What works elsewhere may not do the trick.
Many of you will have expanded your business outside its original location or made a move into an area that you weren’t totally familiar with.
In general, it’s quite easy to work out the nuances of a new area and slightly tweak your marketing and sales model to suit the new area. If you’re based in Sydney and you open an office in Melbourne, for example, you just need to learn to carry an umbrella and hate Collingwood. Subtle nuances.
I have just returned from China and, among other things, I sat down with Kaseya and explored their business march into China and asked about how they approached the Chinese market compared to a western market such as Australia.
First, I want to dispel a couple of myths and give you some facts about China. Many people say China is big. It isn’t. Big doesn’t even come close to describing the country. With a population of 1.339 billion it is 58 times larger than Australia. In China when they say you are one in a million, there are a thousand just like you.
Technically that is now wrong – there are 1339 just like you! Their largest city, Shanghai, has about the same population as our entire nation. There are 118 cities in China with a population of more than one million and 39 over two million. We have just five over one million. Life seems cheap.
Rafferty’s Rules of road traffic results in 446 traffic deaths each year per 100,000 cars owned, compared to Australia’s figure of seven. We are constantly discussing the reduction of our road toll yet they seem to accept the casualties.
More than 100,000 people died in workplace accidents last year and I can understand why. I saw one building with four-storey scaffolding – made of bamboo and lashed with fencing wire. I saw gardeners trimming hedges down the centre of a motorway just standing on the roadway (with hi-vis jackets admittedly) while cars went past at 120km/h a few centimetres away. They have 134 million people existing on less than $1 per day which helps to explain their average per capita GDP of only $A5413 (ours is $40,234).
When Kaseya entered China two years ago, the method was to attack the market with a similar approach to other countries and then tweak it as it went. It needed more than a tweak. Labour is cheap. Total cost of an experienced engineer is about $A5000 a year. The typical solution to any problem in China is to throw more people at the problem. The Grand Canal is 1794km long and was dug by hand – five million pairs of them – back in 486BC.
The IT industry is no different. The great argument for automated management software in Australia (and most western countries) is to remove the boring repetitive and tedious work from your expensive and highly skilled workforce and let them engage in other work that is more challenging and can’t be performed by software.
The typical solution in China is to just have people perform the boring and repetitive work. Why bother with an AMS solution when people are available for very low prices?
Where Kaseya really started to gain traction was in being able to leverage larger, more effective reseller partners and in gaining key vertical wins which it then used to tout to the market – which therefore increased legitimacy. As a contrast, in Japan – which many people consider is a similar market – the real turning point was being able to apply its software to specific projects.
Once clients started to realise using Kaseya to deliver a specific project was faster and cheaper than human labour, suddenly the pitch was modified and the sales flowed.
The marketing has been a challenge for Kaseya. There is no community of service providers anything like Australia’s. That makes finding the right marketing to reach potential clients difficult.
China is a single-party state governed by the Chinese Communist Party. Internet censorship restricts the use of many sites such as YouTube, Twitter, Facebook, BBC News, and Amnesty International. This censorship can also make the internet painfully slow – not great for a software solution that relies on the internet. The location of the Kaseya server in relation to the endpoints is absolutely critical to ensure the optimum internet connectivity.
Discounting creates a completely separate issue. Everyone in China expects some haggling. I think if a marketing company offered a free product, a Chinese person would want to haggle for a better deal.
Kaseya is a true international organisation and would typically expect the same return on their product no matter the market – but China is a market unto itself so it has to be a little more flexible here.
Overall, despite the challenges and the cultural divide, Kaseya is tracking well. With 14 staff in China it has secured 40 clients but, more importantly, 90,000 endpoints. Q1 this year was the best so far for Kaseya China with more than $500,000 of revenue and the growth is expected to continue as they learn more about the market and as labour costs start to rise.