Her 99 Wuxian is the third largest m-commerce company in the most populous nation on the planet.
Back in the noughties, when smartphones first began their evolution, Amalisia Zhang saw the potential of mobile commerce. Nine years later, her 99 Wuxian is the third largest m-commerce company in the most populous nation on the planet.
In the backrooms of China, where deals are made or missed over banquets and bottles of baijiu, Amalisia Zhang convinced nine out of 10 major banks in the world’s second largest economy they needed to be in business with her.
She then transformed an ambitious idea into a company that has a customer base of 32 million, bigger than Australia’s entire population.
Then, after signing on another 41 banks and financial institutions, Zhang turned 155 merchants and potential rivals into 155 lucrative revenue streams.
The business Zhang founded in 2011, 99 Wuxian, has in just three years become the third largest m-commerce company, by total transaction volume, in the most populous nation on the planet.
Yet sitting in the lobby of an upmarket hotel in Shanghai’s Jing’an district, the 41-year-old CEO says that despite appearances, this is no overnight success story.
And 99 Wuxian’s current position, secured by a third-party payment platform and banking app with a unique twist, is nowhere near her end game.
Less than 12 months after bringing the company to its initial public offering (IPO) on the Australian Securities Exchange (ASX), Zhang is hinting at a US listing debut for 99 Wuxian on either the NASDAQ or New York Stock Exchange (NYSE).
How the mobile internet pioneer arrived at the concept for her business, and grew it despite the m-commerce ambitions of Chinese e-retail juggernauts Alibaba and Jingdong Mall (JD), is a mystery to most.
Now Zhang says the company, often touted in tech circles as “the invisible runner-up” in the market, is about to turn heads.
A business administration and marketing graduate of the UK’s Bath University, Zhang’s first job was with Hong Kong telco PCCW.
In the late 1990s, when most PC users were still listening to their dial-up internet connecting, she saw the potential of online business. “I remember I thought e-commerce would be the business of the future,” she says.
Then in 2000, she started talking to Ctrip. Now the biggest online travel agency in China, at the time Ctrip was little more than a plucky start-up with about 40 employees.
Three years into the job at PCCW, Zhang made a “brave” decision and jumped to the travel start-up.
"There are 1.23 billion mobile phones in China already. There are more phones than computers, and the internet is now being accessed more on phones than computers." – Amalisia Zhang
She quickly became the company’s Hong Kong general manager but, keen to build something of her own, she cashed in her shares and left when Ctrip listed in 2004.
She took six months off, travelled, and “listened” to people and the markets. “My original thinking was that I could bring the e-commerce experience to mobiles,” she says. “But at the time mobile internet speed was very slow.”
There was no single, defining moment that decided the future direction of Zhang’s business. Instead, she says, she worked meticulously to identify problems that the virtually non-existent m-commerce industry would face when it began to boom.
“The first problem was payment,” says Zhang. “At that time, even Ctrip experienced problems when it came to payment. It was a bottleneck for the e-commerce business.”
The other problem, she says, was that China’s banking sector was woefully behind the times. “We have 4.3 billion bank cards in the country,” Zhang points out. “About 10 per cent of those are credit cards.
However, recent reports show we have less than 12 million point of sale (POS) machines and only 2.5 million automatic teller machines (ATMs).
Compared with the huge amount of cards issued, the acceptance environment [for POS], it’s very underdeveloped.”
She deduced that rather than following the development model seen in the West, China would leapfrog straight to mobile payment methods.
The backbone of her business concept became pre-emptive commercial solutions to the problems she’d identified.
In early 2006 Zhang started Handpay, a mobile payment platform, and convinced big names such as Bank of China and China Construction Bank to get on board.
She already had strong connections to the sector, as she sprang from one of China’s prominent banking families.
And she concedes that pitching 99 Wuxian to China’s bank executives was made considerably easier by the fact many of them had known her since she was knee-high.
Zhang’s father, Zhang Hongyi, was among the first wave of Chinese bankers sent to study abroad when the Communist regime began its economic reforms in the late 1970s.
His career took the family from Tianjin in China’s north to Hong Kong and the big cities of the south, where Zhang Hongyi held top positions including president of the Bank of China’s Shenzhen branch.
At a time when millions of Chinese still lived in rudimentary conditions on subsistence farms, Zhang’s father was already exposing his daughter to the wider world. “My father always told me to ‘open your eyes and open your heart’,” she says.
Zhang laughingly concedes she has good “guanxi”, the all-important personal and professional relationships essential for doing business in China.
“It’s true,” she says. “But relationships only let you knock on the door. Capability is the thing that allows you to really do business, because you have to deliver on what you promise.”
With a personal perspective on life and business that seems to fall somewhere between mysticism and pragmatism, Zhang relentlessly “keeps a positive mindset” and looks for new opportunities.
It’s an attitude she applied to a shortcoming with Handpay discovered in 2011, when the company realised that by looking at payment only, there was no application or place for the end user to actually make purchases.
So Zhang established 99 Wuxian, a “mobile marketplace” platform, and embedded it in the banking app.
Customers of the 50 participating banks and financial institutions suddenly had the option of buying a wide range of physical and virtual goods and services offered by 155 participating Chinese merchants.
With the strategic acumen of a pint-sized Sun Tzu, Zhang has so far avoided direct confrontation with juggernauts JD and Alibaba.
Free for banks and consumers, 99 Wuxian makes its money by taking a commission from sales made by merchants.
By setting up her virtual marketplace first, Zhang basically made it more cost effective for big name merchants such as Tencent and China Unicom to be in business with her, rather than set up rival ventures.
It’s a business-to-business-to-customer model Zhang calls “B2B2C”, which she says is distinct from what the big Chinese e-commerce retailers are doing.
“We don’t sell clothes and plasma TVs. We provide a one-stop-shop solution for all the lifestyle products and services the consumer wants, like topping up your mobile or paying for utility bills or buying online gaming,” she explains.
Zhang created the Shanghai-based 99 Wuxian, which only has 190 employees, to handle rapid growth from day one. Her mentality is to spend time getting the right idea, and be prepared for it to take off.
Between 2011 and the middle of this year, it did, with 99 Wuxian’s registered users growing from 3 million to almost 32 million.
But Zhang is quick to put her company’s gains in context. The gap between 99 Wuxian and China’s e-commerce king, Alibaba’s Taobao, is enormous.
“Our total transaction volume last year was 5.96 billion renminbi [US$900 million]. Taobao dominated 60 per cent of the m-commerce market with 110 billion renminbi [US$17.9 billion] in total transactions,” Zhang says.
But with tens of millions of migrant workers and rural Chinese coming online for the first time, Zhang says there’s still market share to gain.
“There are 1.23 billion mobile phones in China already,” she says. “There are more phones than computers, and the internet is now being accessed more on phones than computers.”
Julia Q Zhu, a former Alibaba employee and founder of China-focused e-commerce research firm Observer Solutions, says retail e-commerce sales in China last year clocked US$7.1 billion in the third quarter (the nation’s peak retail period), up 141.9 per cent from 2012.
Alibaba customers alone spent a record US$5.7 billion on retail in its e-stores in a single day.
Zhu says at the time most pundits missed the real significance of what had occurred: 25 per cent of all those purchases were made with a mobile device. And she says this year will be even bigger in terms of total sales through mobiles.
The figures are proof of Zhang’s prescience, but they also represent her greatest challenge: the big players in e-commerce have well and truly woken up to the potential of m-commerce.
“The biggest challenge right now is a lot of the e-commerce platforms are moving to m-commerce,” she says.
Growing the business was the main driver for 99 Wuxian listing last October. The company successfully raised A$20 million in its strongly oversubscribed IPO, with the A40 cent share price jumping 12.5 per cent on the first day of trade.
As to why 99 Wuxian listed in Australia, Zhang says it was the right fit on a number of levels. At the time, China was closed for any IPOs, Hong Kong needed three calendar years of operation, and arch-rival Alibaba was thinking about the NASDAQ.
“It was about compliance but also reputation, and Australia has been good in terms of boosting our reputation and the continued development of our business,” she explains.
With last year’s profit totalling roughly 3 million renminbi [US$480,000], Zhang believes the young company needs time before investors can expect dividends. But they may not have long to wait.
A recently completed placement of A$25 million at A55 cents per share reflects a shift in strategy brought on by the faster than expected challenge from competitors.
“At the beginning of this year we thought we didn’t need to grow the number of business partners very quickly, after getting the 50 banks on-board,” says Zhang.
“But now we are changing our strategy to grow our business partners as fast as we can to dominate the sector.”
The recent cash injection, essentially a war chest, will fund an aggressive marketing campaign launched with Zhang’s resource-savvy style.
“Our strategy will be joint marketing campaigns,” Zhang explains. “We will leverage the banks’ resources, the merchants’ resources, and our own. This is the most efficient and cost-effective way.
If one of us spends a dollar, we get the value of three dollars.”
With the strategic acumen of a pint-sized Sun Tzu, Zhang has so far avoided direct confrontation with juggernauts JD and Alibaba.
"I believe eventually we will be either the biggest or second biggest m-commerce company in China." – Amalisia Zhang
Now that a showdown for m-commerce market share is looking increasingly inevitable, she’s formulated a counterintuitive strategy to leverage the strength and momentum of her opponents to her advantage.
Zhang believes JD’s listing on the NASDAQ and Alibaba’s IPO on the NYSE can be turned to 99 Wuxian’s advantage.
“I think [listing in the US] would be a good opportunity, because Taobao and JD have already educated the market. It now understands e-commerce and m-commerce in China.”
Zhu believes the dominance of Taobao and JD will continue, stressing that the recently named richest man in China, Alibaba founder Jack Ma, has publicly stated the mission of his company’s mobile department is to eliminate Taobao with Taobao Mobile.
But Zhu also believes the future leaders in Chinese m-commerce will be those that tap into what she sees as the biggest growth area: online to offline services (O2O).
“Compared to traditional e-commerce, meaning all the products people can buy online and ship in boxes, there are even bigger commercial opportunities,” Zhu observes.
“Payment and O2O-related services can not only be used for online shopping, but also commerce in the real world.”
China’s e-commerce giants are already making a concerted push into O2O, but so is 99 Wuxian.
The hallmark of Zhang’s career has been her ability to make accurate predictions ahead of the curve. With a confident smile, she makes what she hopes will be another one.
“I believe eventually we will be either the biggest or second biggest m-commerce company in China,” she says. “I have positioned us to do this.”
What Amalisia Zhang has learned
The secret of change is to stay brave and focus your energy, not on fighting the old, but on building the new. You have to be sensible and pay attention to key details though.
Take some time gathering information and put everything together for new and future developments, and accept responsibility for possible failures. There are no guaranteed rules for success, but it helps to think differently.
When I was young, my father gave me a small book by a famous Chinese mathematician. He uses the example of preparing four Chinese dishes and a soup for dinner in one hour.
It sounds impossible, but if you calculate and apply time management, it can be done. It’s a philosophy that’s all about getting better outcomes with a more cost-effective use of your time.
I think it is very important in the business world, and it helps me to arrange my time more efficiently and balance my lifestyle between work and family.
All the businesses I have been involved in are new and challenging, which can be stressful.
You need to keep a positive mindset to handle all the difficulties, because while you can’t choose what you are facing, you can choose to be optimistic and that helps you stay persistent.
This article is from the November 2014 issue of INTHEBLACK.