Web 2.0 madness grips China
(CNET News.com)Updated: 2007-06-08 14:50 Cultural nuances
The success of many local companies has come at the expense of multinationals. Google is a distant second to Baidu. While a preference to "buy local" can't be dismissed, many Chinese say that international vendors ignored cultural nuances.
Google, for instance, will split Chinese names into separate terms in a search, which skews the results, said Max Yuan, CEO of Incesoft, adding that Chinese search engines like Baidu do a better job. To prop up their efforts in China, Yahoo teamed up with Alibaba, while Amazon bought local online bookseller Joyo.
Business models also need to be tailored to local conditions too. The 83,000-plus screen network owned by Focus actually isn't a network at all. If the screens were connected, it would constitute a TV network and the government would insist on monitoring the content. Thus, the ads don't come from a central server. People on bicycles go to the screens every week and replace the memory card in the back, which bureaucrats have no problem with, Shiong said.
In video, KU6.com grew by tapping in the ubiquitous desire to make money. Like Revver in the U.S., KU6.com gives a portion of its ad revenue to people who submit videos. But then it goes one step further. The top 10 money earners and top 10 video contributors are listed on KU6's home page, which turns contributing to the network into sort of a video game. The site provides data on the top earners for the day, the current month and since the site began. Contributors get 10 percent to 50 percent of the ad revenue.
Li offers different types of ad presentation, with some advertisers opting to have their ads run before the video instead of after, which the most popular format. The company also holds contests: Yili, a dairy company, gave a 100,000 yuan (US$13,000) prize to the person who came up with the best ad. The contest drew more than 500 videos made by amateurs and professionals and generated 18 million page views. The top earner has pulled in US$5,700 since September--more than many new college graduates earn in a year.
The top contributor for May posted 7,089 videos during the month. "That means this guy posted over 200 videos every day," Li said. "I don't pay this man's salary or provide an office for him. I just share."
Then there are the "soft" ads. Li gets contributors to make ads/product placement videos for advertisers. In one, a surly teenager walks alone in the streets talking about loneliness and carrying an MP3 player.
"Samsung. Look!" Li laughs.
Another factor fueling the boom is that Chinese media companies are inexpensive to create and run. A growing start-up with 40 to 50 employees might burn through 500,000 renminbi (US$67,000) a month, Shiong said.
By contrast, chip companies or manufacturing outfits require buildings, intellectual property, land and often lots of employees. These companies also have to try to sell products internationally, unlike media and software companies that can stay local.
"The amount needed is really low. Survivability is not an issue," he said. "The problem is scalability."
And would-be media giants know that they can't rest for a moment.
"Either die or make money," said Li.
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