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Free Paper Towel + Internet Traffic: Yun Zhi IoT Raised CNY 10 Million in Pre-A

May 26, 2018 by Yun Nie
Free Paper Towel + Internet Traffic: Yun Zhi IoT Raised CNY 10 Million in Pre-A

When some Chinese companies turned the page on a long and storied history of the conventional business model, Yun Zhi IoT (The Internet of Things) was the first to monetise Internet traffic by providing free paper towels and soon after announced raising CNY 20 million in pre-A round financing.

Jiuzhoustar.com was the lead investor, followed by other investment companies. Funds raised in this round will be utilized in market expansion, software development and automatic induction paper machine.

Yun Zhi IoT was established in 2017, riding the wave of “restroom reformation” and started by promoting “getting free paper towels” by scanning QR codes. Unlike other enterprises that targeted shopping malls, stores, and restaurants to gain from selling paper towel machines and monetizing Internet traffic, Yun Zhi focused on vacation spots, universities, hospitals, parks, and other public recreation places in which a large number of low-cost customers gathered.

Yun Zhi team said that from February to date, it has been strategically collaborating with different local governments, departments, and organizations, which has helped in increasing equipment sales. Nearly 10,000 devices were installed in more than 10 provinces, such as Beijing, Chongqing, Hebei, Guangdong, and Zhejiang.

According to statistics, user frequency for one Yun Zhi machine exceeded 20 on average. The company expressed that it will continue to extend their customers groups, users scopes, and shape their using habits.

The founder of the company, Liao Yuxing, said that Yun Zhi imported wall mounted machines that were bought at CNY 700. To optimize internal structures, operating processes, and multi-dimensional data collection, Yun Zhi’s professional teams were studying and developing outer cases and core parts themselves, which would reduce 40% cost in the production chain.

Customers can get 1 meter free paper towel when scanning such machines and every machine is able to provide paper towels 180-270 times. The daily cost of the machine will be around CNY 2 and average cost of machine maintenance can be controlled under CNY 1. In general, payoff period of one machine is approximately 30 days.

Government officials in Xiamen, Chongqing, Beijing, Anhui, Shandong, and Hunan provinces have signed an agreement to buy and install 2,500 machines from Yun Zhi. It was estimated that before June 2018, the company would distribute over 20,000 machines in China.

To promote user experience, Yun Zhi chose mini programs rather than WeChat Official account as the channel for customers to scan QR code. Furthermore, mini programs can activate multiple functions like searching for restrooms nearby, encyclopedia, mobile games, etc.

Liao Yuxing said “our current goal is to explore the market. In the future, we will center around high-quality products and services to improve monetization ratio. Detailed methods include mini program online retailers, LBS consumption recommendation, mobile games, videos, and WeChat Official account.”

In terms of brand marketing, public restrooms are in urgent need of free paper towels compared to shopping malls, chain stores, restaurants, and similar entities. Thanks to abundant pre-existing market resources, the company can advertise its products and services at a low cost.

In addition, a report from United Nations suggested that half the population in developing countries (2.5 billion) failed to promote their hygienic facilities. As part of the “restroom reformation”, Yun Zhi provided strategic plans concerning restaurant management and paper towel utilization. Meanwhile, the company is actively preparing for overseas expansion, especially in Southeastern Asia and India.

Liao Yuxing believes that all hardware in the future will be free due to connecting to users. Yun Zhi may continue a “paper towel sale + offline customer traffic” model after pre-A round fundraising.

Yun Nie

Yun Nie is a New York-based tech reporter. She focuses on India-China financial market, global IT giants and technology-centric market trends. She can be reached at Yunnie@thepassage.cc.

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