Chinese start-ups hoping to make it big in the West now face a major hurdle: their connections back home. He scrutiny TikTok faces in the US about its management structure and data practices is a poignant reminder that giving up Chinese affiliations can be essential to gaining acceptance abroad.
In their expansion to the West, Chinese startups are now disassociating themselves from home, as we have detailed in a series of stories (here and here). The process could include moving its controlling entity to a foreign country, switching to cloud centers abroad, and relocating its executives abroad.
In the context of disassociation, a company is taking an unconventional path. Rather than try to mask its Chinese identity, Seafile, a low-code app developer founded in 2012, has expanded internationally by forging a symbiotic relationship with its German joint venture, SeaTable.
Since its founding in 2020, SeaTable has amassed nearly 200,000 users for its cloud-based database platform outside of China, while the local version of the software has some 500 customers, including the German Armed Forces, a corporation that It is listed on the German stock index Deutscher Aktien Index. (DAX) and several universities.
Unlike many Chinese startups going global that are driven by heavy investment ventures, Seafile runs an enviably self-sufficient business. The company has not raised external funding since it secured a million yuan (~$142,000) angel round from Matrix Partners China. a decade ago. Today, it is profitable and internally funds all ongoing development of SeaTable. Seafile has 40 employees in China and 10 in Germany.
relinquish control
In 2019, Seafile’s two Chinese co-founders, Daniel Pan and Jonathan Xu, approached their future partners, Christoph Dyllick-Brenzinger and Ralf Dyllick-Brenzinger, with an intriguing proposal: to establish a joint venture to help Seafile grow in the foreign.
At the time, the two German brothers, who were veteran consultants, had been helping Seafile distribute its other product, a sync and share solution, for a few years. They were attracted by the opportunity to have a stake in a product they really believed in: a low-code database tool that offers a self-hosted option.
SeaTable offers on-premises and cloud-based solutions, a strategy it believes sets it apart from industry giant Airtable.
“Europe is all about data privacy, data sovereignty,” Ralf, CEO of SeaTable, told TechCrunch in an interview. “Then there will be a huge market demand for the product in Europe.”
The Dyllick-Brenzingers rose to the challenge and founded SeaTable GmbH, with Seafile holding a 50% stake to maintain their commitment to product development while maintaining a firm separation of German company management and access to customer data. .
Focusing on Europe, SeaTable is multilingual, coming in English, German, French and Russian, with Spanish and Portuguese in development. Language may seem like an inconsequential feature, but in underserved markets with high purchasing power, such as France and Japan (as is the case with the Airgram meeting productivity tool), having the option localized could help a startup get ahead. SeaTable also boasts the ability to store millions of records compared to Airtable’s scale of tens of thousands, according to Ralf.
In hindsight, the two Chinese founders have chosen the best possible path for Seafile’s global expansion at a time when the public and government in the West are increasingly skeptical of the companies’ Chinese ties. But entrepreneurs who want to run an empire are not easily swayed, let alone deal with partners who live thousands of miles away. As Ralf commented: “I think a lot of trust is needed between the two parties.”
data separation
SeaTable’s low-code database platform. Image: SeaTable
Although Seafile is not involved in the day-to-day operation of SeaTable, it plays a key role in developing Guangzhou’s database platform, a setup that is common among global tech companies wanting to take advantage of China’s quality, affordable engineers.
“The China team gives us a piece of software… that everyone can download from the internet, from the repository, and we, the German team, use it. The deposit is something like the line of separation. Jonathan and Daniel manage everything on this side of the repository and we manage everything on that side,” Ralf explained.
A repository, in computer programming, is a centralized digital storage that developers use to make and manage changes to an application’s source code.
The SaaS version of SeaTable is fully operated by the German joint venture and stores data in Europe. All customization and services are done in their German office, which handles everything from software installation, running updates, managing backups, troubleshooting, reading and interpreting logs, to optimization of system performance.
“The management of the system are German citizens or European citizens. Apart from the fact that SeaTable is developed in China, it is as European as possible”, added the founder. “It’s ironic that we all have Chinese-made hardware…but Chinese software has a difficult position in Europe.”
The German brothers admitted that SeaTable’s way of marketing is not the “safest”. While some customers agree with its Chinese roots, others, including a ministry in France, have reservations about software originating from China. But this proactive approach sometimes leads to friendly discussions about new forms of cross-border collaboration that take advantage of software development in China, on the one hand, and localization efforts in destination countries, on the other.
“Some of the customers I talk to are completely unaware of the Chinese origin of the SeaTable and I reveal it to them. We don’t want to get involved in arguments and then in the end it comes up as if the SeaTable is Chinese and then they say, look, you should have told us earlier,” said Ralf.
“So we’re very proactive about it and a lot of clients find it interesting because in the early 2000s the typical joint venture model was that European and American companies would go to China and look for a Chinese partner to build their business in. China. We are now an example of a Chinese company coming to Europe to form a joint venture. People realize that this is really interesting, so they’re curious to learn more about it.”
How SeaTable navigates backlash from China as it moves to the West by rita liao originally posted on TechCrunch
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