2023 XVC Entrepreneur-GP-LP Event | Navigating Global Competition: Strategies for Success
Shanghai, May 10th - XVC successfully hosted our annual Entrepreneur-GP-LP Event this year, with nearly a hundred influential global investors, including university endowment funds, family offices, and sovereign wealth funds, engaging in insightful discussions and candid exchanges with our portfolio companies.
The gathering, which hit on the theme of "Navigating Global Competition," was looking in particular at topics that have drawn buzz across various sectors, from supply chain optimization to taking homegrown brands overseas.
"The past three years have been marked by substantial global disruptions, with both entrepreneurs and investors trying to grapple with shifting political, economic, and tech landscape," Hu Boyu, partner at XVC, said in his opening speech. "However, amidst formidable challenges, great opportunities abound."
Looking back on 2022, we observed a challenging year weighed by factors such as ongoing pandemic and faltering economic growth in China. This led to contraction in many sectors, notably the consumer industry, and left many businesses struggling to seek ways out. Though, certain companies managed to defy the market turmoil and stood out as remarkable exceptions, and among them are our portfolio companies.
Backed by self-reinforcing business models and strategic focuse on strengthening core competence, such as product innovation, supply chain optimization and brand enhancement, our portfolio companies have carved out premium positions in their respective niche markets.
Chagee
"Alongside our devotion to the product positioning of crafting fresh milk tea with premium tea leaves, Chagee also maintains a distinct brand positioning," said Jack Zhuang, VP of Overseas Operations at Chagee, during the panel discussion.
"We prioritize continuous brand enhancement, with a focus on 'fostering friendships through tea' and 'embracing internationalized Chinese aesthetic'. This strategic move amplifies our brand impact, empowering us to expand into new regions with a robust brand presence."
Laifen Technology
With its product hitting the market in less than two years, Laifen has expanded its market share with remarkable speed. In 2021, Laifen's supersonic hair dryer achieved an annual sales revenue of RMB 130 million, a figure that exceeded RMB 1.5 billion in 2022.
In the latest GfK Report on "Top 10 Phenomenal Products in the Personal Care Small Home Appliances Category for 2022-2023", only two hairdryer products were featured: Dyson SUPERSONIC HD08 and Laifen LF03.
According to the report, although Laifen's market share (12.6%) still lags behind that of Dyson (36.6%) in 2022, it is gaining ground on Dyson's market share. The report also emphasizes that Laifen's supersonic hair dryer is "on par with Dyson in various aspects".
Li Yuxin, marketing director at Laifen, disclosed that the company has been focused on establishing a Gigafactory with its own R&D center and supply chain, right from the beginning. "Up to now, no personal care appliances companies have ventured into this territory, but it holds significant value," he said.
Finture (YUP)
The Southeast Asian market, led by Indonesia, is widely recognized as the next frontier with tremendous potential in the digital banking sector.
Finture (YUP) has become the first Fintech company in the Indonesian market to issue credit cards. Its credit payment solutions, the YUP Card (a physical credit card) and the YUP Wallet app, have swiftly gained market dominance, making it the fastest-growing credit payment platform in the region.
With monthly card issuance surpassing even the largest local banks, YUP has attracted a highly engaged user base with exceptional transaction activity and retention rates.
"In Indonesia, the credit card industry has a high barrier to entry, which has, to some extent, limited the number of competitors for Finture," said Zou Matt, co-founder and COO at Finture.
"We bring global know-how to the local market. Leveraging our technical prowess and financial expertise, we not only help upgrade traditional banking services to the digital realm, but also address issues such as fraud prevention and credit scoring with data-driven models and algorithms," he explained.
This, in turn, enhances Finture's asset management and operational capabilities, lowers the barriers for ordinary users to access credit cards and credit payment services, all while maintaining a lower level of asset risk.
That being said, building a solid infrastructure alone may not guarantee market penetration; local decision-making tailored to the specific characteristics of the target market is also crucial.
Upon entering the Indonesian market, Finture strategically partnered with local brands in high-frequency consumer scenarios (currently, their payment services cover over 30 million local merchants), and actively engaged with consumers offline. Matt revealed that currently, 60% of their initial customers come from natural traffic generated by partners, while user referrals and user fission account for the remaining 40% of customer acquisition.
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Horwin
Over the course of six years, Horwin has achieved impressive global expansion, establishing a strong presence across four continents and in over 56 countries and regions.
The brand has successfully validated its premium electric motorcycle offerings in Europe, ranking second in overall sales among independent brands. Additionally, it has established dominance in the high-speed (80km/h) electric motorcycle segment, leading in both sales volume and revenue. Furthermore, its global product sales in 2022 skyrocketed by an astounding 220% compared to the previous year.
As emphasized by its CEO and founder Zhou Wei, "At Horwin, we are driven by our mission, forward-thinking technology, and user-centric approach."
Horwin holds more than 200 core technology patents, showcasing its comprehensive independent intellectual property rights and the ability for full-stack R&D.
In this April, Horwin made its debut at Auto Shanghai 2023, unveiling multiple highly anticipated pioneering proprietary technologies, for example, the "Integrated Intelligent Chassis (IM)".
"This three-in-one platform tackles the long-standing challenge known as the 'impossible triangle' in the electric vehicle industry," Zhou further explained.
Lihoo's
The pre-packaged meal sector in China, which is on track to become a trillion-yuan market, is witnessing new players flocking in. Amongst them, Lihoo's takes early lead in the tense race.
Lihoo's has long established an integrated supply chain that spans upstream sourcing of high-quality raw materials, midstream processing techniques and downstream R&D capabilities. This strategic advantage enables the company to develop a series of groundbreaking pre-packaged meal products.
"Without a highly efficient supply chain, innovation alone won't get you far," said Wang Bin, founder at Lihoo's. "To provide sustainable and cost-effective solutions, whether for B2B or B2C, you need a consistently efficient supply chain that caters to the long-term needs of your clients."
Despite the challenges posed by the pandemic, Lihoo's has maintained an impressive growth trajectory. In terms of revenue, the company achieved an impressive 137.07% sales increase in 2021 and continued to thrive with a robust 60% growth in 2022.
Aiper
Initially, Aiper's primary focus was on OEM products. However, as its scale grow, Aiper embarked on a path of vertical integration, encompassing R&D as well as the supply chain.
With an autonomous and efficient supply chain, Aiper has witnessed notable reductions in R&D cycles, enhanced innovation capabilities, cost savings, and significantly improved yield rates.
Meanwhile, Aiper has achieved remarkable growth in both online and offline brand presence. The company not only dominates the cordless robotic pool cleaner category on Amazon, but has also successfully expanded its retail footprint in offline channels.
"Our products are now available in major retail outlets such as Walmart, Bestbuy, Costco, and Home Depot in the United States," said Hellen, the head of brand marketing at Aiper.
"We have pursued a 'Global Local' strategy from the outset, with the goal of establishing a strong foothold in the European and American markets. It is safe to say that we have successfully fortified our position across product, distribution, and brand dimensions."
Looking ahead to the post-pandemic era, we anticipate a pickup in consumer sentiment in China, accompanied by a widespread trend of consumption upgrades. This will result in higher expectations from customers towards enterprises across various aspects.
Brand strength will become crucial, as trust will serve as a prerequisite for consumer choices. Furthermore, consumers will show a greater inclination towards higher quality products and will be willing to pay a premium for them. In addition, consumers will actively seek out innovative products that embrace technological advancements. Moreover, consumers will place a heightened emphasis on the overall consumer experience, seeking not just functional fulfillment but also delightful and fulfilling experiences.
In order to navigate through the competitive landscape, beyond being early movers, enterprises must also establish a "self-reinforcing" long-term structural competitive advantage in key areas such as the supply chain, brand positioning, and data utilization.