Chinese tech giants have had a tough time in Western markets in recent years. Huawei and DJI have been hit by trade restrictions, while TikTok and WeChat are threatened with banning their apps in the U.S. Overall, Chinese companies operating abroad are increasingly wary of geopolitical tensions increasing.
But at an event hosted by California-based crowdfunding platform Indiegogo for Chinese consumer goods manufacturers in Shenzhen, companies sizes ranging from a startup making portable power plants to Midea, the 53-year-old home appliance giant, listened intently to Chinese officials in Indiegogo shed light. on how to woo Western consumers.
“The first step is to be heard by the world. We did it, ”said Li Yongqin, general manager of Indiegogo China, to an entrepreneurs room. “Then we will bravely ride the tide and accept the challenge of becoming the brands loved by users around the world.”
For Midea, “Crowdfunding gives us a very direct way to understand consumers,” said Chen Zhenrui, who oversees the group’s overseas e-commerce initiative. Platforms like Indiegogo and Kickstarter are ways for individuals and organizations to raise capital from large numbers of people to fund a project. In most cases, funders get benefits or rewards from the project they are funding.
Midea raised $ 1.5 million last year for a new air conditioning unit launched on Indiegogo, an almost negligible amount compared to the 280 billion yuan ($ 42 billion) in annual revenue it generated in 2019. But the support of its 3,600 backers on Indiegogo was more proof of the concept.
Within weeks, Midea learned that a compact air conditioner that sits comfortably on the windowsill, blocks out noise and saves energy could attract many American consumers. Like other established Chinese home appliance manufacturers, Midea had been exporting for several decades.
But “in the past, much of our overseas business was in the traditional field of B2B exporting. I think we are still a long way from being a world class brand, ”Chen said.
When Midea first launched on Indiegogo, one user left comments on their campaign page, calling the project a scam: How could a Fortune Global 500 company be on Indiegogo?
“Through communication rounds, we got to know each other. This user gave us a big boost, ”Chen recalled, adding that Midea had used a dozen suggestions from Indiegogo backers to improve their product.
More and more traditional Chinese manufacturers are giving crowdfunding a chance. Padmate, based in the southern coastal city of Xiamen, has built a new brand of headphones called Pamu from its founding as a manufacturer of white label sound systems.
Edison Shen, director of Padmate, said traditional exporting was becoming increasingly difficult as old-school distributors were squeezed by new retail channels like e-commerce. By creating their own brands and reaching consumers directly, factories could also improve their profit margins. Padmate went to Indiegogo in 2018 and raised over $ 6.6 million in one of his wireless headset campaigns.
Most of the projects on Indiegogo will go beyond the 9 million contributor crowdfunding site to mainstream platforms, a listing on Amazon as well as advertising on Google and Facebook. While the core services of these US high-tech companies are not available in China, they all have some form of operational presence in China, whether it’s stationing staff in the country like Amazon or to work through local advertising resellers like Facebook.
Indiegogo itself opened its Chinese office in Shenzhen five years ago and has since seen China-based projects raise more than $ 300 million through its platform, according to Lu Li, chief executive of global strategy at Indiegogo. China is now the company’s fastest growing market, accounting for over 40% of the campaigns that raised more than $ 1 million in 2020.
Kickstarter, a rival of Indiegogo, has also seen a surge in projects from China, which reached a record funding of $ 60.5 million in 2020. The Brooklyn-based company recently started looking for a contractor in Shenzhen. or in nearby Hong Kong to help him research the Chinese market.
“In recent years, more and more Chinese companies are familiarizing themselves with crowdfunding and taking their mark on a global scale, hence ‘blockbuster’ campaigns. [from China] are also on the rise, ”Li observed.