# 229 Leading Localization from Asia with EC Innovations’ Sijie Wei

Globalization of Chinese Brands and Language Services

Introduction to CG Way and EC Innovations

• The podcast introduces CG Way, co-CEO of EC Innovations, focusing on the globalization of Chinese brands like Tencent and TikTok.

• CG is currently based in Beijing, China, highlighting his international perspective.

Professional Background of CG Way

• CG has a background in quantitative finance and computer science, which he views as seemingly disconnected from language services.

• He was approached by James, the founder of EC Innovations, to help globalize the company and drive technology integration.

Overview of EC Innovations

• EC Innovations serves industry leaders across various sectors including life sciences, gaming, finance, legal AI, eCommerce, manufacturing, and automotive.

• The client base is split evenly between APAC (50%) and the US/Europe (50%), indicating a balanced international presence.

Historical Context and Growth Path

• Founded 27 years ago to localize products for companies like HP and IBM entering China; this established a strong foundation in localization services.

• A shift occurred when Chinese brands began competing internationally; ECI started assisting companies like TikTok with their global expansion.

Competitive Landscape in China

• The transition from servicing Western companies to supporting domestic giants like Alibaba posed challenges due to increased competition within China.

Market Dynamics in Asia-Pacific (APAC)

• ECI's growth aligns with macroeconomic trends; they leveraged existing capabilities to assist both Western firms entering Asia and Asian firms going global.

Challenges for Western LSPs in APAC

• Cultural differences make it difficult for Western Language Service Providers (LSPs) to penetrate the APAC market effectively.

Localization Maturity in APAC

Localization and Market Growth Insights

Localization Maturity and Market Transition

• The localization maturity is lagging behind the rapid growth of export markets, indicating a transition towards more sophisticated products that require better localization.

• While the market appears underserved, this presents an opportunity for growth as it has not yet realized its full potential in meeting demand.

Leapfrogging Traditional Workflows

• There is potential for leapfrogging traditional localization workflows, especially with AI advancements; however, this may not be widely visible yet.

• Investment in AI poses a high barrier compared to simpler automation processes, which are seen as lower-hanging fruits for companies looking to improve efficiency.

Challenges in Implementing AI Solutions

• Without established automation processes, the benefits of AI in localization may not be fully realized; manual content extraction remains a significant hurdle.

• Current workflows still rely heavily on manual processes, limiting the effectiveness of AI solutions until proper automation is implemented.

Domestic Market Dynamics in China

• Beyond major tech companies, there are emerging domestic brands driving localization and translation demands within China’s growing internationalization efforts.

• Industries such as construction, electric vehicles (EV), gaming, and AI are seeing substantial internationalization from Chinese manufacturers.

E-commerce and Language Services Demand

• E-commerce is another key vertical contributing to language service demands due to increasing globalization efforts by Chinese companies like Alibaba.

• Alibaba's recent launch of new tools for buyers and sellers highlights significant investment in language services and technology within China.

Research Focus on Language Models

• China leads globally in research focused on large language models (LLMs), with many impactful studies emerging from the region.

• Cultural factors influence Chinese IT giants' preference for developing proprietary solutions rather than adopting partnerships common in Western markets.

Competitive Landscape Among Chinese IT Companies

• Major Chinese IT firms aim to develop comprehensive capabilities across various verticals, resulting in intense competition within the language services space.

• This competitive environment fosters innovation and research output related to language solutions among leading companies like Alibaba and Tencent.

Practical Application of Research Findings

Game Localization Insights and Market Trends

The Role of Research in Game Localization

• The speaker emphasizes the importance of leveraging the latest research from companies, particularly noting differences between Western and Chinese language localization.

• Highlights that tokenization varies significantly between languages, with Chinese being character-driven while English is word-driven, impacting localization strategies.

Overview of Global Game Localization Market

• Discussion shifts to the global game localization market, mentioning a recent acquisition of a Danish company called Character Localization.

• Acknowledgment of Slater's assistance in the acquisition process, recommending their services for others seeking opportunities in the language space.

Current State of the Global Games Market

• The global games market is described as increasingly competitive; 27% more titles were released on Steam in 2023 compared to 2021 despite a 15% drop in total market spend.

• Despite market corrections post-COVID, ECI Games experienced good growth, indicating sustained demand for quality products.

Future Outlook on Gaming Industry

• The speaker expresses optimism about the gaming industry’s future due to trends towards gamification and new technologies like AI potentially transforming gameplay experiences.

Notable Developments in Chinese Gaming

• Recent successes from China are highlighted, such as "Genshin Impact," which showcases mobile gaming potential and encourages local developers to globalize their offerings.

• Mention of "Black Myth: Wukong" as a potential game-of-the-year contender that inspires confidence among Chinese developers regarding AAA game development capabilities.

Challenges in Game Localization Between Markets

• Discusses challenges faced when localizing games from China to global markets versus bringing global games into China; both processes are equally complex.

Cultural Considerations in Game Localization

• Emphasizes that successful commercialization involves more than just language translation; cultural nuances must also be considered for effective localization.

Differences in Gaming Culture and Monetization

Fundamental Differences in Gaming Regulations

• In China, there are regulations limiting playtime for younger players, such as restrictions on playing for extended hours.

• Western audiences have strong opinions on game monetization, while Chinese players tend to be more forgiving regarding these practices.

Evolution of Game Design and Success Factors

• Successful games in international markets demonstrate that engaging storytelling and interesting gameplay mechanics contribute significantly to their success.

• Localization plays a crucial role in the success of games across different cultures, alongside intrinsic player preferences related to monetization and game mechanics.

Challenges in Service Provision Across Different Verticals

• The gaming industry requires high levels of expertise beyond language skills; cultural understanding and technological workflows are also essential.

• ECI operates across various verticals (e.g., life sciences, finance), necessitating specialized knowledge for effective service delivery.

Organizational Structure and Client Management

Managing Diverse Business Units

• ECI has eight separate business units focused on distinct sectors like healthcare or manufacturing, ensuring specialized attention without overlap.

• Each unit maintains autonomy over strategic decisions tailored to their specific client needs while sacrificing some resource sharing between units.

Rebranding Efforts and Challenges

• A brand refresh was initiated at the beginning of 2024 due to a misalignment between the existing brand image and ECI's current offerings.

• The rebranding process involved extensive planning, ideation, prototyping, and coordination among multiple teams to ensure cohesive representation across all platforms.

Navigating the Competitive Landscape

Generating Leads Amidst Competition

Marketing Strategies and Growth Insights

Key Pillars of Growth

• The speaker identifies two major pillars for growth: focusing on the right vertical markets and investing in superior solutions tailored to those markets.

• Emphasizes that achieving growth is easier when a company's solution is objectively better than competitors, especially in growing market segments.

Reputation and Trustworthiness

• Highlights the importance of reputation and trustworthiness, suggesting that letting the product speak for itself can be more effective than exaggerated marketing claims.

• Argues that word-of-mouth remains a powerful tool in the industry, reinforcing that over-representing or underselling AI capabilities can harm long-term strategies.

The Future of AI Integration

Challenges in AI Adoption

• Discusses the current challenges consumers face due to varying qualities and prices among AI-human hybrid models, leading to confusion in decision-making.

• Notes that different content types, subjects, and language pairs affect performance, complicating the choice between human and machine solutions.

Value Proposition

• Suggests that ECI's expertise lies in providing clarity on human versus AI integration through consultation or technology products.

• Advocates for a pragmatic approach where ECI assesses whether tasks should be handled by humans or AI based on existing context and expertise.

Investment Landscape for Language AI

Current Market Valuations

• The speaker notes that current market valuations reflect uncertainty and risk aversion, resulting in lower multipliers compared to previous years.

• Points out that companies like ECI must demonstrate scalable adoption of AI to gain investor confidence.

Opportunities Amidst Uncertainty

• Identifies potential undervalued companies within the market due to investors' lack of understanding regarding resilience against automation.

• Believes there are opportunities for investors willing to delve deeper into understanding which companies could thrive with full implementation of AI technologies.

Perceptions of AI's Impact

Misconceptions About Industry Disruption

• Reflecting on prevailing views, it is noted that many believe all services will soon be replaced by AI; however, this perspective may overlook nuanced realities within various sectors.

Future Roadmap and AI Integration

Rebranding and Focus on Product Development

• The speaker discusses the completion of a rebranding effort, expressing satisfaction with the adjustments made to branding materials such as footers and name cards.

• With the rebranding behind them, the focus shifts back to enhancing products and services, alongside potential international expansion.

AI's Role in Product Development

• The discussion highlights two angles regarding AI: identifying spaces where AI is relevant and determining contexts where it can genuinely assist clients.

• Emphasis is placed on the importance of product quality over mere efficiency; companies that deliver superior products are expected to see significant growth in the coming years.

Human vs. AI Performance

• The speaker asserts that human performance still surpasses AI in most contexts, suggesting that clients prioritize high-quality outputs over those produced by AI.