Across the harbour from the towering skyscrapers that define Hong Kong’s famous financial sector lies a mass of cranes, warehouses and semi-trucks facilitating an industry with an impact worthy of the city’s reputation as an international economic hub.
Those cranes and trucks are driving a behemoth logistics industry supported by the city’s status as both a tariff-free port and the world’s largest air-freight hub. Plus, despite Hong Kong’s shrinking contribution to China’s GDP (from 16 per cent in 1997 to three per cent in 2014) the Pearl of the Orient remains one of the best throughways for companies hoping to enter the mainland market.
Amongst the giants clamouring for Chinese consumers through Hong Kong, e-commerce startups are also finding use for the port — and one company hopes to be their logistics solution.
Floship was founded in Q1 2015 and ‘works very closely’ with Indiegogo to handle logistics for startups such as Pressy (a snazzy headphone-jack plug-in that adds an extra button to Android phones) and Nanoleaf (funky light bulbs trying to save the environment).
Its business strategy is to develop a relationship with crowdfunding campaigns as early as possible and grow with its clients. The company works under the premise that it is not wise to focus on markups and extra fees because ‘if you sell more, you ship more’.
The couriers Floship has partnered with are, as Marketing Manager Richard McGirr puts it, “everyone you’ve ever heard of.” The names include DHL, UPS, FedEx, Royal Mail, SF Express and even the United States Postal Service. It currently works with about 40-50 clients and around half of its shipments go to the US with the other major markets being the UK, Europe and Australia.
According to the company, the reason Floship is having greater success in Western countries is because it is a challenge navigating Asian countries whose ‘rules of business’ differ immensely amongst one another.
“Asia is very fragmented and it is kind of hard to knock it out of the park in all the Asian countries. Whereas we can attack a much larger market like the US or the UK or Canada [at one go] instead of having 40 different strategies for every country,” McGirr tells e27.
Floship cites Amazon and Shipwire as major competitors but notes that both companies are US-centric. In Hong Kong, another company called Easyship is also operating in the e-commerce logistics sphere.
Underdog drive with a long-term vision
Floship oozes the culture of a dark horse challenger that is aware of its small stature, but believes it can compete. Maybe that comes from the quiet confidence of its Co-founder Steve Suh.
The 31-year-old Korean-American from Philadelphia won’t say his company has ‘made it’ because he values perseverance and wants to focus on how Floship can improve. But Suh quickly points out he has 30-40 years left in his career and believes the future of business lies in China-US co-operation.
“So I came to China to learn, understand how Chinese people think, [how they] make business decisions. Because if I know how they make decisions, and if I am on the other side and I am trying to do business deals with them, I understand the process,” Suh says.
His introduction into Chinese business came at the cosmetics startup MyLuxBox — acquired by Jumei.com in 2012. Suh says his time there gave him the experience to take a career leap into 4PX Express (where he eventually took charge of a subsidiary company called JMWant.com).
According to the website, 4PX ranks as the largest e-commerce cross-border logistics company in China. 4PX claims around 20,000 merchants use their service and it has over 1,500 employees. Suh was one of the only foreigners in the company.
“In terms of Chinese logistics and managing a culturally-Chinese company, I really look at that experience and I come away very thankful for it,” Suh says.
The pain-point for Floship came out of his time at 4PX. According to Suh, the website does a great job at targetting the Chinese merchant, but it struggled while serving the international online retailer.
“They didn’t have the trust of working with the guys, couldn’t get through to them, service was pretty poor. I felt like ‘hey why can’t we do something that focuses on international online retailers while providing the service and technology interface that they are accustomed to,'” Suh explains.
The early days were reminiscent of many startups, four to five people putting in long hours doing the work richer companies would simply delegate. Suh says he took charge of packaging during the company’s first Christmas rush because the rest of the team was busy with other tasks.
But Floship did face a major hiring challenge, cited by both Suh and McGirr — tech professionals.
“We got fortunate, but I think in Hong Kong it’s a huge challenge to find really good tech people. Why is the startup scene in Hong Kong still not really flourishing? I think the lack of tech talent is a big concern,” he says.
Despite Suh’s hesitancy to admit it, the company is further along than many startups ever dream of getting.
“The thing is, I don’t want to say that we made it yet. Success to me is being a company that people say good things about. As a team, we are just focussed on delivering the best product. I mean, we are still a startup; I can’t say we made it yet,” concludes a modest Suh.
Looking forward, in the medium-term, Floship wants to push the China angle and open up more warehouses. But, the first priority is to tighten up software before it begins to complicate things.