Matchmakers

Chapter 4

Friction Fighters

How Multisided Platforms Create Value by Finding and Reducing Transaction Costs

It is 1998. Zhang Wei operates a small manufacturing plant in Foshan, about twenty miles outside of Guangzhou in southeast China.¹ He makes plastic sheets, which he sells to other companies that use them to make other products. Twenty years before, in 1978, the Chinese Communist Party had started down the path of economic reform. After it “let some people … get rich first,” many small businesses started throughout China.²

Wei was one of those. After working in a state-owned manufacturing business, he started his business, Foshan Plastic Sheets, in 1986. By 1998, he had five employees, sales of 500,000 renminbi (RMB) (roughly $60,000), ...