Thread by @lillianmli

1) Let's talk about how to think about applying a successful Chinese tech trend to your tech ecosystem.

Let's deconstruct go through the following:
- What makes a trend take off in China
- What is easily replicable
- What isn't

2) A trend takes off in Chinese tech and stays relevant because it can get internet traffic and can make money.

Historically, only getting internet traffic mattered. But as new users dwindled, having a viable commercial model (with eventual break-even unit economics) matters.

3) But how things can make money also requires many Chinese tech ecosystems enabling factors that may not be present in your ecosystem.

So you have to understand whether it was only the Chinese context that meant it would make money.

Let's go with an example - livestreaming

4) Liveastreaming is huge in China - Mckinsey expects the market to be worth $423 billion in 2022, doubling from its size in 2020.

It is an interesting hybrid between entertainment and retail distribution channel. It makes money through, selling goods in-stream and also tipping.

5) So when you are asking whether livestreaming can work in your region, it's really asking two questions:
- Will people tip livestreamers?
- Will people buy things from a livestream?

Let's go into why the answer is yes for China, but some background on enabling factors.

6) Chinese tech has leapfrogged to digital payments. This is due to the lack of good credit institutions in the past, so big tech players like Alipay came in and digitalized finance.

What was once a hindrance will become a boon and vice versa in technology progress.

7) The fact that everyone in China carries two digital wallets (Alipay and Tenpay) means that a lot of digital products have low friction and embedded checkout process.
You can buy something with three clicks in Taobao while still watching the livestream.

8) Customers pay for live stream products in an easy way.
Whenever there's friction between awareness, desire and check out there's drop off rates for buyers. The more you can reduce this the more the whole process works.

9) So as an entrepreneur, this is one of the big enablers I'd be looking for if I'm making a livestreaming product.
Do I exist in an ecosystem where digital payment exists can be embedded into checkout? Or if it doesn't exist in an easy way, should I be making the shovels?

10) But will people tip for livestream in your region? There are cultural reasons for why the Chinese population are happy to tip, there's a strong sense of fandom support (similar to Japan and Korea in some sense. a la BTS army), educational content is worth paying for

11) There are also deeply universal aspects of tipping:
- Showing off in front of the other patrons
- The digitalisation of institutions where men pay for interaction with women (when the market is grey, it's lucrative, what can I say?)

12) Would people buy from live-streaming?

Since experiential buying modes has existed since QVC, livestreaming is not a drastic leap. But the leap you're asking the user to make is a trust leap. Both from a fulfilment perspective and also from a product quality perspective

13) That trust leap can be bridged by a few factors. Trust from an existing service provided (hence why Taobao livestreaming does so well, people already know BABA does logistics well). Or trust in an existing figure aka the livestreamer

14) Having a set of competent livestreamer was key for livestreaming e-commerce to take off in the days. Interesting, while many Chinese celebrities tried their hand at selling on livestreaming, thinking this was a way to monetise their traffic. They all didn't hold longterm sway

15) The current and former champions in Chinese livestreaming are Austin Lee and Viya, two successful salespeople with established track-record before they went online.

Your area's top salesperson is a better bet than the local insta influencer.

16) But that still takes training. Livestreaming is a new delivery medium and it's not just a change of presenter, but a change of the sell content. Scripts help but the presenter needs to be authentic and reactive to the audience's feedback all the while selling. That's hard

17) There are entire supply chains set up to literally scout, train and then support livestreamers by MCN. This feeder ecosystem is a crucial part of allowing the livestreaming trend to take off

18) Lastly it needs to be said, if people weren't buying things online because of delivery and return issues, or trust with payment, having livestreaming isn't going to change all of that overnight. Also more on livestreaming lillianli.substack.com/p/livestreamin…

19) Livestream e-commerce shortens the awareness to desire to purchase cycle, it doesn't magically make people believe in e-commerce. Everything needs to work as a foundational piece before livestreaming can elevate it.

20) Copying without context rarely works now in late-stage consumer internet.

Many recent consumer trends in China typically had supporting demographic (population density for delivery), cultural (spending on education or enabling factors like mobile payment as the foundation

21) To assess whether something would work in your region:
1) Understand what enabling factors made the business model lucrative in China
2) Judge how of that context applies to your region
3) Assess local viability and how to localise to maximise profit

Writing more regular threads these days about Chinese tech and the Chinese economy. Follow along here or on my newsletter. Thannnnnks
lillianli.substack.com