Web2 Asia Startonomics Beijing
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  • On BBS Chinese can express their opinion and offer help. They appreciate the anonymity
  • primary purpose for Chinese to log on the BBS: finding a solution, discussing topics, browsing information, and sharing the life experience are the top 4 motivations. The users trust BBS mainly because they think the information there are usually first-hand, updated frequently and environment of the virtual communities are comfortable. http://www.mobinode.com/archives/276
  • Similar layouts do not mean these Chinese Facebooks function the same as the real Facebook. Being an online social network for Chinese people, it has to understand the Chinese social culture. Xiaonei released a feature called Market, where you can sell and buy second hand things. The second-hand market is an event almost every student union has to organize at least once every semester in Chinese universities Others have integrated products such as BBS (bulletin board system) It is very interesting to see that the features on each site are different and have been well localized, which actually reflects the change and evolvement of Chinese Facebooks. The „problem“ of western SNSs is a lack of Chinese culture. They focus too much on the individual, the Chinese are group oriented. http://www.readwriteweb.com/archives/china_facebook_clones.php
  • But since SNSs are so popular in China, the Copy-cat issue not only is of concern to Western SNSs but also to other Chinese SNSs. For example, the SNS for students „xiaonei“ has a Chinese clone called „xiaonei001“. The operator of xiaonei001 runs another SNS for the target group of white collar workers. „Kaixon001“ is very popular and could acquire 7.5 million users since it started operations in March 2008. Oak Pacific Interactive, the operator of xiaonei has now decided to go the same way and to create a clone of that SNS called kaixin…. http://shanghaiist.com/2008/10/17/the_china_social_network_clone_war.php http://blogs.wsj.com/chinajournal/2008/10/16/not-so-social-conduct-in-chinas-networking-war/ http://www.techcrunch.com/2008/10/16/kaixin001-chinas-apple-of-social-networks/
  • But since SNSs are so popular in China, the Copy-cat issue not only is of concern to Western SNSs but also to other Chinese SNSs. For example, the SNS for students „xiaonei“ has a Chinese clone called „xiaonei001“. The operator of xiaonei001 runs another SNS for the target group of white collar workers. „Kaixon001“ is very popular and could acquire 7.5 million users since it started operations in March 2008. Oak Pacific Interactive, the operator of xiaonei has now decided to go the same way and to create a clone of that SNS called kaixin…. http://shanghaiist.com/2008/10/17/the_china_social_network_clone_war.php http://blogs.wsj.com/chinajournal/2008/10/16/not-so-social-conduct-in-chinas-networking-war/ http://www.techcrunch.com/2008/10/16/kaixin001-chinas-apple-of-social-networks/
  • But since SNSs are so popular in China, the Copy-cat issue not only is of concern to Western SNSs but also to other Chinese SNSs. For example, the SNS for students „xiaonei“ has a Chinese clone called „xiaonei001“. The operator of xiaonei001 runs another SNS for the target group of white collar workers. „Kaixon001“ is very popular and could acquire 7.5 million users since it started operations in March 2008. Oak Pacific Interactive, the operator of xiaonei has now decided to go the same way and to create a clone of that SNS called kaixin…. http://shanghaiist.com/2008/10/17/the_china_social_network_clone_war.php http://blogs.wsj.com/chinajournal/2008/10/16/not-so-social-conduct-in-chinas-networking-war/ http://www.techcrunch.com/2008/10/16/kaixin001-chinas-apple-of-social-networks/
  • But since SNSs are so popular in China, the Copy-cat issue not only is of concern to Western SNSs but also to other Chinese SNSs. For example, the SNS for students „xiaonei“ has a Chinese clone called „xiaonei001“. The operator of xiaonei001 runs another SNS for the target group of white collar workers. „Kaixon001“ is very popular and could acquire 7.5 million users since it started operations in March 2008. Oak Pacific Interactive, the operator of xiaonei has now decided to go the same way and to create a clone of that SNS called kaixin…. http://shanghaiist.com/2008/10/17/the_china_social_network_clone_war.php http://blogs.wsj.com/chinajournal/2008/10/16/not-so-social-conduct-in-chinas-networking-war/ http://www.techcrunch.com/2008/10/16/kaixin001-chinas-apple-of-social-networks/
  • Telephone number 8888-8888 was sold for USD $270,723 in Chengdu , China . The Summer Olympics in Beijing are scheduled to open on 8/8/08 at 8:08:08 p.m. [2] A man in Hangzhou offered to sell his license plate reading A88888 for 1.12 million yuan . [2]

Web2 Asia Startonomics Beijing Web2 Asia Startonomics Beijing Presentation Transcript

  • Western Internet Companies in China < Chinese Internet Companies in the World Georg Godula, Web2Asia, June 11th 2009
  • Contents
    • China Internet Facts
      • Overview of leading Chinese Web companies
    • Western Internet Companies in China
      • Why many fail(ed)
      • Major o bstacles & success factors
    • What can Chinese Internet Companies learn from this?
      • Alibaba
      • Baidu
      • Tencent
      • Perfect World
      • Etc.
    • About us
  • China Internet Facts
  • Quiz: What are these number? China Internet Facts In 2007 the Chinese Internet grew by approx. 80 Mil users . This equals approx. 220,000 new users per day or approx. 9,000 new users per hour . In 200 8 the Chinese Internet grew by approx. users . This equals approx. new users per day or approx. new users per hour .
  • 350 Million Internet Users China Internet Facts
  • China Internet Facts User Characteristics
  • China Internet Facts  Entertainment comes first! User Characteristics
  • 660 Million Mobile Phone Users China Internet Facts
  • China Internet Facts Google eBay MSN Messenger YouTube Flickr Facebook Myspace LinkedIn Yahoo! Twitter Baidu Taobao QQ Tudou, Youku Yupoo, Bababian Xiaonei 51.Com, Kaixin Tianji, Wealink Sina, Sohu etc. etc. Quiz: Who is market leader in China for these categories? etc. Micro blogging Portal Business SNS Working Class SNS Student SNS Picture hosting Video hosting Instant messenger C2C eCommerce Search Engine Global player Leading player in China Type Digu, Zuosa, Fanfou
  • China Internet Facts
  • China Internet Facts
  • China Internet Facts
  • China Internet Facts
  • China Internet Facts
    • At a Glance
    • 3,000 million registered BBS users (one netizen can register in more than one BBS)
    • > 60% of users log on at least 3 BBS more than 3 times per week
    • > 1,600 million total daily page view
    • 10 million posts published every day
    BBS in China Anonymity!
    • At a Glance
    • 80% of Chinese sites are running their own BBS
    • BBS on various topics
    • Discuz! the first ever social platform (BBS system) in China
    • > 400,000 BBS sites built on Discuz! system
    • > 70% Chinese BBS market
    BBS in China
  • Categories & Examples BBS in China Sewing Machine 1.990.228 8.619 bbs.sewinginfo.com Sewing Travelling in Europe 26.378 44.800 www.go2eu.com Qiongyou Diet & Losing Weight 54.444 144.300 www.boohee.com Bohe Furniture 359.391 201.012 www.furniturebbs.com Jiaju Tongji University 28.105 234.646 bbs.tongji.net Tongji Business Forum 9.460 263.027 www.fobshanghai.com Fob Home Decoration 208.890 286.340 bbs.roomage.com Zhuangxiu Administrator Forum 5.245 322.205 www.chinaz.com Chinaz Home Appliances 16.798 508.977 www.jd-bbs.com Jiadian Auto 1.425 700.000 club.autohome.com.cn Qiche Stock Forum 6.691 1.306.691 www.55188.com Lixiang Mobile Phone 3.491 9.329.177 bbs.imobile.com.cn Shouji General 1.052 10.000.000 www.xici.net Xici General 238 20.000.000 www.tianya.cn Tianya Target Group Alexa Ranking User Number Website Name
  • Online SNS in China Active users!
  • www.facebook.com www.xiaonei.com 3 million users in China 40 million users in China SNS in China The Copy-Cat Issue
  • SNS in China The Copy-Cat Issue:
  • SNS in China
  • SNS in China The Copy-Cat Issue: Also among Chinese SNS Recent example: www.xiaonei.com www.xiaonei001.com www.kaixin001.com www.kaixin.com “ Happy” : white collar workers “ On campus” : students
  • SNS in China
  • SNS in China www.geeksonaplane001.com !?
  • SNS in China Foreign Capital Investment in Chinese SNS: Selected Examples United Capital Investment/SIG United Capital Investment 4 n/a 2006 2004 Wealink Giant Interactive Intel/Sequoia/Redpoint Ventures/SIG Asia Investment Sequoia SIG 51 12 4 2 2008 2007 2006 2006 51 Softbank/SBI Holding/JOHO Capital General Atlantic Partners/DCM-Doll Capital Management 430 48.1 2008 2006 OPI (Xiaonei) Investors Value (USD million) Year Name
  • SNS in China The Copy-Cat Issue: The Difference
    • Sales of virtual items:
    • avatars (personalized figures)
    • background music
    • decorations for personal space
    Targeted advertising Main source of revenue Multiplayer gaming Virtual items Interactive services Special applications Entertainment Killing time Building up networks based on shared interests Objective n°1 for users Chinese SNS Western SNS
    • 1 Q coin = RMB 1
    Case Study: SNS n°1: Qzone: Virtual items SNS in China
  • Western Internet Companies in China or „ Why is so damn hard for them to gain a foothold here!?“
  • A common excuse … Cat vs. Copy-Cat
  • But … Copy/Paste is not a Chinese phenomenon only… 
  • A quick look at Germany … Google Google Search Engine / 搜索引擎 eBay eBay C2C eCommerce /C2C 电子商务 MSN Messenger MSN Messenger Instant messenger / 即时通讯 etc. etc. etc. del.icio.us M ister-wong Social bookmarking / 网页书签 Digg Yigg User submitted news / 掘客网页 Yahoo! GMX, Web.de Portal / 门户网站 LinkedIn Xing Business SNS / 商务社区网站 Myspace Wer-kennt-wen.de Working Class SNS / 白领社区网站 Facebook StudiVZ Student SNS / 校园社区网站 YouTube MyVideo Video hosting / 在线视频 Global player Leading player Type / 类型
  • A quick look at Germany … vs. vs. vs.
  • Rest of Europe … Most popular website and SNS in Poland / 波兰最受欢迎的门户网站,同时也是当地最大的社区网站 Most popular website and Search Engine in Czech Republic 捷克最受欢迎的门户网站及搜索引擎 Largest SNS in Finland 芬兰最大的社区网站 Largest SNS in France 法国最大的社区网站 Largest SNS in Spain 西班牙最大的社区网站 Largest SNS in the Netherlands 荷兰最大的社区网站
  • So what are the real reasons?
    • No formal internationalization/China entry strategy
    • 2. Entered China too late/too slow
    • 3. Corporate guidelines vs. Start-up feeling
      • Local HQ has no full decision power
      • Short-term profit orientation
      • Too arrogant
    • 4. Incomplete localization:
      • Translation
      • Content
      • Pricing
      • Branding (name, colours, numbers, etc.)
      • Features
      • Business model
  • The Meaning of Colors Meaning Color China Europe Black „ color of death“, darkness, glory, winter, north death, darkness, mourning White mourning, bad luck, age, autumn, west cleanliness, brightness, hygiene, virginity Red Traditionally: joy, good, wealth, bright, summer, south, recently: government, authority danger, forbiddance, war, sexuality Yellow traditionally: emperor, earth, middle and china, recently: pornography caution, envy, avarice, cowardice Blue algid, ill sky, water, reliable, authentic Brown misfortune laziness, old-fashioned Grey cheap, dull elegant Gold glory, royal, wisdom, perfection money, sun, nature, friendliness Green life, vitality, spring, east nature, hope
  • The Meaning of Symbols Meaning Symbol China Europe Magpie 鹊 que joy, fortunate marriage thievery, robbery, defraud Owl 鸮 xiāo disaster, scare, crime wisdom, clever, bright, intelligent Rat 鼠 shǔ wealth, avarice, demonical possession dirt, cloacae, illness Spider 蜘蛛 zhīzhū luck fear, disgust, threat Clock 送終 short life, wish death time Swastika 卐 wàn luck, numerousness, all war, death, terror Fish 鱼 yú wealth, luck Christianity, Jesus Christ Dragon 龙 lóng power, strength, wisdom, luck, emperor power, danger, chaos Bamboo 竹 zhú integrity, pertinacity, conservativeness, long life -
  • The Meaning of Numbers Positive 6 problem-free, promising, smooth 8 fortune, wealth 9 forever, long-lasting Negative 4 sì ( 四 ) sounds almost like death, dying ( 死 ), disaster 10 shì ( 十 ) sounds almost like „4“, therefore death 13 failure, imperfection 14 yao si sounds almost like “going to die”
  • So what are the real reasons?
    • No local technical development team
      • Slower time to market
      • More expensive
    • 6. Local legislation
    • 7. Sometimes local startups simply have cooler ideas or a better technology + business model
  • What can Chinese Internet companies learn from that for their own international expansion?
  • About us
  • About Web2Asia: Overview
    • Leading partner to launch and scale web- & mobile based companies in Greater China, Korea & Japan
    • Active since 2006 with proven track record of successfully developing and growing Internet projects for Western investors and start-ups
    • Spun out of international marketing & eCommerce BPO company
    • We and our customers benefit from the know-how, infrastructure and global network of our parent company
    Headquarter Sales offices
  • About Web2Asia: Divisions
  • 1. Media & Events
  • 1. Media & Events: selected examples
    • Examples of articles & online publications:
    • Techcrunch: Chinese Social Networks ‘Virtually’ Out-Earn Facebook And MySpace : A Market Analysis
    • Venturebeat: http:// venturebeat .com/2008/07/13/china-web-use-accelerates-e-business-still-lagging/
    • Tour of worlds TOP techbloggers & journalists through China
    • Meetings with largest Chinese Internet players & most promising start-ups
    • November 2008: Beijing – Shanghai – Guangzhou
    • Click here for details
    • Largest (and only) Pan-Asian Web conference
    • Started October 2008 in Seoul/Korea
    • Organized by East Asian work group
    • Click here for details
  • 2. Market Entry & Internationalization
  • Facts China, Japan & Korea www.internetworldstats.com; www.nic.ad.jp; www.nic.or.kr; www.cnnic.cn; www.cencus.gov; http:// ec.europa.eu/eurostat USA EU27 China Japan Korea Population 303.8m 490.43m 1.33b 127.29m 49.23m Internet Users (Q1 2008) 215m 273m 230m 88m 35m Penetration Rate 72% 56% 17% 69% 71% Growth (2000-2007) 126% 199% 833% 86% 83% Mobile Users (Q1 2008) 256m 549m 547m 103m 44m Penetration Rate 84% 112% 41% 81% 89% Growth (2007) 3% 8.6% 20% 2% 4.5
  • Enormous Growth Potential
      • Asia is already the world's largest region in terms of Internet users, but the comparatively low penetration rate in the region – especially in China – bears an enormous potential for growth
  • China Challenge
    • Internationalization is hard, but China is an order of magnitude harder
      • Many US Internet brands have been able to successfully enter Europe, and a few European start-ups are starting to enter the US
      • However, most global Internet companies have failed or are struggling in China: Yahoo, eBay, Google are famous examples
    • China Internet companies are extremely nimble, have strong government and business relationshops (&quot;guanxi&quot;), have incredibly low costs, and are tailored to local tastes
      • Most international Internet sites are relatively slow in localizing for the China market, do not enjoy powerful relationships, and have relatively high costs
    • China's Internet landscape is fraught with dangers
      • The &quot;Great China Firewall&quot; slows or stops foreign Internet traffic
      • Content is carefully scrutinized
      • IP protection is difficult to enforce
      • Ad-based monetization is challenging
    • But perhaps most importantly, it is difficult to assemble a local team at international standards
      • Management talent is incredibly hard to find
      • Communication is challenging
      • Trust is the rarest commodity
      • Because of these challenges, the minimum entry costs to China with a local team is EUR 350,000 with a medium to high probability of failure!
  • China Strategy
    • Internet companies must grow in their home turf at breakneck speed
      • Even if they have the capital, they do not have the management bandwidth to explore internationalization
    • Copy cats regularly scout VC funding reports to see what business models to knock off
      • This is particularly true in China where development costs are a fraction of US and EU markets
    • China Internet user population is the fastest growing in the world
      • Also high broadband penetration and huge mobile adoption
    • Strong RMB - European & American ventures can benefit from this development
    Internet companies must have a China strategy – not just for defensive measures, but to take advantage of the huge growth opportunities – most of them do not have the time to do it!
  • Our Services
    • Market Entry Studies
    • Feasibility Assessment
    • Asian Strategy & Roadmap Development
    • Translation
    • Localization - Cultural content adaptation
    • Software Design & Development
    • Legal Consulting
    • Community Management
    • Customer & Technical Support
    • Order Management, Payment Management & Fulfilment Services
    • Expansion Financing
    • PR, Networking, Government Relations
    • Business Development
    • Online & Offline Marketing
    • Hosting & Administration
    • Cooperation Deals
    Turnkey strategy development & execution of your start-up's expansion to Asia
  • Work with Us
  • Your Advantages with Web2Asia On your Own With Web2Asia Infrastructure
    • High up-front investments in infrastructure, legal entity and relocation expenses
    • Fully functional infrastructure
    • Legal entity already established
    HR
    • Loss of key management in the home market
    • Hard to find qualified people to trust
    • Long training time
    • Local management and operative team fully functional
    • Home market focus can be maintained
    Market
    • New and culturally challenging environment
    • No social and professional network
    • Deep market knowledge
    • Local network already established
    Speed
    • Operational start can take up to one year
    • Operation can be deployed within 1 to 3 months
    Financial
    • High sunk costs and long term capital commitments (infrastructure, contracts, cetup fees, expat salaries)
    • Predefined budget and clearly defined milestones and goals
    • Easy to pull out of the market if targets are not reached
  • 2. Market Entry: example Jimdo
    • We run German website creator Jimdo’s operations in East Asia
    • Launch in China 2007, profitability reached 2009
    • Launch in Japan with KDDI 2009 (click for details)
  • 3. Incubation & Business Acceleration
  • 3. Incubation: example BloggerInsight
    • Crowd sourced Market Intelligence Provider
    • Start-up physically incubated in our premises
    • Launch in China 2008 (click for details)
  • Thank you! W eb2 A sia George Godula Founder Room 2022-2026 No. 1438 Shaanxi Road (North) Shanghai 200060, China Phone: +86 21 32270872 Mobile: +86 159 2100 2780 Fax: +86 21 32270875 E-Mail: [email_address] Web: http://www.web2asia.com Contact