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.