○ There are around 70 million LGBT people in China, who together have an estimated annual spending power of $300 billion
○ The relatively low rate of social acceptance gay people face and ambiguity of government policies has created uncertainty around investments in so-called "pink businesses"
People unfurl a rainbow flag during a gay pride parade in Taiwan, on October 30, 2016. Photo: IC
When Han Zongchuan decided to quit his job and plunge into the "pink economy," he was so optimistic about the future.
He soon found an investor in 2015 that gave him 1 million yuan ($145,400) to kick start his LGBT business, which made him hope his ambitions were soon to be realized.
He first intended to develop LGBT tourism and also cooperate with local governments to build elder care homes for LGBT seniors.
But in less than a year's time, Han had to accept failure. The government of Dalian, Northeast China's Liaoning Province, which had promised to support Han's elder care projects, suddenly turned its back on him with no explanation. The investor also took back his capital.
"I was in great despair back then. People keep saying that the pink economy is a blue sea which is full of opportunities. But according to my own experience, it's still not the time to start a company in this field in China," he told the Global Times.
The pink economy first came to public attention in 2015 after a flurry of media reports about how this group's economic potential was growing along with its visibility.
The 2015 China LGBT Community Report released by the China Pink Market Conference revealed that there are around 70 million LGBT people in China.
Because many of them do not have or plan to have children, they are thought to have more disposable income. Analysts estimate that they spend $300 billion annually.
"Besides Blued (a popular gay dating app which has raised hundreds of millions of yuan), other domestic companies catering to LGBT people can't be defined as successful so far," said Ah Qiang, founder of PFLAG (Parents, Friends and Families of Lesbians and Gays) China.
Due to a lack of social acceptance and unclear government policies toward the community as well as the distance between investors and LGBT entrepreneurs, startups trying to get gold from the pink economy have found that road is bumpier than they had expected.
A business project is introduced during a contest of "pink business ideas" in Beijing. Photo: Courtesy of Blued
Too early to start
Han used to work at a State-owned company. In 2013, he joined the Beijing LGBT Center, a nongovernmental organization dedicated to advancing the cause of equal rights.
But he soon became frustrated, finding it was near impossible to make progress with the little money and manpower available to the group.
"I then started thinking about exploring a new mode, combining business and public welfare together. Also, businesses can help bring the public's attention to the LGBT group," he said.
The statistics that some organizations have produced about the number of LGBT people and their consumption power in China gave his investor confidence, said Han.
Because the investor had some links with Dalian officials, they chose the city as the business's base. Han developed two tour routes, one in Southwest China's Yunnan Province and the other in Dalian.
Han says the local government welcomed them at first because they think "it can bring GDP growth."
All seemed well until the government official who promised to approve their projects refused to meet with Han any more, without offering a reason.
"Then my investor said that my deteriorating relationship with the government had brought him unnecessary attention. So he cut my funding," he recalled.
According to Ah Qiang, most startups in the pink economy are dating apps. Meeting people is tricky for gay people living in China, and the apps can both facilitate this and help them keep a low profile. So far, there are about 10 major gay dating apps for on the market.
He blames the social taboo that makes covert dating apps popular for the scarcity of offline gay businesses.
"In China, most gay people are still unwilling to come out of the closet and let others know their sexuality. The rate of acceptance in society is improving, but still low. Therefore, most gay people will not choose services which openly state that they are tailored for gay people, such as LGBT tourism," said Ah Qiang.
Han used to believe that LGBT tourism will be welcomed by the community. He wanted to provide trips where gay people can get to know each other and feel free to be who they are while traveling.
He trained tour guides to communicate with LGBT people and taught them how to avoid sensitive words that gay people don't like to hear.
Han's his first trip to Yunnan was free for travelers and seven tourists from all over the country participated.
To his surprise, he found that the open atmosphere he had hoped for never materialized, and most of the travelers were clearly not that comfortable with each other.
During the trip, he organized a visit to a gay bar in Kunming, capital of Yunnan. Two of the tourists asked whether he was trying to set them up somehow.
"They believed that hanging out in a gay bar will bring them attention from the police. It's ironic that even inside the community, there is a lack of trust," he said. Homosexuality was regarded as a crime in China until 1997 and was only removed from the official list of mental diseases in 2001. In the last two decades, gay people have continued to face discrimination in society. Their activities are sometimes shut down by police officers.
Wu Wenqing is in charge of brand promotion at Rela, a lesbian dating app. She and some friends used their spare time to develop Rela in 2012 while Wu was working for a foreign firm.
Two years later, they received their first 1 million yuan of investment. She says that she has faced more obstacles in promoting Rela than any other brand she has worked on.
She has had cooperation requests rejected by companies including Xiaomi, a leading mobile phone manufacturer; Tencent, one of China's largest Internet companies; and Toutiao, a popular news app. An email Xiaomi sent to her clearly states that "We are forbidden to promote homosexual products."
Toutiao said that they cannot promote anything related to "lesbians and lesbian dating." "I don't even have a chance to talk to a real person," she said. "Only these machines gave me feedback."
The government has ruled that same-sex romances shouldn't appear on Chinese TV. Recently, there have been reports that the authorities have confirmed that TV and film productions shouldn't show LGBT people in a positive light.
According to Wu, Rela has cooperated with playwrights and production teams to make lesbian-themed films which have both English and Chinese subtitles.
In order to avoid domestic regulations, these works are only posted to Youtube, which is blocked on the Chinese mainland. She says these films have been viewed more than 10 million times.
She pointed out to the Global Times that some shows on the major video-streaming apps, who claim to have LGBT content to gain attention, do not actually have these kinds of plots.
In 2016, thousands of lesbians boycotted the film Run for Love, which misleadingly promoted itself as depicting a lesbian romance.
Looking for the bright future
Rela has also invested in a project that builds apartments for lesbians. According to Wu, their program in Chengdu, Sichuan Province, which has built about 100 apartments, is going well and plans are afoot to open a second apartment building soon.
"But we don't tell the outside that it's an apartment building for lesbians, we only say that the apartment is women friendly," she said.
Most of tenants got to know about the apartments through Rela, but Wu says the straight women living there aren't against the idea of a gay apartment building.
"Compared with straight men, women seem to have a higher degree of acceptance toward gay people," she said.
In last October, Blued partnered with investment management company Mars to launch China's first Pink Economy Innovation and Entrepreneurship Contest in Beijing.
Geng Le, founder of Blued, told the Global Times that they received more than 60 projects, six of which made to the final stage. Half of the finalists received investment. "This isn't bad in a capital winter," he said.
According to Geng, the ban on the "promotion" of homosexuality on TV has brought challenges. Besides this, he said other policies are neither bad nor good for pink businesses.
"We do hope that there will be more beneficial policies coming out. Investors pay attention to policies," he said. He added that most importantly, startups need to prove to investors that LGBT people are willing to pay for their services.
Ah Qiang says that time is needed for the different businesses in this sector to grow. Pointing to Han's failed senior care service as an example, he said that the vast majority of elderly gay people in China are still closeted. Many of them are married with children, and therefore do not particularly require such services. "Most Chinese people who are out of the closet are in their 30s and 40s," he said.
According to Ah Qiang, investors want quick money, but now is the time to plant seeds, not to harvest profits.
"They need to know more about the community. They should work with us to cultivate the community and to enhance social acceptance. While on the other hand, if one day gay people are accepted in society and looked at the same way as straight people, there is no need to single them out to provide exclusive services," he said.
Geng offers a contrasting view however. He said that pink businesses need to grow to reach out to people outside the LGBT community.
"We can make LGBT people an important target of our products but they shouldn't be the only target. Pink business can simply be gay-friendly business," he said.