How to Get Investment from Chinese VC, PE and Business Angels in China?

Yes Chinese have money, a lot of money but … getting investment from Chinese People in not that easy. 

If you want to know a good way to success , continue this article.

In 10 years, the Chinese economic landscape has changed dramatically. The country deeply rooted in an industrial economy aims to turn towards an economy centered on service and innovation.

A drive for development driven by foreign investment

China is the third largest investor in the world with investment flows in the region of $125 billion. Chinese investors are poised to play a leading role in the global market.

The Chinese economy for some years now faces a real turning point, moving from an emerging country to a developed country. However, this transition is for the time being at these beginnings because Chinese companies still have to work on their competitive capacities and advantages to become real players in the economic transformation of the country.

At the national level, economic development will mainly be achieved through the involvement of local players in the various sectors of digital, e-commerce and the e-economy. From an international point of view, by the investments of private and public-sector companies in capacities and competitive solutions still undeveloped in the country.

The change in the economic landscape of China depends on three main factors:

• The emergence of the Chinese middle class, which favors domestic consumption through higher purchasing power
• An economic model increasingly focused on the development of the service industry
• And the desire to become an economy centered on technological development and innovation.

Investments encouraged by the government

The Chinese government aims to become an influential player in the global economy. To this end, the government has put in place an economic development plan up to 2020, aiming, for example, at encouraging investment by private companies abroad or at effectively internationalizing the national currency.

The government supports companies investing to facilitate trade with foreign countries. Indeed, in 2016, foreign direct investment was made in more than 150 countries worldwide representing more than 6,000 companies.

These investments are justified by a willingness of the government to make the country more attractive in different sectors and especially in the service sectors, where local companies do not have the capacity, knowledge and know-how to develop at the moment effectively.

The objective of these investments is also to be able to offer domestic companies a competitive advantages certain to meet in a first to the requirements of domestic markets before thinking of any conquest of foreign markets. Indeed, as mentioned earlier, the emergence and development of the purchasing power of the middle classes has enabled the Chinese economy and markets to have many business opportunities.

In addition, the devaluation of the yuan facilitates foreign investment becoming more attractive to Chinese investors.

Chinese investments in Europe

The fields of energy and logistics in Europe have attracted many Chinese investors in recent years. The Big 3 including France, Germany and the United Kingdom, are the favorite destinations of Chinese investors. However, there is growing interest in Italy for the manufacturing sector and for Ireland.

For these investors, various European sectors have several investment opportunities that could interest Chinese companies in their desire to diversify and acquire better technological skills. The Chinese interest is more focused on the manufacturing sector, transport and logistics and the real estate sector.

The development of brand image and reputation in China has become a determining factor on the part of Chinese investors in the acquisition of businesses in Europe. Differentiating by a good image and a good reputation becomes important in local markets. European brands represent golden opportunities for Chinese companies since they have very good visibility and a strong interest among consumers in the Middle Kingdom.

Further readings from the news:

• Chinese Strategic outbound Invesments
• Chinese Global Investment Influence
• China leads Global Investment 

How to get Investment from Chinese VC, PE & Business Angels?

• Overseas presents excellent opportunities for Chinese companies. Overall, Chinese companies are warmly welcomed and face no obstacles from countries and governments. However, the trading environment of different countries and China differs greatly.
• In this second part, we will study the necessary means to set up by companies wishing to acquire an investment from Chinese investors.

Developing its brand image and reputation in China : the starting Point 

In China No Reputation = No Trust => No Business

Reputation is a crucial element in the development strategy of any company wishing to develop and gain visibility in China. Indeed, the perception of brand image and its quality is strongly correlated with its reputation. The more a company is known and visible digitally, the more it will have negotiating power and attraction.

1. Work your presence on the Chinese digital sphere through your website

• Hello Boss, I have find a good startup 
• What is their Website ? 
• www.mystartupisthebest.com
• It is in English… I do not not understand sorry. 
• Ok boss. 

The first step is to build your online visibility. To do this, you will have to adapt and develop a version of your website in Mandarin. This adaptation is necessary to first gain visibility on the search engine in China that is Baidu which more easily accepts the results in Mandarin and to meet and adapt to Chinese investors. Hosting your website on a Chinese server is not compulsory but will strongly favor your ranking on search results. A .cn domain name is strongly recommended.

2. Who wants to invest in a Ghost Company?

   Invest a Minimum on your SEO on Baidu to be found.

The position of Baidu in China is Strategic.

“What did you find about this startup ?”

“I did not find anything about this startup on Baidu, Boss” 

“So, forget about it”

Indeed, this search engine is considered to many as being the equivalent of Google in China. It is also used in 70% of Internet searches done by Internet users. Developing visibility on it is a key point of your Chinese investor prospecting strategy.

To do this, several important points are necessary to achieve the optimal use of Baidu referencing:

• Quality content: Optimizing your ranking on the search engine will depend on how much time you spend on content. This content will allow you to have a large number of web pages and to have better traffic.
• Backlinks: the content you have created requires incrementing on it several internal or external backlinks to develop your presence on the search engines. The more backlinks you have, the better your traffic and visibility.
• Keywords: base yourself on a set of 15 to 20 keywords in Mandarin by relying on it to improve your ranking.

3. A presence on social networks and ERP

But we have 1M likes on Facebook. 

You know what: Chinese, do not care about Facebook! 

Why? 

Because it is blocked in China, they can not see it. 

Social networks such as Facebook, Twitter, and YouTube are censored in China. However, the country has developed its own digital and social sphere, with a larger number of users than its western counterparts. The place of marketing on social networks in the country is much more developed and is an integral and essential part of many companies wishing to develop their notoriety.

WeChat and Weibo are the two main networks to use in your strategy and will be a lever for growing your reputation and prospecting investors.

Show your Wechat Amazing Results

WeChat account is the most used platform in the country that will soon exceed one billion users. The platform has become an irreplaceable actor in the everyday life of individuals, whether in the private or professional sphere.

Unlike Facebook, WeChat is a closed platform where you cannot view the profile of an individual without first adding it via a QR Code or its identifier. Building your corporate account or an official account on the network takes time mas will allow you to have better visibility and to be perceived as a trusted actor.

Do not forget to link your website to your account and vice versa.

In addition, to generate the interest you will need to share content on the network. To do this, you’ll need to create and enter specialized newsgroups based on your product or services and initiate conversations around your brand and share your content.

Weibo is strategic for E-Commerce (Tmall Taobao)

Weibo (literally “Micro Blog”) allows the publication and visualization of messages in a public way. With fewer users than WeChat’s 300 million monthly active users, Weibo has the advantage of offering freedom of publication and unlimited scope that WeChat does not have. The network is an absolute necessity for anyone seeking to promote its activities in China.

In addition to your presence on social networks, your promotion through ERP is essential to generate interest and gain investor confidence. Developing your audience in online Chinese media is a good way to give your company the promotional tools to attract Chinese investors. Do not hesitate to develop your presence on general and popular media such as Sohu, QQ, News 168, and Toutiao. But also, to target, according to your activity and your sector, the appropriate specialized media.

Trust in the heart of the relationship between startups and investors

• The law does not protect Business men in China (and investors) 
• So they based most of their Business Relation on “trust” 

The culture of trust and relations is quite different from that of Western countries. Also, this parameter is an important factor to consider in your dealings with potential investors as this is crucial to the success of a fundraising event with Chinese investors. This requires considerable time to build a relationship of trust in China.

Working on your pitch to attract potential Chinese Investors

Seducing and making your project appeal to investors through a presentation is not an easy exercise to achieve. However, there is still a necessary element to obtain the investments necessary for the development or growth of your project.

For this, here are some tips to follow (or not) for good preparation:

• Know and understand your target: learn upstream to know the person (s) you will be confronted with in order to adapt your strategy and your speech. Are they aware of your sector? Are they experts in this field?
• A presentation prepared to the smallest detail: do not neglect your presentation in any way. Have a nice project, yes but it still needs it and for that, a dynamic and animated presentation of your project to interest investors is a solution. Make your presentation “sexy” to make it appealing and simple to understand your audience.
• 4C according to Slide At Work for the success of your pitch:

– Consistency: Constructing the script as a logical sequence

– Clarity: Orient the content to the specific concerns of your Chinese interlocutors

– Conciseness: Distinguishing the accessory from the essential

– Credibility: Illustrate and concretize with examples

• Anticipate Q&A

The government’s willingness to restructure the country’s economy and become a dominant player in world markets allows companies from both the public and private sectors to invest in foreign markets. Despite some regulations, particularly in the real estate and entertainment sectors, sectors that will bring real added value to countries are still very attractive to China.

Need help contacting and pitching VC PE and Business Angels in China?

1. Do not hesitate to contact us to understand the whole of the Chinese digital ecosystem and how it works to ensure the success of your projects with investors.
2. Gentlemen Marketing Agency we can help you develop the most consistent and effective strategy possible to attract potential Chinese investors.

• Our agency specializing in marketing is located in Shanghai.
• We are committed to partnering with Companies/startups to grow their business in China.
• Do not hesitate to contact us for more information.