I was sitting in a panel with former Facebook senior in Tencent MIND summit 2009, Guangzhou and we together talked a lot about China web as well as Facebook. The million-dollars question is what’s the best strategy for Facebook in China, and the conclusion I want to tell you here is, it might sound a bit aggressive but I think it does make some sense, Forget About China.

If you are not ready for China, don’t come - I was leading Netvibes in China but it did not work out in the end. The product itself is one thing as Netvibes’s personalized page is just too good (advanced) for Chinese web. And Netvibes was not ready too. We actually had a very good start, e.g. together with Sohu, we launched the first Open Platform in China in Jan 2008; We also signed the agreement with Maxthon, the leading Chinese browser; We were discussing with Monternet (China Mobile), Yahoo China, Comsenz, CSDN etc which are looking into Netvibes’ widget technology; We have reached tens of leading Chinese services providers (medias, video-sharing, image-sharing, sns, music, blog services, rss players,etc). All these sound super great, but caused the trouble: we did not have the resource (money, team etc) to handle them. No matter how strong you are in western market, once you are in China, things can be totally different. Do not assume your good Chinese partners want you badly, in most cases they can live well without you (and with local partners), so sit closely to them, push them on the projects instead of waiting for them; China, in general is cheap, but cheap does not mean you don’t need money. Well, in web 2.0, Word-of-Mouth (WOM) is brilliant, but do remember sometimes WOM is driven by money, especially in China. Did you see Facebook officially runs any promotion campaigns in universities? At least i did not know any in UK. But in China, offline promotion in campus is quite common and costy.

If you believe your global strategy can work, don’t come - In other words, if you neither understand Chinese Internet culture nor listen to your local advisers, it is almost impossible to succeed in the end. Myspace China is a good example, and Censorship could be an interesting topic too. OK, I know most of people think censorship in China is a bad thing as they do believe in User Generated Content (UGC) in web 2.0, i.e they ‘respect’ whatever users generated. Then the decision makers who are sitting far far away from China will tell you, NO! we are not going to compromise with local regulation. But do not forget, censorship as far as I know, it is everywhere not just in China. If you have double standards, do not complain on other things when your business fails.

Back to 1 year ago, the rumor about Facebook in China is everywhere, which local social network Facebook would acquire, who might be appointed to be the CEO of Facebook China etc. Too much buzz about you but nothing become real, which will do no good for your future plan: The young Chinese users do not know Facebook still, and the worst thing I heard is some of them who know Facebook are saying, hm… Facebook looks like Xiaonei, Kaixin001 etc.

My former Facebook friend thinks Facebook will eventually come to China, but not in near future. So Mark, until you make a clear decision, please forget about China. And most importantly, this strategy, I think it applies to other web companies who wants the China cake too.

We (DeNA) will not be able to copy our success. We are here to meet friends and share insights. This market is very different so we need new ideas for China.

Today, we obviously have the answer: DeNA, the biggest mobile social network in Japan and currently has 632 employees with a market cap of USD1.5 billion, has entered a tentative (not final) agreement to take a majority stake in WapTX, the owner company of the leading mobile SNS Tianxia (天下网) in China.

Tianxia, the leading Chinese mobile SNS is reported over 30million registered users and 1million active users daily. DeNA has around 14.2 million users in Japan and 18 billion page views per month. It sounds like a win-win deal. Also note that Tianxia was invested by Infinity Venture which is from Japan, this deal is not that surprising, I guess.

Another giant from Japan Mixi has its office set up for quite a while, but its Chinese version still keeps very low key. Mixi is facing a very tough market in China, Social Networking. But for DeNA, the story might be different since the Chinese mobile market just reborn because of 3G and Japan has very advanced mobile industry and loads of experience in running a mobile service.

Welcome, DeNA! We are looking forwards to some fresh ideas from Japan mobile web.

Why do we want to do a video blog? In past several months, we’ve been to many conference and events inside and outside China, met many great people and heard loads of interesting stories, and we don’t want all these slipping away. But text can not cover everything and we want all these great people sitting before the camera and telling their stories in their own way; On the other hand, video-sharing is so hot in China, but still the entertainment content is dominating everything. It would be naive to say that we want to change this by launching a video blog, but we really want to bring some fresh air and hope our young generation can learn some priceless experience after watching the video we shot for their future career.

MOBINODE.tv is a video blog focus on Tech, i.e. tech startups, founders, entrepreneurs, thoughts leaders and grassroot in Chinese tech industry are all our ‘targets’; MOBINODE.tv will not be a Tech channel as you find on traditional TV. We want it to be more personalized and free-style because we are not only producing these video, but also thinking of and learning from what we see and hear in China’s fast growing tech industry. MOBINODE.tv will be soon delivered in both Chinese and English like what we have done very well in this blog, as bridging the global industry with China is still our very important mission.

We are very exciting about the launching of MOBINODE.tv, and we also understand that doing a video-blog is not that easy as pressing the Record button. Preparing the interview, editing the video etc are very time-consuming and sometime even boring; I dont really worry about the content and pretty sure we can find many brilliant interviewees as well as cool projects, companies and ideas, but facing such a massive market with full of energy, we can not cover everything. MOBINODE.tv now steps forward and takes the lead, what I really expect is an Ecosystem where more volunteers in different places can join us and bring the Tech scene around you to the global audience.

My best wishes to Cindy’s team and also to this young MOBINODE.tv. Please, do feel free contact them (via Twitter, Fanfou, Digu or online form) if you, your startup, company, event and story want to be broadcasted in a multimedia way.

• 316million Internet users, ~2.9million Chinese web sites;
• But, the Internet penetration has reached only around 25%;
• 107million bloggers by end of 2008;
• 670million mobile subscribers;
• and ~117million users surfing Internet on their mobile devices.

But, considering the population of China, you probably would not be surprised by the figures above. So in this post, I am not going to spend time on these figures which I do think are getting boring. What is the most important and also interesting topic, at least for me, is: How dose this industry evolve?

Copy-to-China Model

What is the Copy-to-China (C2C) model? Basically, it tells you the fact that there are many Chinese web companies which just copied the ideas from US/EU then launch services serving local users. The famous examples reported are listed below, including:

• YouTube - Youku, Tudou, Ku6, 56 etc
• Facebook - Xiaonei, Xiaoyou, Tongxue, Kaixin001 etc
• Twitter - Fanfou, Jiwai, Zuosa, Digu etc
• Linkedin - Wealink, Tianji, Linkist etc
• Flickr - Yupoo, Bababian etc

Some people complain about China web because of these copycats, but the fact we should see is that the copycats are actually everywhere, not only in China. If you are from Europe, I bet you can list a couple of copycats too, but the difference and the controversial point here is: Unlike copycats in other countries/regions, Chinese copycats can not only survive, but also dominate the local market. This is why the C2C model is getting so famous.

Reformation

However, this Dragon’s web is not all about Copycats. If these copycats want to survive and grow fast, they have to reform to adapt to local Internet culture. Some of them have already started the reformation and done it quite well.

• Social Networking - Kaixin001.com skyrocketed to 30 million registered users from the middle of last year focusing on white collar users with social gaming; 51.com implemented Virtual Coin and payment API into its open platform and the API might be integrated into OpenSocial and already implemented in Hi5.com;
• Microblogging - Sina told millions of Chinese netizen what is blog by inviting celebrities to blog, and now a Chinese twitter-liker, Digu.com is following a similar strategy by inviting celebrities to tweet so their fans will follow. By this way, Digu is turning microblogging service from a effecient Tool for sharing information to a new Entertainment platform in order to attract Chinese young generation and non-geeks; Fanfou.com, the oldest copycat of twitter, recently says they have got the first paid-user: HP. Fanfou now features HP on its main page and rumor event says HP will also pay $$$ per new follower.

Innovation

Social networking, microblogging etc these are service which can be easily understood by global audience because most of them are originated from the west. So you might think China web lacks of innovation, wait, actually there are a few services running in China which you would never know them if you are not in China; even you are in China, as a foreigner you probably never use them and understand how it works. For examples:

• Social Networks can be distributed - Facebook and many other SNSs are telling people, Hey come to join us to meet your friends in one virtual place, but in China, Comsenz developed a product named UCHome, a mini version of Facebook-like SNS which can downloaded for free. In other word, everyone can set up a SNS for different purpose. Over 150K downloads so far, so in China, SNS also goes Vertical!!
• Traditional business and Web 2.0 - If you do not use Dianpin.com, especially in Shanghai where the company is based, you probably will never find the best restaurents. Where is the restaurent, what is its ranking, what’s the special courses, what is the average price per person, how’s the comments from others who’ve been there, Dianpin can tell you what Baidu or Google can not tell; The credit system is not great in China, so Alipay.com allows you to pay after you receive the goods; Liba.com, also a Shanghai-based company, provides a full package for your living: If you buy a new flat, most likely you need find a interior designer. Liba.com runs a great designer community for you and you can check their works before call them; If you need furniture, you can join a group of people who need the same thing to get it at wholesale price (aka Group-Buy); In China, when you buy a new flat mostly likely you are getting married. So in Liba, you can find everything to do with wedding; And recently, Liba launched a new channel call Mum & Baby, obviously Liba is thinking about what happens after the wedding.

The Unique Chinese Internet Culture

There are some facts which I dont want to call the Innovation. Instead, I think Internet Culture is the more proper word to describe them:

• QQ - by end of 2008, 891.9millions registered user accounts, 376.6millions active user accounts; 31.4millions Fee-based Internet value-added services registered subscriptions; 14.7millions fee-based mobile and telecommunications value-added services registered subscriptions. Tencent, owner of QQ has RMB 7.15billion revenue, its gross profit reached RMB 4.98billion.
• Bulletin Board System (BBS) - In China the registered BBS users have reached 3000+ millions; ~80% of Chinese sites are running their own BBS and the total daily page view is over 1600 millions and 10 millions posts are published every day. In China around 36.3% users spend 1-3 hours on BBS, about 44.7% users spend 3-8 hours and even 15.1% users are on BBS for more than 8 hours a day. Over 60% of users will login at least 3 BBS more than 3 times each every week.

When Western Web Meets Dragon

• What you already know - Many foreign Internet companies fail in Chinese web market, including MySpace, eBay, AOL etc, Google is doing OK but just takes ~30% market share; It is too late for Facebook; Netvibes is too complex; Twitter is still for geeks; YouTube has very strong competitors (it is blocked anway);
• What you do not know - However, many foreigners are now setting up their startups in China, and many of them are doing great, e.g. Qunar is now one of leading travel services; Tudou is co-founded by Marc van der Chijs; Qifang won Technology Pioneer award from WEF; ChinesePod was TOP10 podcast site by TIME; CMUNE creates a new web-based cross-platform 3D engine; Neocha is one of the leading SNS focus on artists and indie musicians; BloggerInsight is asking local bloggers for opinions on behalf its western customers who want the business in China; 360Quan has become a popular SNS, and many more!

Conclusion

It will be a joke if I tell you the long post above covers everything about Dragon’s web. But I do hope you find this post interesting, and try to analyze this market from some new angles. China web is evolving, very fast!

DeNA?
DeNA is the biggest mobile social network in Japan. Currently it has 632 employees with a market cap of USD1.5 billion. Their most popular service is called Mobile Game Town (Mobagetown), a service that primarily attracts users by offering free games and that monetizes through advertising. Other services of DeNA include several successful m-commerce related portals such as Mobaoku (mobile C2C), Pocket Affiliate (Japans largest mobile advertising affiliate network), Mobagetown L (services targeted at Ladies) and Mobakore (fashion retail, 79% female users). DeNA has around 14.2 million users in Japan that are good for 18 billion page views per month.

As one of DeNA’s most popular services Mobagetown was launched back in 2006 it offered games for free. As a result users were rather young at that time: over 70% were teenagers. This has changed in the last few years, currently over 60% of DeNA users are over 20 years old which means they can spend money and are worth more to advertisers. DeNA has over 500,000 partner sites to advertise to mobile users. Wong explains that, among others, advertisers can place ads on the front-page, place text ads between search results, and advertise through (mobile) mail. Moreover Mobagetown has partnerships with big brands to integrate their brand in the service. For instance users could at some point get a Coca Cola avatar.

Content
The most important content for DeNA is avatars. “Avatars are very important content for us, avatar sales are still the biggest” says Wang. Actually DeNA was the first company to offer avatars on mobile. Users can choose from many ways to interact with their friends through their customized avatar. They can chat, play games, compete, give gifts etc. Users are even able to have a pet that they can feed and interact with. This year DeNA will roll out 3D avatars and will start providing options to “go outside of the DeNA world.” For instance users can bring their avatar into games at game centers or use them at karaoke bars by uploading it. I’m not sure what this is going to look like, but it is certainly something to keep an eye on.

MUGC
User generated content (generated on a mobile device!) is very important for DeNA. A few almost unbelievable examples: in Mobagatown users have created over 530,000 novels and there are over 26,000 songs made by users themselves. Moreover users create their own recipes and upload + share their own karaoke videos. A more recent services launched in February 2009 allows users to upload their own illustrations made on their mobile.

China = Tough
After introducing DeNA Wang continued to talk about what DeNA is doing in China, and as it turns out: it’s not much. DeNA has been ‘active’ in the Chinese market for over 2 years, mainly doing market research. But Wong seems to be rather humble, almost pessimistic about DeNA succeeding in China. The main reason he mentioned for his rather negative attitude is that in contrary to Japanese users, in China users are not willing to pay for content.

As a result DeNA will start attracting users the same way they did in Japan 3 years ago: by offering free games and setting up a free mobile gaming portal. “In China our strategy will be creating big games with big brands and make money through virtual items” explains Wang. But this will not be the main focal point; offering games will merely be a tool for attracting attention as “we are very good in mobile social services, so we will try this first”. Besides social services another point of focus will be mobile commerce services, Mobaoku is the largest mobile auction site in Japan “we will try this in China also, but it will be hard.” Wang understands that a key factor for success in the Chinese market is flexibility. He thinks DeNA has always been quite flexible, unlike most other Japanese companies that traditionally do not want to change. Other than the fact that Chinese mobile users are not willing to pay for content a whole range of challenges were discussed:

• In Japan there are only a few devices so the market is pretty standardized. In China there are many mobile device players: screen sizes differ, operating systems differ, which makes it a lot harder.
• In China the competition is much harder compared to Japan. Japan is small and closed. “Here we need to start from the beginning” explains Wang.
• In November 2008 mobile traffic exceeded PC traffic in Japan. This is the result of fixed data plan. It will likely take a while before the 3 mobile operators in China start offering fixed data plans.
• China mobile launched a mobile SNS last month. This indicates that they are willing to interfere in the mobile services market which is a big threat for all mobile service providers. The big operators have all the research, a huge user base and the power to change the fee for their own good. Wang: “I worry about this, but I also think there is always need for other services.  Therefore we have to differentiate.”

Wang concludes with: ”We will not be able to copy our success. We are here to meet friends and share insights. This market is very different so we need new ideas for China.”

Long-waiting Maxthon 3.0 alpha 3 version has been recently released, supporting two browsing modes based on different browser engines, WebKit and IE. Thanks to Kukukuan who sent me the download link, I had this brand new Maxthon installed. The interface is pretty neat and loading speed is very fast as expected.  It is obviously at very early stage, except the easy-switch between the Turbo mode (which is using Webkit engine) and compatible mode (which is using IE), I have to say not much I can test out. But still, as the first Chinese browser which supports Webkit engine, the new Maxthon 3.0 is quite promising.

Powered by Webkit and the outstanding HTML5 (which introduces Canvas, Application cache and database, Video, Webworker and O3D), Maxthon is facing a brand new future: Maxthon for Mac even a mobile version is not a mission impossible any more. But Jeff calmed me down and he said, we have not thought about those new products, although there is possibility. Our main focus is still on Maxthon 2.0 and we simply want to make it better.

I asked Jeff when we can see the final version of Maxthon 3.0, he said there was no exact deadline for it. “A good browser depends on good user experience which the deadline usually does not help. ” said Jeff. “And we now want to spend more effort on the global market, and this time we are more serious than ever.“

From the ground up
According to Matt one of the most important things in China is to know what you know and know what you don’t know. When About.com decided to enter the Chinese market back in January 2007, they started out by digging deep to learn what is going on. Based on this initial orientation stage it was decided that Abang.com had to be launched from the ground up. ‘It was not so much about launching the about model in China, we were more free’ Matt explains.  This is quite special as most of the companies that entered China (and failed) just planted their existing model and assumed that some localization would do.

Foreign company?
As Abang was started from scratch Matt argues that you can’t rightfully call it a foreign company entering China. He wonders what is a foreign company? Baidu has received investment from foreign companies. So is Baidu a real Chinese company? Basically it does not come down to who your investors or even employees are. That’s actually irrelevant. More relevant here is the flexibility of your company. It is essential to be able to cope with the fast changing environment in China. ‘That is one of the major reasons why many foreign companies in China with a lot of baggage are failing.’

After it was decided that the Chinese About.com would start from scratch, 2 focus areas were determined:

• Content: as content in China often has no high value and investment behind it is lacking most of the times
• Metrics: a lot of advertisers were (and still are) frustrated by the metrics available. To quote Thomas Crampton ‘Abang will offer advertisers reliable third party statistics to measure an ad campaign’s effectiveness.’

Near future
According to Matt About.com gave it’s Chinese subsidiary plenty of room to get started. Naturally Abang had the luxury of many resources and financial backing (read: time) to figure out how to be successful in China. ‘We started without the bells and whistles we have in the US, but we are soon building new stuff specifically developed for the Chinese market.’

Go Shanzhai!
It is the rise of the Shanzhaiji (山寨机), the so called “Bandit Cell Phones”. In 2008 alone over 250 million Shanzhaiji handsets where produced. The handsets are mainly targeted for China’s rural markets and are extremely cheap feature-to-feature compared to established brands (starting at $40). Moreover the style and designs are constantly evolving and changing.

From Copycat to Culture
As Scully Meng, Journalist & Editorial Assistant at Chinadialogue, described it at Mobile Monday Beijing #28, Chinese youth are “seeking for fun to get away from the stressful, high speed, unstable monotonous urban lifestyle.” As a result there is a great need for entertainment and eye catching gadgets that make you stand out from the others. Though Shanzhai started out at as “creatively imitating the famous”, nowadays, according to Scully, the copycats have evolved into a phenomenon that is “at the edge of Chinese creative culture”.

Many Chinese feel that creative minds have been slowed down by international copyright regulations. They are tired of the Western companies that are constantly charging for royalties and asking for money. You can imagine that also the Chinese government is not very unhappy with the rise of the Shanzhiji culture as they have the objective of building up a local industry.

“MTK Inside”
Karl Weaver, Principal at Newport Technologies, describes the rise of Shanzhaiji as “part of the non-mainstream culture”. According to Karl, Shanzhaiji manufacturers have a wild ambition to innovate and endlessly cater the needs of customers. The spirit of Shanzhai includes the willingness to satisfy all the different market segments. They are able to constantly adapt, innovate and tweak their offering as the turnaround time is only 3 months for a handset (instead of the 9 months that established brands need).

So how do  Shanzhaiji manufacturers manage to produce handsets with so many features with such a short turnaround time? The revolution is heavily supported by the Taiwanese Mediatek which has a 90% share of Mainland China’s mobile chip set market. According to Karl “the MTK system-on-a chip is creating a disruptive innovation revolution, rewriting the rules in a 1.2 billion a year handset industry.”

Final Thoughts
While most attendees agreed with the speakers that Shanzhaiji culture is a good example of Chinese innovation, during the concluding buffet and drinks I collected some interesting critical remarks:

• “This is no real innovation; it is just creating fun stuff, look at all the examples; why is a Buddha phone innovative? It is just humorous, that’s all!”
• “No wonder that they can offer their handsets for so little, they hardly have any R&D costs: it’s stealing. Nobody in the audience had the guts to ask about this, including myself!”
• “I don’t see a Shanzhaiji app platform being developed any time soon.  The phenomenon itself has shown that handsets are becoming a commodity, and that the real money does not come from the handset innovation anymore. When you look at the iPhone, it’s reasonable innovative but it is their business model where the real (profitable) innovation is taking place.”

Below the presentations of the two speakers and the short introduction to the Mobile Monday Beijing #28 session.

4 days after the book was published, a 20 year old Japanese college student started an English translation project, which immediately attracted many collaborators. They formed an online group, which consisted of around 10 initial core members, and closedly proceeded with the project (this closeness at the initial stage was based on the leader’s idea that in order for an open source project like this to work, the foundation on which late participants can easily add new values must be solidly built). A French version of this project soon emerged, and this project, contrary to the English one, is being proceeded in a completely open environment by making it possible for anyone to discuss and collaborate on the leader’s blog.

Only within a week since its birth, the first round of the English translation project was finished and made public (it was done is such a short period of time that even the author himself has not read it yet). Now that it’s public, anyone, from anywhere in the world, can join and collaborate to make it better (ex: An american shogi lover might make a film explaining in English some difficult shogi moves in the book and post it on YouTube. A chinese genius scientist might get motivated to create a computer shogi which is stronger than human (as it happend in chess!). The Wikipedia page of Yoshiharu Habu, the best shogi player, might be richly written in English.). This is truly a sign of open-source-mindness emerging in the Japanese web.

http://modernshogi.pbworks.com/

Japanese cultures, despite having long attracted so many people from the world over, are actually only superficially understood and there is actually much more that people from all over the world could enjoy. However, since only a few Japanese people are capable of delivering their messages in English, which has become the most influential and dominant language, or other languages, it was thought to be impossible for people outside Japan to truly appreciate, or even vaguely understand, Japanese cultures (except mangas and animes, which are widely appreciated around the globe).

I don’t believe it only applies to Japan –there are many countries which cannot spread their cultures because of language barriers. I hope this project, which accumulates the wisdom of crowds and works as an open source translation project, will become a role model for writers, musicians, and artists etc, from all over the world. I also hope that a time will come when more and more diverse cultures can be fully appreciated through the use of the internet.

References:

Open-source style translation project “Shogi” book

Geeks have always wanted to track where their girlfriend(or mum) is. And finally we can do it. With geolocation APIs, you will be able to know where you are, or maybe even write an app to find out where your friends are. A geolocation-aware brower will be able to give website designers the ability to request for location in a web app.

Imagine carrying your laptop around town, and where ever you go, you will still find a lovely coffee shop where you can grab a latte and continue working. The usage scenario is massive. You can write a location-aware photo site and kick Flic*r’s arse(providing that they are not doing it already). You can also write a ground-breaking search engine that returns results that are location sensitive. (the search engine will need to get the permission to retrieve your location)

Geolocation itself is not new, currently web apps use IP addresses to figure out a person’s location. The latest geolocation API endorsed by W3C(web standards body) uses stuff like GPS, WiFi point and Cell-ID. For example, Opera browser uses Skyhook’s service to figure out a location. Your device will not need to come equipt with triangulatin devices

One location-based service is lastminute.com’s hotel radar which uses Google Gears. Another one that I can think of is to bring telco’s friendfinder service to the laptop. In Malaysia (so do other places), the friendfinder app allows you to track the location of you friend based on the CellID of their handphone. By using geolocation build you increase the accuracy of this application by mixing in GPS and WiFi.

So now, budding web developers, here’s another technology to help build the next great web app.

References:

Google Gears Geolocation resources
Firefox Geolocation resources
Opera Geolocation resources
W3C Geolocation API guidelines bewarned of stuff that makes you sleep