This presentation is prepared for GWC executive trip – USA, http://www.thegreatwallclub.com/EN_hd_usa.html

1. January 2010
www.thegreatwallclub.com
GWC executive trip – USA | Contact: yiqun@thegreatwallclub.com

2. Why look at China?
What are “Chinnovations”?
Some examples

3. Why look at China?

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

5. 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

6. 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

7.  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*

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

9. Mobile
operator
Service &
Handset
App
maker
provider

10. What are “Chinnovations”?

11.  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

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

13. 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

14. WANG Jianzhou
CEO, China Mobile
2009 WEF, Davos

15. 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

16.  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

17. 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
million USD in
 Huge population
 Unbalanced economic
2009H1, Y0Y growth
development ~100%
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.

18. 1 billion USD rev. in 2008
~40% net profit
~90% of 1 billion USD from users
Source: Plus Eight Star, 2009

19. Some examples

20.  ~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

21. 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

22.  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

23.  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: GWC, Jan 2010

24. 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

25. 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

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

27. www.thegreatwallclub.com
yiqun@thegreatwallclub.com
boyiqun
www.linkedin.com/in/boyiqun
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