Comparing with last report by CNNIC, the increase of number of new Internet users is slowing down with 43 million new users added in first half of 2008 vs. 48 million in second half of 2007. On the other hand, new mobile Internet users increased significantly from 50.4 million to 73 million.

CNNIC said that over 107 million users in China own blogs/spaces, doubled in six months. By the end of 2007, it was reported that there were about 49 million users having blogs/space. The report does not provide a definition of blog/space. I guess the statistics includes users in SNS as well. Since many users write posts in SNS, for example, users will write articles in 51.com, it will be counted as a blogger as well. According to the report, over 70 million users updated their blogs/spaces in last six months.

Online music is still the most popular services with 84.5% usage rate. Notably, IM usage rate decreased from 81.4% in January 2008 to 77.2% while email usage rate increased from 56.5% to 62.6%. About 81.5% people read news online, a big increase from 73.6% in half a year ago.

The report said that 38.8% of Internet users in China, or about 98 million users, visited BBS/online forum in last six month, the number is much lower than I expected. BBS/online forum is one of the most important service in China’s Internet, there should be more users of BBS, I think. About 23.4% or 59 million users have posted articles in BBS/online forum in last six months.

About 25%, or 63.3 million users go shopping online, an increase from 46.4 million in half a year ago, and 22.5% or 57 million users made online payment, an increase of 23.8 million users.

If you can read Chinese, you can download pdf version of the report from CNNIC, or you need to wait more time for English version to be available.

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Mobile Monday Beijing’s website has a detailed transcript of the event, here are some of my quotes.

Why going abroad? PP.cn and Yicha enter Japan market because Japanese mobile market is more mature, and “it is easier to make money from mobile internet services in Japan”.

To find a right partner is critical for entering a new market, it seems their investors offer many helps to address this issue. For example, Velti, Casee.cn’s investor, helps Casee to sell its mobile marketing platform in UK and Europe. Yu Dong, CTO of Yicha, said “Our Japan CEO has 10 years of advertising and local launching experience in Japan, and our Japanese investor Hikari Tsushin helped to identify him as well as other key team members. As a result, it was relatively easy for Yicha to start and to manage.”

Alex Liang, CEO of Pica, thought “In some cases, your VCs can help you. Other ways are to go to conferences, meet local partners and local offices for large companies, like Orange. Huawei is another channel that can help you as they are looking for services to bundle with their platforms.”

What is difference between Japanese users and Chinese users? Jerry Lee, CEO of PP.cn answered, “Japanese users are young. They were born in the 1990s. Maybe due to the lack of space in Japanese houses, 13 to 18-year-old audience do not have their own computers in their rooms. Even if they have, the computer is around their parents. Therefore, they rely and spend much time on the mobile phones which dominates very much of their daily life (for entertainment, living…etc.).

Also, opposite spending habits are found between Japanese and Chinese users. Japanese would spend a lot of money for new and quality products. Often, buyers think that the more expensive the product is, the more reliable it is (no viruses,..etc.); however, this is not the case in China.”

Check Mobile Monday Beijing’s report for more about the event.

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China Web 2.0 Review: Would you please briefly introduce yourself and your team?
David: I am a programmer in 42friends which is one of the leading Facebook apps developers. I have over 10 years experience in designing and developing large scale network system.

CWR: What widgets your team have developed on Facebook?
David: We have Growing Gifts and Hatching Eggs and others with over 10 millions installation on Facebook.

CWR: How do you compare Xiaonei’s platform with Facebook’s developer platform?
David: Xiaonei platform is a nice attempt but the whole platform feels rushed. The APIs are not ready for serious use and the platform team are not prepared to deal with third party developers. Xiaonei has improved quite a bit in the past week. However, Xiaonei today would hardly be comparable to Facebook a year ago, but it’s making progress.

CWR: Why do you think Xiaonei’s API s are not quite ready for serious use?
David:Xiaonei’s platform is at best an alpha version and was launched in a rush. The API and the system is still under rapid change as we speak. The collection of functionalities are barebone and the integration with the UI are not finished. The Xiaonei development team was very unresponsive to the developers in the beginning with almost no communications with any developer community in June, the first month of the opening of the platform. As the result, Xiaonei’s poor treatment of the third party developers, it sparked the gathering of over 80 angry third party developers in Beijing in June 28th.

Right before I started to response to this email, Xiaonei has announced their next generation interface which is a complete copy of the new Facebook UI which has been expected to create some major impact on the apps. Xiaonei has not even communicated with the third party developers on such change.

CWR: If your resource only allows you to put effort into one platform in China, which one you will choose, Xiaonei.com, MYOP from Comsenz, OpenSocial from Google, or others?
David: First, there is also 51.com’s open platform and OpenSocial is only a spec. The only Open Social site in China is myspace.cn. At the current time, there is no real viable platform for third party commercial developers. Myspace.cn has the except comprehensive platform and commercial policy.

Xiaonei has created quite a controversy with its first release of the term of service for the developer platform. We are still waiting on the new TOS from Xiaonei and hopefully it would be a more third party developer friendly. 51.com’s platform looks interesting but won’t go online for another month or so. I don’t see a business case for the MYOP from Comsenz.

This is still a very early stage of platform opening up in China and good time to experiment and learn about the platforms and the sites. It’s too early to talk about putting resource into any of these platforms.

CWR: You said you are waiting for the new TOS from Xiaonei to be more developer friendly, what you expect from the TOS?

David:The TOS released on the 7/8 basically prohibit any commercial activities of the third party apps, no ads, no e-commerce, no links to outside Xiaonei and the worst clause in the TOS is third party developers would have to agree to transfer all intellectual properties rights of the apps to Xiaonei and are prohibited to create the same apps for other social networks. Moreover, Xiaonei also demand the right to any works created by the users with all third party apps. Yes, the graffiti you created with the third party apps on Xiaonei belongs to Xiaonei!

The TOS released on 7/8 angered so many developers and it caught the attention of some IT press and Xiaonei did one modification to the TOS which basically return the right of the apps to their developers. The no commercial activities clause is still on the TOS today; although Xiaonei has announced the further improvement of the TOS in a month.

CWR: As a widget developer, how do you evaluate and choose a platform?
David: Stable system, responsive platform team and a viable business model for the third party developers.

CWR: In China’s market environment, how can widget developers make money?
David: Advertising such as Google Adsense is one way. The more interesting approach unique to China would be the virtual currency. QQ has already proven that Chinese netizens are willing to pay for the network service and entertainment with USD $ 200+ millions sales of QQ coin. SNS sites such as 51.com and Xiaonei already have virtual currency system in place. It would be beneficial for both SNSs and developers if SNS would open up this system and allow the apps developers to tap into it.

Open platform isn’t a new business. It just lower the barrier of entries of the old partnership model by letting everyone in.

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To be a developer for TOP, at first you need to sign up as an ISV in Alisoft, the software business under Alibaba Group. TOP will adopt Alisoft to test, release and manage third-party apps for Taobao. Since Taobao is a C2C e-commerce site, not a SNS. TOP mainly focus on applications which will help buyers or sellers to make transaction on Taobao, it is quite different from apps on SNS platform which are mainly entertainment and fun oriented. Taobao also allows developers to sell their apps on the platform to make money.

Before the platform launches, some ISVs offer apps to Taobao’s users already. For example, a shop traffic analytic app, Hao Dianpu, has recorded over 30,000 monthly installation, and generated over RMB300,000 revenues. You need not to share revenue with Taobao/Alisoft now.

According to TOP’s page, Taobao currently encourages apps on sellers marketing platform, visual presentations, items management, inventory management, CRM, analytics tools, mobile applications, overseas market, logistic services, financial and loan services, buyers’ browsing tools, auction and pricing system, and etc.

Let’s see whether TOP will further strengthen Taobao’s market position to compete with Tencent’s Paipai and to-be-launched Baidu’s C2C service.

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If we check the Alexa data of Kaixin001.com and Hainei.com, which is a SNS launched in late 2007 and targeted similar market as Kaixin001.com, we found that Kaixin001’s Alexa data has exceeded Hainei since May. Since Alexa data is not reliable, we also use Google Trends for website. It also shows that Kaixin001’s traffic increased quickly and now is close to Hainei’s.

Based on my personal observation and experience in Kaixin001.com, I also think that it is possible that Kaixin001 already has more user than Hainei, and many users are quite active on the site.

How can kaixin001 gain such growth momentum in a short time? Its secret weapon is the entertainment and just for fun applications on the site. When Kaixin001 was launched, it offered some just for fun applications for users, for example, two most popular apps are very similar to “Friends for Sale” and “Parking War” apps on Facebook. These apps are quite sticky and helpful in retaining users and keeping users’ activeness. This may be another proof that SNS with game elements is very important, and entertainment is still a killer app.

At the same time, Kaixin001 encourages users to invite their friends to join the site, the more they invited, the more “money” they can get to buy friends or cars in the apps. These viral invitations attract more and more people to register the site and join the community.

Leveraging game-like apps and viral marketing, Kaixin001.com gained high growth in last three month. Though it is still very small, when compared with Xiaonei.com or 51.com, it is worthy of keeping a close eye with it.

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If you are regular reader of this blog, you might be familiar with many of the findings already.

According to the report, online chatting is a very important Internet service in China, 89% of Chinese Internet users using IM, versus 63% usage of email, while in US, 91% of them use email, only 39% use online chatting. BCG thinks that it is because Chinese users regard IM as a more advanced service, if they can communicate with contacts in IM, why bother to use email.

The report found that e-commerce is still in its early stage in China. Only 28% of Chinese go shopping online, compared with 71% in the US. The lack of trust on Internet merchants is the biggest problem for e-commerce business in China. BCG said, when asked why you don’t shop online, people show their concerns on product quality guarantee, the reliability of sellers and concerns on their personal financial information.

Even though people don’t buy products online, they do research online before they make purchase decision. The report said the biggest reason for people to visit BBS/forum is to seek the answers of their questions, 93% of people think that’s key driver for them to keep visiting BBS.

The report found that Internet users in China are more social, because higher percentage of them are using BBS/forum and blogs than in US.

Online game is very popular in China, with 85% of Chinese Internet users playing online games and 43% of China’s game players playing games on mobile phones.

You can download a summary of the report (in Chinese) from Global Entrepreneur Magazine’s website.

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Two weeks ago, Giant Interactive, a major online gaming developer and operator, announced its $51 million investment in social networking site 51.com, and back to CHINICT event in May, 51.com already said it would offer web-based games to users soon, actually it has started to partner with 51wan.com, a leading web-game developer and a portfolio company of Sequoia China, to provide web games.

Yesterday Oak Pacific Interactive(OPI), the holding company of Xiaonei.com and Mop.com, announced an RMB 10 million acquisition of a game developer PeaGame. PeaGame develops four web-games. Currently OPI already operates a web-game called Mop Pet, it is said that it is generating several million RMB every month for the company.

Today Sina reported that Myspace.cn will launch online game business within this year.

Besides these, since Xiaonei.com, Comsenz’s UCenter Home and 51.com are all launching their developer platforms, we expect that more web-game developers will work on social game widgets to exploit the platform.

In China, online gaming is a sector which has proved that it can really charge users and get real money. Due to the characteristics of online ads market in China, it is not easy to monetize traffic of SNS by ads, so online games seems the way to go.

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To develop apps on MYOP, you need to register a user in MYOP’s website and add a developer app to manage apps you create. After your apps are submitted to and approved by MYOP, they can be run on every UCH-based SNS. Different from Facebook or Xiaonei, UCH-based SNS are distributed. So users of UCH-based SNS will be able to choose apps on MYOP freely, it is not like an add-on system which only site owners can choose what to install and offer to users. But a site owner still has right to manage a whitelist and blacklist for apps.

As we said yesterday, Xiaonei’s developer platform has many restrictions, and it is not open enough. However, MYOP is a quite open platform. According to its terms of service, generally you can develop any kind of application, as long as your app does not violate any applicable laws, regulations, copyrights, and etc. Developers can also monetize apps by adding advertising on their apps pages, and they need not to share those revenues with Comsenz. But apps should not add advertising on user profile page and newsfeed.

Just two months after UCH was launched, over 15,000 site owners have installed UCH to build their own SNS, which in total serve over one million users already. We expect to see more and more niche and vertical SNS appear in China, just as what you see for online forum in China. Therefore, MYOP has big potential to become a very important open platform for developers, let’s see what will happen three month later.

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When we talked about “open platform” idea in China before, we have some concerns about how open the platform will be, because most of Internet companies in China historically have a culture about control, not share.

After reading the terms of services of Xiaonei’s platform, we found that it is not a really open platform. According to terms of services, developers are NOT allowed to develop apps 1)which can link to website other than Xiaonei, or 2) which will lead users to register third-parties website or services, or 3)which have competing business with Xiaonei, or 4) which are related to recruiting services, online traveling services, music or photo album services.

Before Xiaonei updating its terms of services today, it even said that Xiaonei owns all rights of apps on its platform and all content generated in apps, and developers are not allowed to use apps they create on other websites. In today’s new version, Xiaonei finally acknowledge that developers retain all rights of applications they create.

Based on terms of services, developers or third-parties sites will not benefit from Xiaonei platform, because they are not allowed to leverage Xiaonei’s user base to develop its own users or to use advertising model for apps. So it is not an ecosystem, but a closed platform for Xiaonei.

Besides Xiaonei, 51.com also started closed beta of its developer platform, I still cannot find it in 51.com’s website. Comsenz also launched a developer platform for its distributed SNS software UCenter Home, I’ll write another post on it tomorrow.

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At the same time, Baidu recently partnered with Nokia to provide widget on Nokia’s Widsets platform. It is said the Widsets has over 4 million users in China already.

51.com raised $51 million: we reported in May that 51.com is closing another round of about $50 million, it is official now. The Nasdaq listed online gaming company Giant Interactive invested in $51 million to take 25% shares of 51.com. Therefore, game, esp. web-based games will be a very important feature of 51.com. It is said that Jack Ma of Alibaba was also very interested in 51.com, and make the same offer to the company, but Yuzhu Shi of Giant Interactive finally won the deal.

Fundraising of Ku6 and Youku: Ku6.com and Youku.com both announced new round of financing. Youku raised $30 million equity financing led by Maverick Capital and $10 million equity loan. Ku6.com is said to have raised $30 million in this round, and the details to be announced in next week. Ku6 also announced that it got the licence from CCTV to broadcast video clips on Beijing Olympic Games.

Youku and Ku6 were both founded by former Sohu managers. Youku was started by ex-Sohu COO and president Victor Koo, and Ku6 by Li Shanyou, who began his career at Sohu in human resources but ended up as a senior vice president and Chief Editor at the time of his departure in mid-2006.

Check Kaiser Kuo’s post for more information.

Telstra buys stake in Chinese vertical portal: Australian telecom operator Telstra announced that it has acquired 55% stakes in both Norstar Media and Autohome/PCPop. These two companies both operate popular vertical portals on IT and auto information. Norstar operates IT168.com and Che168.com, while Autohome/PCPop operates Pcpop.com and AutoHome.com. Besides Telstra, CNET China owns several IT vertical portal and an auto information vertical portal xcar.com.cn, PConline.cn, a Hongkong listed company, owns PCOnline.com.cn and PCAuto.com.cn. In 2006, Telstra acquired a 51% stake in Soufun, a real estate vertical portal, for $254 million.

Event: Entrepreneur 27 Singapore Unconference: Entrepreneur 27 Singapore will be organizing the 5th Unconference on the 12th of July 2008. The event will start off with a pitching session, followed by breakout sessions which comprises of 4 simultaneously running tracks. Check out the unconference site for more details.

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