Connecting and speaking with seasoned professionals to inquire and discuss various business topics is something I enjoy and find necessary to equip myself in today’s fast-changing business climate. My typical process to reach out to a professional is via the LinkedIn non-paying “Connect” invite with a concise short note. Once connected, I would write the person a brief, customized, to-the-point message. In which, I clearly state my reason to reach out; why I chose him or her to connect, and include a clear and reasonable request (a brief intro virtual meeting/call). I have found this approach quite effective, with a response rate of approximately 10%.

The Mentoring Club, which I heard about via the WTM Berlin Slack channel a few weeks ago, is a game-changer! I can now browse through experts of specific work areas to select mentors to speak to, who have volunteered to be mentors and are ready to answer questions. At first glance at the site of The Mentoring Club, one will see that experts come from diverse geographic locations, with many from the Berlin area. If you have questions about a career path, a type of role, or a business situation, it is helpful to speak not only to experts who might have first-hand experience of what you are looking for, but also those who work in adjacent roles that can give you their perspectives to an issue or a role. Once identifying the mentor to speak with, one can easily book an appointment via Calendly, with no questions asked.

When seeking to speak with those mentors who are currently marked unavailable to mentor, I suggest connecting with them via LinkedIn. And if a connection invitation is accepted, write the person a nice note about why you need to speak with them. I find this approach can at times ‘bypass their unavailability’, so you can still get a meeting. Many people like to help (including me!). I have spoken to two professionals from The Mentoring Club so far and both times had a great experience. Because they have volunteered themselves as a mentor, they were very receptive to my direct questions and tried to be as helpful as they could.

For those who are new to finding mentors or shy about building one’s professional networks, I highly recommend starting with using The Mentoring Club. I never know the rewards that I might reap when stepping outside of my comfort zone to speak to someone new. Quite a few people from my ‘warm and close’ network include those that I met through reaching out ‘cold’; now I could easily reach out to them to inquire about something and about anything.

When deciphering the dynamic of a two-sided marketplace startup, including the use of measuring market efficiency, revenue growth projection, and resource allocation, it is necessary for founders to extract relevant data and calculate the following metrics. Founders can then use these metrics to gauge the attractiveness of their marketplace business to both sides of users and explore how to use company resources in the most impactful way to grow their business.

Market liquidity: Simon Rothman of Greylock Partners defines liquidity as “the reasonable expectation of selling something you list or finding what you’re looking for.” Generally, your market liquidity will reflect the relevance and speed of your matching system.

• Seller (provider) liquidity: percentage of listings that move to contracts, which lead to transactions within a suitable time frame (ex. hourly, daily, monthly, quarterly), depending on the nature of your business.
• Buyer (finder) liquidity: the probability of a visit from either a buyer or finder, excluding those who quickly left (bounced), that will lead to contracts or transactions. This can be calculated as total contracts or transactions per month divided by total unique visits per month.

💡 Manage customer expectations: avoid employing a subscription revenue model when the marketplace is 1) low in stock/listings 2) low in traffic 3) lagging behind a reasonable transaction time frame established by competitors or traditional business players in the same industry, due to low matching relevance system or tractions.

Net Promoter Score (NPS): an indicator of growth, created by Fred Reichheld, Bain & Company, and Satmetrix, NPS extracts insights from answers to a simple question given to customers — “How likely are you to recommend our company to a family, friend, or colleague?” (On a scale of 0 to 10, 10 being the most likely.) To calculate NPS from that data, take the percentage of total customers who rate 9 and 10 (the enthusiasts and promoters) and subtract from that the percentage of customers who rate 6 and below (the detractors, who would spread bad word-of-mouth).

💡Calculate NPS separately for both your buyers (finders) side and sellers (providers) side. According to the article “The One Number You Need to Grow,” NPS has a high correlation to revenue growth, unlike customer satisfaction rating or retention rate, which show little correlation. Growing NPS means increasing both top-line revenue growth and bottom-line profitability while incurring less customer acquisition costs.

Concentration: By applying the Pareto principle (also known as the 80/20 rule), we can assume roughly 80% of your company revenue is generated by 20% of your users (sellers or buyers). Or, 80% of revenue on your platform is generated by 20% of product categories.

💡Who are these top 20% revenue generators? It is crucial to apply your resources to delight these users. Have your customer success team touch base with them on a regular basis(monthly or quarterly), so you can anticipate and fulfill their needs. Regular and personal contact with the top 20% will aid in growing your business as you help to grow theirs, while also managing your customer concentration risks. Similarly, consider the top 20% revenue-generating product categories (or talent categories in the case of a hiring platform)? Allocate most of your marketing investments to these.

Transaction per Active Seller (Provider) / Transaction per Active Buyer (Finder): the number of transactions per buyer to the number of transactions per seller (provider). “Active” is defined differently by different companies.

💡Uncertain which side should you focus on? It is important to generate supply for the side that has a higher number in the ratio to create more transactions. For example, consider an employment marketplace platform where candidates might get a new full-time job ( a contract) once every one or two years with employers that could hire for several positions yearly. Say on average, you have a ratio of 50:1 between the number of transactions per seller (job provider) and the number of transactions per buyer (candidate). While employers often list the job across several platforms or channels consistently for a period of time, candidates will most likely stick to the platform they got their last job with. Similarly, if candidates don’t find anything on your platform and transact on a different new platform, they will most likely never return to yours. This early experience is sticky, and its dynamic is intensified as the ratio gap grows. In this case, your team should focus on expanding the side with a higher number in the ratio — the employer side of the pool.

Buyer/finder and seller/provider overlap: number of buyers (finders) who are sellers (providers)

💡While organic buyer-to-seller conversation doesn’t take place in all types of marketplace business, it is highly beneficial to both revenue growth and reduction of customer acquisition costs if this already occurs your platform. Watch the presentation by Brian Rothenburg from Eventbrite to identify when this dynamic is organically happening and how to spur its growth.

“Holy Pig!” 12 Tips on 🀄 China Business Practices

In the spring of 2017, the chairman of a leading bicycle and e-bicycle manufacturer — my employer at the time — asked me to assess the performance of a Suzhou-based logistics and supply chain management startup he had invested in a year earlier.

Early startups require lots of TLC. This project quickly developed into a bigger commitment where I ran the company as the Deputy CEO. Initially an external consultant, with time I gained the trust of my employees.

Through teamwork, we made a variety of changes to increase productivity. We reorganized team structure, responsibilities, and compensation plan. We relinquished time-consuming businesses with low margins and reshaped the culture of the firm. We instilled upon team leads the importance of transparency in company finance and encouraged them to update their records on a weekly basis. Perhaps most importantly, we skillfully let go toxic and underperforming employees. This team effort resulted in a 20% reduction in monthly operating expenses within the first four months of my joining the company.

As part of this process, I successfully met with the head of the procurement department of one of the world’s biggest LCD panel manufacturers. This small win ended my sales team’s repeated attempts to tell me that what works in the West doesn’t work in China. They finally began to believe that “Western” tactics, such as cold-calling, might work in the Chinese business culture.

So how did I — a “non-local” Taiwanese-Canadian woman, educated in the West since the age of 15, with no logistics and supply chain management industry experience — manage to navigate the waters of business in mainland China? I adapted my background and experience to the culture I was working in. I believe in the Chinese saying 事在人为/shi zai ren wei, which translates: the matter depends on the person who does it.

China, the Wild Wild East, is fascinating, baffling, and humbling. It has no room for Western business pomposity. In the spirit of the twelve Chinese zodiac signs, I would like to share twelve tips to help you adapt to business practices in mainland China.

1. Be ready to talk about HISTORY and some anecdotes of Confucius. You might be used to talking about last night’s game or which art exhibition you have visited lately. Put all of this aside for now. To break the ice and begin to bond with mainland Chinese business people, especially men, I advise you to talk about first the subject of history, then your understanding and appreciation for Confucianism and selected Chinese literature. Be aware of coming across inauthentic, overly enthused, or obsessed with Chinese culture. Relax and smile (like a Buddha).

Most of the time, Chinese people like to talk about history from the imperial era, particularly warfare, strategy, and mindset. I’m sure you can see how these topics relate to business dealings.

In preparation, I would suggest reading stories from Shiji by Sima Qian, a historian in the Han dynasty. In recent years, Chinese heritage appreciation has been on the rise in mainland China. People of all socioeconomic classes love talking about Confucius’ teaching. Confucian teachings emphasize the importance of 礼/li (politeness and etiquette), 和/he (peace and harmony); and 仁/ren (love that is beyond selfishness, based on respect and caring for one another). The government has posters across the nation “educating” the masses on the topic of 文明/wenmin, which means acting civilized.

2. Read between lines. Feeling baffled after a meeting with your potential Chinese suppliers, business partners, or government officials? This often happens when one isn’t used to Chinese business culture. The true message is often in what’s left UNSAID. After President Xi makes a speech, business people in China pass around the speech transcript on WeChat and decode what he means. You will need to engage in a similar kind of reading between the lines.

Hire a trustworthy local employee with great translation, business, and negotiation skills to help you interpret situations and strategize. Talent like this will take time to find and identify, and you will need to continually evaluate his or her fitness for the job. But when you find the right person, their help will be invaluable in translating what is happening below the surface.

3. Be prepared to deal with avoidance. Avoidance is the Chinese way of direct communication. The Chinese, especially business people and government officials, choose silence and outright avoidance to say no, express that they can’t talk about the subject you proposed, or show that they are disinterested. They will often physically look away after you ask them a question, even in a one-on-one conversation. This lack of an answer is an answer in itself. Direct communication, though highly valued in Western culture, can easily be seen as inexperienced, clumsy, and reckless (鲁莽/lu mang).

When this happens, you have a few options. You can drop the question or topic for now and gracefully change the subject as if nothing happened. You can let the silence last for a while — maybe offer some more tea or coffee to give the other party time to think. Or you can let the other person or people initiate the next conversation topic.

4. Stay calm, alert, and patient throughout your negotiation process with the Government. Say you are a running candidate for a business association or expanding your market reach into the second- or third-tier cities; in the negotiation process, the Chinese government is not looking for a one-time agreement. Negotiation (谈判/tanpan) literally means “to discuss” and to “judge.” Trust is essential and takes time, dinners, drinks (several), and many meetings to build. The negotiation operates on the assumption of future long-term cooperation and problem-solving. Outside the comfort of metropolis first-tier cities such as Shanghai and Beijing, expect that things to be done quite differently. You need to be prepared and have ready access to local information, whether through your advisors, local staff, or friends in the government — even those who work in a different city. They can help you anticipate how the negotiation process might unfold.

Chinese regulatory bodies operate in an opaque manner, and often the changes cannot be anticipated. The government reviews deals on a case-by-case basis and may change the process of things — on a whim, as they wish, with their own reasoning. The progression of a project and negotiation process can become complex and drawn-out. Executives need to tread carefully, be patient, and use appropriate, well-thought-out hints and tactics. You don’t always get to do what you want to do. Your business must go along with the Communist Party of China’s policy and guidance support.

5. Eliminate your preconceptions about how government relationships are built in China. While kickback business practice still runs rampant in China, even in Western companies, do not think from your previous associations with China that government relationship building still functions under the gift-giving system. President Xi has been cracking down on Chinese government corruption, beginning with the Communist Party’s anti-corruption campaign in 2012. One can see this effort reflected in corruption-themed TV dramas, of which the most well-known is 人民的名义/The Name of the People.

For business success, you cannot deny the importance of building strong local governmental relationships. You will notice how often you must build and rebuild relationships with local authorities. Local officials shift from post to post every few months — a strategy the Chinese Communist Party has put in place to discourage corruption. One thing that hasn’t changed is doing dinner with drinks.¹ Consult your existing local governmental liaisons to strategize appropriate occasions to meet with new senior officials of local government and quasi-governmental entities.

6. Be aware of the “Truth Hyperbole.” A former MBA classmate of mine from China, with whom I often discussed Chinese-Taiwanese-Canadian-American cultural differences, once made an astute observation using a number analogy. He asked me, “So Peggy, in the West you can call the number one a seven? But you cannot call zero a one, correct?”

His question made me think about Trump’s “truth hyperbole” philosophy. Playing up one’s strengths or putting oneself in the best possible light is deeply rooted in Western culture. I first became painfully aware of this culture during my MBA study when I saw how comfortable my male colleagues are with this practice. Many I know find it acceptable to call one a four or even a seven in regard to their experience, skills, etc.

In China, truth hyperbole is taken beyond boasting, to dishonesty or complete fraud. It happens a lot, unfortunately. Doing thorough due diligence on your potential employees, customers, and others is absolutely necessary. If you contact your chamber of commerce in the major cities in China, they can help with introducing and vetting business partners for you.

7. Conduct in-depth research on a fragmented consumer market. The Chinese consumer market is very complex to navigate, even for domestic brands. If you think throwing a million dollars or more on Tmall will result in Chinese market launch success, you most likely will be disappointed. In the home appliance section alone, more than three thousand new products are released on Tmall daily.

In recent years, great wealth has been generated in the second-tier cities (smaller than Beijing, Shanghai, Guangzhou, and Shenzhen, but still have a population in the millions), some of which have become targets for luxury e-commerce platforms. These second-tier cities accounted for more than 80% of China’s online luxury retail sales in 2016. In 2017 JD.com, the second largest e-commerce platform, sometimes referred to as the Amazon of China, invested $397 million in Farfetch, a UK fashion retailer, and launched Toplife, an e-commerce platform geared for growing demand from Chinese consumers for luxury goods.

Be aware that tastes, trends, and consumer behaviors differ vastly, even from city to city within the same tier. Prior to making decisions about your China market entry strategy, I would advise you to hire an experienced Western market research firm with well-established local relationships to conduct in-depth market analysis.

8. Be nice, but not too nice. Don’t be the 老外/Laowai (slang for foreigner) and act in a way that you would not want your boss back home to see. Be nice to the Didi and the taxi drivers, no matter what — unless you are being scammed, of course. Learn some Chinese and be courteous.

One thing to remember: leave your tipping habit in the West. Tipping culture doesn’t exist in the Greater China region (Taiwan, Hong Kong, and mainland China), except in KTVs.² Your Western colleagues working in China will appreciate your efforts to not reinforce the locals’ false expectation of receiving tips from Westerners. Unlike the Japanese (who find tips insulting), Chinese locals will happily take your money, then laugh at you to their colleagues or call you a fool behind your back.

9. Use reasoning and volume to win a street fight. As bizarre as it sounds, you will notice that some — particularly the less educated — don’t take you seriously when you kindly assert your boundaries or voice your dissatisfaction. Once you raise your volume, you will find they listen and submit all of a sudden, sadly.

If you haven’t engaged in street-style verbal fighting, get ready! Receiving an overly inflated bill after a meal; having luggage wheels run over your feet as a matter of course; being squeezed sideways out of a lineup in front of the ticket window — All of these unfortunately still happen quite often. Note that I am not encouraging you to set straight every frustrating situation which you might encounter, particularly at the beginning of your time living and working in China. The questions to ask yourself before getting into a verbal fight are: “Is this worth my time and energy? Do I want to risk having my mood ruined for the next few hours? Will I kick myself later if I don’t say something now?”

Knowing how to engage in a verbal fight using loud, logical arguments is a useful skill to have in China. When you engage in a fight of this type, give your opponent concise bullet points with supporting evidence of what they have done wrong in a way that they can’t refute. This will take some practice.

I notice that by tuning my own mood through morning meditations, I’ve learned to give clear, precise instruction to people who provide services to me, whether it be a taxi driver or my employee. I often take the path of the least resistance, avoid crowd, or make reservations online (although, with certain public transit services, expats with a foreign passport cannot book online.) I am able to steer myself away from potential frustrations.

If you decide to engage in a street-style verbal fight to voice that you have been taken advantage of — whether you are in a restaurant or in a train station — make sure EVERYONE can hear you! Don’t be afraid to use your voice. Learn to pick your battle, and avoid them to your best ability.

10. Watch Chinese TV dramas as a gateway to understanding the culture and business practice. If your Chinese is good enough, watch some Chinese TV — particularly such programs as corruption dramas and Chinese imperial palace dramas. They will deepen your understanding of Chinese culture, as well as educate you on how government officials and employees think and act. With time, you will improve your skills in dealing with people–speaking effectively and persuasively, Chinese style.

11. Find an experienced and street-smart HR lead. Expect your local Chinese talent to ask for a raise every few months or pull any manner of trick you are not used to dealing with in the West. Managing local labor is an interesting juggle. The Chinese government has a very pro-worker employment and labor law system. Make sure you have an experienced, street-wise head of HR. With time, such a hire will prove indispensable in helping you avoid hiring landmines, steer away from labor disputes, and devise a people management strategy.

12. Remember that appreciating the Chinese government’s way of doing things is an acquired taste. The Chinese government is impressive in carrying out its orders and coming up with solutions to problems. Their approach often shocks the Western logic and most likely will seem unfair, unreasonable, or bizarre.

For example, with the Social credit score system, people are rewarded or punished according to their daily actions. Did you know that your traffic violation tickets can potentially prevent you from sending your children to the best schools? This threat has so far worked magic to tame mainland Chinese drivers.

You will not be able to change governmental or cultural traditions. You simply have to accept them.

After my first three months of frustration from living in China, I developed a phrase to repeat in my mind: “This is China.” Repeating that phrase helped me find acceptance, keep a cool head, and stay alert. It changed my perspective; I started to see humor everywhere around me, instead of ranting “This is unbelievable” or “This is unacceptable!” Who knows, you might even catch yourself at times feeling strangely amused and impressed with how the Chinese government goes about governing their people.

I’m often asked about frequent mistakes companies make in regards to entering into China. They fail to conduct in-depth research, have false expectations built upon Western business experience, fail to build quality business partnerships, and more. What these mistakes share is a lack of humility. You will hear business stories in China about success, failure, and frauds that will shock you. It is the Wild Wild East. Be diligent at building relationships and steer away from making assumptions without in-depth analysis and consulting with experts of different level seniorities before making business decisions. Stay fresh, humble, and remember these twelve tips, and you too will be able to find business success in mainland China.

¹One thing to know: outside of the first-tier cities, local officials expect you to drink. If you are not drunk as a skunk by the end of dinner, it may be considered “disrespectful” to the officials. Fortunately, women are waived from this expectation most of the time.

² I recently learned this culture extends even to Chinese restaurants here in Germany — don’t expect tips from Chinese customers. In fact, if you bring a group of friends for dinner in a Chinese restaurant, you should ask for a group discount. This is a typical Chinese restaurant business practice.