by Glenn van der Meer
A well-known stereotype about doing business in China is that the key to success is a network of good relationships, and that the personal bond with the decision-maker in an organization is more important than the actual product being sold. Glenn van der Meer doesn’t want to claim that *guanxi* (relationships) is unimportant, but through his work in China – selling software to state-controlled media companies – his earlier perception has been considerably adjusted.
My employer, Tiledmedia, is a spin-off of the Dutch research institute TNO. Our headquarters in Rotterdam employs 20 people, and I have been working from Hangzhou for four years. I want to illustrate how the above nuance has been established through two projects that Tiledmedia has carried out: the Olympic Winter Games in Beijing with the state television company CCTV and a Live Streaming Service for Migu, the streaming platform of China Mobile. Both projects were related to VR livestreaming; this form of entertainment is technically complex, and the costs to create a good experience are significantly higher than livestreaming standard video. Tiledmedia has developed video player software that produces ultra-clear VR video. This product incorporates nearly 15 years of research, making us well-known in this field.
We came into contact with Migu during a conference where we demonstrated our technology. Many months of technical discussions followed, providing information about our service, testing our tech with Migu’s video, and so on. Ultimately, a public tender was issued, which was handled by Migu’s procurement department. To participate in this tender, we chose to establish a limited company in China; nevertheless, we were seen simply as “the foreign party.” Migu’s procurement team was strict regarding interactions with potential suppliers. We were only allowed to communicate with the buyers via Migu’s own chat system, there was only very limited contact between the procurement team and the project team that would ultimately carry out the service, and we had to sign an unprecedented number of documents during the tender process to cover (the appearance of) conflicts of interest. These documents stated, for example, that we had no family or friendship ties with the procurement and project teams and that we had not given each other gifts or donations.
Ultimately, a Live VR streaming test was set up to weigh all options against each other, and after we came out on top, negotiations about the price commenced. More than two years after the initial contact, we could finally stamp a contract. Even after securing the project, stroopwafels and clog keychains that we brought from the Netherlands were kindly refused by our contacts. In hindsight, we learned that we were the first foreign party in the history of Migu to supply software to the company, which played a role in the extensive due diligence they conducted. The biggest rigidity we encountered was not the importance of guanxi with Migu but more the engagement with a large state-controlled organization with a highly compartmentalized structure. This led to a lot of surprise and misunderstanding on our part.
For the Beijing Olympic Games in 2022, Tiledmedia also participated in a tender. This time we were not the submitting party but a supplier for an American partner that was carrying the project. We competed with a Chinese company that claimed to be able to deliver a similar solution faster, although we had our doubts about this. CCTV itself did not yet have a VR streaming product, so it was certain that they needed a partner to have the service ready on time for the Games. The project was prestigious for CCTV, as the Games were an important focal point for China to demonstrate their technological advancements. The hard deadline of the Games worked in our favor because CCTV had to make a quick decision and opted for our solution, which had already been implemented successfully in other countries. Ultimately, the project was a great success; for the first time, 8K VR video was streamed live to millions of people on a large scale. Especially on VR headsets, the experience was very special. I was able to watch more than 100 hours of ice hockey, figure skating, snowboarding, curling, and more. The feeling of having a front-row seat in the stadium while you are actually just sitting at home on your couch is and remains an intriguing phenomenon!
In both the Migu and CCTV projects, I was impressed by the competence of the staff involved, but this is not surprising when you realize that these people stream content daily to an audience larger than the total population of the Netherlands. I hope that this article has adjusted the image of the pompous public official who relies on handshakes and a lot of Moutai for business deals. I certainly hope that the emphasis on competence will continue to prevail in China in the future!
