Most people understand that rewards based crowdfunding platforms can be an effective tool to test a new product or service. If it is a hit in presales, it bodes well for a larger market roll out. The same can be said for Chinese companies seeking entry into US markets. For many of these companies, it is more about market validation and less about the sales. Many Chinese rewards campaigns are from well-established companies.
Speaking on Bloomberg, Shai Oster explains the phenomena;
“The greatest mystery for a Chinese company is the American consumer. This platform is a great way to test the platform in a small, super cheap way. They don’t have to pay to set up an Indiegogo campaign so very quickly they can see if there is any interest in their product.”
Oster explains that Indiegogo has embraced this strategic approach by Chinese hardware firms and now they have a more formal process in place to encourage companies to do the same. Kickstarter is a bit different as they do not have a Chinese version site. But some Chinese companies will find a US partner to launch a campaign on the Kickstarter platform.
One of the benefits of a Chinese campaign is the fact they are much closer to the manufacturing process. This may mean fewer delivery delays – a common challenge on rewards platforms today.
Watch the video below.