Foreign startup chases ‘China dream’ through e-commerce

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The trio are the founders of baopals.com, a website that helps English speakers to navigate and make purchases on Alibaba’s e-commerce platforms Taobao and T-Mall, China’s mega-Amazon-style online retailers.

Thornhill and Erickson said they each planned only a one-year stay before coming to China. But 12 months after Thornhill arrived in 2007 and Erickson in 2012, both decided to stay.

“Once you come here, it’s hard to leave,” Erickson said.

In 2015, together with McNew, the three U.S. expats founded the e-commerce startup in Shanghai, having realized that shopping on Taobao — a daily convenience for Chinese natives — was disproportionally difficult for fellow laowai (foreigner).

“When I needed or wanted to buy something on Taobao, I always told my students or colleagues to help me purchase,” said Erickson, who formerly worked as a teacher in China.

For their startup, Thornhill and Erickson took on the responsibilities of product and business development respectively and McNew was in charge of tech development. The trio quickly turned this market demand into a business.

After six months of preparation, baopals.com was officially launched on March 1, 2016. On the first day, the site received 12 orders for 22 products, which totaled about 1,360 yuan (US$202) in sales.

The trio weren’t discouraged. Without money to spare on paid advertising, Erickson said he asked friends to make banners and shared them on WeChat.

Words started to spread, and after being featured on the expat magazine That’s Mags a month after launch, the company began to grow at a steady pace.

Erickson said what really attracted users was the platform itself.

“Have a great product with great service and people will talk about it,” he said. “Your product is your number one marketing tool.”

Within a year, baopals.com recorded its first month with positive cash flow in February. And after 18 months, it has sold 640,000 products and the team has moved from an 80-square-meter apartment to a bigger office with 30 employees.

“Currently, we deal with about an average of 600 to 700 orders a day, and the number is growing at a rate of 20 to 30 percent every month,” said Thornhill, who saw their development to be “healthy, organic and sustainable.”

“At the first place, none of us have thought about doing e-commerce or starting a business in China,” Erickson said. “It was just the right climate for it.”

From 2015 to 2016, China’s online retail sales of physical goods increased by 28.6 percent annually on average, 18.1 percentage points more than the total retail sales of consumer goods, according to the National Bureau of Statistics (NBS).

The surge of the online shopping was accompanied by more convenient methods of delivery in China. Last year, the express delivery service delivered 31.3 billion parcels, 5.5 times of that in 2012 and an annual average increase of 53.2 percent.

“The e-commerce seen here is incredible, and it is mostly untouched to world outside China,” Thornhill said. “This is an opportunity for us and for baopals, to be part of the expansion of what’s working so well here in China to the rest of the world.”

Users can shop on baopals.com via their website or through WeChat, which contain detailed information from the original Chinese e-commerce platforms that has been translated into English. Purchases made on baopals.com can be paid using Alipay, UnionPay and WeChat Wallet.

“For us, [as foreigners], it’s pretty clear that the best shopping is done in China,” said Thornhill, citing the reasonable prices as well as the convenience of express delivery and online payment.

“It’s a shame that only China has this treasure,” Erickson said, explaining that baopals.com is considering expanding the business globally in the future.

With several years of working experience in China, Thornhill said he believes if you work hard, you can achieve your goals. “It is kind of what the American dream is always meant to be.”

“We seem to get a sense of that more here in China,” he said. “And the sense is really the China dream.”

“We have a team of around 18 Chinese and 12 foreigners working together on the same dream, and that’s really cool.”

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