In this episode, we had the pleasure of hosting Mr. Cui Yuwei, the founder of Sparkoz (Chinese: 汤恩智能), and Mr. Zhang Xu, the Marketing Director of Standard Robots (Chinese: 斯坦德机器人), as our distinguished guests. The discussion centered around the insights and trends of China's robotics industry going global.
EqualOcean: Greetings, dear friends of EqualOcean! Welcome to the third episode of EqualOcean's Globalization Salon. Our guests for this session are Mr. Cui Yuwei, the founder of Sparkoz, and Mr. Zhang Xu, the Marketing Director of Standard Robots. Before we delve into our conversation, allow me to introduce EqualOcean to our new audience. EqualOcean is a business information platform and think tank that focuses on facilitating the globalization of Chinese brands and assisting overseas companies and institutions in seizing development opportunities in China. Our website is available in both Chinese and English, with our English content being featured on platforms such as Bloomberg, Refinitiv, and SeekingAlpha. Our business analysts are frequently interviewed by international media outlets like The New York Times and The Wall Street Journal. For more information, please visit our website at cn.equalocean.com. This is the third episode of EqualOcean's Globalization Salon series, where we invite representatives from enterprises, investors, and key opinion leaders (KOLs) in the field of globalization to share their practical experiences and insights every Wednesday at 8 p.m. We sincerely thank our guests for joining us in this live session. Now, let's have Mr. Cui and Mr. Zhang introduce themselves and give a brief overview of their respective companies.
Cui Yuwei: Hello, everyone. I am Cui Yuwei, the founder of Sparkoz. Sparkoz is a young company in the commercial cleaning robot industry, established at the end of 2020. Our main business is providing cleaning robots and related services for public spaces. Currently, we have two wholly-owned subsidiaries in Los Angeles, USA, and Hamburg, Germany. Around these subsidiaries, Sparkoz has carried out a series of localized operational services, including building delivery systems, and more.
Zhang Xu: Greetings to all the viewers. I am Zhang Xu, the Marketing Director of Stander Robot. Standard Robots primarily focuses on the research and production of mobile robots, specializing in logistics automation applications. Standard Robots was founded in 2015 and has expanded its presence to several countries besides China.
EqualOcean: Thank you for the introductions. Could you share some surprising or counterintuitive traits you have encountered in the European and American markets compared to your preconceptions about them?
Zhang Xu: In the past, overseas customers expected Chinese brands to offer better cost-effectiveness. However, it turns out that customers are highly receptive to high-value products, even if they come with a premium price. This trend is not exclusive to overseas markets; it exists in China as well. Our customers in industries such as automobiles, semiconductors, lithium batteries, and biomedicine prioritize meeting their expectations and performance requirements over pricing concerns. If the product meets their expectations, price negotiations become less of a barrier.
Cui Yuwei: At the beginning of the year, during the CES exhibition, a Chinese investor asked me why there seemed to be more demand for service robots in China, despite higher labor costs in Europe and America. Whether it is in delivery, hotel services, or cleaning, service robots are much more common in China. On the other hand, the penetration rate of service robots in Europe and America seems to be much lower, and they are rarely seen in many public places. From the perspective of demand, this situation seems counterintuitive. Considering the cost and value proposition, the same cleaning worker in China might cost three to four thousand Chinese Yuan, while the cost for the same worker in the US would be three to four thousand US Dollars. So why is the penetration rate of such robots lower in the US than in China? This is a thought-provoking issue. Many Chinese companies might have superior product quality, supply chains, and cost-effectiveness compared to their European and American counterparts. However, they may lack in brand influence, channel establishment, service capabilities, and even service systems, which could impact the market penetration.
EqualOcean: What steps should companies take when venturing into the European and American markets to better access them?
Cui Yuwei: Initially, companies may seek collaboration with local distributors or partners with relevant resources. However, I believe it is crucial to immerse oneself in end-user scenarios. For cleaning robots, in particular, the channels and relationships can be more complex, with various stakeholders involved in providing related services within a particular scenario. Nevertheless, it ultimately comes down to understanding the customer who makes the final purchase. Understanding their motivation for buying the product is vital, and shortcuts may not always be the most effective approach. It might slow down the product's market entry and pace.
Zhang Xu: In the industrial field, we often encounter multi-party communication and information loss problems. Therefore, engaging with the customer directly is crucial. From a marketing perspective, when venturing into new markets, we need to focus on two aspects. Firstly, we need to conduct comprehensive market insights and research externally. This could be achieved by conducting on-site research with customers or through third-party research methods. Secondly, we must also look inwardly. With the current surge of companies going global, it becomes even more important to identify the unique characteristics of your own company and avoid falling into the trap of homogenization in the overseas market. The overseas market is vast, and we need to identify the specific scenarios where we fit in better, thus establishing a good reputation for Chinese robotics on a global scale.
EqualOcean: Overseas consumers might not be very receptive to Chinese brands. How can companies change these perceptions, build their brands, and educate the market effectively?
Zhang Xu: First and foremost, we need to consider whether our company truly has a brand consciousness. A brand is not an abstract concept; it manifests in many specific details. For example, during exhibitions, we often see Chinese companies still displaying their logos in Chinese, and some brand translations might even be incorrect. If such small details are not taken care of, it is difficult to claim that your company possesses brand consciousness and brand identity. Secondly, when building a brand, it might be necessary to adopt multiple strategies rather than relying solely on a single approach to impress customers.
Cui Yuwei: Sparkoz has put a lot of effort into localization. For example, when operating in the US market, our interactions with customers are handled by the US team, which helps establish better trust relationships. Of course, building a brand requires a combination of strategies. A strong foundation in technology and product quality is essential.
EqualOcean: Compared to local manufacturers, do Chinese companies face challenges in understanding the specific application scenarios required by foreign customers? How can these challenges be overcome?
Zhang Xu: In terms of scenarios, China's domestic market is more diverse than overseas markets. As a result, foreign markets offer almost no scenarios that we have not encountered in China. However, there might be differences in certain local certifications or operational habits, which can only be discovered when we engage in actual projects. To preempt and address potential issues, we should collaborate with local market and industry experts for better adaptation.
Cui Yuwei: Indeed, the scenarios in the Chinese market are remarkably diverse and abundant. However, there are two aspects to consider. Firstly, we can often find corresponding scenarios for overseas markets based on our experiences in China. For example, both China and the US have Costco stores. However, the demand and distribution of such scenarios might differ between the two markets. To address this, we refine our products using data from the Chinese market and then closely conduct actual research and field observations with customers in the overseas market to gauge their usage and workflow. If we fine-tune our products to near perfection in China before going global, our efficiency abroad will be significantly improved. Rushing into foreign markets without adequate preparation may lead to higher trial-and-error costs, and customers might be less tolerant, potentially leading to less desirable results.
EqualOcean: Excellent pre-sales and after-sales services are key factors in winning the favor of European and American consumers. How can companies excel in providing these services to dispel consumer concerns?
Zhang Xu: Ideally, we want to prevent any issues from occurring in the first place. It's best to proactively address potential problems to avoid facing them locally, as the cost of resolution increases exponentially. However, if a problem does arise, having localized support is crucial. We can dispatch engineers to the site to resolve the issue, or establish a sales and support team locally, even considering engaging third-party engineering implementation teams, which can be trained to provide paid after-sales service. Another consideration for customers is whether there are overseas warehouses available to facilitate direct replacement in case of issues. I'd like to add that in many cases, it's necessary for us to personally address after-sales problems. Especially in new business development, benchmark cases, or with particularly important clients, handling after-sales issues can also provide an opportunity to refine our products or technology.
Cui Yuwei: After-sales service is of utmost importance, and I believe the best after-sales support can only be provided by us ourselves. In the initial stage of market expansion, particularly with key clients, I think it's essential for us to be personally involved. This may involve deploying our employees to the location or sending our most capable staff to provide support. Failing to handle the initial stage properly might lead to project failures, and rectifying the situation later on becomes much more challenging. Of course, this approach also depends on the development stage of the company. In the early stages of market expansion, it's crucial for us to deeply participate in after-sales support rather than considering it as an extra cost to be delegated to others. However, when we reach the stage of expansion and scaling, we can leverage more resources, especially once we have established standard solutions and SOPs (standard operating procedure). This could involve collaborating with distributors, agents, or third-party entities to enhance the efficiency of the after-sales process. Additionally, as mentioned by Mr. Zhang, predictive maintenance is becoming increasingly prevalent. With many robots now having digital connectivity, including information on consumables and the working status of each motor, we can precisely monitor and collect data. This data becomes the basis for after-sales support, and ideally, we can resolve issues even before customers become aware of them, utilizing methods such as internet and cloud platforms.
EqualOcean: What changes have occurred in the global robotics industry in the first half of this year? How do you see the trend of global expansion for the robotics industry in the next three years?
Zhang Xu: After the pandemic restrictions eased, companies have been eager to expand overseas. However, the acceptance of Chinese companies by local people is not as high as before the pandemic. Previously, when Chinese companies came, many local companies welcomed them. Now, the situation may be less welcoming, but that doesn't mean the demand is less. In fact, there is still a lot of demand. After an exhibition, we come into contact with the needs of many end-users, intermediaries, integrators, and distributors, even more than before the pandemic. However, the decision-making cycle might be longer now. They may consider issues like policy stability and political factors, which can create more concerns. So, companies need to use superior products and services to gradually dispel their concerns.
Cui Yuwei: Nowadays, customers are considering things they didn't think about before, such as stability and data security. We need to do more to prove that we can provide stable products and services. Therefore, we believe that localization is essential in the current situation. In terms of demand trends, we actually feel that the demand for robotic products that increase productivity or efficiency is growing, especially in Europe and America. Factors such as inflation, labor shortages, and economic downturns make them welcome products that can reduce labor or increase cost-effectiveness. However, we need to provide more substantial evidence or on-site trials and cases to prove ourselves and gain customer acceptance. Going global is an inevitable trend, especially in such a difficult year. The overseas market is vast, but it's not easy to do well.
EqualOcean: What are some key considerations for companies when expanding into Europe and America? How can they prepare well before going global?
Zhang Xu: Going global is like starting a new business. Companies face a whole new environment in the overseas market, from R&D, design, production, logistics, and marketing – the entire process needs to be reorganized. This includes personnel team configuration, product strategy, roadmap, and scenario-based approaches, all of which require careful planning. Therefore, when preparing to go global, companies need to prepare for everything and try to be as fully prepared as possible. The reason for going global is to find new growth lines or achieve higher profits, but if you are not ready, you may end up in a dilemma where the new overseas business becomes a burden instead of bringing growth. Secondly, you need to be mentally prepared that going global may be a long-term endeavor, and it may not result in significant achievements quickly. It's a long-term commitment, and you need to persevere to iterate the product and improve the scenarios.
Cui Yuwei: I would like to share our own experience. We can't say that we are fully prepared now; we are still on the road to preparation. However, I feel that for B2B service products, it's essential to choose your niche market carefully. During the initial stages of going global, you may need to focus on specific regions and industries and concentrate on one or two points. For instance, we may have multiple application scenarios for one product in China, but when starting overseas, we might need to focus more. Select a small part of the larger market and do it well, build benchmarks, and establish a good brand reputation. This way, the early investment in human resources and trial and error costs won't be too high. In comparison, the other approach is to take everything we have done in China and push it all overseas, which may present more significant challenges. So my advice is to be selective in regions and niches.
EqualOcean: Thank you both for sharing many valuable insights and experiences with us today. For those interested in Sparkoz or Standard Robots’ services, please feel free to contact us or scan the QR code below to join our global community for direct communication with our guests.