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China's Online Market Challenges 2014


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CDNetworks and guest speaker Forrester Research, Inc. explore the various web performance and regulatory challenges companies must overcome to effectively deliver web content and applications within the Great Firewall.

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China's Online Market Challenges 2014

  1. 1. Demystifying China Online 2014’s Key Market Challenges Presented by Sponsored by: Featuring:
  2. 2. Forrester’s clients say about doing business in China… Operational challenges are not intuitive Laws/regulations are difficult to navigate and constantly evolving Local expertise is difficult to acquire You need local relationship to survive China needs to be treated as a separate entity – not as an expansion of existing business
  3. 3. The “Great Firewall of China” creates unique problems › Router blocks: • 97% of international routers are blocked • 3% of internal routers are blocked › Preferential treatment from agency to agency • Grounds for blocking are inconsistent and subjective • Some blocks are temporary or due to internal agency mistakes › All domains are subject to being blocked • Over 2,500 foreign domains are blocked in China – including some of the biggest and most used in the U.S. including Facebook and Twitter › Lag in load time • Loading a non-Chinese hosted webpage takes an additional 10-15 seconds when accessed in China
  4. 4. © 2013 Forrester Research, Inc. Reproduction Prohibited 4 Response time in China is far slower than that in other markets
  5. 5. © 2014 Forrester Research, Inc. Reproduction Prohibited 5 Online consumers prefer link saturated sites
  6. 6. Web content hosted outside of China often has performance challenges TCP/IP round trip time Http round trip time (for a single object) Firewall filtering Response time for a single object Response time for a typical web page Between China and US/Europe (measured on a single object) 600MS 2,000 – 3,000 MS 450 MS ~3 seconds 20-30 seconds Your users in China will feel the pain!
  7. 7. Southern China: Telecom territory Northern China: Unicom territory The great divide between the north and the south …
  8. 8. Source: China Internet Network Information Center (CNNIC) Nearly 50% of internet users in China are in rural areas where the internet connection is unreliable and processing times are extremely slow
  9. 9. Licensing requirements can be a barrier to entry when hosting a website in China › Beian (Record Bureau) & Gongan (Public Security Bureau) Licenses • Required for all websites hosted and delivering from within the Great Firewall › Internet Content Provider (ICP) License • Required for all websites with a shopping cart › Additional licenses may be required for: • Education • Healthcare • News/media • Pharmaceutical
  10. 10. In the case of Uniqlo, the holding company and the flagship site also had to be registered on the ICP license
  11. 11. Some content is easier to host in China than others Content Type Likelihood to be blocked Adult/pornography Forbidden Gambling Forbidden Political Forbidden Anti-government Forbidden Religious High User-generated (SNS, BBS, blog, sharing) High News High Gaming Medium Entertainment Medium Software Low Enterprise Low e-Commerce Low
  12. 12. Option #1: Move content closer to the greater China area Hong Kong and Singapore are two common hosting locations
  13. 13. Content distribution speeds with content closer to China Http round trip time (for a single object) Firewall filtering Total delay (for a single object) With direct peering connection to all three major ISPs in mainland 100 MS 450 MS 550 MS No direct peering connection 300 MS 450 MS 700 – 800 MS The limiting factor with this option is poor connectivity and firewall filtering
  14. 14. Challenges with hosting close to China, but outside of China › Choosing a hosting provider can be tricky › The great firewall blocks IP › Sites hosted on the same server (or same IP block) as questionable content will also be blocked
  15. 15. Option #2:Host content in Mainland China
  16. 16. Southern China: Telecom territory Northern China: Unicom territory The great divide between the north and the south requires mirrored sites The sparse bandwidth between the south and the north means you need mirrored sites in both territories
  17. 17. Setting up websites in China is a complex operation › Businesses must apply for a government-issued license - licenses vary for each type of site › The rules for obtaining licenses are confusing and procedures unclear › Rules and regulations for obtaining a license change frequently › Licenses takes longer to acquire and are under more scrutiny for western brands › Local operation requirements
  18. 18. Option #3: Hosting externally with a CDN within China Geographic coverage is key
  19. 19. Using a CDN significantly reduces delivery time Don’t do anything Hosting close to China Hosting in China With CDN acceleration User performance 3 seconds (for a single object) 450 MS 10 – 300 MS 30 MS Efforts involved Easy Medium: Finding a good hosting provider can be challenging High: Business must do everything. Finding a hosting provider, applying for licenses and keeping up with regulations Easy to Medium: CDN partner manages licenses and regulations ROI Time Frame N/A – will see little incremental growth Slow Medium Fast
  20. 20. Criteria to choosing a CDN partner in China › Local coverage • Being able to deal with the north-south divide • Deliver good performance all over China › Local know-how and expertise • Knowing how to deal with the evolving regulation landscape in China • Manage regulatory compliance for you › Local relationships • Good relationship with local ISPs and network peering points
  21. 21. Criteria to choosing a right CDN partner in China › Global operations • The ability to deliver content in and out of China › Global know-how • A mature business that knows how to do business with multi-national companies › Global management • Let you have a global understanding of how your web content is being delivered › Mobile optimization • Help optimize the payload sent over the network by compressing images and page structure based on current network conditions (e.g., 3G versus 4G), thus helping the slow lane go as fast as possible.
  22. 22. Global Content Delivery Network • Accelerating over 40,000 sites across 140+ PoPs around the globe • Only Global CDN with a presence inside of Mainland China (25 PoPs) • Integrated solutions: Performance, Security and Scalability • Industry leaders in reaching emerging markets
  23. 23. Great Firewall – Slower Websites 40% slower download time 64kB object downloaded from Test agents inside of China • Guangzhou (inside China) • Hong Kong (outside China) Source: NetworkBench results, Sep. 2012
  24. 24. Distance = Latency Downloadtime(sec) 0 10 20 30 40 50 60 70 80 London Paris Geneva Frankfurt Oslo Madrid Milan Istanbul NewYork NewDelhi LosAngeles SaoPaulo Tokyo Sydney Seoul KualaLumpur BuenosAires Taipei Chengdu HongKong Beijing Guangzhou Singapore Xian Site performance degrades as distance increases Source: Source: CDNetworks network monitoring POP latencies, 2012
  25. 25. Also found increasing load time of the page from 400ms to 900ms – led to 25% reduction in traffic Why Does it All Matter? Faster Sites Perform Better Found a 100ms of delay reduced revenue by 1% Found that speeding up their website by 5 seconds increased their conversion rates by 7-12% and doubled # of visitors from search engine traffic 0 10 20 30 40 50 60 70 80 90 100 TBs Social Gaming Customer Go-Live: Feb. 2012 3.7x traffic in 6 months Source: Source: CDNetworks Performance Monitoring, 2012
  26. 26. The Options… Add more Datacenters • Attempt to get close to end-users • Expensive • Complex • Sync problem • Doesn’t solve performance issue 1 HW Appliances • Expensive • Need IT team • No support for remote end users 2 Traditional CDN • Only focused on caching • Doesn’t support client-server apps 3 ADCWOC WOC Cache Cacheable Non-cacheable
  27. 27. Next Presentation – Get Faster & More Reliable Web Performance in China