The Do’s and Do Not’s of China Market Entry – with O’Melveny Managing Partner Walker Wallace

08/21/17 • 30 min

The Shunwei China Venture Capital Podcast

We sit down with Walker Wallace, managing partner of O’Melveny’s Shanghai office, to discuss how foreign tech companies should think about entering the China market. It’s worth noting that most tech start-ups should not even consider China entry in the early days, as building up tech and achieving a focused product-market fit should be the only priority, and a premature obsession over China could very well be a huge distraction. But for companies that have built up a relatively sustainable business and are looking to scale, a thoughtful, well executed China strategy could create significant value. Today we discuss: what type of tech companies should consider entering the China market? What should their key considerations be before designing a market entry strategy? What are the different options and structures available? How do JVs work, and what is the value exchange between JV partners? Any other best practices to keep in mind? Walker J. Wallace is a leader in O’Melveny’s China practice. He has extensive experience in international transactions and has worked with clients in a wide range of projects across Asia, from multi-nationals seeking to invest in China, to private equity funds pursuing investment strategies in Southeast Asia. In China, Walker has helped clients negotiate the complexities of investing and structuring business operations in numerous industries, including consumer products, healthcare, real estate, software, media and entertainment, retail and education. Walker has been working in the Shanghai office since 1997. He is the former Chairman of the Legal Committee for the American Chamber of Commerce in Shanghai, and is the co-author of “Acquisitions of Companies with Chinese Assets,” “Foreign Private Equity Investment in China: Which Way to the Exit?,” “Onshore Financial Investing in China,” and “Enforcement on Defaulted Loans and Mortgage on Real Property under Chinese Law.” Walker was named as a leading lawyer by Chambers Asia 2016/2017 under the categories “China, Corporate/M&A” and “China, Private Equity: Buyouts (International Firms)”. Walker earned his J.D. from Columbia University, and his B.A., cum laude from Williams College. He is admitted to the bar of New York.

Previous Episode

“Rent-to-Buy” the Chinese Runway – with YCloset COO Michael Wang

Today we catch up with my good friend Michael Wang, who is currently COO of YCloset, an online clothing rental and subscription service that raised $20m Series B in March and has already scaled to 40 cities in China. Before YCloset, Michael was on the other side of the table, having spent a few years at KKR before joining IDG Capital, where he was also the lead investor for YCloset's Series A+ round. As such, Michael offers a unique view, speaking from both an operator and investor perspective, and can help us understand the following: Clothing rental companies only recently became popular in China, whereas comparable companies abroad such as Rent The Runway have been around since 2009... what's different now? How does YCloset compare against global and domestic competitors? What are key success factors in this market, from optimizing logistics to central dry cleaning to capital accessibility? What role do China's tech giants (e.g. Alibaba or JD) play in this arena? What is the "rent-to-buy" model, and what might this market look like in the near to medium term?

Next Episode

ofo and the Future of Urban Transportation - With ofo SEA GM Alan Jiang (via The Harbinger)

Today we are joined by Alan Jiang, Head of Southeast Asian business for ofo, the world’s leading station-free bike sharing company. Alan oversees the company’s strategy and operations in Southeast Asia. Previously, Alan worked at Uber for four years, helping to launch Uber’s business in China, Malaysia, Vietnam, and Indonesia. Today, Alan starts by first sharing his story at Uber, before transitioning to ofo. Alan tells us more about how bike sharing is drastically different from ride sharing, and the impact that companies like ofo have on cities where these programs are located. Alan also talks about ofo’s global strategy, particularly in Southeast Asia.