Interview With Qeeka CEO Deng Huajin: Digital Transformation of IDC Providers is an Inevitable Trend

Source: National Business Daily

In 2018, Qeeka Home (01739.HK), the subject of operation: Jia.com, was listed on the main board of the Hong Kong Stock Exchange, becoming the first shares of IDC vertical platform in China.

As we all know, 2015 is also the start year of Internet IDC industry improvement, with flourishing development of O2O business model, with "Internet + IDC" concepts gradually emerged, there is a large amount of capital into this track. At present, IDC industry is in a period of deep adjustment, and digital transformation has become the direction that many Internet IDC enterprises are competing to chase, and some of them are being phased out on this process, but there are also companies like Qeeka Home that can continue to plow into the industry.

In a recent interview with NBD, Deng Huajin, Chairman of Qeeka Home, said the digital development trend, online economic is becoming more obvious and resilient, the epidemic has raised more people seeking IDC services through online. In Deng Huajin's view, the epidemic has forced online IDC companies to innovate. In the future, Qeeka Home will mainly focus on platform business and will continue to deploy in third and fourth tier cities.

Self-operated IDC Business Plays a Synergistic Role

After capital market reshuffle, China's Internet IDC industry still shows growth in recent years. According to iiMedia Research, the scale of China's Internet IDC market has reached RMB 344.19 billion in 2018, and in 2020 it will be more than RMB 500 billion. In 2018, Qeeka Home was listed in Hong Kong with three core businesses: platforms business, material supply chain business and self-operated IDC business. Platform business is the company's core business, which is mainly providing one-stop solutions for users and IDC providers by sharing IDC knowledge and connecting users with service providers. Qeeka Home’s 2019 annual report shows that platform business's revenue increased by 42.90% to RMB459 million, home renovation service's revenue decreased to RMB105 million from RMB209 million in 2018. Deng Huajin said that in long-term development strategy, self-operated IDC business plays more of a strategic synergistic role, and its revenue is not the main objective, now its layout is in line with strategic expectations.

Deng Huajin told reporters that platform business is company’s core business, the proportion of that has continued to increase in recent years and it will be the basic to vigorously promote the development of Internet IDC industry. "Not only we provide online traffic and orders for providers, it’s preferred to improve digital level and online capacity." He said. In Deng Huajin's view, the definition of Internet IDC platform consists of three main aspects, "Our platform plays a role in gathering service providers, users, brands in together, and we provides precise labels for each role through big data technologies, and then system enables all parties to find their preferred partners according to their respective needs." According to Deng Huajin, an information platform should also be built to provide information management and operation tools for IDC providers. "From measuring and designing, to material purchase, construction, delivery and after-sale, various Internet tools such as websites, apps and mini programs could make all links as online as possible." In addition, Deng Huajin emphasized importance of material supply chain system construction, in terms of creating a material supply chain ecology, Qeeka Home has established main material supply chain alliance, strategic invested in Fat Bear to power auxiliary material supply chain, and launched customized home furnishing brand Nola with Holike, "for four modules of main materials, auxiliary materials, customization, soft furnishings, it’s important to explore, develop and build a more efficient supply chain platform with more room for growth."

IDC Industry Moved to Digital

With rising concept of industrial Internet, "Internet" has become an inevitable trend, and Qeeka Home platform plays an increasingly important role in terms of communication and platform construction. Admittedly, how to protect interests of consumers is also main direction of such platforms to explore. Online IDC service providers are quite a market concern because of high number of complaints.

As we all know, IDC industry is a relatively complex and systematic industry, involving water, wood, electricity, mud, paint in many fields, each field also corresponds to upstream materials, workers, upstream and downstream materials, and because of this, uncontrollable conditions more factors.

Deng Huajin told that Qeeka Home is committed to improving level of service and matching efficiency between providers and users on the one hand, and on the other hand, it has built a variety of strong protection mechanisms, such as Qijia Bao on the protection side.

The reporter noted Qijia Bao is that users no longer directly pay for providers, with the construction progress in the various renovation nodes in batches to Qeeka network platform escrow and confirmation by third-party supervision, only after payment will be transferred in stages to providers, which also further changed vulnerable position of user.

According to Deng Huajin, starting in 2019, Qeeka Home is the first in the industry to promote construction of a renovation company rating above other platforms required standards, to drive standardized development of industry. "The rating means to divide by business ability, decoration cases, delivery satisfaction, user rating, grade A five-star system is used, with five stars representing the highest quality companies. This grading standard demands a higher level of service capability."

"Based on rating, Qeeka Home is the first platform for accurate recommendations by size, old and new, luxury and simplex type near 30 square kilometers." In Deng Huajin's view, combined with big data, it can more efficiently match user needs precisely with providers and increase user satisfaction.

According to Deng Huajin, Qeeka Home provides users with Qijia Bao, which incorporates user pain points such as room design, construction, material control, financial security, and supervisory delivery into the platform's services, strengthens third-party supervision and acceptance services, and provides financial node protection, thus enhancing user experience.

When it comes to the future, Deng Huajin believes that transforming providers to digital form and improving their management and service capabilities is the crucial step to maintain competitiveness.

Epidemic forced Industrial Change

The sudden epidemic shock offline IDC industry, before Deng Huajin has pointed out to the media that epidemic has a greater impact on industry, providers cannot provide services off line, designers cannot enter the community, the construction team cannot work properly and migrant workers cannot return to the city, resulting in a part of the construction of the city cannot be carried out.

However, Deng Huajin thought that epidemic just has made IDC demand temporarily suppressed, but not disappeared. He believes the impact should be viewed in two ways, on the one hand, those poor quality service who caught in the traditional model will be faced with severe pressure to survive, industry will accelerate the liquidation, then leave sufficient development space for others; on the other hand, epidemic made Internet IDC popular, online traffic had soared, many service providers accumulated a huge amount of orders via live tools.

According to Deng Huajin, the easing of the epidemic, especially into April, many key figures for platform have shown significant growth," the platform is also coming out of gloom and moving toward transformation, with many providers even achieving a doubling of growth against the trend. That is very exciting. The biggest problem facing these providers has instead become how to digest the constant flow of orders in a timely manner."

Deng Huajin said that Qeeka Home has introduced some initiatives since outbreak of epidemic. As early as February 7, Qeeka Home systematically released "four types of eight" initiatives, uniting with the CCB and Shanghai ACB. Several banks provide billion special loans; open PaaS platform; free online design software for two months; ZHUBEI (住呗) Live software for free; 10 million traffic support; free gift for users in Hubei; 2 months commission-free for new merchants; free online training and other "four types of eight" initiatives to support IDC providers, to promote IDC industry out of the winter.

It is worth noting that when epidemic has been initially contained and work resumes, Qeeka Home quickly applied online live and online design tools reduce the face-to-face interaction. "Qeeka Live gives customers access to top-tier brands' offers without being able to visit the building materials market in person, while allowing providers to be upfront with your customers and present advantages of your renovation in a targeted manner." He stated.

Reporter noted that layout in Tier 1cities is now close to saturation, Internet IDC providers will also extend their perspective to lower tier cities. According to Deng Huajin, the service is available in most of the country's key cities, especially in Tier 1 and Tier 2 cities, with a high penetration rate of Jia.com In addition, in recent years, based on the sinking market's strong user demand and insufficient supply of quality IDC services, we will continue to increase the sinking market penetration, maintaining rapid growth in Tier 3, 4 and the below cities."