China’s citizens are fully connected, but its enterprises are still in the early stages of digitization.
E-commerce and mobile payments are major drivers of the tech industry, but, increasingly, Chinese startups and tech giants are shifting their focus to business-to-business (B2B) products. The sector shift is attracting prominent startups from abroad, including US unicorn Branch.
Founded in 2014 by four Stanford graduates, Branch is a mobile marketing company that uses a deep linking solution to seamlessly integrate core marketing channels such as email, social media, and ads. It enables businesses to drive organic growth by connecting users to relevant app content.
Deep links are internet links that point to specific content inside an app rather than just the homepage. Without a deep link, locating a certain product involves multiple steps from finding the app in the App Store or Play Store, opening the homepage, locating the search function, before finally searching for the desired product.
Instead of directing users to a homepage, Branch redirects them from a website, promotion email, or a friend referral in messaging apps to a specific page of product or service. This B2B product helps businesses achieve higher user conversion and retention by providing a seamless redirecting experience.
Deep linking is a complex landscape for developers because it involves many different standards, which work differently across platforms. Branch combines every standard into a single package, thus deferred deep links can effectively route users even if the app is not installed.
Branch was one of the first movers during the industry transition from web to apps, and now powers over 50,000 applications. These include Airbnb, Pinterest, Slack, Amazon, and Tinder. “Over half of the top 200 apps are using Branch links, ” Jason Li, Branch’s China country director, told TechNode.
The Silicon Valley startup reached unicorn status in late 2018 after receiving more than $100 million in its Series D funding round, led by the venture capital firm founded by Android co-founder Andy Rubin. Its total funding is now $242 million, according to Crunchbase.
While deep linking is a useful tool, it’s not a novel technology. The market is riddled with competition, so Branch is expanding into mobile measurement, using its deep link infrastructure and data. By providing a service to help advertisers track their customers and to optimize their campaigns, it hopes to stay ahead in the B2B game.
Crossing the Pacific
What is more, Li described how the startup is planning to launch in China at the end of March. The unicorn is a stark example of where Chinese tech is underdeveloped, and why its San Francisco counterparts are moving in.
“China’s B2C mobile internet market is probably leading the game global wise, but China’s enterprises are way behind the Western counterparts in terms of business management and operation,” said Li.
The rising marginal cost for attracting individual users and fierce competition in business-to-consumer (B2C) verticals are the main reasons driving China’s tech industry towards B2B services, he continued. There is great opportunity in the sectors of CRM, recruitment, stock exchange solutions, and others, he added.
In 2018, B2B comprised almost 40% of Chinese startups, overtaking e-commerce as the most popular sector, according to a national business report by NetEase Cloud and startup database IT Juzi.
Even before officially launching, Branch has locked in several Chinese clients. These are transnational e-commerce platform Global Egrow, B2B e-commerce operator DHgate.com, Android developer APUS, fitness and workout trainer Keep, and airline Cathay Pacific.
“Chinese companies are seeking growth through ‘rough’ methods. They rely heavily on the advertisement for overseas expansion, while US firms strive for organic growth through omnichannel coverage from mobile web, email, word-of-mouth, etc.,” Li says. These require specialized solutions, which have birthed a developed B2B industry in the US.
Services and team are the two major differentiators of Branch in facing competition from global and Chinese rivals, according to Li. “We will provide premium services to clients, responding within 2 hours when they have inquiries. On top of that, we got an experienced team coming to form Salesforce, LinkedIn, Gartner, etc.,” he added.
“In China, we going have an entirely different product portfolio for Chinese market specifically. We also consider to build a local R&D team, local product manager in China in the future,” he added.
Branch’s first targets are Chinese companies looking to expand overseas. The firm is planning to tap China’s local market toward the end of 2019 or early 2020.