Interview with John Eng CMO of NewVoiceMedia
John Eng is CMO of NewVoiceMedia and has almost 20 years’ experience doing business in China. Thanks to top-tier experience in some of the world’s best-known technology businesses, he was able to give us an invaluable primer into working in the world’s largest market.
“I started my career as a product specialist with Microsoft in 1999, working with Bill Baker creating programmes for global execution on the launch of SQL Server Business Intelligence. In 2005 I moved to a field operations role in the US, responsible for demand generation, where I experienced first hand the challenges of executing global programmes in the field and being accountable for a bookings target. This was followed by a stint at Microsoft France kicking off SQL Server 2005; again evangelising and building the market.”
“In 2007, presented with the opportunity of a stint in Eastern Europe or China, as a second generation Chinese immigrant and native speaker, I jumped at the chance at the latter. So followed a two year crash course in how to do business in China.”
“As the Chief of Staff to Tim Chen, CEO of Microsoft China, I had a front row seat in the highest level discussions in the region; as Microsoft tried to legitimize their business – fighting piracy and persuading customers to buy software licenses legally. While Microsoft had a very high market share, and nearly every developer was using .NET and SQL Server, almost no one was actually paying for it.”
“We understood that our best bet was to pursue a strategy of aligning ourselves to the objectives of the Chinese government. At the time, a key objective of China’s route to becoming a major world player was to gain soft power through vehicles like the World Trade Organization. So we worked with the government and with various large organisations such as the telecommunications providers to help them raise their visibility with the WTO. Within three years, China was the best performing subsidiary in Microsoft.”
“We quickly learned that China was unique in many ways. What worked in other territories didn’t work there; and equally, what worked well in China would not translate into other regions. And as a new entrant, you need to work this out fast.”
Key lessons include:
1. The combination of a strong and centralized government system with a capitalist mentality means that when both aspects are being satisfied, change can happen very fast.
2. Solution-selling does not work: it was – and is – all about relationships. We hired lots of people purely for their contacts and often one phone call was all it took to open a door.
In China it really is all about two things – understanding the government agenda and who you know.
China’s Five Year Plans are formalised and highly publicised government strategic commitments. They are effectively inviolable, so companies which visibly contribute to the Plans will be welcomed, and those which don’t will have a (probably impossible) mountain to climb.
The Five Year Plans are strong expressions of economic and social ambition; for example highlights of the 13th Plan (2016-2020) include:
- Innovation: moving from heavy industry to providing digital services
- Welfare: redressing the balance between urban and rural
- Environment: promoting green culture and business
- Entrepreneurship: “Everyone is an entrepreneur, creativity of the masses”
- Manufacturing: a “Made in China 2025” policy, with particular focus on product quality and the nurturing of academic research into commercial success
- Society: “Economy needs a Rule of Law”
Exporting the same philosophy to LinkedIn APAC
“I joined LinkedIn in 2011, as the company’s sixth employee in the APAC HQ, responsible for
expansion and monetization. One of my key tasks was to help the company succeed in Australia, India, China, Japan, Korea, Southeast Asia and other growing parts of Asia; and I combined many of my lessons from Microsoft to help LinkedIn develop a strategy that again aligned with government priorities. I worked with a talented multi-functional ‘China’ team in HQ and in-region so that we could understand the market requirements and act with precision.”
“I strongly recommend that anyone considering entering China familiarize themselves with the five year plans – in particular the 11th, 12th and 13th – this is how you align with government priorities.
“At the time we were entering the market, there was a big focus on upward mobility as workers moved from factory-based, low-skilled work to an information and talent based economy. There was encouragement for stronger international connections between English-speaking Chinese executives and their peers around the world, in particular North America.”
“At LinkedIn, we knew that we were well positioned to help on both of these counts. However, we also understood that there were some areas of our product that were not acceptable to the Chinese ethos, such as any form of news feed and, at that time, video; so we removed those features from the product.
In the end we had two parallel work streams:
1. Help Chinese multinationals recruit and build their brands outside of China; and
2. Develop the Chinese professional social network market and build our monetization for the domestic China market. We started engaging professionals with colleagues and contacts in other countries and focused on helping them hire internationally – and the strategy worked. We couldn’t actually sell in China as we didn’t have a legal entity; so we set up a legal entity in Hong Kong, based our go to market teams out of Singapore and Hong Kong and flew in and out. Within a few years we had tens of millions of subscribers.
Five lessons from John Eng
- There is no monolithic market called ‘Asia’. Europe is hard, but at least there is economic alignment. In Asia there is no such thing. Different markets are at different points of maturity and they are all culturally very different – each with different government agendas that can either help or hinder foreign investment.
- Many technology companies eye China first, as it has the largest potential market; but I would advise that you enter the China market carefully and only after you’ve been successful in Australia, SEA, etc. It’s fraught with risk, especially as China wants Chinese technology, which is making things even harder. Only enter China when you’re resourced to do so and when you have a great partner – and that might mean last of all.
- Identify a favourable target addressable market (TAM). It should be large but narrowly defined. Focus on one or two large TAM geographies at a time.
- Put your people in-country in the largest TAM, not necessarily in a jump-off hub like Singapore, though that may be the home of your legal entity. It’s essential for delivery teams to be close to their customers.
- Lastly, because of the complexity of the market, you will need plenty of management maturity paired with highly experienced and local people. Let them learn, and trust them to run the business because they will appreciate local nuance much faster than those based in HQ. Therefore, finding those with leadership capacity and the ability to be agile can make a huge difference. Local competition is fierce and can be much more agile and advanced than you might think.
…and some country commentary
• ANZ is a strong early-adopter IT market. Many tech companies test their ‘version one’ products in ANZ as they have a strong propensity to adopt early and buy SaaS. It represents a highly addressable TAM.
• Japan is incredibly quality-oriented and a naturally late adopter. It is therefore possible to go in too early with a product that just isn’t ready. It is better to learn about the market first and adjust your product to fit local requirements as there will be Japan-specific preferences. Go there with a mature ‘version 3’ product.
• Korea may be an outlier. Generally, I found millennials there to be very open to adopting new platforms. On the flip side, those just slightly older tend to be more conservative and not as open to foreign tech brands.
In conclusion, many make the mistake of thinking of Asia as a monolithic market. It’s not. It’s a multi-local market with different nuances, cultures, business norms and needs. There is no ‘right’ way to attack Asia, but a strong strategy might be to put people in Australia for a couple of years and then a second large TAM for a couple of years too. Then, when you need a hub, build a HQ in a connected centre like Singapore to support the rest of the region. From there, you can overlay functions like regional finance, HR, operations, marketing, sales, support, etc.