define ‘entrepreneur’ as someone who has created an innovative product or service that’s high risk, but projected to have high growth potential.
Maybe You Shouldn’t Be an Entrepreneur By Min Chen
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n recent years, it seems as if all we do across the realms of media, entertainment, and business is obsess about entrepreneurs. Terms like ‘valuation’ and ‘fundraising’ are as relevant to our cultural discourse as ‘fake news’ and ‘G.O.A.T’. But one thing we don’t often talk about is the fact that not everyone should be an entrepreneur. Some of us are meant to wake up in our bed, instead of seeing how deep the rabbit hole goes.
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One thing we don’t often talk about is the fact that not everyone should be an entrepreneur. A combination of forces has led to the so-called “celebritization” of the entrepreneur, as coined by Max Marmer in Harvard Business Review. In addition to characterizations of the ‘genius billionaire playboy philanthropist’, millennials are no doubt enchanted by the technology boom and overriding notion that we must pursue our passion or work for ourselves to feel fulfilled. The most crucial attraction to this obsession is simply that entrepreneurs have the potential to shape our everyday lives with their vision – a tangibility that imbues belief in our own ability to propel change. It’s no surprise that the romaniticazation of startup life has encouraged a record 14% of working age Americans to become startup founders, according to the Global Entrepreneurship Monitor. The issue with this trend is not only that the discrepancy between expectation and reality is vast, but that the belief can have serious consequences on the individual and even economy. Putting entrepreneurialism on a pedestal oversells a path to those who may not be suited for the lifestyle – where failure can incur a devastating loss of time and resources.
We tend to look at entrepreneurialism as a self-actualizing journey rather than any other career choice, where personality and skill set play into how suitable you are for the role. Printing a business card that says ‘Founder’ doesn’t make you an entrepreneur; having the willpower and decisiveness to bring a valuable and viable product to market, turning a profit, and moving your company beyond the startup stage, does. There are countless permutations of traits that make a successful entrepreneur, with sources like Forbes claiming that antisocial behaviour in one’s teenage years is an indicator for future success. Pubescent psychoanalysis aside, what we do know is that conviction isn’t always enough, and neither is a relentless work ethic, a high business IQ, or any type of legendary networking skills. Aspiring entrepreneurs should really be asking themselves how willing they are to make sacrifices in their social life, relationships, and hobbies - just to name a few. Sure, we can all pull an all-nighter here and there, but can you spend years turning down invitations, forgoing holidays and missing those weekly latté art classes?
Shawn Osborne, the CEO of the Network for Teaching Entrepreneurship, believes that mentoring ‘better prepared’ and ‘more-motivated’ entrepreneurs has direct socioeconomic benefits, even if it means there are fewer of them. You can still pursue your dreams and bring about change without being an entrepreneur. Starting a small business or freelancing are indispensable to our economic system and are options that give you freedom while minimizing the risk and stress of startup life. So, which is it? The red pill or the blue pill?
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You can still pursue your dreams and bring about change without being an entrepreneur.
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Aspiring entrepreneurs should really be asking themselves how willing they are to make sacrifices in their social life, relationships, and hobbies. Most importantly: can you handle the trauma of committing years of your life to something only to fail? Gauging whether the startup life is for you, as with every other decision we make, comes down to self-reflection and weighing what truly makes you happy. Understanding our own emotional endurance and motivations are not just part of the equation, but the bottom line.
About the Author
Min Chen is the Senior Marketing & Brand Manager for Garage Society, a regional cowork operator and entrepreneurial hub. She moved to Hong Kong two years ago after having lived in Boston, Shanghai, and the UK.
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Continuing on the Hack Horizon Journey
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n May, Hong Kong hosted the first TravelTech hackathon on board a British Airways A380 flight to London’s Heathrow Airport. The three day mobile event resulted in a range of exceptional products and digital platforms that could make travel simpler, safer and cheaper. Thirty-two developers, designers and entrepreneurs, 10 of whom from Hong Kong, were selected from almost 700 global applications for the unique threeday hackathon. During the launch event at WeWork in Causeway Bay, the participants came together for the very first time and were organized into teams of 3-5, depending on their experience and skill sets. From that moment on, they were connected with members of the travelling public, so they could test out their ideas
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JUMPSTART July/August 2017
and receive live feedback at every stage of the journey. As they moved from one mode of transport to another, the teams worked around the clock with industry experts and mentors who were on hand to guide them through the ideation process. Thanks to partners including Travelport and Skyscanner, the participants also had access to some of the best industry technology and open APIs. While the concept itself was novel, Hack Horizon had a very significant objective - to tackle real pain points in the passenger experience and raise awareness for the future of TravelTech in the ecosystem. Some of the biggest names in the industry, including British Airways, Hong Kong International Airport, Heathrow, MTR and TfL, pledged their support to the initiative, providing not
only financial backing but also industry experts who gave the participants vital insights throughout the three days. Traditionally, airlines, airports and hotels have long lead times and large budgets in order to challenge the status quo - but in just 80 hours, 32 talented individuals identified major customer pain points, built out a MVP and pitched their business models to industry bigwigs. Today, this is a common practice in industries such as finance and health but why isn’t it the norm for the travel sector? Hack Horizon concluded with a pitch event at The London Transport Museum, in front of a panel of top industry judges. The diverse range of prototypes presented included an endto-end security luggage transfer service
3 Simple Ways For Founders To Increase Sales & Build Customer Loyalty By Sam Ameen
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ant to increase your sales from existing to new customers? Luckily, it’s not rocket science. It just requires you to be a little more human and stop auto-piloting through your day.
1. Have Some Fun
powered by blockchain, a smartwatch leveraging deep learning to personalise the passenger experience at airports, a digital service for parents who need to arrange for their children to travel internationally on their own and a chatbot so groups can collaborate on trips and bookings. Crowned the winner by the esteemed panel of travel-expert judges was Destination, an In Flight entertainment-to-mobile retail solution that allows passengers to book activities for their destination while on a flight. LuxExpress, a global traveller network giving passengers access to best-priced luxury duty free, came in second place. So what’s next for these fledgling technologies? The Hack Horizon team, consisting of four young and inquisitive globe-trotting millennials based in London and Hong Kong, have committed their ongoing support to all of the participants. While the ideal is for one of the ideas of tech travel to progress further, the opportunity to connect the world’s top talent in TravelTech is much bigger. As Kristy Hart, one of the co-founders, said, “The travel industry is already extremely competitive and consequently, digital innovation is high on the agenda; we need to find ways to foster the talent that’s out there. Our aim now is to increase the chances of turning exceptional ideas into reality in the travel sector.”
Even if your clients are businesses, it doesn’t mean that your marketing and sales have to be boring and overly corporate. Remember, you’re still dealing with humans, prone to procrastination and browsing through Facebook all day. When reaching out to prospects, experiment and try using a casual and fun approach. Here’s an example of a template I’ve used before, which I’ve had success with. Hey John, I have a couple of ideas on how your company can [increase it’s revenue / save costs / generate more leads]. Would love to share them with you. To make it easy, as I know you’re super busy, just reply to this email with: A) 15 minutes you have free in your calendar next week (Don’t worry, I promise it won’t take any longer!) B) The name of your favourite drink from Starbucks (I’ll buy one for you to say thanks for your time.) The worst case scenario is you get a free drink. Just click reply and let me know. Cheers, Sam P.S. If you want a beer instead - that can also be arranged! :)
2. Create an Emotional Connection
Here’s a great example from Zappos. One of their customers was late in returning a pair of shoes once, due to a family member passing away. When Zappos heard about it, they paid for a courier to pick up the shoes and arrive at the customer’s door with a bouquet of flowers and a handwritten note with their condolences. Remember, customers build brand loyalty once they are emotionally attached. A study in the U.S. shows that when a startup optimises for an emotional connection, they outperform competitors in terms of sales growth by 85%.
3. Personally Thank Your Clients
As a startup founder, you should always individually call up your clients and personally thank them for their business. It also gives you a chance to get their feedback and learn how you could improve. Alexis Ohanian (Co-Founder of Reddit) said, “Founders have to realize the bar is set so low because most companies stopped giving a f*ck so long ago... it ends up being pretty easy… Compared to building out the actual site or architecting the back-end, this doesn’t require a few years of programming expertise. It just requires you to gives a damn, which not enough people do.” My challenge to you is to take the next five minutes to think about what you can do to improve your personal touch. Can you make your interactions with prospects a little more human? Can you add some humor to your emails, marketing, or website? About the Author Which clients can you call up today Sam Ameen is a Hong Kong-based to say thank you for their business?
Little things like these will help you stand out from the crowd. There is no doubt about that.
entrepreneur with a background in digital marketing and user acquisition. He is currently the Head of Digital Marketing of Betatron Startup Accelerator and IC Studio Ltd.
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LinSon Business Consulting Your Business Partner
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JUMPSTART July/August 2017
Jumpstart Your Productivity with These Hacks
I had 99 problems
So I learned about problem priorization
Now I have 100 problems
By Kaden Ng
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truggling with getting things done? You’re not alone. Using our time ineffectively is a recurring problem for many of us. Here are some hacks that will help you boost your productivity and stop wasting time on things that don’t really matter.
Focus on Your Goal and Produce the Right Things
Your hard work and efforts are worthless when you’re not steering towards the right course. Being productive means far more than doing things quickly. We must, in the first place, put our attention on the right tasks and prioritize the right problems. The 2017 Project Management Institute Survey shows that the primary cause of failure in most projects is lack of clearly defined objectives and milestones to measure progress. So, identify what your goals are and stay very focused. For instance, if your goal is to grow daily visitors of your website, then, focus on growth! Don’t get caught up in building fancy features or polishing tiny details that will not drive more traffic. When you’re setting your project plan, always bear in mind the Pareto principle (also known as the 80/20 Rule) – 80 percent of your results come from 20 percent of your activities. In other words, most of what we do has little effect on our lives. But a vital few can produce an outsized impact. From this perspective, we can cut 80% of our tasks that are unimportant to our objectives. As Steve Job succinctly puts it, “Innovation is saying no to a thousand things”. Be goal-driven and learn how to say no.
Manage Your Progress with Productivity Apps
With the right goals in mind, we must also find ways to measure progress and keep track of our milestones. Here, productivity apps come in handy. To-do lists and project management applications are powerful tools that can help us work smarter both as a team and as individuals. When you have tons of tasks ahead, to-do list managements can help us keep track of upcoming tasks and avoid making mistakes. There are myriads of to-do list management apps out there, but Wunderlist, Any.do, and Todoist stand out as the top ones. With these apps, you can set deadlines and reminders for your tasks, divide tasks into subtasks, add notes, upload files and delegate work to teams. They can also be integrated with Slack, Google Calendar, and Dropbox, making them versatile tools to keep track of your projects. All their main features are free of charge. If you want more functionality to manage complex tasks, project management applications are what you should look for. Trello and Asana are the best ones in the market that are free for their core functions. These tools provide a superior real-time collaboration experience through their project boards, helping the team oversee the workflows and stay on top of things. It’s time to ditch excel and give these apps a try!
Hack Into Our Psychological Force
Have you ever spent a whole evening just to finish a 10-minute task? If yes, you’ve experienced the Parkinson’s Law – work expands to fill the time available for its completion. When we think we have all the time in the world, our mind will add unnecessary steps and details, and so the work drags on. However, when you’re under pressure or in a rush, your mind will be astonishingly effective in distinguishing what is and is not important. Your productivity will skyrocket. Given that work is elastic in its demands on time, why don’t we hack into the psychological force behind Parkinson’s Law to our benefit? By setting artificial deadlines, we can restrict how long we allow things to take. However, this may not work for everyone. Deep down, we all know these deadline are fake. As a result, they’re too easy to ignore; work will build up once again. We need to do more than that – we need to make artificial deadline “real”. Every day, there are dozens of things that you can’t push back. When you schedule a meeting, you can’t push that back. When events like these happen, there are usually small blocks of time in between. Try sandwiching in tasks that will usually take longer! By doing so, you can elevate the pressure of being late and the unpleasantness of leaving task incomplete to boast your productivity. If you’re intrigued by quantifying your productivity, you should try RescueTime – an analytic application that demonstrates how you spend your time with your computers and smartphones. It is free for its basic features. If you spend hours doing unimportant things, they will all be shown in the report. If you’re embarrassed by how unwise you are in allocating your time, you won’t want to make these mistakes again.
Practice Mindfulness
When you’re busy hustling for the whole day, it can be quite difficult to keep your mind sharp. Mindfulness is a popular form of meditation that can help you improve, focus, reduce stress, and enhance wellbeing. Entrepreneurs like Steve Jobs, Richard Branson, and Arianna Huffington practiced mindfulness avidly. They credited mindfulness for helping them become more successful. Read Mindfulness: An Eight-Week Plan for Finding Peace in a Frantic World, a book based on Mindfulness-Based Cognitive Therapy written by Oxford and Cambridge professors. A simple 10 – 20 minute daily exercise can help you find serenity and cope with the modern hectic lifestyle. ■
About the Author
Kaden is the Head of Operations and Content Strategy of Jumpstart Media. He project manages the production of Jumpstart Magazine. 7
5 Ways to Boost Your Memory By Chloe Wong
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f you weren’t born with the gift of good memory, don’t worry! There are ways to help you remember meeting deadlines, names and your pitch speech. Here are 5 tips to keep you up on the memory game.
Mental Gym
As much as our body needs to work out, our brain also needs to work out from time to time. We are often caught up with day-to-day tasks which require minimal mental effort from our brain. As a result, our brain lack stimulation, hindering our ability to learn or memorize new things. Try to challenge yourselves with brain-boosting activities and take a break from your daily routine. Do a crossword puzzle, complete a Sudoku or learn a new language! These tasks might seem insignificant but they’ll go a long way in your memory strengthening journey.
Pick Up Your Pen
Forget your smartphones and tablets – time to pick up your pen and jot down the things you need to remember. Try to use crazy, weird and bold fonts to highlight the things you want to remember. The principle is simple: When you make the words difficult to read, you tend to read it one more time which helps reinforce your concentration towards that particular item. During a boring class or meeting, pick up your pen and start doodling. It will keep your brain busy, active and help you to remember more!
Use Memory Techniques
There are various mnemonic devices we can use to help organize information. The most common technique is chunking. It refers to breaking down your information into smaller chunks to make it more “digestible” for the brain. For instance, “Pick Up Gift” can be memorized as “PUG”. Other common techniques include using acronyms, visualizations and rhymes.
Eat Smart
One subtle way to improve our memory is to eat smart. We can consume food that contains Vitamin D, Omega 3 and antioxidants to stimulate the production of new brain cells. Food such as salmon, fresh tuna, celery, cauliflower, walnuts and broccoli are proven to be beneficial to your brain’s health and neurological development.
Take Naps
Don’t underestimate the power of a midday nap. Studies have found that infants who take naps perform better in new information processing and cognitive development. The same goes for adults – a midday nap can significantly boost and restore your brainpower. We’ve all been there– if getting an eight-hour sleep is not an option, try to get at least a 45-minutue power nap. It can really make a difference and allow you to migrate new information into your long-term memory storage.
8 Hysan Avenue Causeway Bay
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Instant AVERAGE: JUMPSTART July/August 2017 Office $28up/hour
Fun Fact
Flickr and Slack Started as “A Game that Never Ends” By Kaden Ng
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tewart Butterfield is the founder of two widely successful startups – Flickr, sold to Yahoo for reportedly $35 million, and Slack, one of the most popular communication tools among the startup community. However, Stewart did not start with these lucrative ideas. In fact, these successes came into being from the failure of his initial gaming concept. First Failure: After studying philosophy in Cambridge, Stewart Butterfield’s dream was to create a gaming world where people played not for winning, but for the sake of interacting with people. He and his team started building an MMO game – Game Neverending, and released a prototype on 2002. It was a very complicated online game. As ButterA5 AD 2 output_Jumpstart.pdf 1 9/6/2017 field admits, the concept was too weird and unfamiliar to people. The Game
Neverending project was unable to raise money and was forced to shut down. Pivot into Flickr: Things took a serendipitous turn when Butterfield noticed that the photo-sharing feature of the game was surprisingly well-received. In 2004, he decided to take a pivot and launched Flickr – an online photo management and sharing application. It was acquired by Yahoo one year later. Second Attempt: Despite his initial failure, Butterfield’s dream to build the Game Neverending lingered. With his success with Flickr, Butterfield raised over $17 million to build Glitch – Game Neverending 2.0 with major improvements in user experience and technology. But again, some of its features were simply too 10:17 AM strange. The company ran out of cash, and the game was shut down again.
Pivot into Slack: Then (again!) Butterfield and his team turned a byproduct of the game into something successful. During development, the Glitch team built an internal chat system, finding existing options unsatisfactory. Despite the already-crowded space in enterprise communication, Butterfield believed that his team has something unique to offer to the market. This marked their pivot into Slack. Slack’s latest valuation is at 3.8 billion. Butterfield has huge ambitions for his game, but his concept simply does not fit the product market and is not something people want. In Butterfield’s comebacks, he noticed gaps in the market. Pivoting when a need is discovered became crucial to his success; his adaptability is a skill we should learn. Do not cling to an idea that will bring you nowhere.
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Sponsored Content
Interview with RedMountain Asia An One-Stop Back Office Outsourcing Platform
RedMountain Asia www.redmountainasia.com
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helly Tsao, the former Head of HR of a multinational financial corporation with 20 years of professional experience in HR, noticed a gap in the market. Every growing startup has to invest in back office administration, but entrepreneurs do not have the time and budget to cope with this mundane process. Startups need an affordable way to outsource such necessary-but-annoying tasks and stay focused on what really matters. To bridge this gap, she founded RedMountain. Gone are days when you have to worry about HR, payroll, and bookkeeping! With RedMountain, you can also easily stay on top of HR matters with their user-friendly online HR portal. In this issue, we had the pleasure to sit down with Shelly to discuss how RedMountain can help the startup community.
Can you tell us more about RedMountain?
RedMountain is a one-stop back office outsourcing services provider, with a major focus on Human Resources and Payroll. We bring the simplicity of our one-stop back office services to the community. Backed by our online HR portal “I-Red”, the community can trust us to look after a full range of back office administration: from company set-up, facility management, IT infrastructure & office system, to the very core of human resources, including payroll administration, work visa processing and staff leasing. Services for specialized functions are always on the menu.
Why should we choose RedMountain?
Conventional back office administration, including HR, is essential but usually tedious and time-consuming. While the management team and practitioners are shifting bandwidth to focus on strategic aspects, our specialists are their trusted 10 JUMPSTART July/August 2017
partners in general daily operation and administration. We are their companions, assisting them with systematic, tailor-made and efficient HR, office and IT solutions. We see ourselves as business partners to our clients and their working partners, and to the in-house back office specialists. We are determined to bring in-house services toward professionalism. We work with our client in more strategic roles on business and corporate development, elevating back office team members as profitable assets.
What are the comparative advantages of RedMountain to the other outsourcing services providers? To live up to our company’s motto, “Solutions with a Human Touch”, we always put ourselves in the shoes of our clients. Our specialists, with their extensive experience and knowledge, go the extra mile to work out quality solutions for our clients at a reasonable budget. As a firm that highly embraces technology, we always keep our eyes out for effective tools to enhance our back office solutions and upgrade our services.
What are 3 HR tips you would like to share with the Hong Kong startup community?
1. Offer your direction and demonstrate your vision clearly. Your team looks up to you for it. 2. Hiring talent must come at the right price. Be fair to the talents that took the risk to join your startup. 3. Don’t overlook laws, rules and regulations. Do business smartly, and don’t wander into gray areas. If you want to thrive on business success, you need the right professional partner. Contact enquiry@redmountainasia.com to find out more about RedMotuntain.
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The Magic of Co-innovation
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elcome to the Connected Age. We live in a world that is now transparent and open-sourced, driven by the interdependency of behaviors and interconnectivity of events. Success is no longer dependent on cool technology or venture capital, but on whom you know and how you work with them. True innovation occurs when information and ideas are shared, not withheld. When it comes to collective intelligence, “diversity matters more than individual brainpower” (Steven Berlin Johnson, Future Perfect). The emergence of globalization and digital technology has unleashed a boundless flow of ideas, capital, talent and opportunity, and the ability to tap into that flow has become the key to meaningful productivity, growth and prosperity. Such a world has several benefits. It reduces redundancies, sparks fresh thinking, and drives us to ask different questions - better questions. It pushes us to challenge our existing mental models, think laterally and exponentially, rather than linearly. It calls for a new type of
leadership - one that is all about breaking down walls instead of building them, and focuses on becoming a connective agent first to become a change agent. As it turns out, co-innovation is one of those rare occasions that lets us have our cake and eat it too. In a world that functions in accordance to networking principles, knowledge and reciprocity only grow larger as you use them, bringing forth more opportunities for everyone. Creativity begets more creativity, connections beget more connections, success begets more success, and giving begets more giving. The pie truly is infinite. At Metta, co-innovation is something we’ve built our organization around. For us, it’s a way of seeing the world, and it starts with helping our members connect the dots and expand their possibilities. We do this by finding the most brilliant and passionate individuals from across industries, geographies and sectors, who put their individual interests and egos aside to come together in a powerful process of simultaneous learning and doing. It
By Divya Samtani is precisely this cross-sector collaboration that drives impact on a grander scale than otherwise expected. Classic cross-celeration, as we like to call it. With alliances ruling the 21st century, the best thing to do now is to organize the disorganized and create a community out of disparate network nodes. This allows individual players to operate at the confluence of where the most generous relationships are borne, where information flows free and where people trust one another enough to help one another. Positioning yourself at this convergence of knowledge and opportunities is what will ultimately empower you to master the art of facilitating connections, brokering knowledge and harnessing the power of co-innovation.
About the Author
Divya Samtani is the Head of Programming & Partnerships at Mettā.
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Introducing BYT
The Socially-Sustainable, Environmentally-Friendly Fashion Brand “‘If you can change fashion, you
can change anything.’ This mantra has kept me focused when we started our social impact, upcycled and socially-sustainable fashion brand, BYT. One needs a tough backbone, resilient willpower and visionary insight as mental fuel when the hours are long, the task list even longer and the path to success is an uphill road,” said Christina Dean, co-founder of BYT and founder of Redress when we recently caught up with her in Hong Kong. Meet BYT, the startup fashion brand, born from the 10 years of dedicated hard work of Redress, the Hong Kong charity with a mission to reduce waste in the fashion industry. BYT co-founders, Christina Dean and Michelle Bang, have the audacious dream to prove that fashion - the world’s most polluting industry - can become a force for good. BYT will transform textile waste – of which China is estimated to generate 26 million tonnes every year - into sustainable clothing that’s affordable, original and luxurious, through social enterprises and factories with exemplary social standards. A portion of BYT’s profits will be donated back to the charity Redress to help them further catalyse change in the fashion industry.
“Fashion gets a lot of criticism,” explained Christina, “I’ve been working in the non-profit sector for 10 years to promote ways to clean up fashion’s act. The fashion and textile industry has a lot to answer for. Take your pick: rampant water pollution, excessive contribution, climate change to unethical social issues. But fashion also has the power to drive change.”And change is exactly what this daring duo wants to achieve.
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If we can change fashion, we can change anything. 12 JUMPSTART July/August 2017
With years of experience under their fashionable belts – Christina founded and ran Redress for 10 years; Michelle is an ex-investment banker and fashion buyer, also Redress’ previous COO – it’s little surprise that BYT is off to a flying start. BYT is passionate about their birthplace in Hong Kong, holding a deep commitment to local innovation arising from the region’s long history and expertise in the apparel industry, tailoring, technical and design knowledge. Created entirely using textile waste, BYT’s first upcycled collection has already been bought by Lane Crawford for retail in September 2017. BYT’s upcoming retail is on bytlife.com’s future e-commerce platform. With star designers cherry-picked from the EcoChic Design Award, the world’s largest sustainable fashion design competition organized by Redress, and with unrivalled access to textile waste from the region, it’s not a surprise that this startup is quickly gaining traction.
Women, let’s not fall short in our businesses By Kimberly Whiley
“The world wants solutions to fashion’s carbon footprint,” says Michelle Bang, CEO of BYT. “Asia is the home of huge future fashion consumption that is coupled with increasing ethically-minded consumers. If we can tap into this market, BYT will become a nimble business that can unlock textile waste and put it fashionably back on the streets around the world.” And BYT is indeed catching the world’s attention. BYT and Michelle Bang are representing Hong Kong in the Chivas Venture, a global competition aimed at finding and supporting ‘extraordinary startups’ that use business to create positive change. With USD1 million up for grabs between 30 social entrepreneurs around the world, BYT is now in the running to win much-needed funds to scale up their dreams.
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Asia is the home of huge future fashion consumption that is coupled with increasingly ethically-minded consumers. “The fashion industry is one of the world’s biggest economic industries, as well as one of the most polluting but it’s also an industry that thrives on creativity and change,” said Christina. “If we can change fashion, we can change anything.”
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n a business hub like Hong Kong, entrepreneurs often feel isolated and disadvantaged because of the limited networking opportunities and informational access that infrastructure corporations can provide. Women business owners, being a smaller group, are particularly affected by these issues. Global studies show the following: 1. Women businesses make up only 5-10% of businesses globally. 2. Women make up only 19% of high growth entrepreneurs. 3. Women only receive 5% of venture capital investments. With 47% of Hong Kong’s employment coming from SME, we know that women have some part to play and need support, just like everyone else, to Scale Up. Elizabeth Thomson and Kimberly Whiley have been mentoring women business owners for 20+ years in Hong Kong, and formed The Women Entrepreneurs Network (WEN) in Dec 2015 to help women deal with the issues below. Here are some of their tips:
Set Goals & Know how to EXIT
Best way to scale up any business is to set a target that is reasonable and find solutions to achieve this. In many cases, setting these goals are harder to set than achieving them since you might be too “CLOSE” to the business to see the needed next steps. This is where mentors, circles, and other groups can help you. You can start today and set a few goals down on paper. Next time when you go out for coffee with a business savvy friend, explore your ideas with them and see where that takes you. To start a business is to figure out how to EXIT. Goals need to be set along the way as milestones to reach the exit stage, and discussing your ideas with others will help you through this process.
Work FOR your business and not IN your business
When you make your to-do list every morning (if you haven’t been doing this, start tomorrow), make sure it is not a list of admin work. Contrary to people’s belief, handling emails is not a way to build a business. Admin work needs to be done but it should not take up your full day. Your business needs your daily attention for ways to SCALE UP and constant evaluation on how to be better. Schedule that time, and have someone else to do the admin work. RESULTS happen when you are focused on the goals, not the admin work .
REMEMBER you are worth every cent... and more....
Women are the last to think about themselves. We have noticed that in many cases, they are the last to take a salary in a business and the first to price their services below market rate. Never forget how important you are. START TODAY and think about yourself first – what your values and expectations are and how you could achieve them, rather than how to reduce them. You might need to be creative and offer something different from your competitor. That reasoning will help you realize and achieve the fees that you deserve, and be at your personal best.
About the Author:
Kimberly Whiley (Tamco Holding Ltd) is the current Chairwoman at WEN. She co-founded the group and was a past president of the Women Business Owners Club (WBOC). The goal of WEN’s events is to bring together like-minded women into a small circle where they can find solutions to pressing problems. An example would be finding the right legal advice; discovering new markets; and structuring their company for a future sale. Information on membership, events, as well as WEN Monthly Networking Drinks can be found on their Facebook page (The Women Entrepreneurs Network HK) and Web Site (www.wenhk.org).
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500 Trips to Shenzhen. So what’s your plan? By Derek Kwik
Derek Kwik is our guest curator for this issue. Born and educated in Hong Kong, Derek is an early “returnee” to Asia with 25+ years of market entry experience. Since 1999, Derek reviewed over 15,000 business plan beginning with first generation internet companies. In 2004, Derek launched BraveSoldier Venture capital, a technology venture capital fund, as the Managing Partner. With deep experience in investment banking, direct investment and management consulting, he has worked in all aspects of fundraising including angel investing, family offices, Series A and IPOs. Derek was the CEO of a Chinese contactless mobile payments company and credited for “leading from the front” from seed round to commercial responsibilities to investor exit. With over 500 day trips to Shenzhen, Dongguang and Guangzhou, Derek has supervised manufacturing operations in telecoms, robotics, wearables and PC peripherals. Derek is an author of two books. university guest lecturer, TEDx speaker, Trustee and CO-Chairman of Society For the Prevention of Cruelty to Animals (SPCA), Advisory Council member of Junior Achievement and mentor/advisor to several start-ups. He is also a multi-day ultra-marathon runner, PADI Dive Master and jiu-jitsu practitioner.
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ive hundred. Five hundred is the total number of day trips I have made to and from Shenzhen, Zhuhai, Dongguan and Guangzhou to walk the production and assembly lines of consumer electronics factories. My China manufacturing experience runs deep across mobile handsets, MP3 players, electronic sport watch and heart rate monitors, PC peripherals, robotics, mobile payments, wearables and electronic cigarettes. Since 1999, I have witnessed local manufacturers across Guangdong Province undertake a series of upgrades from manual labor, semi-manual to full automation. I learned what we all know today that “Made in Shenzhen” does not mean the same thing as “Made in China”.
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The total number of factory workers in Shenzhen outnumbered the entire workforce of the United States 14 JUMPSTART July/August 2017
In fact, Shenzhen has undergone a tremendous metamorphosis from a once sleepy fishing village of 30,000 inhabitants into a hungry hive of migrant workers that swelled the population to 12 million today. It has been said, “All roads lead to Shenzhen for hardware”. An estimated 90% of the world’s gadgets and gizmos are made here. In 1980, Beijing declared Shenzhen as China’s first Special Economic Zone (SEZ), and in less than 40 years of economic development, the city became one of the five largest and wealthiest cities in the country. At one point, the total number of factory workers outnumbered the entire workforce of the United States (how do you like that, President Trump?). In 2016, Shenzhen’s GDP totalled US$294B, which is higher than the GDP of entire countries such as Pakistan, South Africa, Columbia, Chile, Bangladesh, Portugal and Vietnam. Shenzhen’s role as the world’s leading technology contract manufacturer for global brands like Apple, Microsoft, Dell, Sony, etc. paved a path
for the establishment of local tech companies’ headquarters, such as Huawei, Tencent, BYD, Konka, Skyworth, Coolpad, ZTE, Gionee, TP-Link, DJI, BGI, OnePlus etc. Even little known companies, like Shenzhen-based Transsion Holdings, are the market leaders for the fastest growing smartphone market - Africa. Chinese smartphone makers collectively own over 40% of the global smartphone market, of which over twenty companies are based in Shenzhen. Much of the credit goes to branding behemoths, like Apple, who constantly push the capabilities of Foxconn into producing the highest quality product in return for the most amazing consumer experience. As these local factories dispatch their marketing executives to attend trade shows and exhibitions around the world, soft skills such as English speakers, communication and networking are now standard. This has paved the way for hard skills like institutionalizing the manufacturing process with SOPs, BOMs, IP protec-
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It is still the Wild West and having the right partners to help navigate this land grab to make the right decisions is Shenzhen Trip #1.
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Today, Shenzhen is a hotbed for startups. You can get anything made here. tion, batch coding, compliance standards, and even Kaizen, the Japanese word for “continuous improvement” in manufacturing operations. China can now manufacture a brand, not just a product – young startups, there is a significant dynamic here, so take note. There are two things that Shenzhen does better than any other city in the world. 1) Create, foster and deliver an individually unique entrepreneurial experience for founders. 2) Manufacture some of the coolest gadgets on the planet with a precise mix of quality, speed
and cost. But does Shenzhen make strategic sense for the smaller guy? You can get anything made here. You have cheap labor (it’s still cheap considering that it is skilled labor), complete government support, multiple shipping ports provided by the Pearl River Delta Economic Zone, a low corporate tax rate and the most prestigious PE, and VC firms are located just over the border. Today, Shenzhen is a hotbed for startups. The same eco-system that is so pervasive across Hong Kong is here too: a hodgepodge of startups (some good, some not-sogood), co-working spaces, accelerators, incubators, meet-ups, corporate partnerships, investors
and government support. The entrepreneurial spirit is even more raw and visceral out here. Everyone is all about the hustle. Today, I travel to Shenzhen once or twice per week. The door-to-door three-hour commute by bus is mundane. The operational plan from prototype to mass production is a minefield. Building relationships with the local factory personnel from the owner to managers to engineers to line workers and even the security guard takes… well… it takes 500 trips. But with tens of thousands of factories mixed in with component suppliers, packaging companies and logistics providers peppered over a sprawling city of 800 square miles, it is still the Wild West and having the right partners to help navigate this land grab to make the right decisions is Shenzhen Trip #1.
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Due Diligence
* The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.
Finding The Right Manufacturer In China By Bernard Poon
1. Do a site visit and look out for possible problems
Whether you are looking for an investment opportunity or a business partner, you can’t go wrong by starting with a site visit and talking to personnel from different departments to understand the business and to look for abnormalities. During site tours, key issues are often identified and could become deal breakers. Look out for idle or outdated machinery and equipment that may require repair or replacement; this may indicate required spending in the future to maintain technology competitiveness or to increase production capacity - all of which may impact ROE. Similarly, aged or damaged inventory that should be written off and the condition of the plant and building are all potential red flags that can be picked up.
2. Do not underestimate environmental issues
Technology manufacturing companies often need to dispose of materials that could be harmful to the environment during the manufacturing process. Investors need to be cautious as the company could be heavily fined by the authorities. This may require significant future capital expenditure on waste treatment facilities; the company may be forced to shut down until the issue is properly addressed. 16 JUMPSTART July/August 2017
3. Take note of inventory provisions From a financial perspective, a typical area of concern for investors in the technology manufacturing sector in China is inventory provision. Although we have seen improvements over the past decade, we still encounter companies that do not have proper inventory management policies to identify obsolete or long aged inventory. Hence, understating the inventory provision continues to be a focus area. For example, some companies only require the accounting and finance department to estimate inventory provision but the production personnel, who is in the best position to assess the usability of inventory, is not involved in the process. Alternatively, the accounting policies applied may not have been recently updated, despite rapid changes in the business and industry. In addition, some companies keep their inventory at offsite warehouses or have consignment inventory at distributors – neither are regularly monitored. It is not uncommon to see that many companies do not have formal policies to assess the condition and salability of their products on a regular basis. As a consequence, those products are no longer saleable (particularly those high-technology products that easily become outdated or prone to damage) and cannot be identified in a timely manner.
4. Warranty provisions could be complicated
Technology or electronic products often come with a warranty period. Many manufacturing companies in China do not have the experience or sophistication to properly estimate the warranty provision at year end. The exercise could be time consuming and challenging, depending on the product range, warranty period and historical records of faulty products, such as the frequency of returns and average repair costs. Potential investors of such manufacturing companies should spend time to understand how the warranty provision is being calculated to assess its adequacy as of the closing date. Liabilities related to warranty provision are often considered and addressed in the sales and purchase agreement.
5. Do not forget the labor force.
While technology-focused manufacturing companies are generally not as labor intensive as traditional manufacturing companies in China, the labor force still remains a crucial part of operations. All companies need to comply with the local regulations and contribute social insurance and housing fund at rates that may vary from one city to another. Under-contribution is a common issue. The labor cost base may increase considerably if fully compliant with the regulations. It is best to seek professional advice on the
The Story of Nepture
How I Launched and Built My First Startup By Simon Tian
adequacy of social insurance provision as the advisors will need to check with the local authorities on the applicable contribution rates for the various social benefits. In addition, other areas such as severance payments (if there are plans to close part of the business) and underage labor are also areas of concern, especially with foreign investors.
6. Understand the working capital requirements of the company
Similar to overseas-based manufacturing companies, those in China may have a relatively high working capital requirement, especially if capital is tied up in inventory, prepayments for inventory and materials, and long outstanding receivables (especially with domestic customers). It is not surprising to find companies with a cash conversion cycle exceeding 100 days. As part of the efforts to understand the business, investors should spend time to understand the real working capital requirement of the company, possible improvement measures, and consider whether further working capital finance might be needed post completion. As with doing transactions in western countries, investing in Chinese companies in the technology manufacturing sector (or any sectors) requires a skeptical mind, patience and knowledge of the company and the environment in which it operates. Investors should conduct sufficient due diligence and not be afraid to walk out of a bad deal.
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eptune was an idea that I had conceived at 13, but it was not delivered into this world until my 18th birthday. The first wave of wearable technologies hit the market in 2012 but these devices were “dumb” and dependent on antiquated wireless technologies. One of them is Bluetooth which needed to be forever tethered to your smartphone – a hassle to need to live with. People believed then that the future of wireless evolution was headed towards Bluetooth; herein lies the greatest misconception. This presented me with a reason and an opportunity to make a difference with Neptune. As a high school student with no prototype, I had to start with what little I had. I spent a mere five dollars to purchase the Neptune domain, used Weebly to build my website and held dear to the basic computer rendering of the device which I called the “Pine”. I googled how to drive traffic to the website and issued a press release on PRWeb. This alone generated mainstream tech coverage the very next day. Within 3 weeks, Neptune received 20,000 reservations for the Pine. With orders in hand, I traveled to China to meet with prospective consumer electronics manufacturers and product development firms. I took a crash course in Chinese manufacturing and learnt more about the process of transforming my vision for the hardware from a concept to a reality. Within two months, I engaged with a Chinese manufacturer and a handful of professional parties to kick-off development.
About the Author About the Author Bernard Poon is the Transaction Advisory Services Leader at Ernst & Young. EY recently released the 16th edition of Global Capital Confidence Barometer in April, which gauges corporate confidence in the economic outlook and identifies boardroom trends and practices in the way companies manage their Capital Agenda.
Simon Tian, 23, is a Canadian tech entrepreneur and inventor. He is the founder and CEO of Neptune, a consumer electronics and wearable technology company. Simon dropped out of high school at the age of 18 to start Neptune, and has raised $2 million from crowdfunding sources alone. Simon is a 2015 Thiel Fellow, having been awarded $100,000 by PayPal co-founder and venture capitalist Peter Thiel. Simon was named one of the top 30 Quebecers under 30 by Les Affaires in 2014.
One of my biggest challenges was to act as the bridge between the engineering and design teams so that they could work together efficiently and effectively. Effective communication became one of my most cherished tools in churning dreams into a living-and-breathing product. Seven months later, I launched a Kickstarter campaign. My campaign went on to raise $800,000 in one month – one of the highest-grossing campaigns of all time. This provided the necessary funds for mass production. Soon after, in 2014, the Pine shipped to retailers, like Best Buy and Amazon. Neptune went on to sell over 10,000 Pine devices. Till this day, the Pine has a dedicated and passionate following. Now, I am working on my next device – the Neptune Hub, a smartwatch that is designed to power your everyday technology; all in one place. There is a lot of anticipation from media publications, like Wall Street Journal, Engagdet, Wired and the Verge, to see this product become a global popular device. With $1.16M raised in an Indiegogo campaign, we are excited to bring in another piece of never-seen-before technology that will go on to render whatever devices you now know as “smart” dumb.
Advice of Counsel : *
Avoid These 3 Classic Mistakes Getting Your Start-up off the Ground By Thomas Chou
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have had a unique and rare opportunity working with hundreds of startup companies from across the globe, from my days as a young associate in Silicon Valley advising the first generation of dot-com darlings and the subsequent Web 2.0 companies that rose from the ashes of Y2K crash, to now, working with the new wave of innovators in China and across Asia that have blossomed over the last decade. I have been consistently awestruck by these entrepreneurs’ consistent demonstration of energy, passion, commitment and a determination to succeed, despite their differences in geographies and market opportunities. However, when it comes to getting Hong Kong and China based companies properly organized as a platform for future debt and equity financings, strategic alliances and eventual IPO or M&A, I have been frustrated to see so many talented entrepreneurs making costly but avoidable mistakes - particularly since these mistakes tend to recur time and time again. The following list highlights some of the most common mistakes that you are advised to note and avoid.
1. Poor Company Structuring
When Hong Kong based startups visit me for the first time, many of them have already incorporated into Hong Kong. 18 JUMPSTART July/August 2017
*Because of the generality of this article, the information provided herein may not be applicable to all situations and should not be acted upon without specific legal advice based on particular situations. The views expressed herein shall not be attributed to Morrison & Foerster, its attorneys or clients.
There are many reasons why a Hong Kong based entrepreneur should and must set up a Hong Kong entity - to hire employees or take advantage of preferential tax treatment for dividends received from a China subsidiary. However, there are also advantages of having a Cayman Islands or British Virgin Islands company structured as a parent holding company of a Hong Kong subsidiary: - There are cumbersome procedures for a Hong Kong company to repurchase restricted (i.e., unvested) ordinary shares from founders and to repurchase preferred shares from investors; troubling, considering that VCs in Asia often demand a right to have their shares repurchased upon certain events; - Transfers of shares of a Hong Kong company require a payment of a stamp duty and, typically, will also require presenting financial statements to the stamp duty office; - Hong Kong companies provide less flexibility for listing companies a US IPO. While it is possible to restructure the Hong Kong company to be held by a parent company in a more flexible jurisdiction (such as the Cayman Islands), this requires going back to all your existing shareholders to explain why the restructuring is necessary; then
redirecting your scarce funds from the rock star engineer you were about to hire to your reliable but decidedly less glamorous solicitor. At these initial meetings, founder shares purchase agreements are often memorialized on a cocktail napkin, a WeChat/WhatsApp message (or a photo of a napkin sent via WeChat/Whatsapp). Suffice it to say, the actual share register that evidence such ownership rarely match these initial founder share purchase agreements. It is true many well-intentioned and passionate founders end up leaving the start-up earlier than expected (for reasons best left to another article). What happens to the departing founders shares in that situation? Can the company buy them back, and if so, how many shares and at what price? It may be no surprise that these very basic terms are not often clearly set out on these ephemeral contracts. Needless to say, it is critical to have well-constructed and legally binding founder share purchase agreements put in place; not only for the protection of the non-departing founder and the departing co-founder’s successor, but to the professional investors who will insist that the share capital of your startup be deployed to those who will drive the company forward after the departure of said founder.
2. Treating China as “just another big market”
5 of the top 10 unicorns by valuation currently call China their home. It is no secret that China is an extremely attractive market for manufacturing hardware, as well as for distributing the domestic consumer market. It is also no secret that non-Chinese founders have had no shortage of challenges to succeed in China. There are significant restrictions on foreign investment in Chinese companies, particularly those engaged in the internet, mobile, entertainment and cloud-based services. Moreover, the traditional structuring “toolkits” to address these restrictions are evolving, such as using variable interest entity (VIE) structures. New cybersecurity laws are expected to impose stringent requirements on data privacy and localization of data content. While some aspects of foreign investment in China are liberalizing, like in certain areas of ecommerce, you should be realistic about the significant operational, financial, and legal resources you will need to set up meaningful operations in China.
3. Nothing is More Expensive than a Cheap Lawyer
Acting as a self-serving comment from a lawyer with a healthy billing rate, I cannot emphasize enough that hiring attorneys with low hourly rates does not cut down the overall cost of a project. In many cases, putting in a lower-cost inexperienced lawyer on your project may actually result in a higher final bill. You should be looking for counsels experienced in the type of transactions that you will need and can help you prioritize the critical issues that you need to focus on - issues that present theoretical risks but are practically acceptable and are not applicable to your company. The right lawyer, hopefully, will not accept shares of the company, cocktails, or a delicious chicken burger in lieu of legal fees. But lawyers who do regularly work with startups may have special discounted or fee deferral arrangements that you can explore. As an entrepreneur, the demand for your time is unrelenting and time lost fixing avoidable mistakes can be a startup’s death sentence. I urge you to have the foresight to invest time upfront
and get things done right, saving you time and unnecessary legal expenses down the road and giving you an unfair advantage over your competitors.
About the Author Thomas Chou is a partner in Morrison & Foerster LLP. He is co-head of the firm’s Asia private equity practice. Mr. Chou is also a leader in the firm’s China M&A group. Mr. Chou is consistently recognized as a leading lawyer in the areas of M&A, Private Equity and Venture Capital by major independent lawyer ranking organizations, including Chambers Global, Chambers Asia-Pacific, Legal 500 Asia-Pacific and IFLR1000.
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5 Tips for Building a Relationship with Your Chinese Manufacturer By Carly Liao and Eddie Lam
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s the Pearl River Delta region in Guangdong province continues to evolve from being China’s industrial powerhouse to an innovation hub, more factories are now opening their doors to startups. Some may even welcome you with open arms and offer perks like lower MOQ requirements and generous payment terms. Although it may be easier to find a manufacturer nowadays, the real challenge is how you can establish a solid relationship with this important business partner. After all, your startup is heavily dependent on your manufacturer because they are the ones who will turn your ideas into reality. You may have heard some cautionary tales about working with Chinese factories. But based on our experiences as a manufacturer in China, many of these pitfalls can be avoided if you know how to build a good relationship with your manufacturing partner. Here are some tips:
1. Meet them in person and do a factory tour.
Although emails and calls are good for early-stage communication, it is worthwhile to make a trip to visit the manufacturer in person and get to know the people you are working with. This is a great way for you to make a good impression, as well as for you to tour their facilities and gauge their manufacturing capabilities. This acquaintance stage will go smoother if you work with a manufacturer referred by your business contact because the mutual connection can boost your credibility. Ideally, you should partner with strategic investors who can give you access to their large network of contacts and resources. But generally speaking, many investors are happy to offer advice and make introductions, even if they are not planning to invest in your startup.
2. Share your vision and long term plan.
Given the small volume of business you are bringing to the manufacturer at the beginning, chances are you will not be their significant customer. Try to get them excited about playing a role in your future by communicating your vision to them. Also, manufacturers typically commit a certain production capacity to their major clients well in advance. Our key clients always share their long-term production plans 20 JUMPSTART July/August 2017
with us and propose estimated annual volumes for the next three years. Although startups may not be able to accurately foresee that far into the future, you should try to share your plans as soon as possible to ensure that your orders do not clash with the factory’s prior commitments.
United States months in advance. Our client purchased spare components for us in advance to avoid any production delay. A sense of trust and mutual understanding can go a long way. If you’ve got your manufacturer’s back, they will have yours too.
3. Ask for their feedback.
5. Station yourself at the factory and offer on-site support.
This will make your manufacturer feel valued as an important business partner. You will also greatly benefit from this cycle of constructive feedback, especially during the EVT, DVT and PVT phase. Remember, they are a team of specialists who can give you practical tips on how to optimize designs for mass production and cost saving. As a startup, you can leverage their technical expertise and soak up their insights like a sponge. Even experienced brands with tried and tested products, like McDonald’s, often collaborate with us on their product designs because they want to hear feedback from our perspective.
This is especially crucial at the start of mass production. Be aware that unexpected problems may arise at this stage even if all parties have done everything correctly up to this point. By stationing yourself at the factory, you have the opportunity to monitor the production lines in real time, offer timely feedback and debug on the spot to ensure continuous production. Your manufacturer will be grateful for your on-site support because any interruption on the production line will have a cost and schedule impact. Also, your physical presence can serve as a friendly reminder for the factory to prioritize your production.
4. Understand their constraints and set realistic targets.
If you think you’ve figured out every possible scenario and fine-tuned every detail to perfection, then you are about to learn a valuable lesson called Expectation vs. Reality. One thing you will soon realize is that it is impossible to achieve a 0% defect rate. So be considerate of your manufacturer’s constraints and set realistic targets together. During the PVT phase, be sure to work closely with your manufacturer to estimate the defect rate and then order spare components prior to mass production. We did this for a Disney product which required a specialized lenticular sheet that must be sourced from the
About the Author Carly Liao and Eddie Lam are husband and wife investors based in Hong Kong. Their two manufacturing plants in Guangdong produce plastic premiums for brands like McDonald’s, Disney and 3M. They enjoy connecting with passionate entrepreneurs because they like to invest in the people first, ideas second.
The Contrarian View An Alternative to China By Andrew Yang
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he continued interest in investing in and acquiring manufacturing assets located in China has been important for device and component manufacturers. As the quality of such products have increased over the last decade, many regional and international manufacturers of electronic, automotive, digital and mechanical devices either outsource their manufacturing to Chinese companies or have acquired their own such facilities in China. Naturally, a lot of domestic, regional and international money has flowed into China to support its recognized manufacturing prowess. However, with the increasing cost of labor and the valuations of China-based companies becoming less than a bargain, there is expressed interest in replicating the “China story” with South East Asia. In the last four years, I have had the fortunate opportunity to spend time with an increasing number of angel investors, venture capitalists and entrepreneurs principally based in Hong Kong, Singapore and Jakarta. The struggles faced by investors and potential portfolio companies appear to be universal across different jurisdictions. Except for a selected few South-East Asia based companies that have attracted interest from international and Chinese investors, many small to medium sized companies in Indonesia are looking to secure their first international investor. Those based in South East Asia have recently started to openly welcome money coming from sources originally earmarked for investments in China. Historically, sources of very early stage funding were rare. Survival would depend on the continued support and investment of a small number of established Indone-
sian conglomerates or family offices. In recent years, the situation has improved with more accelerators/incubators in place to support the growth of local entrepreneurs. However, there still remains a gap between angel/venture capital and traditional private equity. Investors willing to invest between US$10-30 million are few and far between. Those companies who’ve “made it” were fortunate to find investors/partners willing to bridge this “growth gap”. Most of the recent excitement in Indonesia comes from the e-commerce space. With financial and demographic metrics identified as undeniable, many strong e-commerce companies have emerged and are rapidly approaching this “growth gap”. Many of these companies are interested in welcoming Chinese or China-savvy investors for several reasons. First, since no current e-commerce/tech company based in SE Asia has successfully listed on an international stock exchange, validation in the form of an investment leading to a strategic sale to a Chinese or other international conglomerate is seen as the most favorable outcome (fingers crossed that the first of the SE Asia tech unicorns will have a successful initial public offering later this year). Second, many Chinese e-commerce players potentially bring solutions to key technological and infrastructural challenges currently faced by the same players in Indonesia; most notably in the form of payments. Third, Chinese investors may be keener on learning about
the unique dynamics of local markets, as opposed to taking control, removing local management and imposing home office policies and procedures. It is promising that the likes of Alibaba, Tencent and JD.com have either already made or openly expressed interest in taking their first significant step into Indonesia. Interest from these Chinese behemoths will hopefully push others to make their first investments into the region. It is equally promising that there will be a sizeable increase in interest from China and Hong Kong based family offices, mostly in the form of investing indirectly through SE Asia or Indonesia-focused angel and venture capital funds. Given most of these family offices are standing behind significantly larger family holdings, including companies listed on international exchanges, as well as connected to a broader network of institutions across Asia, it is promising that they are making such efforts. However, investments from the very big to the very small still leave the “growth gap”. Luckily, there are several groups of investors that have taken action to fill the “growth gap”. In the last several years, China/Hong Kong based venture capitalists have been extremely aggressive at trying to secure both investment opportunities as well as strategic partners to start SE Asia-focused growth funds. Some of the efforts are driven by leading tech investors/funds historically focused in China, Japan and Korea. Other efforts are led by well-known and regarded tech venture investors who trained Silicon Valley, bolstered their CVs and deal sheets by succeeding in China and have refocused on applying their experience and knowledge into SE Asia. However, in my opinion, while any interest in closing the “growth gap” will be well received, investors who are able to assist these promising companies to introduce, maneuver and cooperate with the Chinese or other international behemoth conglomerates are the most welcomed and needed.
About the Author Andrew Yang, partner of Addleshaw Goddard, has spent his entire career as a lawyer in Asia.
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10 Heavily-Funded Startups in 2017
2017
By Kaden Ng
has been a great year for many Hong Kong startups. Here are 10 startups that have achieved incredible milestones this year. Check out these heavily-funded startups in Hong Kong!
1. Lalamove (EasyVan)
2. Klook
Founders: Chow Shing Yuk Funding: US$30M Series B, Jan 2017 Founded in: 2013
Founders: Ethan Lin, Eric Gnock Fan, and Bernie Xiong Funding: US$30M, Series B, March 2017 Founded in: 2014
Originally founded as EasyVan in Hong Kong, Lalamove is an on-demand van rental startup. Lalamove is on a mission to make it easier for goods to find a driver, and for drivers to find goods to deliver through technology. Lalamove transformed the logistics sector with instant order matching, GPS vehicle tracking, 24/7 services and drivers rating. Currently with a presence in 45 cities, the latest rounding will facilitate its expansion to over 100 cities in Asia by the end of the year.
Travel Tech is a very crowded space, but Klook stood out and became Asia’s top player in the in-destination services segment. Klook provides a wide range of in-destination services for the Pan-Asia market, such as booking attractions, tours, activities, transportation and meal vouchers. With the latest round of funding, Klook is now building a bigger team to expand their destinations globally. The goal is to IPO in 5 years.
3. Freightos
4. Oddup
Founders: Zvi Schreiber Funding: US$25M Series B, March 2017 Founded in: 2012
Founders: James Giancotti and Jackie Lam Funding: US$6M Series A, April 2017 Founded in: 2015
In the past, finding and comparing freight rates was difficult. Getting a quote for international cargo shipments could take days and the process was not transparent. Freightos brings speed and transparency to the freight transportation industry. Their online international freight marketplace provides logistics companies with freight rate management and instant freight quoting.
Oddup is a data-driven research platform that provides analysis and ratings on startups. Oddup rates startups on a score of 0 to 100, providing a curated view on the potential success of a startup. Currently with footprints in over 10 cities around the Asia-Pacific, Oddup is firmly positioned to continue its strong growth not just in Asia, but globally.
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5. Campfire
6. Banuba
Founders: Albert Fung, Wang Tse, and Brian Fung Funding: US$6M Seed, March 2017 Founded in: 2016
Founders: Vadim Nekhai Funding: US$5M Venture, Feb 2017 Founded in: 2016
Campfire is a premium co-working space in Hong Kong, located in Kennedy Town and Wong Chuk Hang. Campfire has been growing quickly since its inception in 2016. In addition to the 2 existing locations, they are launching 4 more spaces this year. On top of that, Campfire will launch 2 co-living spaces, allowing entrepreneurs to live and work together.
Banuba is an app developer and computer vision-centric startup, focused on developing technologies for augmented reality-enabled mobile applications. Banuba’s SDK enables real-time face tracking, age detection and gender estimation, emotion recognition, eye-gaze direction tracking, motion capture and background change. They have applied for over 11 US patents for real-time video processing and image recognition stabilization.
7. Lynk
8. Gravity Supply Chain
Founders: Peggy Choi, Jennifer Li and Evan Han Funding: US$4M Series A, April 2017 Founded in: 2013
Founders: Graham Parker and Darren Palfrey Funding: US$2.5M Venture, April 2017 Founded in: 2014
Lynk is a platform that connects users to subject-matter and functional experts in different fields. With a US$1 million seed round in 2015, the team has doubled in size between its seed round and now. Lynk has over 35,000 experts across 73 countries and regions. They include C-level executives, scientists, engineers and specialist advisers.
Gravity Supply Chain is a developer for cloud-based supply chains and logistics visibility platforms. It aims to help users access supply chain data across any device at any time, providing real-time visibility over their entire end-to-end global supply chains. It also analyzes real-time data to provide predictive insight.
9. Qupital
10. Soundbrenner
Founders: Andy Chan and Winston Wong Funding: US$2M Seed, May 2017 Founded in: 2016
Founders: Florian Simmendinger, Julian Vogels Funding: US$1.5M Seed, Jan 2017 Founded in: 2014
The problem of unpaid invoices troubles many SMEs. When invoices remain outstanding for 90 days or longer, it poses serious problems to the companies’ cash flow. Qupital is a FinTech startup that helps SMEs raise funding against their unpaid invoices in 24 hours or less. What Qupital does is channel a loan to cover around 80 to 95 percent of the invoice’s value with their platform connecting these SMEs to potential investors.
Getting the rhythm right is essential to every musician. However, the sound of a metronome can be simply too intrusive. To solve this problem, Soundbrenner created the world’s first wearable metronome – the Soundbrenner Pulse. The smart metronome drives vibrations into your body, replacing the audible click of traditional metronomes and allowing the musician to focus on the music. 23
Jumpstart’s Directory of Entrepreneurs
Jennifer Suek Founder of Deown, gadget sharing platform in Hong Kong www.de-own.com
Lena Quek Founder of Babykins, a mobile app to track and benchmark your baby’s progress www.babykins.co
Raymond Yip Co-Founder & CEO of Designjar, an AI-powerd digital advertising platform for Asia www.designjar.com
Claudia Sin Founder of ChatCampaign.io changing spammy promotions to conversations, that people can participate and enjoy www.chatcampaign.io
Anna Chew Co-Founder & CEO of BEAM Storage, a concierge service offering warehousing and logistics on a mobile app www.beamspace.com
OVER 250 PROFILES ONLINE Paul Du Long Managing Director, Otonomos (HK) Limited www.otonomos.com
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Aaron Weller Co-Founder & CEO of Lucid & Miss Amara www.missamara.hk
Join our growing directory of entrepreneurs, freelancers, and investors. Create your free profile online.
Sponsored Content
Interview with Pakpobox
An Intelligent Solution for Logistics Delivery
Tell us about PakpoBox. What inspired you to start PakpoBox? How did you realize the pain points of the last delivery mile that your business has presented a solution for?
My family has been in the logistics industry for over 30 years. In the last 5 years, e-commerce has grown beyond anyone’s anticipation in terms of volume, scale, markets and countries. With this incredible growth, the whole logistics industry has been sharing the same fear of not being able to fill this growing capacity. Since then I realized the problems associated with last mile deliveries: limited delivery capacity, growing labour costs and difficultly for customers to agree on delivery schedules; one in every 4 parcels fail to be delivered at first attempt, leading to poor and frustrating collection experiences. Historically, customers had to wait at home for hours and the courier may not even arrive. But not anymore - we have busy lives and things to do; we can’t always be at home when the courier calls, leaving logistics providers with multiple and hugely-expensive delivery attempts. Pakpobox was born to fix all these problems - a network of modern letterboxes, fully automated that can connect thousands of global online merchants to customers. Today you can shop from Amazon in the US or Taobao in China and collect from Pakpobox, 24/7, in convenient locations and in total privacy. Unlike home delivery service, Pakpoboxes are always open and 70% cheaper. Delivering goods to smart lockers is 10 times more efficient than delivering to single residential units (one courier can deliver up to 60 parcels per day to single homes and 600 parcels to smart lockers), and it helps reduce delivery costs and CO2 emissions.
Who are your target clients? What are the advantages for clients using your products?
For couriers companies that need to lower their delivery costs and increase their capacity, Pakpobox can reduce delivery costs up to 85% and increase their capacity 10 folds. Unlike our competitors, our network is open to multiple courier companies. For online buyers who need privacy and extended-delivery options, Pakpobox is open for collection of online purchases 24/7 at convenient locations, in total privacy and is 50% cheaper than home deliveries. For tenants who need to do laundry and dry cleaning, Pakpobox is open for dropping off and collecting laundry 24/7 in convenient locations and is 30% cheaper.
What are the three things you would like your customers to remember after using your services? Convenient. Easy to use. Always available (24 hour service).
Tell us a little bit about how you grew your business from conception to where you are now?
Our journey began in November 2014, earning Yahoo Hong Kong as our first strategic partner. Since then, we have built strong partnerships with logistic operators like Hong Kong Post, Morning Express, 4PX, Singapore Post and online platforms such as Yahoo Hong Kong, Buy&ship today, Taobao, as well as Groupon. So far we have installed over 4000 doors in Hong Kong and have generated 1.5 million USD in revenue, serving more than 150,000 happy customers.
What’s next for Pakpobox?
We want to take Pakpobox from a hardware company to a global platform company. Our goal in Hong Kong is to build a network of 1,000 smart lockers that are 5 times more convenient than the post office. We are now discussing partnerships to enter into Australia, Indonesia and Taiwan by the end of 2017. We are also looking for more online merchants to integrate with, other than Taobao. In Asia Pacific, we want to install and operate 10,000 smart lockers by 2021 and build the biggest e-commerce delivery infrastructure in the region.
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Playground Moderating xJumpstart Jumpstart
Gallery of Events Jumpstart X Derek Kwik
Startup Zone Sharings
Jumpstart x HKTDC
HKTDC Spring Electronics Fair & ICT Expo Playground with xSunFounder Jumpstart
Brinc.io @ Startup Launchpad
their Raspberry Pi Smartcar
Tanscorp UU Smart Dancing Robot
Real-Time Translation Earbud
Startup Launchpad 26 JUMPSTART July/August 2017
Jumpstart Moderating the APEC Startup Ecosystem Roundtable
Playground x Jumpstart Playground x Jumpstart Release Party Fireside Chat
Jumpstart Party @ MakerHive
Playground x Jumpstart
Jumpstart x RedMountain
Jumpstart Release Party Playground x Jumpstart
HKTDC Startup Mixer
Jumpstart x Playground.work
HKTDC Entrepreneur Day HKSTP @ TIA Singapore
Jumpstart x Carousell
Playground x Jumpstart
Tech in Asia Singapore
Interview with Sheelpa Patel, the Head of Infiniti Lab Interviewed by Kaden Ng
W
herever you look, innovation is increasingly driven by entrepreneurs. To stay ahead of the curve and spot innovation as it happens, corporates around the world have a growing interest in investing in startups. Spearheaded and Infiniti Motor—Hong Kong-based luxury vehicle makers — launched the Infiniti Lab back in 2015. Infiniti Lab is a platform designed to connect Smart Cities and Internet of Things (IoT) startups with Infiniti Motor. In this issue, we have the pleasure to talk to Sheelpa Patel, the global head of Infiniti Lab. We are excited to learn about Infiniti Lab’s effort in driving innovation and empowering female entrepreneurs.
How Infiniti Lab was Started
Infiniti has always been a brand driven by a deep belief in the power of entrepreneurial spirit. When Sheelpa joined Infiniti, the team realized that there was an opportunity to do something disruptive with the startup ecosystem, shaping the future of intelligent urban mobility. Things moved quickly. Partnering with Nest VC, Infiniti created the Infiniti Lab – a unique platform for engaging entrepreneurs.
Reimagining Smart Cities
The core of Infiniti Lab is its three-month accelerator program, targeted at passionate entrepreneurs who share Infiniti’s vision to improve future urban living through technology. In the past two years, Infiniti Lab ran very successful programs to prepare early stage startups for commercial integration. For instance, the Hong Kong-based E-Cycle worked with Infiniti Motor to develop the prototype for their premium electric bikes that are foldable and easily rechargeable. E-Cycle is now preparing for their pilot phase with support from Nissan Motor, Infiniti’s parent company. Infiniti Lab has also helped Germany-based Green City Solutions to bring CityTree – a freestanding smart air purifying system – to Hong Kong. CityTree is able to utilize a special moss that effectively eats pollutants from the air without creating hazardous bi-products. Thanks to Infiniti Lab, Asia’s first CityTree is now located outside Hopewell Centre in the busy area of Wan Chai, helping Hong Kong alleviate air pollution.
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“We wanted to build that bridge between the startup environment and the corporate grid”, said Sheelpa. “We believe that the innovations and technologies developed by these startups – right here in the Infiniti Lab – contribute to Smart Cities of the future and to Infiniti’s overarching mission of developing world-first technologies that enhance the driving experience of our customers.”
The Future of Infiniti Lab
What started as a localized pilot project is now a global program. Infiniti’s goal is to offer programs globally for every type of startup at every stage of their journey. Infiniti is currently running another accelerator in Singapore for mature-stage startups, with the theme Smart Mobility. Infiniti has also recently launched a pre-accelerator program, qualifying Canadian entrepreneurs to secure a place with global accelerators. Targeted at idea-stage startups, Infiniti plans to launch Startup Weekend events globally – next stops for Infiniti Lab include Taiwan and Dubai.
Empowering Female Entrepreneurs
Beyond Infiniti’s vision to shape the future of smart cities, it is exciting to see Infiniti’s recent initiatives in empowering female entrepreneurs. Last April, Infiniti hosted Hong Kong’s First Startup Weekend Women in Tech Initiative, with 35 female participants. “The initiative served as a fantastic opportunity to encourage the growing number of female leaders in Hong Kong to start a business, and to connect more women to the number of resources and mentors available in the local community”, said Sheelpa.
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There aren’t enough female founders in any industry, let alone the tech industry in Asia. So, it is very important for us to empower female entrepreneurship on a much broader basis. Infiniti has also worked with ‘Young Makers, Change Makers’ to produce the ‘Technovation’ event at Infiniti Lab Hong Kong in April. This is a global annual program that offers girls around the world the opportunity to learn skills needed to become tech entrepreneurs and leaders in areas of social and community issues. Infiniti Lab hosted the event and provided mentorship for their GirlsMakeTech workshop on Branding, Digital Marketing and Pitching. The youngest participate is just 10 years old! In Singapore, Infiniti is now working closely with the Female Founders, a Singapore-based a non-profit, to host a ‘Smart Women, Smart Cities’ panel discussion. This event will mark the culmination of Infiniti’s Singapore Smart Mobility program. “There aren’t enough female founders in any industry, let alone the tech industry in Asia, so it is very important for us to empower female entrepreneurship on a much broader basis.” Sheelpa hopes to pave the way for empowering enterprising female individuals to push the boundaries of the tech industry.
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21F The Phoenix, 23 Luard Road, Wan Chai +852 3568 6343
OTHER LOCATIONS AROUND ASIA
OTHER LOCATIONS AROUND ASIA
21F The Phoenix, 23 Luard Road, Wan Chai +852 3568 6343
Looking for a work space? Join our community to meet and work beside other like-minded creatives! 29
For more information, us through to contact@thehive.com.hk to find a space like-minded available near you! ng for a work space? Join ouremail community meet and work beside other creatives!
For more information, email us through contact@thehive.com.hk to find a space available near you!