How SeaTable navigates the China backlash as it heads West

Budding Chinese startups to succeed in the West, they now face a major obstacle: their ties with their country of origin. The scrutiny TikTok faces in the United States over its management structure and data practices is a poignant reminder that giving up its Chinese affiliations could be essential to gaining acceptance overseas.

In their expansion to the West, Chinese startups are now decoupling from home, as we have detailed in a series of stories (here and here). The process could include moving their controlling entity to a foreign country, moving to overseas cloud centers, and relocating their executives overseas.

Against the backdrop of decoupling, a company takes an unconventional path. Instead of trying to hide its Chinese identity, Seafile, a low-code app developer founded in 2012, has expanded internationally by forging a symbiotic relationship with its German joint venture, SeaTable.

Since its inception in 2020, SeaTable has amassed nearly 200,000 users for its cloud-based database platform outside of China, while the on-premises version of the software has around 500 customers, including the armed forces. German companies, a company listed on the German stock index Deutscher Aktien Index. (DAX) and several universities.

Unlike many globalized Chinese startups that are fueled by heavy venture capital investments, Seafile has an enviable and self-sustaining business. The company has not raised any outside funding since securing angel funding of one million yuan (~$142,000) from Matrix Partners China ten years ago. Today it is profitable and internally funds all of SeaTable’s ongoing development. Seafile has 40 employees in China and 10 in Germany.

Giving up control

In 2019, the two Chinese co-founders of Seafile, Daniel Pan and Jonathan Xu, approached their future partners, Christoph Dyllick-Brenzinger and Ralf Dyllick-Brenzinger, with an intriguing proposal: to create a joint venture to help Seafile grow. abroad.

At the time, the two German brothers, who consulted veterans, had been helping Seafile distribute its other product, a sync and share solution, for a few years. They were enticed by the opportunity to have a stake in a product they truly believed in – a low-code database tool that offers a self-hosting option.

SeaTable offers both cloud-based and on-premises solutions, a strategy it says sets it apart from industry giant Airtable.

“Europe is about data privacy, about data sovereignty,” Ralf, CEO of SeaTable, told TechCrunch in an interview. “There is therefore going to be strong 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 from German corporate management and access to customer data.

Focusing on Europe, SeaTable is multilingual and is available in English, German, French and Russian, with Spanish and Portuguese in development. Language might seem like an unimportant feature, but in underserved markets with high purchasing power, like France and Japan (as is the case with the Airgram meeting productivity tool), having the localized option could help a startup get ahead. SeaTable also has a storage capacity of 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 Western public and government are increasingly skeptical of the companies’ Chinese ties. But entrepreneurs who want to run an empire don’t let go easily, let alone deal with partners who live thousands of miles away. As Ralf remarked: “I think it takes a lot of trust between the two parties.”

Data separation

Although Seafile does not participate in the day-to-day operations of SeaTable, it does play 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 Chinese team gives us software … that anyone can download from the internet, from the repository, and we, the German team, manage with that. The frame of reference is a bit like the dividing line. Everything on this side of the repository is managed by Jonathan and Daniel and everything on this side is managed by us,” Ralf explained.

A repository, in computer programming, is a centralized digital storage 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 customizations and services take place in its German office, which handles everything from installing software, performing upgrades, managing backups, troubleshooting, reading and interpreting logs, until system performance is optimized.

“The managers of the system are German nationals or European nationals. Apart from the fact that SeaTable is developed in China, it is about as European as it gets,” 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 marketing method is not the “safest”. While some customers agree with its 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 cross-border collaboration that leverage software development in China on the one hand and localization efforts in target countries on the other.

“Some of the customers I talk to are totally unaware that SeaTable is Chinese and I’m the one telling them. We don’t want to get into discussions and then at the very end we think SeaTable is Chinese , then they say, listen, you should have told us earlier,” Ralf said.

“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 for European and American companies to go to China and look for a Chinese partner to grow their business in. China. Now we are an example of a Chinese company coming to Europe to form a joint venture. People realize that oh, that’s really interesting, so they’re curious to know more about it.