Web2 Asia Startonomics Beijing
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Transcript of Web2 Asia Startonomics Beijing
Western Internet Companies in China <Chinese Internet Companies in the World
Georg Godula, Web2Asia, June 11th 2009
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Contents
1. China Internet Facts• Overview of leading Chinese Web companies
2. Western Internet Companies in China• Why many fail(ed)
• Major obstacles & success factors
3. What can Chinese Internet Companies learn from this?• Alibaba
• Baidu
• Tencent
• Perfect World
• Etc.
4. About us
China Internet Facts
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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 2008 the Chinese Internet grew by approx. users.
This equals approx. new users per day or approx. new users per hour.
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350 Million Internet Users
China Internet Facts
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Internet Users by Age
49,6
76,7
47,3
27,822,0 19,7
9,9
0
10
20
30
40
50
60
70
80
90
Under 18 18-24 25-30 31-35 36-40 41-50 Above 50
Million people
China Internet Facts
User Characteristics
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660 Million Mobile Phone Users
China Internet Facts
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China Internet Facts
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Type Leading player in China Global player
Search Engine
C2C eCommerce
Instant messenger
Video hosting
Picture hosting
Student SNS
Working Class SNS
Business SNS
Portal
Micro blogging
etc.
eBay
MSN Messenger
YouTube
Flickr
Myspace
Yahoo!
Baidu
Taobao
Tudou, Youku
Yupoo, Bababian
Xiaonei
51.Com, Kaixin
Tianji, Wealink
Sina, Sohu
etc. etc.
Quiz: Who is market leader in China for these categories?
Digu, Zuosa, Fanfou
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China Internet Facts
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China Internet Facts
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China Internet Facts
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China Internet Facts
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China Internet Facts
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BBS Daily Online Time / User
15,1%
44,7%
36,3%
3,9%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
> 8 hrs
3-8 hrs
1-3 hrs
< 1 hr
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!
Anonymity!
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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
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Categories & Examples
BBS in China
Name Website User NumberAlexa
Ranking Target Group
Tianya www.tianya.cn 20.000.000 238 General
Xici www.xici.net 10.000.000 1.052 General
Shouji bbs.imobile.com.cn 9.329.177 3.491 Mobile Phone
Lixiang www.55188.com 1.306.691 6.691 Stock Forum
Qiche club.autohome.com.cn 700.000 1.425 Auto
Jiadian www.jd-bbs.com 508.977 16.798 Home Appliances
Chinaz www.chinaz.com 322.205 5.245 Administrator Forum
Zhuangxiu bbs.roomage.com 286.340 208.890 Home Decoration
Fob www.fobshanghai.com 263.027 9.460 Business Forum
Tongji bbs.tongji.net 234.646 28.105 Tongji University
Jiaju www.furniturebbs.com 201.012 359.391 Furniture
Bohe www.boohee.com 144.300 54.444 Diet & Losing Weight
Qiongyou www.go2eu.com 44.800 26.378 Travelling in Europe
Sewing bbs.sewinginfo.com 8.619 1.990.228 Sewing Machine
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Online SNS in China
Active users!
Active users!
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SNS in China
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SNS in China
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SNS in China
www.geeksonaplane001.com !?
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SNS in China
Foreign Capital Investment in Chinese SNS: Selected Examples
Name Year Value(USD million)
Investors
OPI (Xiaonei)
2008
2006
430
48.1
Softbank/SBI Holding/JOHO Capital
General Atlantic Partners/DCM-Doll Capital Management
51 2008
2007
2006
2006
51
12
4
2
Giant Interactive
Intel/Sequoia/Redpoint Ventures/SIG Asia
Investment
Sequoia
SIG
Wealink 2006
2004
4
n/a
United Capital Investment/SIG
United Capital Investment
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SNS in China
The Copy-Cat Issue: The Difference
Western SNS Chinese SNS
Objective n°1 for users Building up networks based on shared interests
Entertainment
Killing time
Special applications Interactive services Multiplayer gaming
Virtual items
Main source of revenue Targeted advertising Sales of virtual items:
• avatars (personalized figures)
• background music
• decorations for personal space
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Case Study: SNS n°1: Qzone: Virtual items
1 Q coin = RMB 1
SNS in China
Western Internet Companies in China
or
„Why is so damn hard for them to gain a foothold here!?“
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Cat vs. Copy-Cat
A common excuse …
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Copy/Paste is not a Chinese phenomenon
only…
But …
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A quick look at Germany …
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Type/类型 Leading player Global player
Search Engine/搜索引擎 Google Google
C2C eCommerce/C2C电子商务 eBay eBay
Instant messenger/即时通讯 MSN Messenger MSN Messenger
Video hosting/在线视频 MyVideo YouTube
Student SNS/校园社区网站 StudiVZ Facebook
Working Class SNS/白领社区网站 Wer-kennt-wen.de Myspace
Business SNS/商务社区网站 Xing LinkedIn
Portal/门户网站 GMX, Web.de Yahoo!
Social bookmarking/网页书签 Mister-wong del.icio.us
User submitted news/掘客网页 Yigg Digg
etc. etc. etc.
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A quick look at Germany …
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vs.
vs.
vs.
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Rest of Europe …
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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
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So what are the real reasons?
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1. 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
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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 Colors
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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
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The Meaning of Symbols
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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”
The Meaning of Numbers
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So what are the real reasons?
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5. 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
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What can Chinese Internet companies learn from that for their own international
expansion?
About us
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Headquarter
Sales offices
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
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About Web2Asia: Divisions
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1. Media & Events
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1. Media & Events: selected examples
• 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
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/
• Largest (and only) Pan-Asian Web conference
• Started October 2008 in Seoul/Korea
• Organized by East Asian work group
• Click here for details
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2. Market Entry & Internationalization
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Facts China, Japan & Korea
USA EU27 China Japan Korea
Population 303.8m 490.43m 1.33b 127.29
m 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
www.internetworldstats.com; www.nic.ad.jp; www.nic.or.kr; www.cnnic.cn; www.cencus.gov; http://ec.europa.eu/eurostat 46
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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
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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 ("guanxi"), 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 "Great China Firewall" 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!
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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!
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Our Services
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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
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Work with Us
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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
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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)
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3. Incubation & Business Acceleration
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3. Incubation: example BloggerInsight
• Crowd sourced Market Intelligence Provider
• Start-up physically incubated in our premises
• Launch in China 2008 (click for details)
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Thank you!
Web2Asia
George GodulaFounder
Room 2022-2026No. 1438 Shaanxi Road (North)Shanghai 200060, China
Phone: +86 21 32270872Mobile: +86 159 2100 2780Fax: +86 21 32270875 E-Mail: [email protected]: http://www.web2asia.com
Contact