Serious business

Hangzhou, a city made for entrepreneurs

Our series exploring fresh ideas, technology and entrepreneurship continues with Hangzhou, home to Alibaba, Chinese unicorns and more. Words by LUKE KELLY, illustrations BY RYAN CHAN

Alibaba is a behemoth and Hangzhou is its home. The company delivered the biggest IPO in US history in September 2014, and Jack Ma, its founder, is reported by Forbes to be worth US$30.3 billion. He lives in the city, where the company sprawls over a 150,000-square-metre campus.

Alibaba is one success story, however, among many in Zhejiang Province. Wahaha – China’s largest beverage manufacturer, which employs 30,000 people – has its headquarters in the city, as does Geely, which bought out Volvo in 2010.  According to the Hurun Research Institute, the province has produced 72 billionaires.

‘Start-ups in Hangzhou can get a lot of help, whether from the government, capital markets or society,’ says Tong Luyao, chief operating officer at Hangzhou-based Entertech, which created Naptime, an eyeshade that uses EEG technology to help users sleep better. ‘We got our angel investment through an entrepreneurial roadshow organised by Zhejiang University. The government provided offices free of charge to help us get through the most difficult stage.’ He adds that the city boasts a high degree of internationalisation, a constant inflow of talent and a lower cost of living than nearby Shanghai.

Hangzhou’s GDP rose 10.2 percent in 2015, versus a 6.9 percent increase at the national level. Its government is looking to have high-tech companies contribute more than 50 percent of total industrial growth by 2020. The city hosted the G20 summit in 2016 and will host the 2022 Asian Games, further boosting its reputation.   

Tech hopefuls flock to Dream Town, a startup hub near Alibaba’s headquarters. It offers successful applicants free office space, cash subsidies and training. Already home to hundreds of small businesses, the incubator hopes to eventually attract 10,000 university graduates to set up startups. Ma has said in interviews that Beijing is the hub for state-owned enterprises, Shanghai attracts multinationals and Hangzhou is something else entirely: ‘In our city, we like entrepreneurs. We like people from nothing building an app.’

The person

Zhang Lianglun

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Selling peace of mind to parents

At just 31 years old, Zhang Lianglun has made serious waves in Hangzhou’s tech scene. In 2011, Zhang left a promising career at Alibaba to build his own e-commerce empire, roping in a number of his colleagues. He first built a discount site named Mizhe, catering to China’s online shoppers. The site raised US$1.6 million in Series A funding just a year after it went online. But Zhang was already looking towards his next venture: an e-commerce platform catering to young, internet-savvy mothers.

That venture, BeiBei, was an immediate success when it launched in 2014. Zhang cleverly targeted the site at younger mothers who were distrustful of Chinese products and comfortable with shopping online. His team of buyers and reviewers rigorously vetted each and every product and vendor on the site. Rather than an open marketplace, Zhang wanted a carefully curated product selection, with a focus on quality and reliability. The largest part of BeiBei’s workforce is dedicated to eradicating sub-par products, and the platform has been quick to terminate contracts with sellers that don’t meet
its standards.

Capitalising on China’s growing middle class and the relaxation of the one-child policy in 2015, BeiBei grew to unicorn status (denoting a valuation of over US$1 billion) in just two years and is now the country’s largest online retailer of mother and baby products. And there’s still plenty of growth potential within China: according to research firm Roland Berger, China’s mother and baby market is expected to increase by 12 percent annually and reach nearly RMB 1.7 trillion by 2020.

For both of his ventures, Zhang paid attention to optimising the user experience. His team targets relevant product recommendations and repeat buyers, making the shopping experience as seamless as possible for parents. ‘We found out our customers want a one-stop platform,’ Zhang told Forbes in a recent profile, ‘and we’ll give them what they need.’

The product

FangCloud

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A growing player in data storage

With about 100,000 clients, including Zhejiang University, and revenues that increased more than fivefold between 2015 and 2016, FangCloud is a name known in China that could also soon be recognised beyond the country’s borders.

The cloud services company was created in 2013 after its core team met while working in Silicon Valley for Box, the world’s largest enterprise cloud storage service provider. After two years of development, the solution went online. Just one year later, FangCloud had a nationwide operations network with centres in Beijing, Shanghai, Guangzhou and Shenzhen. The company also enjoys a strategic partnership with AliCloud, the data security wing of Alibaba.

This year, says chief executive Yan Cheng, the company has set its sights on the European and US markets. It has the financial backing to challenge established cloud heavyweights. In November 2016, it won an US$8.4 million Series A funding round, having previously raised more than US$6 million across two rounds in 2014.

Cheng says FangCloud is aiming to disrupt traditional file management systems, which often ‘can only partially satisfy the needs of enterprises’, forcing companies to buy an array of systems and then figure out how to get the various elements to work with each other while keeping the data secure. FangCloud hopes to become a one-stop content platform for enterprises in the next five years, he says. fangcloud.com

What to watch

Talk to me

Goji is attempting to revolutionise the business of English language exchange, using an app to connect Chinese customers with native English speakers across the globe. Users can earn money by conversing with language learners via the app. gojinet.com

How to spend it

‘Making business payment into China shouldn’t be hard,’ reads the home page of Hangzhou’s PingPong Financial. This startup provides a payment service for Chinese e-commerce sellers to help them accept purchases from overseas. pingpongx.com

Quick fixers

If you run into car trouble, contact Chemayi through its app, and a staff member will show up, take in your vehicle for repairs and deliver it back to you. The service is now in Hangzhou, Shanghai, Beijing and Guangzhou. chemayi.com

Additional reporting by Letitia Lin

Cathay Dragon flies to Hangzhoufrom Hong Kong 28 times a week

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