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China Research Report

China Research Report. June 2007. China Office. http://trac/wiki/InternationalTeam/China 1 employee: Reno Peng We’ve been busy setting up the legal structure, establishing our physical office, and doing research on not only the China SNS market but also Japan, India and Korea

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China Research Report

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  1. China Research Report June 2007

  2. China Office • http://trac/wiki/InternationalTeam/China • 1 employee: Reno Peng • We’ve been busy setting up the legal structure, establishing our physical office, and doing research on not only the China SNS market but also Japan, India and Korea • http://trac/wiki/InternationalTeam/ChinaReqts • http://trac/wiki/APAC

  3. Executive Summary • China SNS Hot, but Internet Advertising and e-Commerce Weak • Total 200+ SNS, $100M+ USDfunding, 19 SNS in China Top100, 12 in Alexa Top500 (10 clones of YouTube, 2 of MySpace) • 2006 Internet Ad Rev : China $750M USD (YoY 44%+) vs US $16.8B USD (34%+) • Easy Public Networking Features and Mobile Hot • Flash not a problem: Broadband penetration 75.9%, among which Webcam 60% • Easy Features Facilitates Networking: Social Reference Links, Visit Trackback • Mobile Hot: heavy SNS usage, WAP penetration at 13% • No Real Geni Competitor Right Now, but Cloning Fast, but Innovation Low • BabyTree.com offering Parenting Networking, growing fast since launch in March 2007 (see appendix) • Jzoom.com cloned Geni/ Genebase, but too weak w/ little $; 2+ genealogy sites trying Family Networking (see appendix) • Chinese Family-Oriented, but See Limited Value in Genealogy • Little genealogy discovery value: 72.1% Internet users young than age 30s • Family communications not hard: Mobile users 487M, 38% of China population • Genealogy research limited, but many records lost during Cultural Revolution; only tracked male side • Privacy Concerns Significant; Users’ Main Activity is Entertainment • Real Name % < 10%, users fear of being spammed instead of ID theft

  4. Agenda • China Internet background • China SNS status • Top10 SNS Research Methodology • Top100 Websites • Top10 SNS • Key findings on success of Top SNS • Successful features of Top SNS • Issue in China and Next Step

  5. China Internet Summary: Hot industry, Huge user base, Entertainment the #1 Application • Infrastructure Solid • *Penetration: broadband 75.9% (104M), among which webcam 60%+; WAP 12.4% (17M) • User Base Huge, but Quality Low, Entertainment is #1 purpose • *72.1% young users (<=30s), out of total 137M users (10.5% of population, YoY 23.4%+) • *Key usage: 65.9% News, 62.2% Game, 56.5% Multimedia, 53.5% Entertainment, 43.2% (60M) Community/BBS, 44.8% on Email, 44.1% on IM • Privacy Concerns Huge and Real Name Few • “Users aren’t serious on most Web2.0 sites, not to say on traditional ones, and just play around not doing real work, usually don’t use real name, not seriously treating SNS as well” --- Keso, #1 China tech blogger • User fear of being spammed instead of being stolen of ID • Innovation Low, Cloning Fast • Contents eye-catching on celebrity gossip and porn-like multimedia • YouTube clones are featuring gossip on homepage & portal ad to bring up traffic • Gouzai.cn 2 times tripled traffic in last 6 mons since launch • Features complex, times of clicks relatively high • but features itself doesn’t matter too much to the site’s popularity when it catering for users’ swank mentality • Design busy, only to 1) show plentiful/substantial content 2) reduce times of clicking for fearing of losing users • $ mostly spent on 1) strengthening servers to facilitate many resource-consuming features 2) branding • Internet Ad and e-Commerce Weak • *2006 Ad Rev: $750M USD (YoY 48.9%+) vs US $16879 USD (YoY 34%+) * Source: CNNIC, iResearch

  6. China Web2.0 and SNS Summary • SNS Hot in Size, Low in Profit • Total 200+ SNS, $100M+ USD VC on 16 SNS (total VC pool: $5B+) • User Base of Top3: 51.com 60M, Tudou 18M, Wangyou 10M • 10 clones of YouTube, 2 of MySpace and 2 of Facebook in Alexa China Top100 sites • 19 in China Top100 (19%), 12 in Alexa Top500 • Biz Model a Problem • Estimated Market Value: $45M USD ($21.75M on Marriage/Dating, $23.25M on Others) • Several purchase, but No IPOs like Mixi in Japan, XING in German • Tencent Dominates IM and Accumulated Huge SNS Potentials, All local SNS Face This Pressure • IM (QQ) Market Share 84.4%, 70M+, among which 9.95% shared w/ MSN • QQ.com the #1 Community for Entertainment • Biz Models Hard to Find in China SNS • Most offer Advertising but Rev Low • Few offer Premier Membership or Virtual Goods

  7. 1. Leads generation: -Scan each site and mark its Category, SNS attributes, US equivalent, Function description -Select each category’s top2 Alexa China Top 100 Websites 2. Experience and deep dive: -Explore key features of each -Summarize key differentiator of each, as well as find User# and Funding$, thro blogs/industry or VC event news Top 10 SNS Individual Research Final Report 3. Summarize: -Distill key success traits from Top10 SNS -Distill key indicator from CNNIC 2007 report -Analyze SNS market status Top SNS Research Methodology

  8. Top 100 China Websites per Alexa

  9. Top 5 Chinese SNS Also track key features, financing, team background, and other notes

  10. Rest of Top 10 Chinese SNS

  11. Love21CN MSN CN/ Sina 56.com NetEase Youku/ Ku6 Baidu Key reasons for Top SNS’ success • Focused on Entertainment as User Demand • All Top10 are offering featured entertainment content thro public features • Not Requiring Real Name Registration • Built a Hot Community • Small but Frequent Product Innovation Helps 1st Mover Secure User Stickness, but Low Brand Loyalty • Facebook clone Zhanzuo, YouTube clone Tudou still have biggest daily PV in category • First Mover Clone from US Help To Boost Traffic Fast • New Marketing Idea Helps To Boost • Wangyou: Video competition • Zhanzuo: ‘Occupy Deskmate’ • Douban: Social Recommendations • Wealink: Forward Listings to Connections • 56.com: Picture Slideshow • Partnership w/ Influential Resources Helps To Dominate Market • Zhanzuo & Xiaonei both have strong relationships w/ universities and ministry of education • Wangyou partners w/ TV/Radio Stations • Rich $ Funding Affords for Server Improvement • Partnership w/ Big Portal Helps To Boost Traffic and Attract New Sign-Up

  12. Free Public Easy-to-find Networking Features Hot in Top SNS Who recently visited you • Hot Public Networking Features Facilitates User Activities • Visit Trackback/Pingback - who recently visited you • User-Generated Social Recommendations Link or Site Recommended Link by user tastes and activities • ‘Occupy Deskmate’ - recommend or make user partners to increase networking opportunity • Hot List of discussion/featured items • Tag Weight • Copy-paste-able Viral URL/Widget • Other Hot Private Features • News feed (Facebook-like), News push (forward-able sharing/wanted listing) • Feeding Personal Listing/Blog • Network location/distribution statistics (LinkedIn-like) • Interactive Wish List • Lunar Calendar & Fortune Prophesy People in this group also interested in the following groups Zhanzuo ‘Occupy Deskmate’: today they two are ‘deskmate’ People who love this item also interested in the following items Recommend or make user partners to increase networking opportunity Kijiji: Fortune Prophesy w/ Lunar Calendar Tudou: today his and her interest matches

  13. Hot Networking Feature: Visit Trackback and Trackback Widget Widget of this feature for other blog/viral usage Who recently visited you

  14. Hot Networking Feature: Reference/Recommendation Link People in this group also interested in the following groups People who love this item also interested in the following items Recommendation based on your activities and interests He and she shares same interests in these content News feed of other users/friends

  15. Issues in China for US Internet Companies • Performance • Global decision making and global product • Microsoft, Apple, Yahoo, eBay, Google… • MySpace CN has been granted local control • Crazy competition • Cloning • PR may not be enough; may need marketing to build brand • Limited revenue opportunities • Government regulations

  16. Appendix

  17. 2.7 % Beijing 2.0 % 3.4% 1.2 % 3.5 % 1.1 % Tianjin 1.9% 4.6 % 2.8 % 0.3 % 8.2 % 0.3% 1.1 % 7.5 % 3.8 % 2.9 % Shanghai 0.1 % 2.5 % 3.9 % 3.7% 5.0 % 7.1 % 2.1 % 3.0 % 3.7 % 1.0 % West China 2.0 % 13.4 % 17.2% 2.7 % Coastal China 57% 0.9 % China Regional Focus Can Vary Distribution of Chinese Internet Users • Geographical concentration • Chinese users concentrated in coastal areas (57% of total, 2006, CNNIC) • Top 4 cities contribute 50% plus of advertising sales • Top 5 cities accounted for 60% of Ctrip’s hotel sales and 80% of its air ticket sales volume, 2004 • Geographical dispersion • IDC estimates that 80%+ of online gamers came from non-top tier cities (2003) Source: CNNIC

  18. China Internet User: Young men of high education Level accounts for big percentage 17.2% (<= 18yr-old) = 85.21% teenage 66.53% of their parents surf

  19. Internet Usage more on play and Communications ways can vary Communications ways among typical users Blog BBS MSN IRC QQ Email

  20. China Market Monopoly of Instant Messenger: Tencent, no public API Penetration by city market share (others) (others) Office user distribution & market share High-level user distribution & market share

  21. (General Community) Top Community sites weekly ranking & volume change from iWebChoice*/Alexa Category Ranking among All China Sites Tianya.cn Mop.com Zhanzuo.com, more focus on Alumni/Campus Networking (Blog Service Provider) (Video Sharing) 2 Reach weekly Reach 3 mons ago 3 mons change PV 3 56.com (Friendship) tudou.com 1 Youku.com Wangyou.com Pomoho.com iPart.cn Ku6.com, part of volume colluded from mumayi.net, a life SE (Alumni Reconnecting, non-SNS by 07Q1) ChinaRen.com (Biz Relationship Networking) (Marriage/Dating, little-SNS) Love21cn.com Traditional Community Cheating Suspicous Hot SNS Notes SNS rank * iWebChoice.com is a subsidiary of iResearch.com, a MR, in China 1

  22. BabyTree.com

  23. Jzoom.com

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