Nov. 30 (Bloomberg) -- A prospective customer enters a high-end jewelry store and sinks into a leather couch. A sales rep hands her a glass of Champagne and an iPad packed with images of jewels for her to choose from to make a custom piece. She flips through them and, with the help of a wireless connection, flicks her creation onto an iVIP, a small table fitted with a touch screen. There, she rotates or enlarges the image. As soon as she sends it to the iVIP, it also automatically emerges on a V-Cube, a triangular display device mounted at eye level next to the table. From the luxury of the couch, she watches the V-Cube rotate 3D images of her creation. Using the iPad or iVIP, she tries it on, using an avatar instead of waiting for the real piece to be crafted.
It sounds complex, but this is Zhongjie “Sunny” Jiang’s vision of the jewelry store of the future. It’s a model that has intrigued Chinese jewelers looking to cut retail-space costs and online jewelry outlets seeking to distinguish themselves. The former head of consumer operations and search quality for Google China, Jiang founded his information technology company, Waltz, in Wuxi, China, in 2009 to sell luxury retailers technology to display and sell their wares better. Today, Waltz designs software and hardware (including the iVIP and V-Cube), renders 3D animation of products, and customizes and installs its display gadgets for clients. Mainland and Hong Kong jewelers, such as Yuehao Jewelry, TTF Jewelry, and Chow Tai Fuk, use iVIP and V-Cubes, and Celinni in France, ZS Diamonds in the U.K., and Dimend SCAASI in the U.S. use Waltz for their websites’ 3D animation.
Jiang says the 47-employee company had $38,000 in revenue in 2009, is on track for $1.5 million this year, and could hit $15 million in 2011, when he aims to double its workforce. As part of its overseas returnee incentive program, the Wuxi city government invested $700,000 in Waltz and pays the rent on its 13,000-square-foot office. Up next: bagging bigger international brands―. Jiang says Waltz just secured a deal to provide the French luxury cell phone company Hanmac in-store display technology in China and set up a Paris sales office to showcase Waltz’s technology and services. Jiang, 36, spoke recently with Bloomberg.com contributor Megan Shank about Waltz’s traditional sales model, introducing new technologies to old industries, and why American companies fail in China. Edited excerpts of their conversation follow.
Megan Shank: What made you think the Chinese market was ready for 3D images of consumer products?
Zhongjie “Sunny” Jiang: After “Avatar” came out, 3D technology became very popular in China and around the world. I believe it’s only the beginning. Unlike other industries, the high-end consumer retail market has not yet taken advantage of technology. At the same time, shoppers have demonstrated their willingness to buy in a new way. Take the rise of Bluenile.com in the U.S.: This business model has become popular in China only during the past two or three years. Now hundreds of such websites are emerging. The fashion industry is aggressively looking for new ways to use multimedia and information management systems to sell their products and track their inventories. China is the second-largest luxury consumer market in the world and the fastest-growing one. My old Google China colleagues started their own businesses, but as far as I know, I am the only former Google China employee who started a business in a traditional industry.
Q: Who are your competitors?
A: For V-Cube, we have some competition in Denmark, though their price is 10,000 euros [$13,340] and ours is 38,000 renminbi [$5,700], so it’s a completely different dynamic. For 3D design, we have competitors in Israel and France. They have better technology but higher prices. Considering price and quality, we’re still the best choice. In the domestic market, we don’t yet have a direct competitor.
Q: How have the technologies you’re using and adapting been used traditionally?
A: Multi-touch screen technology has been in existence since the 1990s, but Apple only recently popularized it. Now Apple holds patents for its multi-point touch screen, but many companies are out there with similar patents and products as cool as iPad. As soon as an Apple product is launched in China, a copycat enters the market in Shenzhen. The technology behind V-Cube is not a secret, though we do hold intellectual property rights, including a pending patent. Holographic technology has been extensively used in museums, in large-scale exhibitions, and on television. It has rarely been applied in the commercial world, however, especially in the retail market. There are a couple of reasons why. First, there’s been little consideration for how to create small holographic machines for in-store display. Second, learning how to mass-produce lifelike images of 3D jewelry and other luxury products at low cost has been a challenge. [On a consumer level,] it’s not meaningful to display only a few images, as the museums do.
Q: How have you met this challenge? What’s your process?
A: For example, we’ll have clients take three pictures of a diamond ring from different angles, so our technicians can see details. The 3D design team has a three-step process. First they use 3D modeling software to create the image. Then they render it according to the shape and color. Finally, they animate the image in a way that highlights the details. So it might turn, zoom in or out, or pause on a certain component. My technicians are highly skilled art school graduates. The reason we’re more efficient and cost-effective than other market players is that we are extremely specialized. We cut this three-step process down into smaller steps. And as with car manufacturers, each of my technicians focuses on only one of those divided steps within a process, so we can affordably process hundreds of models in a day.
Q: What is your sales model?
A: For the domestic market, we are using agents who are resourceful and strong at sales. Most American companies fail in China because they don’t use agents. For example, Dell is famous for its direct sales business model, but two years after the company entered the Chinese market, it had to change its strategy because it couldn’t reach local customers without agents. Now its model is similar to Lenovo’s -- using a whole network of agents. Baidu became the No. 1 search engine in China simply because it relied on agents rather than its own sales and marketing team. These agents are powerful either geographically or within an industry. Many times, they have strong connections with the local government, which is difficult for newcomers to manage.
Q: How will you deal with possible IP infringement?
A: This is China. As long as you have cool stuff, people will copy it. If they don’t, it means you have a poor product. You have to think ahead. We have our first generation V-Cube, but we’re already at work on our second and third generation, which we’ll launch as soon as the future competition shows up. We don’t want to engage in price wars. We want to attract clients because of our advanced innovations.
Q: You’ve received a lot of support from the Wuxi city government. What influence does it have on you?
A: They’re playing the role of angel, but they’re not intending to be a portion of my company forever. They promised me I can purchase their portion of the stock back within two years at a low interest rate. It’s a good partnership, and it’s good for them, because we provide jobs and pay taxes.
Q: You’ve said you want to be the Apple of China. What do you mean?
A: Apple is good at generating cool stories, designs, and ideas. Apple is successful because of its marketing and advertising capabilities. That’s what I admire and hope to emulate with Waltz. I’d also like to create a diversity of Waltz products, as Apple has done with MacBook, iPod, iTunes, iPad.
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