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2015

Is China looking to build its own secure smartphones?

Digital Trends - “Right now the security sector is very hot,” said Chris DeAngelis, Beijing-based general manager at consultancy Alliance Development Group. “The government is looking for non-foreign technologies as much as possible to prevent various back doors.”

Ecommerce offers a cheaper and faster way to market in China

FT - In just a few years, the BAT conglomerates has been able to monopolise every aspect of daily life that could conceivably be put on the web and sold to the public. “They all want to own the customer, they want to be with them every second of the day, when they watch a video, chat to their friends, buy groceries, or go to a restaurant” says Chris DeAngelis from the Beijing-based Alliance Development Group.

China Aims to Build Its Own Secure Smartphones

WSJ - China is seeking to make its own secure smartphones, in an attempt to insulate its handsets from U.S. surveillance. The effort involves both state-owned companies and some of the country's savvier technology firms and marks the latest step in Beijing's quest to build a homegrown tech industry that cuts out U.S. suppliers.

China seeks quantum leap to a new economic model

FT - Chris DeAngelis, of Beijing-based Alliance Development Group, believes China’s resources will eventually win out. “In areas such as software development I am already seeing huge amounts of creativity percolating out of the universities and younger graduates,” he says.

Chinese apps see a space in utility

Press Reader - The company are adept at adding features and functions quickly and many have deep pockets to support marketing and distribution investments,” said David Sullivan, MD of Alliance Development Group, which provides global technology companies with services in China market expansion, business development and strategic investment.

Apus to invest Rs 100 crore in Indian startups, to open India R&D center"

ET Tech - These companies are spreading their wings, there's going to be more cross-border partnerships," said David Sullivan the managing director of Alliance Development Group in an earlier conversation with ET. ADG provides global technology companies with services on China market expansion, business development, and strategic investment services.

The power of big data in China

CKGSB Knowledge - “In the big picture, I would say big data and all of what that entails is being massively embraced by China, by the Chinese government, by the internet companies,” says David Sullivan, an analyst at Alliance Development Group (ADG), which assists technology companies expanding in China. “They were and probably are a little behind Google and Amazon, but they started a little bit later. Right now, they’re starting to establish more R&D centers, they’re putting more dollars behind it.”

      Xiaomi China's new phone giant takes aim at world       WSJ  - Entrepreneur Lei Jun’s smartphone startup used social networking to win over Chinese, but can he repeat overseas?  When Xiaomi Corp. launched a new smartphone here in April, there was an air of chaos. Employees were still stuffing gift bags that morning, and a few staffers from Beijing headquarters, pressed for time, arrived on tourist rather than business visas.  Read the full article at  Wall Street Journal        ADG Insights   |   ADG and Clients News   |   ADG Newsletters                     Back to top

Xiaomi China's new phone giant takes aim at world

WSJ - When Xiaomi Corp. launched a new smartphone here in April, there was an air of chaos. Employees were still stuffing gift bags that morning, and a few staffers from Beijing headquarters, pressed for time, arrived on tourist rather than business visas.

      Apple bets big on China      Apple fans were on the edge of their seats at a March press event, waiting for details on the company’s first wearable, the Apple Watch. But their enthusiasm had to wait, because CEO Tim Cook wanted to talk about China.  People attending the San Francisco unveiling saw a short video of excited Chinese shoppers crowding into a new Apple Store in Hangzhou, a glimpse of what future stores would look like. Close-up shots showed a customer drawing Chinese characters on an iPhone 6.  “It is an incredible place, and it’s a gorgeous new design,” Cook said of the store.  China has become a key market for Apple, representing one-third of the company’s sales in its last fiscal quarter. Sales in the region, which includes Taiwan, grew 71 percent to $16.8 billion, compared with a year ago. Apple has been bullish in the region, with 22 stores and plans to roughly double that amount by the middle of next year. The iPhone 6 and 6 Plus have been big sellers, as more Chinese shoppers are purchasing the larger screen phones as a status symbol, analysts said.  “I’ve never seen as many people coming into the middle class as they are in China,” Cook said in a call in April with investors. “That’s where the bulk of our sales are going. We’re really proud of the results there and continue to invest in the country.”  Analysts expect that Chinese enthusiasm for iPhones will segue into Apple Watch sales.  “The next step is about wearables,” said Daniel Ives, a managing director at FBR Capital Markets. “When you think about the Apple Watch, one of the biggest opportunities is in China.”  Cook’s travels  Cook opened an account this month on Chinese microblogging site Weibo, similar to Twitter, posting about his China travels in English and simplified Chinese characters on his iPhone 6. “Thanks to all our customers and staff for a great week in China. Zaijian!” Cook wrote on May 14, signing off with “goodbye” in Mandarin.  At the Apple Watch presentation in April, Kevin Lynch, Apple vice president of technology, showcased Watch apps, including WeChat, which is popular in China. He said his “friend from China” had messaged him on WeChat about where they would go for dinner.  China is seen as a key market for technology companies because of its mobile-first culture and a growing middle class primed for smartphones. China’s Ministry of Industry and Information Technology said 1.3 billion people in China use cell phones (its population is 1.4 billion), with roughly half on 3G or 4G networks, according to Xinhua, China’s government news agency. There’s opportunity for Apple to persuade those mobile users to switch to iPhones.  “China at this point is the fuel in the growth engine for Apple,” said Ives. “When we think about iPhone growth and the iPhone 6 product cycle, it’s really all about China at this point.”  Apple held the largest share of China’s smartphone market at 15 percent in the first quarter, according to research firm IDC. Close behind is Chinese manufacturer Xiaomi at 14 percent, followed by Huawei (11 percent) and Samsung (about 10 percent), IDC said. Unlike in the U.S., China’s smartphone market is fragmented, with many more manufacturers in the running, compared with the U.S. market that is dominated by two, Apple and Samsung.  “The competition is pretty much a land grab opportunity at this point,” Ives said. “It’s about converting the Chinese consumers” into Apple users.  High-end purchase  But stretching a month’s salary to include an iPhone purchase may be tough for some workers. Analysts place the cost of an Apple iPhone in China at around $700. The average monthly salary in Shanghai is about $1,163, according to a 2014 article in China Daily.  One advantage that Apple’s competitors have is they also offer lower-priced phones. While an iPhone may cost $700, a Xiaomi phone could cost half that, said David Sullivan, managing director of Alliance Development Group, which helps tech companies expand in China.  As Chinese competitors “sell more globally, they are getting stronger,” Sullivan said. “They are competing around the world. Their products are getting better. Apple’s challenge is to stay up there. In some way, they (may) feel like they are getting boxed into the high-end” market.  Apple released the iPhone 5C in countries including China in September 2013, but it didn’t attract many buyers, analysts said. Part of the problem was that the phone was marketed as inexpensive, but it wasn’t substantially cheaper than the iPhone 5S, the newest version of the phone at that time, they said. Apple did not respond to questions about plans to market a lower-priced version of the iPhone 6 in China.  But some reports suggest that China’s smartphone market is slowing down. Sales of smartphones in China fell 4 percent in the first quarter compared with a year ago, according to IDC. That was the first annual decline in six years, indicating that it may be a mature market like the U.S. or United Kingdom, the research firm said.  “Just like these markets, convincing existing users as well as feature phone users to upgrade to new smartphones will now be key to further growth in the China market,” said Kitty Fok, managing director at IDC China.  Regulatory issues  Analysts also warned that down the line, Apple could face regulatory issues in China, where the government has made it more difficult for Silicon Valley tech firms like Facebook to operate. Those challenges could come when the company starts offering Apple Pay in China.  Besides opening new stores, Apple has been investing in the region. It said developers in China have earned through Apple app sales more than $3.4 billion, with more than half paid in the last 12 months. Apple says it employs 8,000 people in China and Hong Kong, and says it has helped create at least 1.5 million developer jobs or work related to its software. The company also has undertaken major environmental initiatives to protect as much as 1 million acres of forest and build two 20-megawatt solar farms in China.  For now, the iPhone 6 remains a hot item for Chinese shoppers.  “It’s a status symbol,” Sullivan said. “People want the best.”  Read the full article at      ADG Insights   |   ADG and Clients News   |   ADG Newsletters                     Back to top

Apple bets big on China

SFGate - One advantage that Apple’s competitors have is they also offer lower-priced phones. While an iPhone may cost $700, a Xiaomi phone could cost half that, said David Sullivan, managing director of Alliance Development Group, which helps tech companies expand in China.

Asia-Pacific Heating Up for US Payment Expansion Plays

XRP Talk - China will be one of the most difficult markets for outside companies to penetrate, but one of the most lucrative. “But we are seeing it as sometimes the first place to go” especially for companies that want to partner with handset manufacturers, said David Sullivan, managing director at Alliance Development Group (ADG). For about 14 years, Sullivan with ADG has been helping mainly U.S., although some European startups, expand into China. ADG has worked with 80 companies since its launch in 2001, including Zong, a mobile carrier billing startup acquired by PayPal.

      For over 14 Years ADG has been Assisting Overseas Technology Companies Entering the China market. By TechNode        
  
 
  
    
  
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  Today, entering the China market is the holy grail for many global tech companies. It’s a huge market that any business would love to get involved in. However, it’s also challenging market where the players should map out thorough strategies to penetrate it. With China’s internet giants actively scoping overseas markets for the latest technologies, there have been a few success stories, one of which was EyeVerify, which received investment from Qihoo360 last year. With EyeVerify’s team based in Kansas City, the deal was achieved with support from Alliance Development Group (ADG), functioning as their business development team in China.  Founded in 2001, ADG executes strategic China business development, corporate development, and market expansion initiatives for global technology companies, working deeply within the Chinese tech ecosystem. ADG has been around for 14 years in Beijing, helping over 70 companies since its founding in 2002. ADG’s clients vary in size from multinationals with large teams in China to middle market companies to startup solution providers, including market leaders such as PayPal, Nuance and IBM. The first ten years for ADG were mainly focused on helping telecoms companies understand the local market and to set up partnerships with service providers like Huawei. These included clients such as TCS promoting A-GPS platforms, PCTel selling network testing solutions, or Convergys with interactive messaging and voice solutions. In 2011, ADG strategically pivoted to focus on the fast-growing mobile internet sector.  Today ADG worka with hot technology software companies like Fleksy, EyeVerify, OpenMobile, Canonical (Ubuntu Mobile OS) and Graphite Software. These companies are typically looking for strategic distribution partnerships through cooperation with device manufacturers and internet companies, or are looking for strategic investors who can assist them in China or globally. Qihoo’s investment into EyeVerify was a good example of this trend. TechNode interviewed ADG’s General Manager Chris DeAngelis about overseas companies entering China market and his advice to them.   Who are your clients and why can’t they enter the China market themselves?  ADG’s customers primarily come from the U.S., Canada and the UK. Our clients are overseas companies that understand the value we provide and who accept a fee-paying model. Over the years we experimented with success-fee models but learned that if companies are not willing to get the support which is often needed to write a monthly check then they are probably not serious about the market and won’t be prepared when things start moving forward. China is a hard market and we need partners that are willing to invest along side of us. Success in China requires much more than a network or introductions; it requires persistence and a local presence hitting the streets every day. It always shocks us that so many companies will say China is their most critical market yet will assign only a third of one guy to cover China from the other side of the world. Flying in and out rarely leads to any success. We believe our model provides a way where they don’t have to go all in until they can gain real traction.  What is the competitive edge of ADG in helping foreign tech companies enter the China market?  We provide an alternative model for entering the China market that I have never seen elsewhere. For example, you can try hiring a local sales guy to get you started, or maybe you can find an experienced “China hand”, or you can reach out to the accounting or consulting firms. But the fact is, they don’t provide much beyond some basic introductions, some general advice and they definitely can’t provide an experienced team that can hit the ground running, and support your changing needs as you grow. A new company can lose a year just trying to understand Chinese business practices and how to manage the cultural challenges.  Another major difference with ADG is that we recognize that to be successful you need to be Chinese, and that’s why we only have one foreigner on our team in China. Other companies that try to offer similar services to overseas companies are 80% foreign, which means they can communicate effectively with their clients but can’t offer real value on the ground. We have a unique model where we act as part of our clients’ teams but still represent ADG and our own brand. Our model is very hard to execute which is probably why no one else does it. It has taken us years to figure out how to quickly integrate ourselves into effective members of our clients’ teams considering they all have different products, cultures and demands.  On the other hand, what is the current status of China companies going global?  It is happening very quickly and in subtle ways beyond what everyone sees with Alibaba, Tencent and Xiaomi. There are companies like Cheetah Mobile, whose utility apps are already showing real success outside of China. APUS is another impressive company in the launcher space – in six months they gathered 90 million users, with over 90% outside of China. And of course there are the smartphone OEMs that are starting to have success building their own brands outside of China, like ZTE, Huawei, Lenovo, TCL (which is unique in that it sells 90% of their phones outside of China) and OnePlus, which has recently gained a lot of press coverage.  There will be local competition since there are preference for local suppliers that challenges US/global tech companies, what are the strategies to manage it?  In our experience these types of preferences for local products mainly affect big companies that sell products across all market segments and therefore often compete directly with local vendors. This can be difficult. because Chinese customers often don’t need the best in the world and ok is good enough. For us, our clients are typically No.1 or 2 in the world in their product niche. If we offer a product that is the best-in-class and the customers see and need the value, they will buy it. They will still negotiate a tough price but what is lost in price can often be gained in volume.  How do you help US/global tech companies to protect their intellectual property (IP) in China?  This is a somewhat controversial topic. I would say to most smaller companies that if you are afraid your IP will get stolen in China, it means that you probably cannot do business in any part of the world either. The best way to protect yourself is to keep innovating and to choose partners that are concerned about protecting their global reputation. Finding the right partners is critical. There are many companies in China that now understand it is better for them to buy or partner than to waste years trying to do it themselves.     Read the full article at  TechNode.com       ADG Insights   |   ADG and Clients News   |   ADG Newsletters                     Back to top

ADG Profiled in TechNode

TechNodeToday, entering the China market is the holy grail for many global tech companies. It’s a huge market that any business would love to get involved in. However, it’s also challenging market where the players should map out thorough strategies to penetrate it. With China’s internet giants actively scoping overseas markets for the latest technologies, there have been a few success stories, one of which was EyeVerify, which received investment from Qihoo360 last year. With EyeVerify’s team based in Kansas City, the deal was achieved with support from Alliance Development Group (ADG), functioning as their business development team in China.

      Disruptive US tech gets an edge with China's new strategic investors. By Forbes      China tech is going global. You don’t have to look far to see the signs. As one of the bigger indicators, China’s tech titans are investing heavily in U.S. tech startups, particularly those with a disruptive edge.  Take SoFi in San Francisco, which has funding with roots from China. Joe Chen, founder of Chinese Internet company Renren is SoFi’s earliest investor and one of the largest backers of the marketplace lender for young professionals.  Chen and SoFi CEO Mike Cagney first connected at a Stanford gathering in 2011 through an acquaintance, and Chen soon had invested $4 million in SoFi, advising Cagney meanwhile that he needed to be more aggressive with an expansion plan for his innovative student loan service.  More resources! A year later, in 2012, SoFi raised a pivotal $81 million, with Chen on board and –  thanks to Chen’s connections and his enthusiasm for the disruptive lending service — David Chao of Sand Hill Road venture firm DCM. Fast forward, and SoFi drew $235 million financing early this February, bringing its total capital raised to $399 million with such big names as Peter Thiel participating.  Since its start in 2011 thanks in part to Chen’s investment, SoFi has loaned $1.75 billion and has branched out beyond student loans to personal loans and mortgage loans and refinancing. Cagney says SoFi has only had two defaults on loans, both due to the borrower’s death. See earlier post on Chen’s investments.  A second example in this China outbound investment trend is EyeVerify, a biometric technology startup in Kansas City. EyeVerify raised $6 million in a Series A equity funding in August 2014, with another Chinese tech titan – mobile security company Qihoo 360 as a strategic investor. Joining Qihoo 360 were Sprint and Wells Fargo  EyeVerify’s CEO Toby Rush says he got an introduction to Qihoo 360 through China business development pro David Sullivan and his team at Alliance Development Group. Rush credits Sullivan for helping him to get comfortable with an investor from China. “It’s a different world, with different expectations,” says Rush. Another hesitation was how the deal with Qihoo could impact “where we go in China in the future” with potential other partners.  But there was no question about having NYSE-listed Qihoo 360 as a door opener to additional contracts inside the firm and extending its reach to mobile carriers. Mike Liao, recently named director of strategic initiatives at Qihoo 360 in the Valley — another indication of China tech’s outreach – is on the board of EyeVerify.  Having secured the financing, Rush is now focused on making his patented biometric technology mainstream, used in financial services, healthcare, mobile security and government.  The founders of EyeVerify and SoFi will be on stage at Silicon Dragon SF 2015 to speak about how their startups are scaling up.  Read the full article at  forbes.com       ADG Insights   |   ADG and Clients News   |   ADG Newsletters                     Back to top

Disruptive US tech gets an edge with China's new strategic investors

Forbes - EyeVerify’s CEO Toby Rush says he got an introduction to Qihoo 360 through China business development pro David Sullivan and his team at Alliance Development Group. Rush credits Sullivan for helping him to get comfortable with an investor from China. “It’s a different world, with different expectations,” says Rush. Another hesitation was how the deal with Qihoo could impact “where we go in China in the future” with potential other partners.