Trax, a Singapore-based startup serving the retail industry, is eyeing growth opportunities in China's huge consumer market and looking to showcase Chinese retail experiences to the West after it signed a deal to buy LenzTech Co, a Beijing-based computer vision technology service provider.
According to company officials, the merger will combine Trax's expertise in merchandising strategies and LenzTech's crowdsourcing market competitiveness and AI technology to help digitize China's offline retail market as well as those in the West.
"China is a promising market and it is set to be the world's largest retail market this year, and there is a clear need for a solution that enables brands to hone their in-store execution and increase their margins," said Dror Feldheim, Trax's co-founder.
According to a report by Accenture, a global consultancy, as the middle-income segment grows, especially in countries such as India and China, the demand for retail experiences and consumption goods technology rise.
Trax decided to tap into China's market to offer its technology in retail solutions to local retailers for them to better digitize their services. The cooperation with LenzTech includes building a research and development center in China with an investment of $20 million to $30 million.
Feldheim believes that Trax's expertise has already proved to be a success in markets such as Russia and Latin America and will help Chinese consumer goods companies to excel further in the retail sector.
"China has a lot to offer to the world, and it will be able to bring its experiences to the world, in markets like the United States and Europe," he said.
"For example, generally Chinese consumers don't want to wait for too long," he said, adding that Chinese retail companies were more engaged with the consumer, and thus were able to provide better and faster service. "If you want to pay, you take your phone and use WeChat (the online payment portal) and you can finish your shopping in an hour."
"In the US, that is not the situation, and we are hopeful of bringing such solutions to the US," Feldheim said.
Trax is on its way to become a unicorn startup with a market valuation of more than $1 billion.
"Any technology company with an ambition will not give up on the Chinese market," said Tang Jinwu, CEO of LenzTech, commenting on the cooperation between the two companies in an interview with China Daily.
A report by KPMG International Cooperative points out that the retail business in China is facing fast reshaping due to the change in geographic features, population and technology.
"The middle-income segment in China will keep growing in the next decade and exceed 65 percent of the population by 2027," the report said. "The consumption power will keep growing."
Retailers will need to provide simple, timely and transparent digital shopping experiences while actively tracking changes in the shopping behavior of customers and offering customized services, the report said.