Hans Tung is managing partner at GGV Capital, a Silicon Valley-based venture capital firm that has invested in many e-commerce companies, including China’s Alibaba Group Holding Ltd. and India’s Snapdeal. Tung ranks No. 21 in the 2016 top technology investors listed by Forbes magazine as he led the investments in Xiaomi at a very early stage.

Internet Retailer sat down with Tung during the recent China-U.S. Investment Summit in Silicon Valley to talk about the latest opportunities and trends in cross-border e-commerce. Here is an edited version of that conversation:

What’s your opinion regarding the current fundraising slowdown?

I experienced the internet bubble between 2000 and 2002, and I also went through the financial crisis in 2008. It is definitely a good time to invest or to create a startup when most people say winter is coming.

Great companies always stand out when the winters are going to end. Facebook was founded in 2004 and Xiaomi was created in 2010. Also, Alibaba, Baidu and Tencent all have gained strong momentum after the first dotcom bubble.

In the winter, startups will find that raising money is difficult, but there are fewer competitors as well since poor-performing companies, which often burn money on marketing, find it hard to access financing from VCs.      

Can you tells about your recent investments?

The first one is a mobile-based shopping marketplace, Wish, which is based in here San Francisco. They help Chinese merchants sell products to mobile shoppers in the U.S. and Europe. In the beginning, they didn’t have a China team and only sold ads. I suggested they expand into China and start to sell products. Two years ago, Wish’s users could only select from 100,000 products; now 30 million products sell on Wish. 

The second one is cross-border e-commerce app RED. Charles Mao, a Stanford graduate, created this app to sell overseas products into China through an online community. When I invested in RED, users could only share shopping experiences and the app didn’t sell any products. I have invested into 10 cross border e-commerce companies, and RED is the most inexperienced in e-commerce operations. But Mao is the smartest founder I’ve ever seen, and he knows how to connect people closely by their interests. Now we all know an online community is very important for e-commerce startups because it acts as an economic moat.      

I also invested in music social app musical.ly recently. The lip-sync app has attracted more than 100 million users and followers on social media and even appeared on the popular TV show “Good Morning America.” Musical.ly is a rare example since it is popular in America but the development team was based in Shanghai. They have a cross-border team as one of their founders and are native Chinese who worked in Silicon Valley for many years.   

I know you invested recently into Airbnb and online messaging app Slack. Why?

We invested in Airbnb [the online marketplace for vacation property rentals] in the past year because we plan to help them expand into China.

Slack also got our funding. The app has become a popular enterprise communication tool in the U.S. Lots of companies, including Microsoft, eBay, Jet.com, are using this app to transfer messages or information smoothly across different departments. The app also has global users in Japan and Europe. In China, Alibaba has a similar app, Dingding, which is actually learning the business idea from Slack.   

Almost all the companies I invested in have become or are close to becoming unicorn companies, which are private companies valued at more than $1 billion. 

Why did you invest in so many cross border e-commerce companies?

I believe cross-border e-commerce is a trend in the next 10 years. I was lucky in many ways: I invested in China’s internet companies in 2005 while the broad-band internet was rising. In 2010, after I bet on Xiaomi, smartphone demand was taking off in China. In 2013, I know cross-border e-commerce and globalization of mobile companies would become the largest wave in the near future. 

When I went to China in 2005, the value of Alibaba increased to $5 billion, up from $170 million when GGV invested in it earlier. Now Alibaba’s value is $200 billion. Why? Online markets grew dramatically because China lacks an advanced retail system like having Wal-Mart and Target in the U.S. Chinese shoppers like to buy online, although there were fake or counterfeit products on marketplaces. Now people are increasing buying authentic products as living conditions improve in China.     

It seems China is tightening its cross-border e-commerce policies for imported products. Your opinion?

For China’s cross-border e-commerce, export is also important. China has many good products, which can be sold at a higher price. Although Wish mainly helps Chinese merchants export, it also works with JD.com to establish a small business division to sell imported products.

Wish features mostly low-ticket products. Is it a good time for Chinese manufacturers to consider creating their brands in the U.S.?

Branding in the U.S. is not easy. First you need to create great products. Over time, consumers will recognize you. Currently, many Chinese sellers lack a long-term plan. I think their mindset will change and good sellers will focus on meeting consumers’ needs in the future.  

The old stereotype for Chinese companies is they often copy the business idea from U.S. tech companies, but now more Chinese internet companies are expanding in the U.S. market.

This is a latest trend in the past three years. The reason behind it is that China’s internet sector has enough development. 

From 2000 to 2010, the trend is to copy the ideas from the U.S. to China. However, China is quite different from the U.S. China has many more users and demands from consumers in China are very different. China’s market is much more complicated than the U.S., so localized companies that provide unique online services could win in China.  

For example, Didi competes with Uber in China in the same taxi-hailing market, but Didi knows more about China. Uber has a more advanced IT system with only 100 technology workers, while Didi operates a less-competitive IT system with 5,000 workers. The result is clear: Didi can cover 500 Chinese cities, while Uber only operates in 50 cities. That type of know-how allows Chinese internet companies to expand into other markets, especially in developing countries. But the successful cases like Musical.ly are still rare. In the next 10 years, with more Chinese-Americans going back to China and working with local talent, those cross-border teams have huge potential in the global market as they can learn from best practices in the world’s two largest markets: China and the U.S.

Why does China have WeChat, a super app where millions of people can chat and shop in an app, and nothing like it has taken off in the U.S.?

Yelp is a good example [of potential]. If Yelp could allow users to make reservations, it could be a super app like WeChat. But they didn’t do so. Most U.S internet companies would like to direct traffic to a retailer rather than handle the transaction themselves.

Another example is Pinterest. Five years after launching, they started to allow users to buy products from the app. But the timing is a big problem because their users are used to discovering things on the app but not shopping on the app.     

What is your focus in the next several years?

I will strengthen investment on cross-order e-commerce and also invest in consumer product brands in a specific category, like Dollar Shave Club. 

Favorite