The Evolution of Dragon's Web: Copy-to-China, Reformation, Innovation and More

According to the latest report from CNNIC, we surely see a huge potential on web and mobile market in China. A Massive Market might be the most common description for the Dragon’s web. :

• 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!