by aspiring Chinese startups to succeed in the West now face a major obstacle: their connections back home. The scrutiny faced by TikTok in the US over its data management structure and practices is a poignant reminder that renouncing Chinese affiliations could be essential to gaining acceptance abroad.
In their expansion to the West, Chinese startups are now breaking away from home, as we’ve detailed in a series of stories (here and here). The process may include moving your parent entity to a foreign country, moving to overseas cloud centers, and relocating your executives overseas.
In the decoupling scenario, a company is taking an unconventional path. Rather than trying to mask its Chinese identity, Seafile, a low-code app developer founded in 2012, has expanded internationally by establishing a symbiotic relationship with its German joint venture, SeaTable.
Since its founding in 2020, SeaTable has amassed nearly 200,000 users for its cloud-based database platform outside China, while the local version of the software has around 500 customers, including the German Armed Forces, an index-listed corporation. the German Deutscher Aktien Index (DAX) and several universities.
Unlike many globalized Chinese startups that are fueled by heavy venture capital, Seafile has an enviably self-sustaining business. The company has not raised any external funding since it secured a million yuan (~$142,000) angel round from Matrix Partners China a decade ago. Today, it is profitable and internally funds all of SeaTable’s ongoing development. Seafile has 40 employees in China and 10 in Germany.
relinquishing control
In 2019, Seafile’s two Chinese co-founders, Daniel Pan and Jonathan Xu, approached their future partners, Christoph Dyllick-Brenzinger and Ralf Dyllick-Brenzinger, with an intriguing proposition: establishing a joint venture to help Seafile grow overseas.
At the time, the two German brothers, who were both veteran consultants, had been helping Seafile distribute their other product, a sync and share solution, for a few years. They were drawn to the opportunity to participate in a product they really believed in – a low-code database tool that offers a self-hosting option.
SeaTable offers cloud-based and on-premises solutions, a strategy it believes sets it apart from industry giant Airtable.
“Europe is all about data privacy, data sovereignty,” Ralf, chief executive of SeaTable, told TechCrunch in an interview. “So there will be a huge market demand for the product in Europe.”
The Dyllick-Brenzingers rose to the challenge and founded SeaTable GmbH, with Seafile holding a 50% stake to maintain its commitment to product development while maintaining a firm separation of the German company’s management and access to customer data.
With a focus on Europe, SeaTable is multilingual and comes in English, German, French and Russian, with Spanish and Portuguese in development. Language might seem like an inconsequential resource, but in underserved high-end markets like France and Japan (as is the case with meeting productivity tool Airgram), having the localized option can help a startup thrive. SeaTable also has the capacity to store millions of records compared to Airtable’s scale of tens of thousands, according to Ralf.
In retrospect, the two Chinese founders chose the best possible path for Seafile’s global expansion at a time when the public and government in the West are increasingly skeptical of the companies’ Chinese connections. But entrepreneurs who want to run an empire don’t give up easily, much less deal with partners who live thousands of miles away. As Ralf commented: “I think it takes a lot of trust between the two sides”.
data separation
SeaTable’s low-code database platform. Image: SeaTable
While Seafile is not involved in SeaTable’s day-to-day operation, it plays a key role in developing the Guangzhou database platform, a common setup among global tech companies looking to tap into China’s affordable quality engineers.
“The China team gives us software… that everyone can download from the internet, from the repository, and we, the German team, work with that. The repository is like the dividing line. Everything on that side of the repository is managed by Jonathan and Daniel and everything on that side is managed by us”, explained Ralf.
A repository, in computer programming, is a centralized digital store that developers use to make and manage changes to an application’s source code.
The SaaS version of SeaTable is fully operated by the German joint venture and stores data in Europe. All customization and servicing takes place in their German office, which handles everything from installing software, performing updates, managing backups, troubleshooting, reading and interpreting logs, to optimizing system performance.
“Managing the system are German citizens or European citizens. In addition to the fact that SeaTable is developed in China, it is as European as possible”, added the founder. “It’s ironic that we all have hardware made in China… but Chinese software has a difficult position in Europe.”
The German brothers admitted that SeaTable’s way of marketing is not the “safest”. While some customers are fine with their Chinese roots, others, including a ministry in France, have reservations about software originating in China. But this proactive approach sometimes leads to friendly discussions about new forms of international collaboration that leverage software development in China on the one hand and localization efforts in target countries on the other.
“Some customers I talk to are completely unaware of SeaTable’s Chinese origin and I’m the one who tells them. We don’t want to get involved in arguments and in the end it comes out like SeaTable is Chinese and they say, look, you should have told us earlier,” said Ralf.
“So we’re very proactive about that and a lot of customers find that interesting because in the early 2000s, the typical joint venture model was that European and American companies would go to China and look for a Chinese partner to build their business in China. China. Now we are an example of a Chinese company coming to Europe to form a joint venture. People realize that this is really interesting, so they are curious to learn more about it.”
