B2B SaaS in China | Hacker News Reader

B2B SaaS in China

jonathanbrun.com

14 pointsjbrun6 comments

Most important question - is it profitable?

My experience was that Chinese companies are loth to pay for anything, let alone software (and let alone EHS software).

Also, I'm more interested in hearing about Fight Club Politique.

This has changed a lot in the past few years. My company started as an outsourcer with a WFOE in China doing custom development for clients in North American and Europe. Today much of our business is driven by Chinese clients. About 2 years we noticed ago that Chinese companies were willing to pay the same rates as our North American clients. There is a lot of money on the table, a big push by the government find tech solutions to modernize existing industries, and a massive shortage of skilled engineers.

This is also why we've seen so many Chinese companies in the tech and games spaces outsourcing to North American these days. It seems every week another Chinese company is opening an AI research lab or game studio somewhere on the west coast of North America.

I would add, it's still more difficult to do business in China than North America. And you will still find bad actors who don't want pay the final instalment post-delivery. But the are increasingly rare these days. As China matures it's becoming more and more like any other stable market.

> a massive shortage of skilled engineers.

I keep hearing that a lot in every other country. And every time I wonder - what is the criteria for the shortage? If it's skill, what is the skill? If it is from a value perspective, what is the expected engineer output vs salary?

In the case of China, a big part of the problem was that the government was too slow to encourage CS education. While it has been pushing CS for the past 10 years, the result is a pyramid with a very very wide base as many juniors are produced every year but very few engineers with the 10+ years experience you'd expect from a senior engineer. So the main problem is the ratio to true seniors who can lead teams or solve problems that reach into many domains are in small compared to the total number of developers. Over time this will work itself out.

Salaries for seniors are rapidly approaching NA rates, it's no longer viable to outsource to China purely for cost reasons. I expect in 4-5 years if the trends hold they will reach parity. But right now the issue isn't about money -- those senior engineers have their pick of their projects and it's very common for them choose lower paying roles if they can work on problems and tech that interests them.

10 years ago, Chinese dev offices looked like sweatshops with as many people crammed in as possible. Now there isn't much difference between NA dev offices and Chinese ones -- at least in 1st and 2nd tier cities. Really the whole development culture has shifted from everyone wanting to work at big foreign firms with safe jobs to everyone wanting to be in a startup. It's done a complete 180.

When we bought the company it was losing about -20% of revenues and had never made a profit. We are up to -10% after 6 months and I think we will get breakeven in 4-5 months. So, we are not profitable yet, but we will be!

Email me anytime about FightClub, have not organized one in a while, but they can be fun!

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