China is arguably the world’s largest manufacturing center for smart devices thanks to the quick rise of hardware hubs like Shenzhen. Groups of foreign entrepreneurs come to the country in search of more affordable parts, efficient manufacturers, cheap labor, crowdsourcing, and the vibrant startup community. But even though their products are manufactured here, it is still a daunting task when they try to sell them in China, a market too large for startups to ignore.
Compared with overseas markets, online marketing in China is more segmented, complex and unpredictable. Even Hover Camera, a drone maker founded by a Chinese team, ran clueless when tapping local market after initial success overseas. “So that’s why they choose to work with VeeShop,” Wendy Wang, founder and CEO of the firm, told TechNode.
VeeShop partners with international smart hardware makers to bring exclusive and high-end products to China via its community of gadget fans by matching key opinion leaders (KOLs) and leveraging online and offline distribution channels.
As an electronics retailer, VeeShop is based on yanxuan, a model behind the success of Xiaomi and NetEase Yanxuan. “To tap China’s consumption upgrading trend, yanxuan (which means “strictly selected” in English) helps Chinese customers to build more affordable yet quality life by selecting a limited number of quality items on a few main categories,” said Wendy. For example, products sold on yanxuan are limited to nine main categories and the SKUs are controlled to around 7,000 items.
While NetEase Yanxuan is focused on providing selected daily life products, VeeShop goes after the smart hardware vertical. “Tmall is the upgraded version for Taobao, but now there’s no higher-end version for JD, China’s major electronics e-commerce platform. JD’s sales per order is at around RMB 200 (around $30), we aim at something between RMB 2,000 to 3,000,” Wendy explained. “China has a huge appetite for smart products. We are talking about a $4 billion market for imported smart hardware here.”
Different from JD’s male-centered customer base, 80% of VeeShop users are female. Wendy sees this as a new trend in the smart hardware industry where smart jewelry, smart home gadgets, and smart maternal & baby care devices are on the rise.
What’s more, the 10-month-old startup is also engaged in enterprise-facing business, providing full marketing solutions for foreign startups in penetrating China with partnership cross multiple channels like JD, Mogujie, Suning, KOLs, celebrities, talented management companies of Billboard Asia.
The yanxuan model reasonably leads to strict project selection standards for VeeShop. “We got three standards in project selection. First, it has to be an international product that as aspires to enter the Chinese market. Second, the product has to be beautifully designed and aesthetically pleasing. A majority of our clients are CES and Red Dot Design Award winners. Lastly, the team has to be in China, rather than hesitating on making the move or not,” Wendy told us.
The global smart hardware boom coupled with China’s market traction have given VeeShop abundant potential clients. It has partnered with multiple hardware incubators and accelerators from around the world including SOSV’s HAX, the first and largest hardware accelerator in the world that has accelerated 12% of the projects that raised more than 1 million US dollars on Kickstarter. As well as several smart device OEM factories like platform 88, a backdoor for Indiegogo and Kickstarter in China. The firm has worked with over 40 companies since launch.
Wendy illustrates how they usually work with partners by using Hover Camera as an example. “To test whether a product works in China or not before reaching a partnership, we would launch pilot test with KOLs. In the case of Hover Camera, we partners with Li Ziqi, a top food vlogger in China, to include a bird’s eye view in her blogs. We got tons of likes after posting the video and that’s how we got the first hint that this is going to be a success in China.”
“Actually, KOLs are quite open to this kind of cooperation because this would be a win-win situation for both parties. We help hardware startups to get media exposures they needed and KOLs get more technological and cool components in their content, which would help to rebuild their brand image and boost traffic in turn,” Wendy said.
The company has a strong team with experience in business and operations. Company CEO and co-founder Wendy previously worked at PwC as a consultant prior to becoming a serial entrepreneur. She sold her first company Palmap, an indoor map company, to Baidu and it’s now the foundation of Baidu’s LBS department. Then, she co-founded Chinese luxury flower brand Roseonly and BitYes, one of the biggest Bitcoin oversea exchange platform globally founded by Chinese before it closed. Co-founder and COO Jason is also a serial entrepreneur, who has over ten years of operation experience in sales.
Although the smart hardware concept witnessed its first boom as early as 2013, Wendy believes the right timing for getting involved in this sector as an early adopter has just arrived. “Hopping on the hottest trend is the work for investors. The popularity of a field among venture capitalist does not necessarily coincides with that for the consumers. Likewise, it would be too early for mass users to consume current hot technologies like AI. In another word, it takes time to transform investment into actual user adoption. The normal period takes three to five years,” according to Wendy.