Fight like Mao, learn like Lenin

On the outskirts of Shaoxing, a small town in the Chinese province of Zhejiang, where textiles are produced, new expensive cottages of 5-6 floors are being quickly built, despite the fact that the scale of farming activity of their owners is decreasing.

The Haolaiwu Textiles textile company, which sells multicolored curtains to Germany, Italy and other European countries, adheres to a spartan approach to production. On the ground floor of a factory, in the light of lamps hanging from the ceiling, a worker sends rolls of fabric to the printing press. A fog of dyes hangs in the air, sprayers put floral patterns on the fabric. On the floor above, about 30 young employees are buzzing with their weaving machines, like electrical transformers.

Such primitive technologies - weaving and printing presses - are now for China the same workhorses of the technological revolution as they once were for South Korea and Hong Kong. However, if production technologies remain traditional in Haolaiwu, the marketing approaches are, on the contrary, the most modern. In 2005, this company registered on Alibaba.com , which brings together suppliers and buyers from around the world. 21 million Chinese enterprises use the site to sell or buy different materials and products. Foreign users prefer the English version of the site, where they are given the opportunity to find the necessary supplier or manufacturer of the goods (from complex radio components to folding dog kits) among myriad Chinese representatives. Haolaiwu, being one of the 3.6 million registered users, managed to find the first customer in the first three months on the site. Since then, this company has grown from 20 employees to more than 80.
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Guerrillas vs. Ericsson

“We were lucky that we didn’t start this business in Beijing or Shanghai,” said David Wei, head of Alibaba.com. If the company began to develop in these cities, then transnational monsters would have devoured us in the bud. Instead, the company relied on a small business, such as Haolaiwu, such as a great many in the district of the city of Hangzhou.

Alibaba is not the only Chinese IT company that finds its customers in the most difficult places. Huawei has become a leader among the suppliers of telecommunications equipment in China, using a similar strategy. In the big cities of China - which, it would seem, could become its main sales markets - international corporations like Ericsson are pushing it out. The head of the company decided to follow Mao’s precepts on guerrilla warfare against a well-fortified enemy: before besieging the cities, it is necessary to occupy the countryside. In the early 1990s, the company served about 200 people who lived and worked in villages and small towns in Heilongjiang Province, in which its equipment was sold. In large corporations, on the contrary, deliveries to the periphery were handled by a small group of employees who contacted customers remotely.

Huawei also invested in the development of its business in Algeria during the earthquake in 2003 and in Iraq during the war. Already in 2006, contracts in these regions brought Huawei profits, which more than doubled the revenues that the company derived in China. Its sales are growing rapidly in Africa and the Middle East. Last year alone, in Latin America, the company's revenues more than doubled.

Yet the capture of the countryside was only the first part of Mao’s strategy. The second part was the capture of cities. Now Huawei is powerfully invading thriving markets. She recently won a contract with British Telecom for the construction of a large modern network. In addition, it produces 3G phones, which Vodafone sells in southern Europe.

Study and study again

As users of the Alibaba site are small businesses and private entrepreneurs, many of whom have very limited experience using the Internet, they need some support. “Sometimes people don't even know how to upload a picture,” says Comrade Wei. One of the companies skidded because it responded to messages only once every three months. As it turned out, her owner had to wait for her son, who goes to university and returns home at the end of each semester and can translate from English.

Alibaba is committed to educating its customers so that they can take full advantage of the technology that she is trying to sell. The company arranges special courses called “Alicollege”, where different ways of e-commerce are taught. And over the past two years, the company has rallied its users into the present community, through large meetings in real life called “Alifest”. Thousands of small businessmen come to the city of Hangzhou to learn the secrets of doing business over the Internet.

Alifest guests gather in the Great Hall of the Peoples of Zhejiang, where, like a television talk show, some of the successful participants are invited to the stage to share personal experiences. One woman with gold braid in her hair told that she works for the police and also sells lingerie at taobao.com , an online auction site for Alibaba users. At the exit from the hall, comics for technophobes are sold, which explain that the mouse should not be fed with cheese, and the “network” has nothing to do with spiders.

The same province brought one of its first customers to Huawei - a small town that was neglected by transnational giants. Like Alibaba, the company has helped its not-so-experienced clients to solve tasks such as drawing up business plans. At their own request, the company began to produce mobile devices, one of which is now widely known, mainly because the telephone is easier to imagine and understand than its other products in this series, such as multiplexers with separation by spectral density.

But despite the fact that Alibaba is engaged in training its customers, it needs to study their behavior and preferences. Of the 25 million registered users of the Chinese and international versions of the site, only about 300,000 pay any fees for additional privileges. They are charged an annual fee for more advantageous positions in the lists, but not a percentage of each completed transaction or the price of a link. The reason for this is that, according to Alibaba, the fee for each transaction will scare away most users. And if for each click on the link from the site, the suppliers will have to pay some amount, this will lead to a “sklikivaniyu” advertising budget competitors.

In the fall, Alibaba put shares in two of its new sites, also sharpened for b2b, on the Hong Kong stock exchange. Investors are confident that she will be able to turn their users into profitable customers. However, the company has yet to make its plans a reality. Internet startups have a treacherous tendency to generate income not for investors, but for users. Near the wall of the Haolaiwu factory in Shaoxing, another four-story house is being built. According to the factory manager, farmers live there, but “they no longer do farming, but only business. They are all millionaires. ”

Translation from English:
Roman Ravve

Crossposted from worldwebstudio