Bandwagon commentary

Never one to miss an opportunity, John Dvorak jumps in to the China stocks melée with an "I would have told you so if you'd asked me piece" on the grotty quality of most Chinese Internet businesses. His insight:

...the Chinese have done nothing other than copy the best America has to offer, and locals use the local copy rather than the originals. That means others can copy, too.

I suppose that's why Yahoo!, eBay and others have done so well in China? Not.

He does have some back-handed compliments for the B2B favourite, Alibaba.com which he describes:

The only semi-original site in China is Alibaba.com. It is kind of a generalized clone of the numerous disintermediation sites promoted to death in the late 1990s as the new way everyone was going to do business in the 21st century.

He suggests that e-commerce can't work like it does in the glorious USofA because China lacks a delivery system. Ah, what it is to hold strong opinions based on limited knowledge. Creaky payment systems may be an issue, but delivery is not.

I do agree with him on one thing; " This downturn is a reality check. It was overdue". Let's just hope nobody is going to John Dvorak for anything other than opinionated fantasy. For reality, they'll have to look elsewhere.

China and the dark ages

Tom Plate is consistently one of the most interesting writers about Asia and, in particular, Asia's media. His columns appear in a number of the world's leading newspapers and his role as Professor at the Asia Media Centre at UCLA plays an important role in putting a solidly academic, while always accessible spin on how our region's media is developing.

I read, then, with great interest his latest column titled, Is China heading back to the dark ages?. He notes:

In recent university and media appearances, I have been struck by how worried many people are about China. Goodwill and high hopes for the world's most populous state are evident almost everywhere. But, increasingly, doubts about the wisdom of the central government's public-information policies cross the face of questioners. People wonder how China can possibly move forward if its media policies are heading backwards.

In his article he refers to a review of the latest edition of China's Media & Entertainment Law by James F. Paradise. This kicks off with the suggestion that "A few years ago, it was possible to talk about a combination of liberalization and censorship in the Chinese media industry. Now the story is more about censorship and a variety of other restrictions as the Chinese government seeks to reassert control after a period of rapid change".

It has become clear to us that this applies as much to the field of B2B media and business information as it does to other, apparently more sensitive areas of the media. Pity. It limits business opportunity both for foreign media companies but, more importantly, for Chinese media and the industries they support.

Not wishing to end on too downbeat a note, perhaps we should also quote Paradise's penultimate paragraph:

As bleak as things may seem, there are reasons for optimism. As the authors of China's Media & Entertainment Law put it, "With China now a member of the World Trade Organization and its economy becoming more integrated with the rest of the world, in addition to the numbers of global representatives flocking to the capital for the 2008 Olympic Games, it would be surprising if the existing strict censorship rules are not relaxed at or about the time of the Beijing games." Regulations have already been eased a bit for foreign reporters and the Chinese government, should it take an enlightened view, may be inclined to seriously ponder how further media repression will damage the country's reputation in the eyes of the international community.

500 million users

You might worry that I'm getting a bit obsessed by this China number game. I posted on Saturday about SMS frenzy over Chinese New Year and the week before about the prospect of half a billion mobile phones all ringing at once.

We couldn't help, then, but notice the posting on Read/Write Web about Tencent's QQ service which now has 572.3 million registered users. OK, so only 221.4 million of those are active, but still! It's an Alexa.com global top 10 site now and must be regarded as one of China's top purveyors of media and communications. Not much B2B focus yet, but with those numbers, as we've said before, there must be opportunities.

Did you know that, through Naspers' investment in around 36% of Tencent, this must also rank as one of South Africa's most successful offshore internet media investments in Asia. Over at Seeking Alpha, Siwei Zhong ranks it as "Out of the many Chinese internet related stocks, my favorite pick is Tencent Holdings (TCEHF.PK)". He notes, "Tencent still has a lot of room to grow in both increasing market penetration and by introducing new services".

Talking of size and technology, and on another tack altogether, we see that McDonald's is working together with DoCoMo to promote through mobile phones what is arguably America's greatest export success: obesity.

Nangang delayed

The Taipei Times reports that completion of Taiwan's long-awaited second major exhibition centre as Nangang has been further delayed. The newspaper says that " The hall was originally scheduled for completion last June but had been delayed until April".

Existing facilities at the Taipei World Trade Center are among the most heavily-utilised in Asia and major shows such as Computex, which now claims to be the world's second largest IT show after CeBIT, are seriously space-constrained.

SMS frenzy and turning worms

It's been a very busy week with various deadlines but I have been keeping an eye on the news. My two favourite China media-related stories this week:

1. The Baidu Europe saga: Many companies have been surprised to discover their brands ( or something very close to their brands) being used by somebody else in China. No doubt the boys at Baidu will be interested in the announcement of baidu.eu with which it seems they are not connected. Fons Tuinstra has been following this closely (see here and here for more). Maybe this is just a repeat of Web 1.0 'hijacking' of URLs. But, as Fons says, "when Baidu China decides to take legal action, it seems that they have a fair chance of winning."
   
2. SMS frenzy: We have written regularly about the mobile opportunity in China and possible business applications of SMS on a massive scale. The size of this potential was underlined by the news reported by PanAsianBiz that in Beijing alone, some 400 million text messages were sent on the Chinese New Year's Eve!! Business Week's New Tech in Asia blog suggested that the number for the whole holiday could be as high as 14 billion.

Still focusing on Baidu, we were interested to see as well the Seeking Alpha piece titled "Can Baidu Survive Google's Ferocious Uppercut?" Analayst Roger Ehrenberg suggests "it appears that Google's persistence, ability to listen and learn and long-term focus has caused it to rapidly close the gap, posing a real threat to Baidu in its home market. Further, some Baidu missteps are hampering its own efforts to continue its meteoric growth in China and to maintain its hometown advantage".

Korean online advertising to hit $1 billion

Posting is patchy as we work our way through a tsunami of project deadlines for which, I dare say, we should be duly grateful.

However, I couldn't resist a quick post on Korea. We don't do too many of those. I see from the FIPP web site that online advertising there is expected to pass through the $1 billion level this year. According to Korea Overture who did the research, that would represent a jump of 15.2% on 2006.

The total Korean advertising market is steady at $7.7 billion. Who is losing? The article doesn't say.

There are now reported to be 35 million Internet users in Korea which is over 70% of the 48 million population.

I shall be back in Seoul the week after next for UFI's annual Asia Seminar. At last count, we had 150 signed up so look pretty much to match the number we had in Hong Kong last year.

India's outsourcing boom running out of steam?

We have posted a few times (e.g. here) about the significance of India's outsourcing boom to media: a number of big publishers have outsourced a good deal of work to India while others (e.g. CMP/Cybermedia) have launched businesses supporting the outsourcing industry. We were, then interested to see two stories which point to some warning signals. Is this industry running out of steam?

Firstly, Om Malik has posted on "Troubling Signs for Indian Outsourcers". This is clearly catching people's attention; the number who have bookmarked it on deli.cio.us is climbing fast. His basic message is that grunt work for the mega-outsourcers such as Tata Consultancy Services (TCS) is no longer attracting the brightest and best from India's universities (surprise, surprise). They are now looking to use their not-inconsiderable intellects for more interesting pursuits and the likes of Google are proving more attractive. The call centre outsourcing business has already fallen prey to low quality hiring.

The second post also concerns TCS, and comes over on China Payments News which reports on a new JV from Tata in China. It reports that:

TCS Asia Pacific owns the majority of the JV with a 65 per cent stake. The three Chinese partners, supported by the National Development and Reforms Commission (NDRC), hold 25 per cent with Microsoft expected to take up the remaining 10 per cent. TCS China will focus on financial services, manufacturing, telecom as well as the government sector, providing IT outsourcing services and solutions to the Chinese domestic market as well as the global MNC customers.

You could argue that, far from marking the end of the boom in India's outsourcing business, this just represents the next, logical step in its development. Whether TCS's move to China represents opening the door to the only serious potential competitor to India in terms of brains and manpower remains to be seen.

China, the Internet and education

A couple of stories have caught my eye in recent days talking about how companies are looking at the Internet as one crucial way to capitalise on the Chinese thirst for international education.

Virtual China wrote a week ago about the way the Confucious Institute (China's answer to the British Council) was using both a massively multiplayer online game called Chengo Chinese
and the virtual world, Second Life, to spread the joys of learning Chinese. The post notes "people around the world are studying Chinese in order to get closer to the Chinese people, and Chinese are studying English. Virtual environments are starting to provide platforms for Chinese and others to learn from one another".

Picking up the "Chinese studying English" point, we then saw a story on Indiantelevision.com (don't ask about the connections, they're too mind-bending for a Sunday) reporting a deal between the BBC and Chinese portal QQ. The piece, looking as though it is quoting from a BBC press release (which we can't find) says "From 14 February 2007, users of the portalll be able to access BBC Learning English content specially tailored for Chinese speakers".

Wishing you health, wealth and happiness...

This is the last working for up to two weeks for large swaths of East Asia as we approach the Lunar New Year/Spring Festival/Chinese New Year holiday. Hong Kong will be closed for business Monday and Tuesday while many in the mainland will take off a couple of weeks.

This is a very happy, family holiday and, as this year it falls relatively late, looks set to be warmer and more pleasant than is often the case.

So, 恭喜發財 Kung Hei Fat Choy or 恭喜发财 Gong Xi Fa Cai, if you're in China, and Chúc mừng năm mới if you're in Vietnam (Tet is basically the same holiday). May the year of the pig bring you all that you wish for.

Over half a billion mobile phones in China...

...and not a single ring tone that isn't irritating.

The Ministry of Information Industry is, according to the People's Daily Online, expecting Chinese mobile phone user numbers to pass through the 500 million level this year. At the end of last year, the 460 million mobiles in China still meant that only 35% of the population had one.

Fixed line connections, according to the same report, are dropping as people rely increasingly on a combination of broadband Internet and their mobile phones for communications. Take note publishers.

As the PanAsianBiz blog says of the same story:

And if that doesn't scare you....think about all those people learning how to use their new cell phone AND learning how to drive at the same time!!

Update: I was only joking when I mentioned ringtones, but that's clearly a great business when there are that many phones. The BBC is now reporting that "A Chinese wireless content firm has said it is considering making a $77.9m (£39.9m) bid for UK-based mobile phone games and ringtones firm Monstermob". The Chinese company concerned is Linktone from Shanghai.

Fake Google

We have written on a number of occasions about IPR challenges for the media business in China. We were amused but not surprised, then, to be directed by the Virtual China blog to a not-quite-Google site. Type in the Google China URL back-to-front (google.cn.com instead of google.com.cn) and you will find the following page complete with ad links to Shenzhen call girls:Firefox blocked a pop-up at this point. So, discretion got the better part of valour and I pursued it no further. So, I don't know if there is any kind of real search engine at all here (probably not).

Baidu books

We were interested to note, at the end of a detailed post on China Web 2.0 Review about Baidu's new video search service, a brief reference to a books search function. It says:

Donews also reported [PW: in Chinese only] that Baidu is to launch book search after Chinese Spring Festival. If this is possible, we don’t think the product will be like Google Book Search, which provides full viewable content, instead it will be like other vertical search engines to be an aggregator of online book stores.

We're not sure on what basis this speculation is grounded although Luyi Chen is pretty reliable on this blog. Given the issues with IPR in China and surrouding Google books, along with Baidu's own run-in with the music industry, we can assume that they will be quite shy of challenging the book publishers too. That being said, there's clearly a mentality of "whatever Google can do in the US, we can do better in China" at Baidu and they're not likely to leave the Googlers to the book world all by themselves.

MacWorld India e-dition

We just wrote about Colin Crawford's posting on the transformation of IDG away from a print-based company (for an interesting perspective on this, see Rex Hammock). Now, we see from the Indian Media Observer, that they're launching MacWorld in India from their relatively new Bangalore operation, IDG India. So much, so dull.

However, the launch will be in electronic format only as a free addition to PC World India. As the screen shot shows, they're launching it next month. I'm not sure how well the reader overlap will work or, for that matter, what Mac penetration into India is like. But, it's certainly a sign of the brave new world of e-led publishing of which Colin speaks.

Vodafone, India and McKinsey

There is much excitement in the general media about Vodafone's apparently successful $11.1 billion acquisition of a controlling stake in Hutchison Essar, one of India's leading mobile operators. I was this time interested by the usual PR puffery statements from Vodafone senior execs:

The PR people has Chief executive Arun Sarin saying that the announcement was "clear evidence of how we are executing our strategy of developing our presence in emerging markets".

Meanwhile, chairman, Sir John Bond (formerly of this Parish, where he ran HSBC), described India as "destined to become one of the largest and most important mobile markets in the world," predicting that the deal would see Vodafone "playing [its] part in delivering the significant economic and social benefits which mobile telephony can bring to the people of India".

I mention this because over the weekend I was reading this interesting piece from McKinsey about the use of mobile telecommunications in emerging markets like China, India and the Philippines. It suggests that "the economic impact of all wireless activity on these countries is up to four times the value to the wireless operators alone. Much of this value appears to come from the productivity gains and economic surplus that wireless customers receive simply by using their mobile phones".

About 3 weeks ago, we were posting on the mobile content boom in India and how this might just be more important than broadband for media companies in the next few years.

Transforming IDG

Colin Crawford talks in his blog about the big transformations in IDG's business. He notes "Today the absolute dollar growth of our online revenues now exceeds the decline in our print revenues. This occurred in the US in 2006 and in Europe during the last quarter". I wonder about Asia where IDG is the largest B2B/tech media player by far outside Japan.

It's hard to imagine that things in Asia will be so different from what Colin describes where "we’ve changed the business mission of our organization away from print. Going forward IDG Communications will define itself as a web centric information company complemented by expos, events and print publications." No accident, I'm sure that print comes last in that list.

Face to Face in India

I have been following this week reports on two events in India which demonstrate quite a few important features of the market there.

The National Software and Service Companies (NASSCOM) annual conference in Mumbai is closely followed in India and around the world as it provides a number of important clues to the direction of development for the all-important IT and outsourcing industries. Business Week's Steve Hamm has been covering it all week on his Bangalore Tigers blog. The titles of his posts give a good flavour of what has been going on:

• Political showdown coming for India's techies
• New worries for the Indian tech industry
• The Changing Rules of Global Competition

Meanwhile, down in Goa, Cybermedia's annual C-Change Forum has been underway. As with a number of other things this company does, it is very much in line with global IT media trends. Rather than the all singing, all dancing giant show which has now fallen out of favour, it offers vendors an audience with India's top 100 CIOs and those CIOs, in resort-style surroundings, an opportunity to exchange notes away from the day-to-day pressures of the office.

Isaac to Google: show us the money

VC Isaac Mao is one of the China bloggers better known outside the mainland. Lot's of people pick up on his posts. So, a fair bit of attention is being given this evening to his "Dear Sergey and Brin" open letter to the founders of Google.

His recipe for their future success in China is a three step programme:

1. Set up a 1B US$ corporate venture fund to invest in China's Internet pioneer sites and cutting edge companies.
   
2. Develop anti-censorship tools and service for global Internet users.
   
3. Increase the incentive to Chinese Google Adsense users.

Speaking as someone whose lifetime Adsense earnings over 18 months has just gone soaring past US$42, I certainly have sympathy for 3.

The China Web 2.0 Review is sceptical about 2., noting:

We wonder if this will work. In fact there’re lots of anti-censorship project in the world. Experienced users already can reduce the effect of censorship into a minimum level. The problem in China is that if you are an influential service, you should cooperate with the government, or you will be cut, like Technorati.

Overall, though, we think it's an interesting piece and well worth a read. It's a nice complement to the Shaun Rein piece we commented on the other day.

Of Mice and Maths

Hong Kong's South China Morning Post writer Jake van der Kamp is popular for his grouchy business columns which typically question those he considers self-righteous about their assumptions. He is particularly fond of poking sticks at those running the Hong Kong government and its associated bodies such as the Hong Kong Tourism Board.

Today, he takes a dig at the HKTB's outgoing chair, Selina Chow Liang Shuk-yee of the Hong Kong Tourism Board for saying that "the city should focus on being the 'events capital of Asia' since per capita spending by the MICE [meetings, incentives, conferences and exhibitions] market averages about HK$10,000 compared with HK$4,600 for other tourists." He asks:

And can we really be certain that the mice market is the one for us in the future? I ask because prowling out there at the moment is a mice-eater in a different league from the HKTB. He goes by the name of Sheldon Adelson and his big mice trap, the Venetian in Macau, has now been topped out. It will soon be baited for business.

One correspondent pointed out to me that he needs shouldn't be so dismissive of the $10,000 number. It may be a little too rounded in this statement but is, actually, based on quite solid research. I was also asked to remind Jake that the "E" in Mice (exhibitions) is a recurrent and particularly valuable business, a point overlooked by convention bureaux all over the world. So there.

Minting it in India

There's already been a fair bit of coverage of the launch last Thursday of the new Wall Street Journal/Hindustan Times joint venture newspaper, Mint. But, I only just got around to looking at it. They're claiming an initial Mumbai/Delhi circulation of 80,000 and the paper - launched into a fiercely competitive market in India - will carry 4 pages of international business news from the Journal.

They gone straight online as well with LiveMint which looks a bit like an orangey version of the Journal's own web pages. This isn't suprising as the designer was Mario Garcia, responsible also for the new look Journal in the US and its international editions. Unlike their counterparts at Dow Jones, however, the Mint folk are not trying to charge for web access.

Real competition here for the Economic Times, Financial Express and Business Standard (with which the FT is partnered).

Let's us all sign up for Ali everything

Taking a leaf out of serial entrepreneur Stelios' Hadji-Ioannou's Easy empire, it seems that Alibaba.com is going to preface everything it Ali-touches with the word "Ali-". Just a day after writing about traffic on their Alipay PayPal buster, we see the Shanghai Daily talking about the newly-announced AliJob channel.

The newspaper quotes Wang Yunfeng, a spokesman for Ali College, a company division for training and certifying e-commerce professionals saying, "It will be free to individual job seekers, but we will charge a certain amount of money for corporate users."

Warning: I'm not 100% sure on the reliability of this story. There is no word of Alijob on the Alibaba.com home page and the "Ali College" bit in the Shanghai Daily article (the only press report I can find on the news) sounds a bit fishy. I also found another site called Alijob.com which doesn't appear to have anything to do with the boys in Hangzhou. Does anybody know whether this is real?

Update: I am assured that this initiative is real but not a major change in the business - more a new 'function' of the web site.

Another US web brand failing in China?

Interesting debate bubbling up across the web today on whether Google is joining EBay and Yahoo! in failing in China. The debate was spurred by analyst Shaun Rein who writes over at Seeking Alpha:

In surveys my firm conducted with Chinese youth in Shanghai between the ages of 18 and 24, over 80% said that they used Baidu as their primary search engine with Google a far second at just under 20%. Google’s poor faring over the last year has caused a lot of analysts to lump them with eBay and other internet failures in China, with many arguing that foreign internet companies can never do well here.

He concludes:

Many critics have said that Google has failed in China. I agree with this but not for the reasons that most critics highlight – censorship. While that is a sexy topic amongst many Americans, Google has failed for much more prosaic reasons. They should learn from eBay’s failure or Yahoo’s experience where too little management control was ceded to the team on the ground.

At China Herald, Fons Tuinstra takes issue with some of this, noting:

"...he goes too fast when separates the censorship issue from what is according to him the major reason for Google to fail in China: failing management, or too much US involvement with the China operation. Google mainly followed a US-agenda, did not listen to its Chinese customers. So, when it came up with this ludicrous censored search engine, they made something the Chinese internet users did not want. And on top of that, it annoyed the hell out of their US constituency. That is two management mistakes in one!"

Alipay metrics

Increasingly it looks as though the Alipay system will sit at the heart of the Alibaba.com 'empire', providing the glue which knits together its various components. It's recently receiving a good deal of PR attention and we note with great interest the press release from last week releasing 2006 metrics.

Highlights:

• The number of registered Alipay users surpassed 33 million
• Alipay's daily transaction volume reached US$12.8 million
  (RMB100 million)
• The number of daily transactions using Alipay reached 460,000

The China Payment News blog, commenting on the story, also adds "Taobao's number of registered users rose to over 30 million by the end of 2006, a 116 per cent increase from 2005 and accounting for nearly all Internet users in China who say they shop online.".

Nature China

Macmillan CEO Richard Charkin in his blog points out the launch of Nature China, an English language site summarising scientific developments in China and Hong Kong. The site is sponsored by Astra Zeneca (so basic access is free) and describes itself thus:

Nature China is dedicated to highlighting the best research coming out of China providing scientists from around the world a convenient portal into publications drawn from across all scientific disciplines. Each week, our editors will select the best research published and provide a summary of the results. Users can also recommend papers to be included in Nature China and vote/comment on those suggestions. The best of these, chosen by you, will be included within the Nature China archive.

It adds:

China's growth as a scientific and economic 'powerhouse' has been unprecedented. Over the past 10 years research output has quadrupled to almost 80,000 manuscripts a year. Futhermore, the number of high impact papers from mainland China and Hong Kong in the top 1% of the ISI database in terms of citations has increased more than ten fold to about 300 per year.

B2B Pakistan

We write an awful lot about China and quite a lot about India. Not so much about Pakistsan although my trip there last March did generate one post. This country generally generates pretty bad press and often isn't given too much thought as a business location. Too bad. It's actually doing quite well on a number of counts.

We were interested, then, to stumble across the B2B Pakistan web site. A well organised directory and sourcing site, it is the brainchild of an IT consulting firm, Softrack Technologies. It is listed on Alexa.com but doesn't appear to be generating much traffic yet.

The site is liberally sprinkled with Google Adsense blocks and a few familiar names were popping up there including Global Sources' China Sourcing fairs.

Blog use

You really are an international bunch. I just looked at the last 50 users. You were from 14 countries with the largest group (15) coming from the USA, followed by Hong Kong (8), the rest of China (7), Singapore (4) and India (4).

Best town name of the day award among our readers goes to Lost Nation, Iowa.

Click on the chart to make it large enough to read. A few obvious missing locations including the UK. Was there the wrong kind of snow on the tracks to stop rail commuters getting to their desks today? In France, I assume everybody is waiting for the new government-sanctioned after lunch nap before logging on.

CEMS Games

We have believed for quite a while now that the entertainment and leisure industries were an under-developed area for business media in Asia. As the larger countries in the region become wealthier, the more developed economies like Singapore and Hong Kong play an increasingly important role in serving their leisure interests.

So, it was with some interest and no great surprise that we saw the announcement (just re-issued in Singapore) from Singapore exhibitions pioneer CEMS that it is teaming up with Leipziger Messe to launch the Games Convention Asia 2007 in Singapore this September.

In the press announcement, the two companies note "According to PricewaterhouseCoopers the Asian games market is projected to grow to US$23 billion by 2009 while the wireless market in Asia is expected to exceed 230 million mobile gamers spending over US$5 billion a year by 2009. The subscription market is expected to exceed US$7 billion".

These types of events can be more complex than traditional trade shows and we see that there will be competitions to attract the enthusiasts as well as - taking the lead from the fair in Leipzig - separate b2b and public sections. I believe that more organisers will be following CEMS and its partners into this segment.