Buying Online Businesses in Hong Kong and Asia

Michael MicheliniBusiness, Ecommerce, Podcast4 Comments


The investment scene is getting HOT in Asia – well all around the world. And in our world, Amazon FBA and e-commerce, which is growing at amazing pace. So, we are excited to bring to you this week’s guest on the GFA interview series:

Our guest expert Murray Priestley. He lives in Hong Kong and his focus is buying, scaling and selling online businesses. A natural leader, he acts as a catalyst for rapid growth & execution.

Keywords to associate with Murray: author, ecommerce, business growth, investing, customer service, IT, leader

Topics Covered in this Episode

  • Connector.

    Introduce Murray

    How did you get into Hong Kong?

  • Connector.

    Investor Mindset

    How should someone prepare to be an investor of online businesses?

  • Connector.

    Asia Investor Mindset

    Is there any differences of mindset when investing in Hong Kong and Asia than other parts of the world?

  • Connector.

    Finding Opportunities in Asia Market

    How are you getting tips and leads on investment opportunities, and ways listeners can also get in!

  • Connector.

    Deal structures

    Many US investors insist on investing in a US entity, even if the company is overseas. Do you have a similar format with requiring a Hong Kong company to be setup, or other special jurisdiction?

  • Connector.

    Protecting Investors

    I worked on Wall Street for a few years back in my younger years, at Deutsche Bank on the distressed debt desk. We always kind of laughed at alot of Asia deals because they seemed so risky and it was hard to know if a government or a founder would pull a fast one and rip off investors in a later stage. Is this something that still exists, is it getting better, never existed?

  • Connector.

    Creating a fund

    So I’m really interested in this – as we have our current e-commerce venture going and building up to make an investment fund. Any strategies for making a fund, having others participate as a investor in a fund?

  • Connector.

    Investment stories

    What are some fun stories about some investments in digital businesses you have made? Fun ones, but also ones we can learn from.

  • Connector.

    Working with you

    So what are you working on now, any deals we can help with.

  • Connector.

    Connecting

    What are some ways people can find you online.

People / Companies / Resources Mentioned in this Episode

1mpayday.com
√ Middle East looks like next big thing

Show Sponsors

Today’s podcast is brought to you by Aurelia Pay. I use them for sending money to my Chinese supplier from Hong Kong – it is a cross border payment solution between China, Hong Kong and South East Asia. So when I need to make a payment to a Chinese supplier, I just hop in to place a remittance, pay to their HK bank account, and Aurelia Pay settle RMB within the same business day! Check them out.

Episode Length 34:36

Thank you Murray! We are rocking over here trying to provide the world with access to information and knowledge of what is happening here in Asia. Are you ready to get to the next level? I’m just so excited to see e-commerce, Amazon FBA, and investment coming over here in Asia – as the show name that was picked almost 4 years ago is now coming more and more true – GLOBAL FROM ASIA.

Hope these podcasts have been helpful to you and your business. Let’s level up.

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Podcast Transcription

“Murray: Amazon is providing this wonderful marketplace. Millions of customers searching for product every single minute. So, that’s where you want to be. You want to be where the customers are.”

Today’s podcast is brought to you by Aureliapay. I use it personally for sending money to my Chinese suppliers from Hong Kong. It’s a cross border payment solution between China, Hong Kong, and Southeast Asia. So, if I need to make a payment to a Chinese supplier, I just hop online to place the remittance, pay to the Aureliapay Hong Kong based big account and Aureliapay will settle RMB within the same business day. So, check them out online at www.aureliapay.com A U R E L I A P A Y .com or check them on their link at our show notes.

Mike: Alright everybody Global From Asia Episode 196, Angelica, how are you today?

Angelica: Yes, I’m doing good Mike and you?

Mike: I don’t know if it’s same for you in Manila but it’s really hot in Shenzhen. I feel like it’s hotter than the summer. I don’t know, it’s been lot more air-conditioning required. I usually tried to live with fans but how about you, is it hot there?

Angelica: It’s actually raining here in Manila. Like we have low pressure area right now. So, it’s like raining thunderstorms, so it’s a bit cooler.

Mike: Wow, it feels like it’s always raining there.

Angelica: I know since it’s already BER month, it’s already October, it’s a rainy season for the Philippines right now.

Mike: Alright. Anyway hopefully the sun comes out soon. Let’s just go don’t let the rain get us down and I’m busy being a dad, I had the whole week with the kids there. Mau just got home from School coz it’s like Golden week like I mentioned.

Angelica: Nice.

Mike: All these holidays. But I’m still working, we’re still working hard on the Cross Border Matchmaker. You got to more involved. Talking some cool people about it.

Angelica: Yeah, with the Cross Border Matchmaker event, it’s going great. We have a lot of people joining in and interested with the event. So, if our listeners wanted to join us, they can message us on our GFA official WeChat so that we can entertain their inquiries and yeah hope they can join.

Mike: Actually a lot of people are complimenting our content lately. We’re having people working extra hard but my friend, Greg in Chicago, sent me a message he says he’s really noticing our contents improving, he likes the member’s series and our videos. We’re doing more videos on Global From Asia, too. Some people might not even know. But how about our member’s series for this, who’s up?

Angelica: Yeah, our member’s series, we featured this week is Lorenzo. We published that last Wednesday and this coming Wednesday we have Jelena, one of our chapter organizers. And we still have a couple of members lined-up.

Mike: Yeah, Helena.

Angelica: Ah, Helena. I’m sorry.

Mike: That’s okay. She’s a great there, Lorenzo has been on our podcast a few times actually for our Ecommerce series. And Helena helped out with the Shenzhen meetups. She should be backed from Europe soon. So it’s great to have everybody getting involved and getting showcased them on the site. So let’s talk about this week’s show. This week, we have Murray Priestley. He is talking about, he’s an investor, he loves investing in digital businesses. He have a great conversation about the investment, the mindset of what investors are looking for. He’s setting up shop at Hong Kong, so I always try to help out our Asia based startups and businesses in Ecommerce companies. He’s interested to get involved with them. He gives us some pointers. So hopefully some of our listeners can get some, at least get some information but also get some investments from Murray, so he ‘s doing some great stuff. Let’s tune in.

Angelica: Yeah.

Mike: Alright everybody. Thank you for tuning into another Global From Asia podcast interview series, we have with us Murray Priestley. Hey Murray, thanks for coming on.

Murray: Hi, thanks Mike. Thanks for the invitation.

Mike: No, it’s great to have you. So, you’re the author for the 1 million dollar Pay Day and you with your partner, Steven, focus on helping Asia based online, I think Asia based but maybe online business everywhere by scaling in selling their online businesses. So, I’m definitely excited to have you on the show and learn some more perspective about investment scenes and online businesses here in Asia. Welcome to the show.

Murray: Thank you. We’re actually, I guess we’re a small private equity, so we rising capital, used at the buy into some Amazon businesses for a number of friends. I’ve learned a lot of lessons on the wide through, I’ve spend at the services company and I definitely, services company has helping a lot of Chinese factories and have bunch of other clients from around the world, do better on Amazon but we’ve raise more money now. Basically by November, we will finalize the multi based fund to really what we’re going into what we’ve been doing in a small but doing in a much, much more bigger way. It’s very interesting world we lived in here in Asia.

Mike: Yeah, Asia were talking about before the recording is, I guess what keeps us here I think its the growth to see opportunity and I speak for myself I think the action are the adrenalin, the energy but yeah, it’s great to have you, pay attention. So, you’re originally from Australia?

Murray: I’m in Australia actually sitting here right now but about to move in living Singapore but for the last 20 years up and down in Asia, Hong Kong, Korea, Singapore. I lived in all those bases so sort of coming back time if you like. Back to lived in Singapore for bit. But it is for the same as we are talking about before, it’s just the energy of what’s happening in Asia not only on young entrepreneurs doing some amazing things from the investor capital perspective , you know raising capital into funds. There’s a lot more available capital in Asia than pretty much anywhere else in the world. It’s a lot of good reasons why Asia hit quarters right now.

Mike: Definitely. So, you worked with both sides I mean as far as the investment side or the entrepreneur side.

Murray: I guess the, a quick background. I used to work for electronic data system, big IT outsourcing company. So, my advantage to look at how the business running and figure out how we can improve it. So kind of, initially raise some capital thinking that we would buy and fix and sell them. So let’s say if we bought 10 Amazon sellers and then stitch together the back end to lower the cost of operation, you know improve sourcing, improve customer service all of those things rather than do it 10 times you know we can do it once for everybody. So, we kind of built a services platform that we can deliver just the standard thing that keeping the stores running. So, that was the idea to lower cost to be used in a good marketing, good sales, skills and then grow revenues and then sell it to bigger guy. That was the plan. We did running to a bunch of problems on the wide through and we learned that if you don’t buy cheap, if you don’t source extremely well, there is not much you can do at that time. Because margins are raw at that time your products sold really well for 6 months and then one of the competitors drop the price and you have to kind of drop to compete and suddenly you’ve got no margin. So you can’t advertise. We’ve learned that lesson. We’re still part of the business is kind of shutting down and the services side of the business, I guess the answer to question is, yes I kind of thinking 2 sides. I think for the investor side but i’m also thinking right now I have to see the operations and to make sure that we’re operating in a way that’s efficient. There’s kind of light difference between private equity and venture capital. I mean, we’re private equity so were hands on. Whereas to capital might take hands off approach. But the new bigger fund is definitely a private equity as well with the focus on finding businesses that providing services to Ecommerce companies.

Mike: Cool. Makes sense. So services, so that’s in November you said. Are you planning to launch that?

Murray: November should be completely closed but we’re looking now. We’re actively looking for companies whether they, I’d like them to have some sales, to start with, that would be good. So not completely starter. If somebody’s got to business that provides services, it could be logistics, it could be financing, it could be education, it could be software, tools whatever in order to support companies that taking risk in inventory and actually making Ecommerce business. We want to basically build a portfolio of companies that can provide services.

Murray: It would be global but since we’re in asia, it’s kind likely will find some great opportunity here in Asia. Definitely there’s American software companies that potentially up for grabs but we may do something, we may for example buy some software or software company and then operations into Asia. Because it’s cheaper to operate, the core power of the business can be here in Asia. We want to take the view that we could outsource or we could people into a services thinking, a platform thinking were we can lower their cost and if for let the business focus on what it does well. You know innovation sales, getting customers and then let all the back end self get done by another team. Make sense with theory, you know what happens with theories sometimes you have to keep it.

Mike: Understand. I’d like to believe in it. I think that is one of the powers of Asia is the access to so much labor such as diverse amount of talent at different levels.

Murray: And looking at the arbitrage. I mean, we’ve got a team in the Philippines, so the average cost of running that team is obviously a lot less than if we have the most city in Hong Kong. But if you go across we know some great software guys that just in the Northern Macau, the Mainland China but the supremely skilled but the cost very cost effective. So we’re definitely up into putting people whether they need to be. I’m not huge fan of having people, single people being hide into virtual teams to live all over the world. I kind of haven’t, maybe i’m too old. But i haven’t really stayed at work that well. I’d prefer to have a more than half the team sitting in one office so they can work with each other and see each other and be cross skilled or the rest of it. But as I said it’s the start of coworking phenomenon around the world, where you are definitely in Hong Kong there’s probably 10 of them in Singapore, there’s about 8 of them, and I just can’t, everything is just fantastic. I love working into co-working space and then just finding network people do. It’s always entrepreneurs and you talk about energy the energy of co working is fantastic. So somehow I’ve been asked to about the help some of those companies and are growing faster.

Mike: It makes sense. I think Hong Kong is like, I don’t want to say babble but there’s so many coworking spaces there now that’s really out of hand the most. I think that, it leads me to my question about opportunities so what would you say is a good way you find opportunities in these markets.

Murray: Right now the word of mouth is the best way, sort of having pretty good network around the world. You made people obviously going to conferences and meeting different people listening to some of the people who speak. Go talk to them, ask them about who are they helping. Just talking that’s to me, is we have more people to talk to than we have the time of the day. So it’s about finding how do we qualified good opportunity that would probably the harder question, there’s so many opportunities. You say in Hong Kong with co working it’s a babble, I mean in Singapore, I don’t know but the government is still about the government was writing 100% lease financing grants to people who started co working spaces. So, suddenly every man and his dogs is ranting now thousand square meters in a building and kidding that out because 100% of it is being funded by the government Singapore government. Its fantastic that’s what you want out of the government to support business and the Ecommerce but so we just can’t wait to really get a little further on the part on what we’re trying to do.

Mike: It’s true. I know in Mainland China, too it’s not as clear cut really but a lot of times the co working spaces are, is programs talked to government supporter or financing in deals. But I think it’s a good way from bottom up kind of, well maybe, is it top down? At least it’s going more closer to the entrepreneur or the startup community it’s important.

Murray: I don’t know if I’ve mentioned this to you the leasing in the past. But in way you are pretty much all throughout China is ecom centers. So, the Ecommerce parks, they like business parks where 100% of the companies are in it are all Ecommerce companies. But rather like in Western culture, we kind of look at things inside, let’s try to be an individualist, let’s try get out there and build a great product and build a great service and try to sell it to people and let’s make money for ourselves. But it’s not the culture in China. In China the culture is more collectivist. So 500 Ecommerce companies will come together in a business park and actually worked to help each other, launch the Ecommerce businesses on the Western world faster. So the time to market that i’m saying is some of the company in China is just would make you head spin. That is got to be good for consumers I think but it’s got to be a problem if you think you are startup american Ecommerce business and you’re planning on taking 6 months to get launch or upseeing on and get done in less than a week. And then I launch 500 brands in less than a week and that makes your head spin.

Mike : It is crazy even just you can learn just by seeing the construction sites is China is almost 24 hours a day. It seems like non stop for the whole time I’ve been here even before. Its true its good point I’ve been to some of those Ecommerce parks in Shenzhen. I think the school’s back even to factories. A lot of times people do sourcing from China we realized a lot of times it’s the same products or in the same cities or same districts. And that’s even with the restaurants like there’s a joke on my friends, let’s say there was like a beach town outside in shenzhen and one restaurant opened that was like a really obscure food like pigeon and fish or something like this. And it was really busy so then all of a sudden a whole road of the same exact food lined up because they copy each other and they kind of cluster around each other in China to kind of create some market in itself. So in a way I think foreigners would get annoy with that or we get upset about that but it seems like in China. Like Chinatown in the US they kind of come all together and helps scale like you said it grows faster and builds buzz around it and people will come.

Murray: My wife and I we lived in Korea in Seoul Korea for about 3 years. We kind of, it was the first time we ever saw that which we go to a particular shopping district and find the, I don’t know the rock climbing district. So every store, maybe 20 stores I know this particular case is where we lived. My old self rock climbing stuff, whatever. And i thought that’s dumb but then when you think about it what it does is it signals to the consumer that if you want rock climbing gear you need to walk to this particular district. So therefore everything that you’ll ever want to buy is right there. So anybody walking around in that area is looking for rock climbing equipment. And so for the store owner. They put themselves, they created a market as you say but it’s better for them. They sell more because people who come there are only looking for rock climbing equipment. I didn’t understand it but yes that you saved all now in Hong Kong and Macau and so other. Just in Vietnam, it’s pretty much all in Asia. But you don’t see it anywhere, you don’t see in Australia, UK, US, its very weird.

Mike: Yeah, which goes back.

Murray: I think it’s a benefit.

Mike: Yeah I think.

Murray: If you want to eat pigeon and fish, you don’t have to think twice do you, you know where to go.

Mike: Yeah, exactly where to go. I guess there’s plus and minus on both sides, it goes back to individualism of the West. Like to be independent and almost offended the others that try to follow what they do whereas in China or Asia is like what you said is collectivism and they clustered together. In the way maybe lack of creativity in the way coz they just see others and they do it. But it also helps scaling and marketing as a group coz everybody is in the same area. So by having by doing the same thing together, the market is developed more people all around it like you said no pigeon and fishes here and it grows everybody’s business. Or at least once they better service the people. Very cool insights.

Murray: I think we obviously we talked about ecommerce, right? So Amazon sells right now, its recently easy business to get into. I’ve seldom seen some guys that really just absolutely that a lot of people struggle with technology. But if you think of it Amazon is providing this wonderful marketplace. So, millions of customers searching for product every single minute. So that’s what you want to be. You want to be where the customers are. Whichever way we, we talked about it, our job is to set up help up people get that, get this stuff or get this stuff and figure out what people want to buy and then provide it in the most efficient way so everybody’s happy.

Mike: It’s true. So for this investment. I think he’s trying to create a much efficiency in the market. I think its the marketplace like Amazon or any marketplace that trying to level the blankfield. So, my next question is.

Murray: Yeah, the next big one I think is the Middle East with Amazon.

Mike: That is true.

Murray: With Amazon buying souq.com an extraordinary amount of money. So, Amazon is putting a lot of weight into Middle East being the next big market. So there’s a lot of investment opportunity to help sellers and provide us getting into Amazon in the Middle East market because again a lot of customers is pretty under service.

Mike: True. Yeah, I think Middle East is a pretty rich consumer as well in spending money. Seemingly a good market. So my next question is, this deal’s structure, I think I mentioned during our recording was, when I tried to raise money from previous startups a lot of times like American investors would say too far away in Asia for their tolerance or for their portfolio. Is that still take into consideration where companies are registered or where the teams is based. You have mentioned a little bit before about online teams, maybe you would like to have some office, does that matter what you think.

Murray: It may not but it’s pretty (blurred) question, because the, the world is very global now so a certain level of investor, so as long they are investing in a regulated market, there’s not really. I don’t think there’s really a concern. I think the average person still likes to invest. It’s kind of like the average person buys all the groceries within 5 miles of where they lived. So there’s do, like local human nature but most sophisticated investors are putting money wherever they want. So as long it is regulated. I know in a particular case we’re talking about having EU registered funds but they didn’t have fee to fund that allows a more, even North American investors to invest into a structure and that then fade back into the EU structures and it again the same thing. I mean they register in the EU because they expect more investor from the EU and from the UK. Asian client investors typically follow the American thinking so quite happy to invest in a fund. The reason why you put into different places in the world, there’s no sense in paying more tax and you need to, you want to be legal, you want to donate extra, I think. So everyone understands that individual is begins to institutional guys that will put into certain small amount to profit equity class. We started with just registered company and in Hong Kong anything less than 20 million doesn’t need to be registered as a fund. So it’s just a company, you’ll not got to get an institutional guy and invest in something like that so it’s simply too small. But once you opened up to bigger investors then you got to go spend the money and time to create the fund structures and make sure that everyone kicks it off and find yourself a corner stand, invest into somebody with the name that actually be the first guy in, and then on the back, this people don’t invest in something new, they want to invest into something that is already running. So I don’t think the rules have changed. I think that everything that you would have been used to in your previous life is still valid.

Mike: Alright, yeah like I joked a lot on the show is I kind of lose touch with my old life or in reality it’s almost been years since I’ve been back even. So, I guess it’s more opportunities, right? We’re out here in Asia. We’re on the ground, we’re able to meet these new startups and service providers. Is there a way that at the same time, how does it matter if its lets say if you want, find the opportunity to invest in the company says like Amazon software company just so they register. I guess do more about diligence or things like that I mean, I wonder a lot of guys we talked to you know our register in Hong Kong or Singapore companies some might be in Mainland China.

Murray: Our Hong Kong company is a completely fine regulatory wised on a global scale, it is safest. I think the, we definitely understand all those little details. But the bigger one is just meeting face to face and find what the people doing and seeing that this proves that what they’re doing is making sales brought an idea. The idea is dispensable you know it’s not something that somebody can just go and copy really quickly and taking care of like a property systemization. We’ve got a robust way of looking at it. But my view is I’m looking to buy cheap, so we want to try and find companies that probably that in spite of themselves than making sales. That they’ve got some obvious things that are wrong.

Mike: Got it. Its definitely, something to improve upon and fix. That’s great.

Murray: Yeah and that look that’s why I write that book was simply a view like his help, private equity firm that would look at the business. He’s what they’re looking to be wrong coz there’s probably 5 or 6 that pretty much always wrong or always can be improved. So you’ve got find them first then – then tells you that you can find more opportunities to improve what they’re doing. But then if you take the 180 degree foot on that, then what’s written in the book is pretty much a risk, if you’ve just got fix these things in your company then you can have a chance of being able to have your company valued at higher amount. Now, doesn’t do many good but, there’s got to be more people who’ll read that book than the ability to buy so therefore go ahead and build up your ecom business based on the kind of mistakes that most people make. Here’s now what to do so go fix that and then look to sell your business at a high. I think that’s to me that’s the only way to think so that’s kind of where we’re at and we definitely if any one of your listeners has got of ecom business we’re services company that they’re thinking about maybe in the next 12 months it will be nice to sell then I’d be happy to talk to them even point out some things that they could do to improve it. Whether we are interested in buying it or not. I mean that’s, I think I believe in karma. So, the more that you sort of give out, the more that comes back. So I’m happy to help anyone I can.

Mike: That would be great. We’re getting towards the end of the interview now so of course I definitely recommend people check out your book its 1mpayday.com and if people are interested in contact about your business. what’s the general best path to doing that.

Murray: Go to that website download the book, it’s free and part of that you’ll oversee given across your email address you get a few emails to some other videos and those videos you’ve got information about how to make direct contact, which is effectively through main website. In a way were very accessible it’s not, we’re not trying to hide between 20 lies of admins and people like that. Again, my business partner and I are very happy to help people, that’s all we do all day really is talk. We’re at the solving problems which is what generally is about business. A companies that we are involved in, there’s all the problems. Or we’re talking in helping other people. So I think that’s the easiest way.

Mike: Very cool, alright. Is there, any other points that you want to bring up. I know you’re very busy and I appreciate the time sharing today.

Murray: Again if I can help you in any way. Same thing on what you’re trying to achieve the, I think the more we can get out and the support Asian entrepreneurs and Asian businesses. I think they the better so that’s why I kind of lived in the region is to help.

Mike: Great, right. I look forward to connecting and sharing this with others to help them. Thanks so much for your time.

Murray: My pleasure. Thank you, Mike.

Mike: Thank you, Murray. I had a good one that was also on our GFA VIP paid members. We had it live for those that tune in and it’s available earlier for the supporting and check out our gfavip.com I always loved that and we could help make connections as well and to support the show. It’s an amazing program or we connect with others and have some special offers. Do you guys listen to this? I wonder if we get cut off actually I don’t know if people listen to WeChat version as podcast get cut off at 30 minutes can you believe that they limit the podcast to 30 minute so you may not be able hear my fun little out raws here. I just like to stick this in for as long as you made all the way til the end. I’d love to know if you make it til the end of this shows r we’re like interviews over and cut this off and see you later but I had a couple of minutes to recap and I hope you guys appreciate that seems like enjoying we have again more and more listeners and downloads and people have been complimenting the show so make me warm and fuzzy inside so it makes the world a little bit better place to lived. There’s some crazy stuff happening with shooting and natural disasters in the world. We guys do our best just to make live it better and I hope this show is helping you make your life little better and by listening it makes me happy so hopefully it’s a win-win that’s it this week. See you soon.

To get more info, on running international business please visit our website at www.globalfromasia.com that’s www.globalfromasia.com. Also, be sure to subscribe to our iTunes feed. Thanks for tuning in.