This is a presentation made for a seminar organized by EU-China exchange program. It replied three questions. 1- why look at China? 2- What online media brings to China? 3- Sources of innovations?

1. China’s Innovations on the Web
Learning from China’s new media
Yiqun Bo, Consulting & Research Manager | +8* | www.plus8star.com
The China Media Landscape| EU-China | August 2009

2. 薄益群
BO Yiqun
Clément

3. www.plus8star.com

4. Cross-Market Consulting
Mobile & Internet Innovation
China | Japan | South Korea

5. 29 events | +100 speakers | +3,000 members | ~1,500 companies

6. Agenda
1. Why look at China?
2. What does online media bring to China?
3. Sources of innovation?
4. Some examples

7. 1. Why look at China?

8. #1 market in terms of users
Source: Internet users Penetration Mobile users Penetration
Plus Eight Star,
2009.4
million % million %
China
300 24% 640 49%
US
225 73% 260 85%
Japan
100 >70% 110 >80%

9. Chinese Internet Players Enjoy
Higher Margins than Global Peers
Source: Operating Margin Company Operating Margin
Plus Eight Star, 2009.4
Chinese American
NetEase 62.1% eBay 24.3%
Alibaba 39.7% Google 30.4%
Tencent 45.4% Yahoo! 0.2%
Sohu 38.2% Amazon 4.4%
Shanda 40.4% IACI -4.3%
Baidu 32.8% EA -13.3%
Sina 20.2% VeriSign 7.4%
Ctrip 27.7%
51job 11.2%
Average 35.3% 7.0%

10. China’s media market is catching
up with the west
Year 2008 US China
(source: Plus Eight Star, 2009.4)
Ad market (bln USD) 293.3 29.5
Ad market YoY growth 3% 15.9%
Online ad market (bln USD) 25.8 2.5
Online ad market YoY growth 21.7% 60.4%
Online ad / Total ad market 8.8% 8.4%

11. Baidu: Box Computing
User requirements
Box
User behavior
Semantic analysis
analysis
Sentences describing happiness
Human-computer
Massive computing
interaction
• Decomposed into 20 semantic elements
• 300 mln times computing
Internet applications
• Search in 10 bln WebPages (Search, Game, Online shopping,
Virus scanning, etc.)
• Deliver result within 1/10 second
• Deal with 1 bln this kind of requests per day
Open platform

12. Part 1 Conclusion
1. Why look at China?
China has the world’s largest online
population and is catching up with the West,
sometimes even leading!

13. 2. What does online media
bring to China?

14. 9% 49%
GDP Internet

15. China Internet/Media:
Enjoying the Highest Margins
Average operating margin (2008E)
Note: e = Morgan Stanley Research estimates
Source: Morgan Stanley Research, 2008

16. “Mice Love Rice”

17. Backdorm Boys

18. Enjoy the Olympics online
Time: 19:56
PV: 2,601,435
Replies: 2,649
Quote: “I am so excited about the drummers,
the view is so grand that I cannot type.”

19. MSN rainbow signature
• MSN and Toyota donated to
the relief efforts that took
place after the Sichuan
Earthquake on May 12, 2008.
• 6,216,469 MSN Messenger
users participated in the
campaign.

20. Internet as a channel for collecting
disaster relief donations
The symbol of online benediction launched by QQ,
32,754,656 QQ users participated in the campaign.
Taobao.com homepage
promoting the donation
41 mln RMB from Alipay and Tenpay within 10 days

21. Grey websites and no commercial
ads for Mourning Day

22. People seeking 2.0

23. Part 2 Conclusion
2. What does online media
bring to China?
Internet not only creates heroes, but is largely
impacting the China’s society as well!

24. 3. Sources of innovation?
5CTM of Chinese innovation

25. 1. Copy
5CTM of Chinese innovation

26. “Benchmarking”
“Inspiration”
“Best practice”
“If I have seen farther it is only by standing on
the shoulders of Giants.”
(Isaac Newton)

27. A quick look at Germany …
vs.
vs.
vs.
Source: Web2Asia

28. Rest of Europe …
Largest SNS in France
Largest SNS in Spain
Most popular website and SNS in Poland/
Most popular website and
Search Engine in Czech Republic
Largest SNS in Finland
Largest SNS in the Netherlands
Source: Web2Asia

29. 2. China
5CTM of Chinese innovation

30. China is learning from the West
2008| 179,800 students abroad
1978-2008| 1.39 million students
390,000 returned to China

31. China’s local features
• Unbalance of development
– 1st tier cities vs. 2nd / 3rd tiers
– Urban vs. rural
• Single child policy
• Internet café
• Entertainment-centric

33. Attention threshold
=
1 billion dollars?

35. 3. Combination
5CTM of Chinese innovation

36. Will it blend?

37. Tencent (1998)

38. Registered users

39. Revenues 2008
(E)

40. Profit margin 2008
Note: Mixi, Gree and DeNA are Japanese social networks. Both Gree and DeNA are purely mobile.

41. Market Capitalization
(August 2009)
27 bln

42. 4. Competition
5CTM of Chinese innovation

43. What happens when you have
20 YouTube
10 MySpace
5 Match.com
4 Facebook
3 Yahoo
…
4 Twitter

44. 5. Constraints
5CTM of Chinese innovation

46. Low GDP/capita
Small transactions / making millions from cents

47. Limited advertising
Alternative business models / B2B toB2C

48. Few credit cards, Low trust
Alternative payment systems, escrow system,
mobile, virtual currencies

49. 4. Some examples

50. Lihua| Order food over IM

51. Alimama| Ad exchange + Micro-retail

52. Babytree| Vertical for young parents

53. Qifang| P2P Micro-lending

54. Taojianghu: convergence of SNS
and shopping
• Beta launch: Mar 31, 2009
• SNS with regular features
for all of Taobao’s buyers
and sellers (about 100 mln
in total)
• Upgraded from community “Favorites”, “Votes” – two key points of Taojianghu
service inside Taobao.com representing online shopping guide features
• Two strong shopping guide
features: Two applications with strong gaming features to
• Favorites: “my accelerate popularity and stickiness
favorites” and friends’
favorites.
Taojianghu: SNS within Taobao.com
• Votes: online survey
system.
• Gaming applications

55. Ucenter Home: “Facebook” maker
An English learning SNS
• Long tail in SNS
• Thousands of thousands of
standardized “Facebook”
• It’s free!
Powered by Ucenter Home
URL: http://home.ebigear.com/network.html

56. Contact Us
www.plus8star.com
boyiqun@plus8star.com
boyiqun +81 | Japan
+82 | Korea
bo_yiqun@hotmail.com +86 | China
Telecom & Internet
www.linkedin.com/in/boyiqun + Added Value
* High quality
www.slideshare.net/plus8star

57. About +8*

58. There are more ideas
outside your country
than inside
Tom Kelley
CEO, IDEO
The 10 faces of Innovation

59. About +8* | “Innovation Arbitrage”
• About us
– +8* | Plus Eight Star is the leading cross-market and cross-cultural consultancy in Asia.
– We provide local expertise & global perspective on mobile and Internet innovation from
China, Japan and South Korea to add value to and accelerate the development of our
clients’ businesses.
• Our services
– Analysis of proven best practices and business models from Asia
– Other services: executive study trips, market entry strategy, M&A advisory, partners
identification, negotiation support.
• Founder & CEO: Benjamin Joffe
– 9 years experience with mobile & Internet in Asia
– Selected among “China’s Top 100 mobile industry influencers” in 2007 and 2008
– Regularly quoted in international press and keynote speaker at numerous telecom and
Internet events
– Fluent in English, Japanese, French with working knowledge of Mandarin, Korean and
Spanish

60. Our Clients
EUROPE USA
ASIA

61. Selected Projects
• Adidas | E-commerce and mobile commerce market analysis and strategic
recommendations for China, Japan & Korea
• Bouygues Telecom | Cases studies of leading Asian Web 2.0 services and virtual worlds
• Deutsche Telekom / T-Online | Benchmark of Korean mobile & Internet convergence
strategies
• EU-China Information Society | Research on e-commerce and virtual worlds to support the
regulatory dialogue between the EU and Chinese authorities
• Microsoft | Analysis of Japan’s key players and market catalysts for mobile commerce
market positioning in China
• DeNA | Benchmark of leading SNS in China and South Korea (DeNA operates Japan’s leading
mobile social network)
• China Mobile | Benchmark of Korean leading online communities
• Sands Capital Management | Evaluation of investment opportunities in social networks in
China
• MIH / NASPERS | Analysis of leading online verticals in China (MIH is the largest shareholder
in Tencent, China’s leading online community)
• IMVU | Benchmark of monetization and engagement best practices in Asian virtual worlds &
SNS (IMVU is a leading US-based 3D virtual world & chat)

62. Social Contribution
• Mobile Monday Beijing
– Founder of the Beijing chapter of Mobile Monday, the leading global network of
mobile industry professionals.
– 30 events inviting over 100 speakers and attended by more than 3,000
professionals from the telecom value chain.
• Media
– Quoted regularly by various news and research outlets such as
The Economist, CNN, Ad-Age, Asia Venture Capital Journal, etc.
– Monthly column on Asian innovation with the leading Chinese business
magazine Asian Business Leaders and news site Interfax.
• Speaking engagements
– Regular keynote, speaker & moderator in IT, Media & Investment events.
– Selection of speaking engagements in 2008/09
• PICNIC (Amsterdam), Lift Asia (Jeju, Korea), Infinity Ventures Summit (Sapporo, Japan),
Ad-Tech (Shanghai), O’Reilly’s Graphing Social Patterns (Washington, D.C.), eComm
(San Francisco), Red Herring Asia (Hong Kong), Asia Venture Capital Forum (Hong
Kong), China Mobility International Summit (Beijing), Media 08 (Sydney), Wireless
Developer Forum (Beijing), Open Web Asia (Seoul), XMediaLab: Virtual Worlds
(Seoul), Mobile Monday Global Summit (Kuala Lumpur, Helsinki), ITU Asia (Bangkok),
EU-China Virtual World Conference (Beijing), Startonomics (Beijing), UnConference
(Singapore), BarCamp (Shanghai), Mobile 2.0 (Paris), La Cantine (Paris), Mobile Focus
(Stockholm).

63. Published reports
• Inside Tencent
– #1 online community in China
– #1 profitable SNS in the world
– Free sample available to download in +8* website
• Inside Cyworld
– #1 online community in Korea
– over 30% of South Korea’s population, and 90%
of Korean netizens in their 20s have a personal
page on the service
– Free sample available to download in +8* website
• Inside Alibaba (coming soon!)
– #1 e-commerce empire in the world

64. Thanks!