How three Americans founded an award-winning start-up in China

Key Points
  • Three American expats launched an e-commerce platform that allows foreigners in China to buy products in English from Chinese e-commerce sites Taobao and Tmall.
  • Media in China has called their story the "China Dream."
Founders of Baopals Charles Erickson, Jay Thornhill, Tyler McNew in Shanghai
Dolphin Media

When Jay Thornhill graduated from the University of Southern California in 2007, he a had plan. He'd spend one year in three different continents teaching English before returning to California to start his career.

More than 10 years later, he's still living in China.

In 2016, he started a company in Shanghai with two other American expats living in his building. The company, Baopals, is an e-commerce platform that allows foreigners in China to buy products in English from Chinese e-commerce sites Taobao and Tmall.

The site works by pulling data from the two Alibaba-backed platforms and translating the info to English. Baopals also offers a customer service center to help facilitate transactions and logistics. It adds a service fee starting at 5 percent for each product.

Thornhill and his co-founders, Charlie Erickson and Tyler McNew, felt shopping online was a hassle for foreigners in China. Before they launched the site, they'd often ask Chinese friends to buy products for them and then pay them.

"Figuring out the language, employment contracts and how we were going to do our taxes was tough," Thornhill told CNBC. "We weren't sure if we'd get busted running out of an apartment," he said of his early days.

They now have an office space with 40 employees — 15 of which are foreigners and 25 are Chinese citizens. The company said it has sold more than two million products through its site and has passed $14 million in revenue since launching.

After the platform gained traction, Baopals was written up by local media. The team also became the first foreign-led group to win the Shanghai-government backed honor "Top 10 up-and-coming entrepreneurs in Shanghai."

Thornhill even appeared on a "Shark Tank"-like show in China, which translates to "Maker China," in which Thornhill said he was offered, but declined investor funding.

Their story was also touted as the "China dream" by multiple local outlets including at least one government media agency.

Alibaba is supportive of his company, Thornhill said, even inviting the start-up to its headquarters in Hangzhou for a tour. The tech behemoth has also featured the Baopals on its official LinkedIn page.

Since Baopals' success is entirely reliant on one company, however, its business model could potentially be upended if Alibaba launched its own English version of Taoboa or Tmall.

"We don't see any sign that that's in the works," Thornhill said. "It's such a small niche market, their platform is completely built for a Chinese audience and to do all of that for such a small market — its hard to see them prioritizing it," he said.

Currently, Alibaba has AliExpress, which is aimed at international buyers.

Alternatively, Thornhill sees other potential future plans for the company.

"Our goal is just building a better and better company and a better shopping platform and if that one day gets us a seat at the table where Alibaba is talking about an acquisition, that'd be amazing," he said. "We'd welcome those talks and see what it means for the company."

When asked by CNBC, an Alibaba representative said the company does not comment on its investment strategy.

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