Entrepreneurship (ID: ichuangyebang) original
Author: Xie Xuan
The source of the title map丨Figure insect creativity
“This year has caught up with the trend. Last year, it was only the entrepreneurs who looked very lively.” Li Jingmin just finished a financing presentation. This is only 3 months after the last round of financing.
In September last year, Li Jingmin and her team developed Gamfun, an interactive social app serving Muslim groups. The product is based on voice social networking, and realizes various scenarios such as interactive games, voice chat, and live broadcast rooms on the basis of traditional chat rooms. At present, the products are mainly aimed at the Middle East market. According to her, Gamfun was officially launched in June this year. By the beginning of October, MAU (monthly active users) had reached 180,000, and ARPPU (average revenue per paying user) had reached $52.
Last year, investors were busy investing in new consumption, medical care, and chips, but the entire social field was very sluggish. Li Jingmin’s angel round financing is “uncomfortable”. Even in the face of early-stage projects, investors still need data and performance. Although the Middle East market has good prospects, the infrastructure is far from mature – technology and payment have not been fully opened up.
This year, there has been a qualitative change. A new wave of going to sea is coming. While everyone is talking about Singapore and Southeast Asia, the farther and richer Middle East market is becoming a new gold rush mecca.
In the international market, the Middle East and North Africa is collectively referred to as the MENA region (Middle East and North Africa abbreviation), with a total population of more than 500 million, including 24 countries and regions, of which 22 are Muslim countries. As the backbone of the world oil market, the six Gulf countries have also boosted the region’s overall income level.
High income also means a big market. According to data.ai data, in 2021, the number of app downloads in the MENA region will be 6.3 billion times, an increase of 53% within two years; games in the category of applications account for a very high proportion, and the number of downloads of such applications is as high as 5 billion times. The cumulative consumption of the App Store reached 1.7 billion US dollars in one year, which is double the growth compared with two years ago; Android users spend an average of 3.8 hours a day in mobile applications.
“(Users) are relatively too rich!” Industry insiders sighed. Unlike Chinese users who are willing to pick wool and spend cautiously, the “local tyrants” in the Middle East feel that spending money must be the best, and they are more willing to pay money.
In the eyes of gold diggers, this is a market with money, people, and willingness, with considerable income levels and relatively unsound infrastructure, showing great potential for development. Logistics, e-commerce, social networking, games… This seemingly blue ocean market has endless temptations; of course, there are also unexpected risks.
Middle East “local tyrants” love to pay
A local “local tyrant” user in the Middle East impressed Li Jingmin deeply.
At first, he charged $100 each time, but soon, it was changed to $500 each time. At that time, the product had only been launched for 3 months, and the user had not even started to promote it. The user had already charged more than 6,000 US dollars into the account.
After charging the money, the user starts to make demands. At first, he liked to chat with a female anchor, so he sent an email to the customer service staff and asked Gamfun to arrange the anchor to go online at a designated time, “Because I am free at this time, if you can do this, I can recharge it in your APP. How much.”
Unlike Chinese users who are willing to pick wool and spend cautiously, Middle Eastern users are often willing to pay first. They feel that spending money must be the best. For a certain anchor they like, they will even open a separate room for him, either by swiping gifts frantically and letting others go away; or by letting more people enter the room and watch him swiping gifts frantically for the anchor.
Most of these anchors on the platform are women from underdeveloped regions such as Egypt and Morocco. Gamfun pays the anchors a monthly base salary, and they can take care of their children while chatting, and some even enjoy the fun of chatting freely online. But there are also girls who are full of entanglements. Li Jingmin has seen a girl who would immediately run aside to make a confession as soon as the chat was over.
However, users obviously do not have any psychological burden on this. The user who wanted to see Miss Sister by name has been eyeing another male anchor in the past two days.
Huang Xianming, the head of the launch of Titanium Technology and the head of Chenxi Studio, has long experienced the payment ability of users in the Middle East. He used to work in the well-known mobile game company “Longteng Jianhe”, and was responsible for the marketing of games such as “Sultan’s Revenge” and “Rise of the King”. Among them, the mobile game “Sultan’s Revenge” with the theme of “expanding territory and conquering Europe” was launched in September 2015 and quickly ranked first in all game lists in the Middle East.
The amount of payment in the life cycle of users in different regions can best explain the spending power. According to Huang Xianming’s observation, the payment amount of users in the Middle East can reach 200 US dollars, and individual higher-quality products can reach 800 US dollars. This value even catches up with Japan, and this is rarely the case in the recently popular Southeast Asian market.
In fact, Chinese game companies have already set foot in the Middle East market many years ago. In 2003, NetDragon won the Middle East market with the Arabic version of “Conquer”, and its income was extremely considerable. Subsequently, many small and medium-sized game companies began to excavate this treasure. Until “Sultan’s Revenge” exploded and Longteng Jianhe came into the public eye, the market was already full of many high-quality competitors, and companies such as Tencent, Fun Plus, and IGG had already “made a wave of money”.
Huang Xianming’s Chenxi Studio has provided overseas marketing services for NetEase Games, TikTok, Kuaishou and other companies. According to his observation, the overseas revenue of head game companies is “much higher than the data we have seen in the market, and (users) are relatively rich.”
According to the “2022 Middle East Mobile Game White Paper” recently released by Snapchat, the annual revenue of the Middle East game market in 2021 has exceeded 3 billion US dollars, and the potential mobile game market in the Middle East accounts for nearly a quarter of the global mobile game market. In the first quarter of 2022, the number of Chinese game makers in the Middle East will reach 15%, and the revenue will account for more than 40%. Not only that, domestic mobile games top the list in terms of revenue and downloads in the Middle East market.
Attractive market, attracting a large number of Chinese enterprises eager to try.
Chen Wei, the account manager of an overseas Internet advertising platform, likes to connect with Chinese overseas companies the most. Games, pan-entertainment, and e-commerce are the most important customers. Their business models are mature. As long as they can make profits, there is no upper limit on the investment of these companies. “If they invest one dollar and earn two dollars, they can invest indefinitely.”
Many Internet companies have consulted Chen Wei about the Middle East market. Many people who are engaged in live broadcasts have ready-made codes in their hands. Chen Wei gave them ideas. As long as they can get the anchors in the Middle East, they can open for business.
Gold rush in the Middle East, not everyone can make money
The market is flourishing, but not everyone can make money.
Huang Xianming believes that some companies succeed because they understand the uniqueness of this market. On the contrary, due to insufficient understanding of the Middle East market, many Japanese and Chinese manufacturers are blocked out.
Li Jingmin calculated an account. Last year, many game companies rushed to the Middle East, but even for chess and card game products, the initial cost is at least 1 million yuan, and the operation is very expensive. Many companies that lack localization teams translate some Arabic The text that people can’t understand at all, let the product go online, and the result can be imagined.
Among the clients that Chen Wei has recently taken over, there are some bad products, or the content is fake, or assembled from various places, and even the anchors are from Southeast Asia.
“The old iron in the Middle East is not a fool.” Chen Wei suggested that they do a good job in the content, but he found that the idea of these customers is to quickly test the water to see if they can make money. The skin and appearance of the people in the Middle East are different, and the language is not fluent, so they cannot impress the local tyrants in the Middle East.”
According to K2VC, an investment institution, it is not easy to replicate the logic of the Chinese market in the Middle East market.
The Xianfeng overseas team has been seeing overseas projects since 2015, and the dividends in those years are obvious. Google and Facebook are cheap to acquire customers, and they have not yet been affected by their privacy policies. Looking back now, what was a small opportunity back then turned into a big business.
Yalla is one of the representatives – as a language chat product established in the UAE in 2016, the company known as “UAE Small Tencent” successfully listed on the New York Stock Exchange in just 4 years. Yalla launched the online flying chess game “Yalla Ludo”, which has been ranked in the top 10 best-selling games in the Middle East for a long time.
“Chinese users rarely come into contact with flying chess, but it is a national-level sports game in the local area, similar to our Landlord Fighting, so you must understand the local area to discover these opportunities. But if the overseas enterprises are not localized, the development ceiling will be very high. Low.”
In Xianfeng’s view, the ideal founder of an overseas project should have two abilities: firstly, he must have long-term experience of living and studying in the local area; secondly, he must have the ability to raise funds globally in terms of vision, language and expression. .
However, in the face of this unfamiliar battlefield, even a team that has been proven successful cannot guarantee that it will continue to succeed.
For example, Jollychic, known as “Taobao in the Middle East”, has deduced a sighing story from cooking oil on fire to rapid decline.
Zhejiang Zhiyu was established in 2012. Its cross-border e-commerce brand Jollychic is mainly for the Middle East, and its business scope covers apparel, fashion, home furnishing, mother and baby, body and skin care and 3C categories. As a comprehensive e-commerce platform, Jollychic has become the most well-known e-commerce platform in the Middle East in just 2-3 years. According to public data, its turnover soared from 100 million yuan in 2014 to 5 billion yuan in 2017. By 2019, Jollychic, MarkaVIP and Dealy’s three platforms have covered 50 million users in the Middle East.
However, this rapid development did not last for a long time. With the rapid expansion of the company in the Middle East market, it shifted from self-operated to an open platform, and even extended its tentacles to mobile communication and social networking for a time. The big stride eventually brought about an overall collapse. Since 2019, Zhiyu has exposed business problems, and by 2021, news such as arrears in payment for goods and the withdrawal of high-level executives have been reported. According to people familiar with the matter, when Zhiyu raised its capital in 2019, its valuation reached 1 billion US dollars, but now this figure has dropped directly to 0 yuan.
Indigenous: “I want a gift of roasted whole lamb”
Some fell, some charged. But as long as it remains at the poker table, the eternal goal must be to impress consumers in the Middle East.
Due to the lack of offline entertainment and cultural fields in the Middle East, online channels have become an important way for locals to relieve their social entertainment needs.
Since we want to provide happiness, just brushing sports cars, yachts, balloons and other ubiquitous gifts in the chat room cannot really impress users in the Middle East. One user emailed Gamfun, “I want a gift of roasted whole lamb”.
Few people have made the material for roasting whole lamb, which almost drove the designer crazy. I made a version and sent it to the past, but the users were dissatisfied, “You can’t do roasted whole sheep with a head. This is too cruel and has to be removed.”
Later, another user asked for a gift of pilaf. This time, according to the logic of Chinese rice bowls, the designer made a style of chicken legs on the plate and sent it over. Users are still dissatisfied, “Our plate is very large, and a whole leg of lamb is placed on it”.
This made the design team realize that to be a truly localized product means that each scene must be developed separately according to local characteristics.
However, roast leg of lamb and pilaf are still small problems. If there is a problem of principle, it will be troublesome.
On Gamfun’s APP icon, a simple gamepad is drawn, and the cross-shaped button inside makes the Middle Eastern customer service team fry the pot.
“People in the Middle East can’t see the cross.” The designer modified it overnight and changed the cross-shaped button to a circle, which was successful.
However, compared to design, the issue of online payment is the real threshold.
In the Middle East, there are very few interfaces that each payment platform can cover. Even PayPal’s application scope is very limited. It can be used in Saudi Arabia, but not in Egypt and the United Arab Emirates.
To this end, people have come up with various methods of cash collection. Some platforms sell point cards, while others choose face-to-face transactions. In order to help the e-commerce platform solve the problem of payment, iMile, an e-commerce logistics company in the Middle East, handed over the function of payment to the courier brother. Suppose the user purchased a cup of 80 dirhams, and the courier sent it to the designated address. Contact the user himself, check the system, and find that the total price after adding the freight is 100 dirhams, the user will hand over 100 dirhams in cash to the courier, the courier will return to the company for settlement, and iMile will return 80 dirhams to the courier. E-commerce platform, leave a 20 dirham courier fee.
This greatly reduces the efficiency of express delivery. If no one can be contacted, the delivery cannot be delivered. The delivery time is too long, which increases the user’s remorse rate, and also brings about problems such as rejection and order forwarding.
In order to improve efficiency, iMile also launched a reverse order service, customers want to return a refund, the courier can pick up the goods and return the cash on the spot. If a user rejects an order, iMile can also put the order back on the shelf, and it can be resold and forwarded within the country.
If you want to completely get through the payment problem, you still need to wait for the development progress of the financial industry, but the chaotic address database problem in the Middle East can only be solved by yourself.
“Our company is next to a factory” “My house is opposite to the Carrefour supermarket”, there is no zip code system and no house number in the Middle East. To this end, every time iMile enters a region, it must establish its own address library.
Sending parcels into the desert is also a basic ability necessary for express delivery in the Middle East. In order to adapt to this complex situation, iMile has been expanding the number of outlets, and now it has covered all GCC (Gulf Cooperation Council for Arab States) countries.
At iMile’s Dubai headquarters, Zhao Yating, the head of the marketing department, has received wave after wave of Chinese delegations, but most companies are still in a groping stage for the Middle East market. From this perspective, Zhao Yating does not even think that iMile is an overseas enterprise. In her opinion, many companies that go overseas are “going out for the sake of going out”, and iMile, a company headquartered in Dubai and using Chinese Internet thinking to solve logistics problems, is essentially a Middle Eastern company.
With a high per capita GDP and a relatively open policy environment, the Middle East market has attracted the attention of a large number of enterprises. Taking Saudi Arabia as an example, because the country does not have any light industry, it is very open to foreign trade imports and does not have strict trade tariff protection policies. This is also the basis for many Chinese e-commerce companies to develop rapidly in the Middle East.
“Sultan’s Revenge” developed another Middle East development model.
According to Huang Xianming, the founder and game director of Longteng Jianhe both have backgrounds in the Middle East and are very familiar with the Middle East market. Therefore, when most of the products are released globally, they chose to produce “Sultan’s Revenge” to focus on the Middle East market.
In addition, one-third of the Middle Eastern employees in Longteng Jianhe’s team participated in all aspects of game production, art, materials, review, and delivery. Therefore, they understand the preferences of the Middle Eastern people for war-themed games, and they also know that major customers think that communicating in English is disrespectful to them. The superposition of various details has allowed “Sultan’s Revenge” to establish a very mature localized operation. mechanism.
Due to the great success of “Sultan’s Revenge”, Longteng Jianhe jumped to the top 10 of the entire overseas game revenue in a very short time. According to the data from the “2022 Middle East Mobile Game White Paper”, Longteng Jianhe has now ranked fifth in terms of revenue of mobile game publishers.
Such success has been difficult to replicate. Although the local market in the Middle East does not seem to be highly competitive, once the number of Chinese people increases, it is inevitable to roll up.
Around 2017, when Huang Xianming launched in the Middle East, the user’s download and installation cost was a little more than 1 US dollar. Now, 5 US dollars may not be able to buy it. “On the one hand, it is because of the market growth; on the other hand, it is Chinese companies. I raised the price myself.”