Event Report | AmCham China: Under the digital influence (1st panel transcript)

+8* China EventsPublished September 23, 2007 at 1:48 am 1 Comment

Panel: Decoding China’s Internet Scene (AmCham China event)

Four experts provide the big picture on what’s happening online in the world’s largest market. The panel will cover trends, myths and realities, and advice in regard to understanding the online environment.

Panelists

• Micah Truman, CEO of Wanmo Performance Advertising
• Andrew Lih, former new media academic at Columbia University and Hong Kong University now authoring a book about online collaboration
• David Wolf, CEO of Wolf Group Asia, author of high-tech site siliconhutong.com
• Matt Roberts of About.com, former chief representative of Dow Jones China and long-time member of the chamber’s Media & Entertainment Forum (moderator)

(1) Trends of China’s Internet

DW | Mobility (mobile, open WiFi, WiMax), OLPC
MT | e-commerce about to go absolutely nuts, starting on the C2C side. The way of doing it in China will be different from other places. 10 years ago: pornography and online gambling, rest was hobby… As first two are forbidden here the way of development will be very different
AL | Lots of SNS shut down recently due to content and ICP issues. Many Web 2.0 lookalikes in China (Facebook, Twitter, YouTube, etc.). Three main things:
• API opening (Yahoo, Facebook, etc.) not so strong in Chinese market
• Free content: not so strong because limited access to content (e.g. Wikipedia) possibility of mashups limited
• Databases: for example, mapping is still limited because sensitive issue
Also, gaming strong and studios are now creating original products.

(2) Is the government control influencing a lot the development of China’s Internet?

DW | Net nanny leads to self-censoring. But where is the real innovation? Are localized versions of Western sites really the best for Chinese users?

(3) Does the lack of innovation have to do with the lack of IPR?

MT | Internet has developed in China with efforts for government control, but today people can largely see what they want to see. As for innovation, Baidu is a search engine with the similar revenue model, but algorithms and business models with ads have been tuned and repurposed. All US champions are being beaten by local companies more able to repurpose the services than they are.

(4) Is blocking Internet information holding back China’s Internet development

DW | Not stopping, but a slowing effect. Govt. response:
• Ignorance: govt does not know what is going on
• Fear: “let’s shut it down!”
• Experimentation: “maybe we over-reacted, let’s open a bit and allow a bit of experimentation”
• Accommodation: still some back and forth going, but largely forward movement
Today, govt may be seeing something healthy in this Internet activity
AL | About Wikipedia: at the beginning was open (ignorance stage), then blocked 18 months ago. After some reopening, it is now really hard blocked. Gave opportunity to Baidu Zhidao (with ICP license).

(5) How about User-Generated Content?

DW | Problems for access: girls, games and stuff from Pentagon. But chunk of content not accessible will likely shrink.

(6) Where is the profit on the net?

MT | White collar: 16 million people. Anybody who can address a sub-group (“women buying luxury goods”, “women who just had babies”) has a good business. Anybody who can find a way to monetize younger people, 15, 16yo, getting a little revenues from each can bring large revenues as well.
AL | We discussed at BarCamp the strong power of having IM / applications running on the desktop. Online gaming also good potential (console gaming banned for now, online gaming restricted for below 18).
DW | People who want to make money on the Internet: e-commerce – people now have money and are comfortable doing things online. Second, entertainment, with a subscription model is much better. Motorola showed with a music store that there was a market and people willing to pay. 3,000 screens for movie in China and TV sucks, so people are looking for other things.

(7) Where are the best places to advertise online?

MT | CPD: cost per day is the standard for the Chinese market. Very similar concept to a magazine. The reason why a large portal with 8 pages to scroll down is because it’s easier to sell for salesmen. In China we have 0.1% CTR. The online ads is mostly “branding” and not clicks. The second tier sites with strong vertical power & Alexa top 500 cannot sell because not enough cachet. They have 60% inventory because too young…

(8) How about China Mobile and mobile Internet? If a company wants to start mobile Internet service, do you think there is a possibility outside of operators’ network or influence?

DW | Some large companies (Nokia, Motorola) could give direct access to services.

(9) How about blocking for economic reasons rather than politics

MT | Various ways to block, but largely for politics
AL | Some blocks are related to content CNN, BBC News, etc. Not many long-term blocks for competitive reasons.

(10) Success factors for local players vs. foreign players

MT | Foreign players have a very good chance if they can be extremely local, with local management, local strategy.

(11) What is the cost of censorship for the government?

AL | The salaries of 20,000~30,000 people working on it.
DW | Blocking becoming more precise, so better. Not all censorship is necessarily a bad thing. There is social value around content blocking, and the debate is also going on in Washington.