China’s Innovations on the Web
      Learning from China’s new media




Yiqun Bo, Consulting & Research Manager | +8* | w...
薄益群
BO Yiqun
Clément
www.plus8star.com
Cross-Market Consulting
Mobile & Internet Innovation
    China | Japan | South Korea
29 events | +100 speakers | +3,000 members | ~1,500 companies
Agenda

1.   Why look at China?

2.   What does online media bring to China?

3.   Sources of innovation?

4.   Some examp...
1. Why look at China?
#1 market in terms of users

   Source:         Internet users   Penetration   Mobile users   Penetration
Plus Eight Star,...
Chinese Internet Players Enjoy
  Higher Margins than Global Peers
         Source:           Operating Margin          Com...
China’s media market is catching
        up with the west
Year 2008                           US      China
(source: Plus ...
Baidu: Box Computing
                                                             User requirements


                    ...
Part 1 Conclusion



       1. Why look at China?
   China has the world’s largest online
population and is catching up wi...
2. What does online media
     bring to China?
9%    49%


GDP   Internet
China Internet/Media:
Enjoying the Highest Margins
                        Average operating margin (2008E)




        No...
“Mice Love Rice”
Backdorm Boys
Enjoy the Olympics online

                                              Time: 19:56
                                     ...
MSN rainbow signature
• MSN and Toyota donated to
  the relief efforts that took
  place after the Sichuan
  Earthquake on...
Internet as a channel for collecting
     disaster relief donations
       The symbol of online benediction launched by QQ...
Grey websites and no commercial
     ads for Mourning Day
People seeking 2.0
Part 2 Conclusion


  2. What does online media
       bring to China?
Internet not only creates heroes, but is largely
  ...
3. Sources of innovation?
   5CTM of Chinese innovation
1. Copy
5CTM of Chinese innovation
“Benchmarking”
                 “Inspiration”
                “Best practice”

“If I have seen farther it is only by stand...
A quick look at Germany …

            vs.




            vs.




            vs.

                        Source: Web2As...
Rest of Europe …
    Largest SNS in France


    Largest SNS in Spain



    Most popular website and SNS in Poland/



  ...
2. China
5CTM of Chinese innovation
China is learning from the West


    2008| 179,800 students abroad
   1978-2008| 1.39 million students
      390,000 retu...
China’s local features
• Unbalance of development
  – 1st tier cities vs. 2nd / 3rd tiers
  – Urban vs. rural
• Single chi...
Attention threshold
          =
 1 billion dollars?
3. Combination
5CTM of Chinese innovation
Will it blend?
Tencent (1998)
Registered users
Revenues 2008




   (E)
Profit margin 2008




Note: Mixi, Gree and DeNA are Japanese social networks. Both Gree and DeNA are purely mobile.
Market Capitalization
  (August 2009)



            27 bln
4. Competition
5CTM of Chinese innovation
What happens when you have
         20 YouTube
        10 MySpace
        5 Match.com
         4 Facebook
           3 Yah...
5. Constraints
5CTM of Chinese innovation
Low GDP/capita
Small transactions / making millions from cents
Limited advertising
Alternative business models / B2B toB2C
Few credit cards, Low trust
Alternative payment systems, escrow system,
           mobile, virtual currencies
4. Some examples
Lihua| Order food over IM
Alimama| Ad exchange + Micro-retail
Babytree| Vertical for young parents
Qifang| P2P Micro-lending
Taojianghu: convergence of SNS
             and shopping
• Beta launch: Mar 31, 2009
• SNS with regular features
  for all...
Ucenter Home: “Facebook” maker
                                            An English learning SNS

• Long tail in SNS
• T...
Contact Us

www.plus8star.com

boyiqun@plus8star.com

boyiqun                           +81 | Japan

                     ...
About +8*
There are more ideas
outside your country
          than inside
                   Tom Kelley
                    CEO, IDE...
About +8* | “Innovation Arbitrage”
• About us
   – +8* | Plus Eight Star is the leading cross-market and cross-cultural co...
Our Clients
EUROPE                    USA




                   ASIA
Selected Projects
•   Adidas | E-commerce and mobile commerce market analysis and strategic
    recommendations for China,...
Social Contribution
•   Mobile Monday Beijing
     –   Founder of the Beijing chapter of Mobile Monday, the leading global...
Published reports
• Inside Tencent
  – #1 online community in China
  – #1 profitable SNS in the world
  – Free sample ava...
Thanks!
China’s Innovations on the Web
China’s Innovations on the Web
China’s Innovations on the Web
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China’s Innovations on the Web

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This is a presentation made for a seminar organized by EU-China exchange program. It replied three questions. 1- why look at China? 2- What online media brings to China? 3- Sources of innovations?

Published in: Business, Travel

China’s Innovations on the Web

  1. 1. China’s Innovations on the Web Learning from China’s new media Yiqun Bo, Consulting & Research Manager | +8* | www.plus8star.com The China Media Landscape| EU-China | August 2009
  2. 2. 薄益群 BO Yiqun Clément
  3. 3. www.plus8star.com
  4. 4. Cross-Market Consulting Mobile & Internet Innovation China | Japan | South Korea
  5. 5. 29 events | +100 speakers | +3,000 members | ~1,500 companies
  6. 6. Agenda 1. Why look at China? 2. What does online media bring to China? 3. Sources of innovation? 4. Some examples
  7. 7. 1. Why look at China?
  8. 8. #1 market in terms of users Source: Internet users Penetration Mobile users Penetration Plus Eight Star, 2009.4 million % million % China 300 24% 640 49% US 225 73% 260 85% Japan 100 >70% 110 >80%
  9. 9. Chinese Internet Players Enjoy Higher Margins than Global Peers Source: Operating Margin Company Operating Margin Plus Eight Star, 2009.4 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%
  10. 10. China’s media market is catching up with the west Year 2008 US China (source: Plus Eight Star, 2009.4) Ad market (bln USD) 293.3 29.5 Ad market YoY growth 3% 15.9% Online ad market (bln USD) 25.8 2.5 Online ad market YoY growth 21.7% 60.4% Online ad / Total ad market 8.8% 8.4%
  11. 11. Baidu: Box Computing User requirements Box User behavior Semantic analysis analysis Sentences describing happiness Human-computer Massive computing interaction • Decomposed into 20 semantic elements • 300 mln times computing Internet applications • Search in 10 bln WebPages (Search, Game, Online shopping, Virus scanning, etc.) • Deliver result within 1/10 second • Deal with 1 bln this kind of requests per day Open platform
  12. 12. Part 1 Conclusion 1. Why look at China? China has the world’s largest online population and is catching up with the West, sometimes even leading!
  13. 13. 2. What does online media bring to China?
  14. 14. 9% 49% GDP Internet
  15. 15. China Internet/Media: Enjoying the Highest Margins Average operating margin (2008E) Note: e = Morgan Stanley Research estimates Source: Morgan Stanley Research, 2008
  16. 16. “Mice Love Rice”
  17. 17. Backdorm Boys
  18. 18. Enjoy the Olympics online Time: 19:56 PV: 2,601,435 Replies: 2,649 Quote: “I am so excited about the drummers, the view is so grand that I cannot type.”
  19. 19. MSN rainbow signature • MSN and Toyota donated to the relief efforts that took place after the Sichuan Earthquake on May 12, 2008. • 6,216,469 MSN Messenger users participated in the campaign.
  20. 20. Internet as a channel for collecting disaster relief donations The symbol of online benediction launched by QQ, 32,754,656 QQ users participated in the campaign. Taobao.com homepage promoting the donation 41 mln RMB from Alipay and Tenpay within 10 days
  21. 21. Grey websites and no commercial ads for Mourning Day
  22. 22. People seeking 2.0
  23. 23. Part 2 Conclusion 2. What does online media bring to China? Internet not only creates heroes, but is largely impacting the China’s society as well!
  24. 24. 3. Sources of innovation? 5CTM of Chinese innovation
  25. 25. 1. Copy 5CTM of Chinese innovation
  26. 26. “Benchmarking” “Inspiration” “Best practice” “If I have seen farther it is only by standing on the shoulders of Giants.” (Isaac Newton)
  27. 27. A quick look at Germany … vs. vs. vs. Source: Web2Asia
  28. 28. Rest of Europe … Largest SNS in France Largest SNS in Spain Most popular website and SNS in Poland/ Most popular website and Search Engine in Czech Republic Largest SNS in Finland Largest SNS in the Netherlands Source: Web2Asia
  29. 29. 2. China 5CTM of Chinese innovation
  30. 30. China is learning from the West 2008| 179,800 students abroad 1978-2008| 1.39 million students 390,000 returned to China
  31. 31. China’s local features • Unbalance of development – 1st tier cities vs. 2nd / 3rd tiers – Urban vs. rural • Single child policy • Internet café • Entertainment-centric
  32. 32. Attention threshold = 1 billion dollars?
  33. 33. 3. Combination 5CTM of Chinese innovation
  34. 34. Will it blend?
  35. 35. Tencent (1998)
  36. 36. Registered users
  37. 37. Revenues 2008 (E)
  38. 38. Profit margin 2008 Note: Mixi, Gree and DeNA are Japanese social networks. Both Gree and DeNA are purely mobile.
  39. 39. Market Capitalization (August 2009) 27 bln
  40. 40. 4. Competition 5CTM of Chinese innovation
  41. 41. What happens when you have 20 YouTube 10 MySpace 5 Match.com 4 Facebook 3 Yahoo … 4 Twitter
  42. 42. 5. Constraints 5CTM of Chinese innovation
  43. 43. Low GDP/capita Small transactions / making millions from cents
  44. 44. Limited advertising Alternative business models / B2B toB2C
  45. 45. Few credit cards, Low trust Alternative payment systems, escrow system, mobile, virtual currencies
  46. 46. 4. Some examples
  47. 47. Lihua| Order food over IM
  48. 48. Alimama| Ad exchange + Micro-retail
  49. 49. Babytree| Vertical for young parents
  50. 50. Qifang| P2P Micro-lending
  51. 51. Taojianghu: convergence of SNS and shopping • Beta launch: Mar 31, 2009 • SNS with regular features for all of Taobao’s buyers and sellers (about 100 mln in total) • Upgraded from community “Favorites”, “Votes” – two key points of Taojianghu service inside Taobao.com representing online shopping guide features • Two strong shopping guide features: Two applications with strong gaming features to • Favorites: “my accelerate popularity and stickiness favorites” and friends’ favorites. Taojianghu: SNS within Taobao.com • Votes: online survey system. • Gaming applications
  52. 52. Ucenter Home: “Facebook” maker An English learning SNS • Long tail in SNS • Thousands of thousands of standardized “Facebook” • It’s free! Powered by Ucenter Home URL: http://home.ebigear.com/network.html
  53. 53. Contact Us www.plus8star.com boyiqun@plus8star.com boyiqun +81 | Japan +82 | Korea bo_yiqun@hotmail.com +86 | China Telecom & Internet www.linkedin.com/in/boyiqun + Added Value * High quality www.slideshare.net/plus8star
  54. 54. About +8*
  55. 55. There are more ideas outside your country than inside Tom Kelley CEO, IDEO The 10 faces of Innovation
  56. 56. About +8* | “Innovation Arbitrage” • About us – +8* | Plus Eight Star is the leading cross-market and cross-cultural consultancy in Asia. – We provide local expertise & global perspective on mobile and Internet innovation from China, Japan and South Korea to add value to and accelerate the development of our clients’ businesses. • Our services – Analysis of proven best practices and business models from Asia – Other services: executive study trips, market entry strategy, M&A advisory, partners identification, negotiation support. • Founder & CEO: Benjamin Joffe – 9 years experience with mobile & Internet in Asia – Selected among “China’s Top 100 mobile industry influencers” in 2007 and 2008 – Regularly quoted in international press and keynote speaker at numerous telecom and Internet events – Fluent in English, Japanese, French with working knowledge of Mandarin, Korean and Spanish
  57. 57. Our Clients EUROPE USA ASIA
  58. 58. Selected Projects • Adidas | E-commerce and mobile commerce market analysis and strategic recommendations for China, Japan & Korea • Bouygues Telecom | Cases studies of leading Asian Web 2.0 services and virtual worlds • Deutsche Telekom / T-Online | Benchmark of Korean mobile & Internet convergence strategies • EU-China Information Society | Research on e-commerce and virtual worlds to support the regulatory dialogue between the EU and Chinese authorities • Microsoft | Analysis of Japan’s key players and market catalysts for mobile commerce market positioning in China • DeNA | Benchmark of leading SNS in China and South Korea (DeNA operates Japan’s leading mobile social network) • China Mobile | Benchmark of Korean leading online communities • Sands Capital Management | Evaluation of investment opportunities in social networks in China • MIH / NASPERS | Analysis of leading online verticals in China (MIH is the largest shareholder in Tencent, China’s leading online community) • IMVU | Benchmark of monetization and engagement best practices in Asian virtual worlds & SNS (IMVU is a leading US-based 3D virtual world & chat)
  59. 59. Social Contribution • Mobile Monday Beijing – Founder of the Beijing chapter of Mobile Monday, the leading global network of mobile industry professionals. – 30 events inviting over 100 speakers and attended by more than 3,000 professionals from the telecom value chain. • Media – Quoted regularly by various news and research outlets such as The Economist, CNN, Ad-Age, Asia Venture Capital Journal, etc. – Monthly column on Asian innovation with the leading Chinese business magazine Asian Business Leaders and news site Interfax. • Speaking engagements – Regular keynote, speaker & moderator in IT, Media & Investment events. – Selection of speaking engagements in 2008/09 • PICNIC (Amsterdam), Lift Asia (Jeju, Korea), Infinity Ventures Summit (Sapporo, Japan), Ad-Tech (Shanghai), O’Reilly’s Graphing Social Patterns (Washington, D.C.), eComm (San Francisco), Red Herring Asia (Hong Kong), Asia Venture Capital Forum (Hong Kong), China Mobility International Summit (Beijing), Media 08 (Sydney), Wireless Developer Forum (Beijing), Open Web Asia (Seoul), XMediaLab: Virtual Worlds (Seoul), Mobile Monday Global Summit (Kuala Lumpur, Helsinki), ITU Asia (Bangkok), EU-China Virtual World Conference (Beijing), Startonomics (Beijing), UnConference (Singapore), BarCamp (Shanghai), Mobile 2.0 (Paris), La Cantine (Paris), Mobile Focus (Stockholm).
  60. 60. Published reports • Inside Tencent – #1 online community in China – #1 profitable SNS in the world – Free sample available to download in +8* website • Inside Cyworld – #1 online community in Korea – over 30% of South Korea’s population, and 90% of Korean netizens in their 20s have a personal page on the service – Free sample available to download in +8* website • Inside Alibaba (coming soon!) – #1 e-commerce empire in the world
  61. 61. Thanks!
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