China's Mobile Internet Market Overview 201001

Make for GWC executive trip – USA January 2010 www.thegreatwallclub.com

移动互联网长城会 Mobile Internet Great Wall Club www.thegreatwallclub.com

Why look at China? What is “Chinnovation”? Some examples

Why look at China?

Internet users 338 231 (Million) (Jun 2009) (2008) Mobile users 695 270 (Million ) (Jun 2009) (2008) Source: MIIT, CIA World

Company Operating Margin Company Operating Margin Chinese American NetEase 62.1% eBay 24.3% Alibaba 39.7% Google 30.4% Tencent 45.4% Yahoo! 0.2% Sohu 38.2% Amazon 4.4% Shanda 40.4% IACI -4.3% Baidu 32.8% EA -13.3% Sina 20.2% VeriSign 7.4% Ctrip 27.7% 51job 11.2% Average 35.3% 7.0% Source: Plus Eight Star, Apr 2009

Over 1/3 from Internet Café Internet penetration 25.5% 73% (%) (Jun 2009) (2008) Mobile penetration 50% 90% (%) (Jun 2009) (2008) Over 50% additional users from rural market = Actively expanded “Blue Ocean” Source: MIIT, CIA World, GWC

 Fixed-line For many users and  Mobile SMEs, Internet will  VAS = 28% of total rev. only be mobile 60 Penetration rate % 50 Mobile = 50% 40 30 Internet = 25% 20 Fixed-line = 24% 10 0 Sources: MIITT, CNNIC, +8*

181 million mobile internet users = 26% mobile users Cost of laptop Netbook 3G Smart phone We expect Mobile Internet market is going to boom in the near future Source: CNNIC, GWC, Aug 2009

Mobile operator Service & Handset App maker provider

What is “Chinnovation”?

 Low price  Short time- to-market 125~142 USD  Over 90% of functions are directly onto the MTK chip Source: an e-commerce site, Jan 2010

 “BlockBerry” made by HAFF-COMM Source: The Wall Street Journal Blogs, Jun 2009

Shaver phone Cigarette case shaped Barbie dressing case phone PSP shaped, popular games preinstalled Watch phone Car shaped Solar power Super lens attachable rechargeable handset

WANG Jianzhou CEO, China Mobile 2009 WEF, Davos

Company Operating Margin Online Ad / Total rev. NetEase 62.1% 13% Tencent 45.4% 11% Sohu 38.2% 41% Sohu’s online gaming biz lists in Apr Shanda 40.4% <4% 2009 with a market cap over 1.8 bln USD.  1st IPO on Nasdaq since Nov 2008 Source: Company data, Jun 2008

 Extremely advanced in China, lead by Tencent, 723 million USD, or 70% total revenue, from virtual goods in 2008 Where? What? Avatar for IM, Apparel, decoration (ear ring, bracelet, necklace, eyeglasses), SNS, game background (building, car, sea, house, etc.), express/emotion, etc. Pet - Virtual • Food for feeding word • Shampoo, body shampoo • Study at school • Work for earning money • Play in the world for entertainment Social • Decoration of personal page and mini-home (background, navigator, network animation, etc.) • Background music (music, player) Social game • Depends on the game, same concept with the ones in social network Online game, • Depends on the game, for example, a powerful car or an accelerator in mobile game Racing Car game Available for both PC Internet and mobile Source: GWC, Jan 2010

Low trust E-commerce booming  Few credit card  88 million online  2.3% of Chinese own credit shopping users card  Taobao GMV: 11.9  Bad credit system billion USD in 2009H1,  Huge population  Unbalanced economic Y0Y growth ~100% development Alipay’s (brother company of Taobao) online escrow system helps both buyer and seller build trust between each other, and largely accelerated online shopping market.

1 billion USD rev. in 2008 ~40% net profit ~90% of 1 billion USD from users Source: Plus Eight Star, 2009

Some examples

 ~900 million registered accounts  ~400 million actives  Over ~40 million paying ones  Revenue in 2008: 1,047 million USD  ~70% from virtual goods  ~20% from wireless value-added services  ~10% from online advertising Source: Yahoo! Finance, Jan 2010

Search QB: Virtual $ Online shopping Entertainment Email Multi-person chat QQ buddy list SMS/MMS Weather File transfer Online disk Voice chat Video chat Wireless service Mini portal Ad Music Chatting with friend Game friend’s QQ Show Interaction Take a group photo with Panel admin friend’s QQ Show Making friends Friend’s QZone E-magazine Background Screen shoot Online video Send pic Stock info Address list Font Group list Smiley Last contacts Animated smiley Input area SMS Main menu My QQ Show History Tencent browser IPTV QQ Pet Source: Plus Eight Star, 2009 QQ Music

 Market cap: 39.4 billion USD  Is it #3 Internet company, after Google and Amazon, in the world? Tencent 5 years comparison Google NASDAQ Composite Source: Yahoo! Finance, Jan 2010

Year 2008 Subscribers +200 million +400 million actives Revenue ~350 million USD 1,047 million USD Net profit - ~40% Market Cap 3~15 billion USD ~40 billion USD Biz model Mostly ads Virtual goods: 70% Wireless: 20% Ads :10% Source: Company data, Plus Eight Star, 2008

 145 million registered users  3 million sellers Consumer community  GMV in 6 months: 11.9 billion USD, 80% of market share 3 service Consumer  YoY growth over 100% platforms community C2C “B2C”  1700 employees Source: Company data, Jul 2009

Price Commission rate Official online store Taojianghu: SNS within of Nokia in Taobao Taobao.com Taoke – Human powered marketing for sellers Generating >100k USD commission per day Recently launched 3 customized Taobao Phone

An English learning SNS  Product name: Ucenter Home  Long tail in SNS  Thousands of thousands of standardized “Facebook”  It’s free! Powered by Ucenter Home URL: http://home.ebigear.com/network.html

App1 App2 App3 App4 …… App N SNS1 SNS2 SNS3 SNS4 …… SNS N Source: GWC, Jan 2010

2010 Global Mobile Internet Conference Mobile Internet Opportunities in Asia Beijing, May 27-28th, 2010 2010 GMIC calls for visionary speakers, partners and sponsors! Gold Sponsors GWC holds the annual Global Mobile Internet Conference (GMIC), one of the industry’s most influential conferences. This year, approximately 1,000 mobile internet professionals will attend the conference. • Keynote speeches from the world’s industry leaders. • Country Forums: China, Japan, South Korea, Europe and the United States Silver Sponsors • Innovation Show – Startup Competition (20 teams from 9 countries) • East & West Dialogue • GWC Member Meeting

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China's Mobile Internet Market Overview 201001

by Great Wall Club on Jan 10, 2010

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