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Ideas for China: What is Next?
DECEMBER 2013 · 
Keywords: capital market,innovation,creativity,leadership
Involved in Chinese media and internet industries for over a decade, Mr. Frederick Demopoulos, who is co-founder of Qunar.com, China’s largest travel internet company which debuted on Nasdaq in November 2013, expects to ride the tide of current financial reforms in China and explore chances and challenges of next business interest.
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Ideas for China: What is Next?
Founder of Qunar.com, China’s largest travel internet company which debuted on Nasdaq in November 2013, pinpoints the role of creativity in connecting with capital and seeking next business opportunity in China.
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Looking for easier access to capital out of financial reforms in China

“I’m looking forward to positive developments in the reforms of Chinese financial systems,” said Frederick Demopoulos, who is founder of Queen’s Road Capital and co-founder of Qunar.com, China’s largest travel internet company, and Shawei.com, China’s largest sports internet portal. FBK conducted an exclusive interview with him at the sideline of the “Innovation 2013: from Silicon Valley to China” conference in Tianjin City on October 31, 2013.

The next day, shares in Qunar, which is owned by Baidu now, made their debut on the Nasdaq Stock Market and surged by as much as 133 percent on the same day. Qunar was the second biggest US IPO by a Chinese company this year, and it has more than 200 million users.

“Entrepreneurs have great ideas, have abilities to build great teams, but they need capital. I hope financial reforms will make it cheaper and easier for entrepreneurs to raise capital and eventually take the companies public in China and abroad.”

“Hopefully, these reforms would lead to a development that would allow entrepreneurs to access capital and eventually realize the returns on their hard work and innovations.”

Next business focus: education

After running successful businesses in Chinese media, sports and travel industries for well over a decade as an executive, investor and entrepreneur, Mr. Demopoulos said he is going to set his next foot in “disruptive education opportunity”, mostly like online education.

“I would pick industries that I like. I love sports, travel, and I also like to educate myself.” he said. “So maybe my next area might be in education space. I’m looking at it very closely.”

Be cautious about Internet finance

Finance is about moving numbers between banks and intermediaries. Anything that is already digital is going to have a fantastic opportunity in online and mobile space. Mr. Demopoulos said that he is very optimistic that the broad category of fintech – or financial services technology – will have a bright future in China.

“But if there is too much capital investment in the category already, like anything in China that is hot, it tends to get a lot of attention, innovation, and sometimes a lot of price appreciation which may not be healthy in a short term,” he cautioned.

With internet finance services, businesses and small entrepreneurs who normally have no access to funds now have a chance to get some funds. “I think some people will create great businesses. Like any financial services, however, we have to have smart regulations for consumer protection. I think this is really important today,” he indicated.

“Most financial crises occurred because the cost of capital was somehow mispriced. This is the same in internet finance category. Let’s make sure that our price risk is properly accounted for, otherwise we might see some problems in the future.”

“Please keep in mind that what is interesting about financial services category is that, within a short term you can generate profits, but within a long term you generate losses. Today, we see a lot of interesting companies doing great things, but you may not see big losses until a few years from now. We need to be aware of that,” he said.

“Within this specific category, it’s probably better to wait and see now.”

Broad definition of creativity in China

“To be honest, everything I’ve learned is from China,” Mr. Demopoulos said. That includes incredible flexibility and creativity that are demonstrated by Chinese entrepreneurs.

But there is difference in creativity between Chinese business people and overseas ones. “Some people in the West believe that creativity means an idea. However, in China, we see creativities in business model and eco-systems, which require high level creativities. It isn’t just a product’s idea, and could be a business model idea, pricing idea, and value chain idea.

“Also on the product side, Tencent has been selling virtual items for years, way before Facebook did. What we see is some independent thinking from China."

There are 4,000 group buying startups in China a few years ago. “Some would say: hey, they are copying each other.” But there are also 4,000 group buying startups in the US. “There is a notion of copying, but it happens everywhere. For me, it is a compliment if someone is copying me,” he said.

Like some speakers said in the conference earlier, CEO or founders of a company are responsible for creativity. “I think Pony Ma (core founder and CEO) of Tencent has done very successfully, as he has created a company’s culture that encourages behaviors of team building, professionalism and creativity.”

“Creativity is not the sole behavior of trade we want to have. We also want people to be professional, have strong team skills. If we think about developing companies in China, we have to be aware of these different things,” Mr. Demopoulos said.

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PROFILE
Frederick Demopoulos
Founder
Co-founder and former CEO of Qunar.com, China’s largest travel internet company; co-founder of Shawei.com, China’s largest sports internet portal. 10 years experiences in Chinese media and internet industries.
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