I had the great pleasure of interviewing Jay Thornhill. Jay is an Australian-American whose one-year stay in China has lasted thirteen years. He is a cofounder and Head of Product Development at Baopals.
Near the end of 2015, Jay and two close American friends, Charlie and Tyler, set out to make China’s largest online shopping platforms accessible and convenient for non-Chinese. They had no experience in ecommerce, no funding or guanxi, and plenty of legal, financial and technological uncertainty. However, they knew this problem needed to be solved, and there was nothing in the market like the solution they wanted.
On March 1st, 2016, they launched Baopals (baopals.com). Baopals is a bridge to all products and sellers from Taobao, Tmall and JD, updating in real time and catered to foreign shoppers. In 4 years, the platform has helped expats in China purchase over 4 million items for CNY250 million in gross merchandise value.
What are the most exciting trends you are seeing in China today?
The speed with which China and its people build new infrastructure, adopt new technology, and take up new habits is a sight to behold. It’s taken for granted now that you can purchase anything you want with a few clicks on the phone and have it delivered to your door quickly and cheaply. Easy access to low-cost products and services is nothing new here, but consumers’ preferences are evolving too. Because China’s economy and culture changed so drastically the past 50 years, the generation gap might be wider here than almost anywhere in the world. The younger generation tends to be more open-minded, competitive, individualistic, and optimistic. A growing number want to carve their own paths, take more risks, try out more hobbies and interests, and live a more varied lifestyle than previous generations. It’s all relative, and China remains far off from the individualism and “pursuit of happiness” ethos of American culture, so it’ll be interesting to see what kind of balance is struck going forward.
How has the coronavirus affected your business and other businesses in your industry?
At the start of 2020, the outbreak looked as if it was going to have a dramatic effect on China but not the rest of the world. A lot of expats in China hurried to fly back home or travel while waiting for COVID to get contained in China. Since Baopals is built entirely for non-Chinese shoppers, we saw a drop of about 35% in sales almost overnight as expats fled the country. Then the outbreak turned into a worldwide pandemic and the borders were closed, so it became clear to us we weren’t getting those customers back for a while, and we wouldn’t benefit from new foreigners arriving in China for a while.
Because of lockdown measures, we had nearly all of our staff working remotely in February, which meant there were 3 or 4 of us working in a 3-story house built for a team of 50 and costing us an arm and a leg. Without an end in sight, we built new backend tools to better manage remote work, including a fully automated points and rewards system for our staff. When we saw how well everyone was working from home, we decided to ditch the office and we never looked back. The pandemic forced a lot of companies and individuals to experiment with remote work, and I think many have found it to be more viable than expected.
Our numbers rebounded more quickly than expected, possibly from shoppers preferring online shopping more now than in pre-pandemic times. With the improved efficiency we’re set up nicely for growth, and we’ve recently soft launched international service to do just that.
What is one thing people outside of China misunderstand about the region
Over the years I’ve become a bit guarded whenever the topic of China comes up with family or friends back home. I have to first assess whether they are genuinely curious about Chinese people and my experience in China, or whether they’re merely seeking to confirm views shaped by western media. If it’s the latter, then they likely won’t be receptive to certain ideas. For example, that many expats feel they enjoy more freedom and opportunity in China than they did in their homelands. Or the idea that Chinese people are not brainwashed – at least, no more brainwashed than the average person nowadays. Most Chinese are proud of their country’s achievements without blindly agreeing to all of the ruling party’s politics. They tend to be defensive when China is criticized, and they’re justified in feeling that western media has a negative bias towards China. The truth is often more nuanced than what is presented, and western media typically avoids anything positive that might be said about China. When one’s homeland is criticized by those who have little to no experience with the country, some defensiveness is to be expected.
What are some companies you admire in China?
China’s tech giants deserve a lot of admiration. Alibaba built the world’s best shopping platform in Taobao, with the most products at the best prices. The only problem is that it was built entirely for Chinese – and therein lay the opportunity for us to create Baopals, making Taobao easy for non-Chinese to enjoy.
Tencent has created, in my opinion, the most useful app in existence. WeChat has grown from a typical messaging app to a do-it-all digital platform that those in China can’t imagine living without. It’s an ecosystem for social life, payments, media, online shopping, gaming, events, and a wealth of other services. One of the first things we did as a company was create our official WeChat service account, which allows users to easily shop on Baopals without leaving WeChat. The bulk of our content and payments come through WeChat, so much so that in over four years we still haven’t built stand-alone apps (they are coming, though!).
I’m also a big fan of other platforms that make life in China more convenient, including DiDi (China’s Uber, with incredibly low fares and an English version to boot), Ele.me and Meituan for food delivery, and Hello Bike or Mobike for biking all over the city.
What is the single most important piece of advice you would give to someone trying to get their business to thrive in this time period?
If there’s any one-size-fits-all advice, it’s to focus on profitability above all else. That may seem obvious, but this seems to be forgotten all too often in the startup scene today. In the second year of Baopals, we got caught up in the hype of top-line growth, media attention, and potential fundraising instead of focusing on what really matters: the bottom line. Our sales doubled while our net profit fell nearly 70%. Once we shut out the distractions and honed our focus on profitability, we found all kinds of ways to improve efficiency and earnings. With the right focus, you can grow your net earnings and improve cash flow even when top line sales are falling. That helps you get through difficult times and thrive on the rebound.
Quickfire Questions
A - What’s the best thing you have watched recently? (Film, TV Show, Ted Talk, Youtube Video, etc.)
I’m enjoying the sci-fi series Raised by Wolves, about androids attempting to raise children and build a colony after leaving a post-apocalyptic Earth. It’s well crafted, visually stunning, and thought provoking. I always enjoy science fiction for being imaginative and exploring the unknown, while ultimately being about us. It’s also a great way to take my mind off anything that might be stressing me out in the real world!
B - What’s the best thing you have read recently? (Book, Article, Research Report, Tweetstorm, etc.)
I’m a big believer in Bitcoin, and there are a lot of exciting things happening in the crypto space these days. Bitcoiners have long anticipated corporations and central banks beginning to hold Bitcoin reserves, so the recent news that MicroStrategy allocated the vast majority of its cash reserves (over $400 million) to Bitcoin feels like a watershed moment. News just broke that Square has also begun purchasing Bitcoin, and no doubt more corporations are discussing how to do the same.
C - What’s the best thing you have listened to recently? (Song, Album, Artist, Podcast, Audiobook, etc.)
“Burn the House Down” by AJR. Never mind the dark lyrics; you can’t help feeling good and adding bounce to your step with this song playing.
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