Xiaofu and Stora Enso: Our First Startup-Corporate Partnership in China

As Foundry companies are increasingly eager to get in touch with the unique field of tech companies of the largest domestic market in the world, the Foundry team is currently planning the third innovation cycle in China.

Our first engagements are already bearing fruit. The first venture client cycle in China featured an opportunity from Stora Enso to make food packaging more sustainable. Their team met Xiaofu, a supply chain traceability company, that combines a sales as a service (SaaS) platform with smart QR code tags to bring information on choices where it matters: directly to the consumers.

Xiaofu’s team has a unique background well suited for the task. Their team of 10 people all have a strong background in research and development from one of the top universities for the subject in China, ZheJiang University.

“In a way, it's quite a coincidence for us to encounter such a good opportunity with an industry leader,” says Tyco Dai, the CEO of Xiaofu. He goes on to compliment Stora Enso’s foresight in the transformation of the renewable materials industry. This was already apparent with the business opportunity laid out by Stora Enso.

Make sustainable food packaging information accessible in on-demand food deliveries

As a renewable packaging materials provider, Stora Enso is actively looking to replace plastics in the food packaging business with more sustainable alternatives. To that aim, Stora Enso was seeking a solution to inform and educate the end-users of their sustainable food packaging products in the booming Chinese on-demand food delivery market. As a renewable materials company, they felt quite far away from the end customers – it is a long value chain to cross and reach them.

“We want to establish a robust position for Stora Enso in the market, providing product information in terms of its safety and sustainability,” says Ma LiGang, Vice President of Packaging Materials China Sales at Stora Enso.

The first intended use was to use a QR code printed on food packaging to pass information to the end-users via smartphones. The takeaway industry was chosen as a testing ground. Effectively, if a lot of people scan their QR codes, Stora Enso can build the ecological chain in the whole on-demand food delivery industry, whereby people will know the advantage of using Stora Enso products.

“The QR code is a carrier that connects us to a lot of parties,” says Scarlet Yue, Sales Specialist of Packaging Material China at Stora Enso.

Exploration of solutions beyond the initial scope

Initially, Xiaofu intended to provide their knowledge about their experiences in how to serve customers through creating a digital element for physical products. However, after their first discussions, they realised there is potential for a lot more.

“It turned out that we were capable of helping a lot more than either of us initially thought,” Dai explains. “From just a couple of use cases, we suddenly had dozens on our hands.”

Xiaofu ended up providing valuable know-how for related development areas for Stora Enso to work on internally, for example, digital solutions for internal supply chain communication.

A testbed for QR coded take-away packaging

The two companies created a local testbed with a limited volume of Stora Enso packaging with Xiaofu’s QR tags in the Hangzhou-Shanghai region. In terms of the local test, the initial engagement can be considered a success. However, LiGang emphasizes this is only the beginning for the ecosystem they have in mind.

“We are looking at more promotions, advertising, and other activities to increase awareness of sustainable, ecological, biodegradable packaging materials, improve engagement and consumer experience, which in turn improve the effectiveness of our product,” he says.

Stora Enso also sets their sights further into the future: there are plans for specialized and targeted information for different packaging product categories, which will require an elaborate digital network to be developed alongside the solution.

“Overall, consumers in China have already recognised the need of moving away from plastic packaging to adopt more environmentally friendly packaging solutions,” Yue explains.

Bringing two professional teams together

Xiaofu caught Stora Enso’s attention among a large selection of potential approaches with their well-proposed solution and experience in providing flexible and responsive service for the team. Their ability to adapt their back-end to Stora Enso’s ideas and needs proved extremely useful. “From the design of the QR code, embedding it on carriers, the buildup of the back end as well as how to improve scanning rate, the Xiaofu team have given really good advice,” says Ma. “The whole partnership was very smooth as well as the communication with their technical team and CEO. The work together has been very good.”

The feeling is mutual in the Xiaofu team, who give thanks to Stora Enso for their detail-oriented and diligent work.

“Throughout the entire process, we feel that the Stora Enso team has been really excellent and professional,” Dai summarizes.

The first venture client cycle in China

The Xiaofu team found the opportunity to be at an interesting intersection, where traditional industries and new digital solutions meet. It was also their first time using the venture client approach.

“Most startup companies don't have such opportunities to reach large corporations,” XiaoFu CEO Dai explains. “Of course, large companies have their own hurdles, that they tend not to be the first ones to try new technology, whereas startups can move fast and experiment early. This leads to the great synergy between the two.”

This was the first time the Stora Enso teams in Shanghai utilized the venture client approach in sourcing new solutions and deploying them to the market with speed.

“Digitalisation is the overarching trend, there isn’t a ready and clear solution as to how traditional industries like us go through the transformation. Foundry provided a really good learning opportunity,” Ma says. He also emphasizes the new ways of thinking that helped the team look at reaching end users.

“This is also a great commercial deployment to see how we can use digital technology to go lower down the value chain, from businesses to customers. Who knows, maybe we can create an e-Commerce platform to directly sell our products or promote our products and philosophies on sustainability directly to consumers!”