I think no one likes to be censored, and that includes me. But sometimes, you can’t have total control over everything, especially when you are doing business in another country. When it was uncovered that Line is ready with filters to prevent the sending of politically sensitive words for the Chinese version of Line (branded “Lian Wo”), the natural reaction of most people was that it is a bad thing.

I thought so too. But when you cover or work in the Chinese internet industry, censorship slowly becomes the norm. It’s common practice in China, across the internet and all offline media, that you self-censor first so that you don’t even trouble the censors. If you don’t want to follow this rule, then get the hell out of China. Run far away.

Now, let me repeat that I’m not a fan of censorship. But at the same time, after complaining about why the hell China blocks certain websites and has certain restrictions, I’ve grown to understand that every country has its own rules and you have to obey them to conduct business there. Period.

So would Line be wrong if it were to really censor politically sensitive words in China? That word filter within the Line app is not yet switched on, but it’s ready to be activated. I personally don’t think Line is wrong because the company has simply followed the rules of the country and the censorship will only apply to its Chinese app. I’m sure there are people who disagree. If you are one of them, kindly share your thoughts in the comments.

China’s first tech IPO of 2013 is still in the works as the global B2B e-commerce platform LightInTheBox seeks to hit the New York Stock Exchange tickers. Now Beijing-based LightInTheBox has adjusted its IPO plan slightly and is looking to raise $100 million dollars – a rise from the earlier scope of going up to $86 million.

Aiming to list as NYSE:LITB, LightInTheBox’s new form F-6 filing with the SEC also shows that the company, which helps small business around the world source things directly from Chinese manufacturers, hopes to debut at between $8.50 to $10.50 per share.

LightInTheBox, whose primary competitor is Alibaba’s B2B global sourcing site, says it has 2.5 million users and pulled in $200 million in net revenues in 2012.

LightInTheBox has been invested in by Zhenfund during its growth stages. It has assigned Credit Suisse, Stifel, Pacific Crest Securities, and Oppenheimer and Co as its underwriters.

Chinese hospitals are, to put it mildly, a bureaucratic nightmare. Just checking into one generally involves, among other processes, waiting in line to take a number and often also waiting in another line to pay for taking that number. Monster e-commerce site Taobao was attempting to take some of the sting out of that with a new service launched earlier this week that allowed customers to book numbers and in some cases also pay online. But yesterday, after just three days open, the service was shut down in Beijing by the city’s health department on the grounds that healthcare is an issue of “public interest” and thus ‘take a number’ services should be non-profit. It also suggested that providing health information to a third party caused a potential information security risk.

That would be a compelling argument, except that many of China’s hospitals themselves aren’t even non-profit, and even in non-profit hospitals there is often a fair amount of under-the-table cash expected from patients if they want to receive good service. Perhaps healthcare in China should be non-profit, but since it very clearly isn’t, why target Taobao for making money off of the convenience of online ‘take a number’ services when for-profit hospitals are profiting daily off of their patients?

One reason may be that the health office operates its own online reservation service and isn’t interested in competition. China’s Railway Ministry has responded similarly in the past, banning competitors and convenient hacks of its own online platform, so the Taobao ban really isn’t all that surprising.

What is surprising is that there has been a bit of pushback on the decision, even in the state-owned press. The People’s Daily, for example, carried a China Radio Network opinion piece titled: “The Health Department Has No Right to Speak for Consumers” that argues:

[The Health Department has suggested there's an information security problem] But everyone who uses Taobao knows that if Taobao leaks your personal information, you can demand compensation. As to whether consumers’ interests are hard, only consumers themselves can know that, and they don’t need some government department to speak for them. When consumers are allowed to openly rate public services as good, fair, or poor [like they could on Taobao], that will be a step forward, not a risk.

The Beijing Health Department says that Taobao is violating consumers’ interests, but no matter how you look at it the department is having itself make the decision instead of consumers, and avoiding the truth that taking a number [at Chinese hospitals] is very difficult.

And the comments from the internet peanut gallery are almost unanimously on the same page. “Shutting down such a good service; Health Department are you thinking with your asses?” wondered one commenter on Sina Tech. “What a pity,” wrote another. Some commenters pointed to the recent ban on taxi apps in Shenzhen as another example of the government squashing convenience and private industry to keep a tight hold on the sectors it oversees. There are a lot of cynical comments about Taobao’s service being banned because it takes some of the money that would otherwise go to the Health Department.

But can public pushback actually lead to a reversal of the decision? It’s certainly unlikely, but it wouldn’t be unprecedented. We’ll be keeping an eye on this to see if Alibaba and the collective internet hive mind are capable of pushing Beijing’s Health Department back in the opposite direction. (But don’t hold your breath).

The partnership between the two companies will have advantages for both. Ctrip has a large userbase, a strong reputation, and a lot of money, but it needs to build strength in mobile (though to be fair the company does already have a number of mobile apps). Fast Hotel Manager gets money out of the deal, obviously, but it should also get access to more of Ctrip’s large userbase, and judging from the low number of app reviews on the iOS and Google Play stores, it could certainly use more users.

It will be interesting to see where the two companies go from here, and whether there will be any integration or cross-promotion between Fast Hotel Manager and Ctrip’s existing mobile offerings.

(via TechWeb)

The new office will work to further localize and popularize WeChat, although with one million Malaysian users the app already has a solid foundation in the country. But it will also work to introduce new Tencent products to the Malaysian market, and it could even become a new source of exits for Malaysian startups. Tencent international business VP Poshu Yeung told the Malay Mail:

Tencent has conducted a lot of mergers and acquisitions around the world and we actively look for innovation as well as expansion opportunities.

So is this good news for Malaysian startups? It’s hard to say. Obviously, more capital in the region is a good thing, but Tencent has a well-earned reputation in China of copying startups’ ideas rather than acquiring them, and then using its massive war chest to bury the original product. And to be honest, we haven’t seen Tencent make a lot of acquisitions in Southeast Asia, so if I were a Malaysian startup, I might be a little wary of the arrival of this new office.

With that said, there’s no cause for undue paranoia before the office even opens, and if Tencent is publicly announcing its intent to look for innovation and potential acquisitions in Malaysia, then the door may well be open for Malaysian startups looking for funding or a potential exit. Whatever happens, it will be interesting to see how Malaysia’s startup scene responds to the presence of the Chinese tech giant once the company has finished setting up shop there.

(Malay Mail via TheNextWeb)

The century-old US luxury retailer Neiman Marcus launched in China very quietly late last year after investing $28 million in Chinese site Glamour Sales. But this week, in a major change in strategy, Neiman Marcus is closing its warehouse facility in China and scaling back its physical presence in the country.

Neiman Marcus’ Chinese site will remain online and in business, but as a Neiman spokeswoman told the WSJ, all orders will be shipped direct from America instead. The representative said this is “a better model” for the luxury retailer, and claimed not to be influenced by a recent slowdown in high-end purchases in China caused in some part by a crackdown on government corruption that makes grand displays of wealth a bad idea.

Despite the difficulties, Neiman Marcus has raised its stake in Glamour Sales at some point in the past year and now holds 44 percent of the luxury e-tailer.

The Neiman Marcus Chinese site – which stocks couture brands like Kate Spade, Helmut Lang, Valentino, and Jimmy Choo – will now ship items directly from the retail chain’s US warehouses. While that will create long shipping times and leave the site subject to currency fluctuations, it might offer some benefits. While Neiman Marcus didn’t outline what those benefits might be, it could mean actually being faster to offer new fashions and product ranges to Chinese consumers, no longer held up by local bureaucracy.

At present, the Chinese site hasn’t been updated to reflect the change in strategy and tells current customer that it ships from its Shanghai warehouse. It’s not clear when the US shipping changeover will happen.

Luxury e-commerce is a huge sector in China, principally covering couture clothing, fine wines, and curated travel.

(Source: Wall Street Journal)

Beijing’s air: Think of the kids (Image: Alamy / Guardian)

You’re an entrepreneur or working for a startup. You’re young. You’re about to have a family that you want to bring up in a nice, safe place. But you don’t have much money. For startups in China, Beijing is still the main tech hub – and that’s bad news. A report by a Chinese think tank this week called the nation’s largest cities “barely livable” in terms of general quality of life and the ecological environment.

Beijing ranked 74th among Chinese cities in terms of livability and 119th in terms of the freshness of its environment. Often cloaked in a smog of lung-wrecking particulates from the surrounding low-tech industrial belt, it’s a grim place to be starting out in life or with a young family. Other large cities like Shanghai and Shenzhen also scored badly in the list. The only large (called “first-tier”) Chinese cities to be deemed reasonably livable in this report are Hong Kong and Macao.

The capital adds to the woes of a young entrepreneur with a mandated car license plate lottery that makes it difficult to get your first ever car on the road. And for a roof over your head, you’re looking at rental or purchasing prices that are more than double that of smaller but equally well developed cities across China. To get on the property ladder for the first time, a small-ish two-bedroom apartment outside of the centre of Beijing will cost RMB 2.5 million ($404,000), which you’ll have to somehow buy on your startup salary of anywhere between $800 to $1,600 dollars per month.

Think local

The alternative to all that lies in China’s smaller “second-tier” cities where the population is just a third or a quarter that of Beijing and Shanghai, and where property costs are half (or lower) than the nation’s top cities. They make for a better place to recruit and keep twenty-something tech talent. In terms of creature comforts, these other cities are not lacking in any way – many have subways, Starbucks, Louis Vuitton stores – and offer fresher air and more greenery for families.

These cities – such as Hangzhou, Chengdu, Xiamen – also have business environments that rival Beijing. Admittedly, it wasn’t always that way. Kerry Sun, a senior partner manager at Pinguo, the startup that makes the hugely popular photo app Camera360, lives in Chengdu in south-western China’s Sichuan province. That’s where the young company has always been based. Kerry says that startup life over 1,700 kilometers from the capital is getting easier now:

Several years ago we found some problems being outside Beijing or Shanghai, such as how to get the latest IT information and where to finding experienced staff. Now everything is getting better. More programmers are coming back to Chengdu because of increasing pressure in Beijing or Shanghai.

Recently the Sichuan government keeps introducing policies to attract startups, such as no tax for the first five years or rent the office to them for free.

While Pinguo didn’t get it that easy, such smaller cities are now more receptive to entrepreneurial web firms. The Camera360-making team is now based in Tianfu Software Park in Chengdu alongside other notable local companies such as game studio Tap4Fun. “In my opinion, Chengdu will be another Silicon Valley in the southwest of China,” adds Kerry, who can also count tech giants like IBM, Intel, Huawei, and Tencent as neighbors in that area of Chengdu.

Bye Bye Beijing

Where are China’s startups? Click to enlarge.

While Beijing’s awful livability index doesn’t dint its business or intellectual prowess (plus, Beijing residents are fantastically friendly, which adds to the enjoyment of visiting), the new report (from the National Academy of Economic Strategy under the Chinese Academy of Social Sciences) will give more momentum to a gradual shift away from starting tech companies in the capital. From 2011 to 2012, the percentage of Beijing-based startups listed on the comprehensive 17Startup directory went down from 49.7 percent to 43.9 percent. We’ll add up the numbers again later this summer when we expect to see that figure shrink again.

Instead of starting up in the same city where an entrepreneur graduated – or in the city with the most prestige – it’s increasingly fine for someone to return to their native province in China. Being outside of the hub is not a barrier to getting significant funding in China either. Pinguo’s Kerry admits that CEO Xu Hao needs to fly to Shanghai or Beijing from time to time to meet investors, but that distance is no deterrent for VCs. Kerry says, “I’ve worked in three IT companies so far [in the region] and all of them got investment from VCs”. Pinguo itself has attracted funding from Singapore-based Gobi Partners and US-based Matrix Partners.

Increasingly, big business is heading out to the provinces as well. Next month, the Fortune Global Forum 2013 will be held in Chengdu.

Perhaps we should have seen this coming much earlier. China’s most profitable web company is Alibaba, the e-commerce and e-payments giant. It is based in Hangzhou, Zhejiang province – about one hour out of Shanghai on the new bullet trains – which is a pleasant city wrapped around a famously beautiful lake with a population of just nine million (just medium-sized by China standards). Why that city? It’s the hometown of founder Jack Ma, who decided to stay put in the city when he quit teaching to build his e-commerce business. Being far from Beijing was never a hindrance for Alibaba, and now the firm’s presence and status is causing more e-commerce startups to launch in the city. Plus, the city scores highly in terms of livability and the environment, with tree-lined streets and a fresh breeze always blowing across the lake.

While those working in Shanghai and Beijing do get double the wages of workers in these second-tier cities, the pay off is not really worth it. It’s fine for those on corporate jobs who can avoid some of the rougher aspects of Beijing’s over-population and griminess, but for the average white-collar worker at a startup, it’s a miserable start to one’s 20s.

Huang Hui, a 27-year-old software engineer from Beijing told the China Daily, after reading about the report:

Beijing has the best medical, academic resources compared with other cities, but it’s not necessarily the best choice when it comes to being habitable. I’m proud of the cultural diversification in the city, but it’s a pity that Beijing sacrifices the most basic essentials, air and water, simply in exchange for all the rapid development.

But with 13 percent of Chinese startups being based in smaller cities in Zhejiang, Sichuan, and Jiangsu provinces, some have already found that the grass is greener if you avoid China’s usual tech hubs.

The department has not officially announced this move and declined to comment for the Southern Metropolis Daily story, but the newspaper received numerous reports of deletion orders from cab drivers in Shenzhen. Drivers were mostly notified of the change by their companies, but the article says that the reporter was shown a memo originating from the Shenzhen Department of Transport that says local cab companies must:

immediately begin thorough self-directed inspection and resolution for all drivers, order all drivers that have installed ‘cab finder’ software to uninstall it, and not to continue using it. If there are drivers who continue to use it, their dishonesty will be noted in their files and they will be entered for a quantitative evaluation.

The Department of Transport has also apparently been asking software developers to stop promoting these apps, according to one technology company in Beijing that said it had 4,000 drivers using its app in Shenzhen before the order came down.

The reason for the ban, apparently, is that the government is concerned these apps could “destabilize” the industry, leading to drivers refusing passengers or driving by them on the way to pick up app users. Since both of those things are fairly common anyway (despite the fact that they’re illegal), I can’t say I sympathize much with the Department’s reasoning, and it’s obviously quite a blow to app developers that have put time and money into promotions in the city.

In fact, this is just the latest in a line of anti-technology, anti-consumer decisions from Chinese government bureaus that seem to be more about protecting the status quo than serving citizens or making life more convenient. China’s Railway Ministry, for example, has a long history of banning apps and services that attempt to make purchasing train tickets online easier, despite the fact that its website is terrible and its mobile app still hasn’t surfaced.

This is ridiculous. While I can understand why the Shenzhen Department of Transportation might want to regulate taxi apps, banning them outright without offering any kind of alternative is needlessly stubborn and backwards. In an age when many city dwellers have devices in their pocket that can pinpoint their location and the locations of nearby cabs, why should people be forced to rely on luck and arm-waving to track down an empty vehicle? And why should cab drivers have to drive around randomly in search of a fare when their phones could be notifying them of all the available nearby customers with pinpoint accuracy in real time? Wanting to regulate this technology is understandable, but shunning it completely is just idiotic, especially for a city that’s generally considered one of China’s most technologically developed. Shenzhen, what are you thinking?

(Southern Metropolis Daily via Sina Tech)

Some crazy things happen in the world of Chinese gaming. Rather than giving each its own article, from now on we’ll be trying to do a semi-weekly roundup of the craziest stories so that you can find all the madness in one place. Here’s what went down this week.

Chinese Model Battles Japanese Porn Star Sola Aoi for the Hearts of Chinese Nerds

How do you win the hearts of China’s otaku community? Step 1: Be super hot. Step 2: Pose naked with a giant rubber duck. That’s the approach Chinese model/actress Gong Yuefei took for the photo shoot pictured above, which she said in an interview is part of her campaign to eclipse porn star Sola Aoi in the, ahem, hearts and minds of China’s gaming community. Gong says that as a homegrown “Calabash Baby” she should easily be able to defeat foreign “Ultraman” Sola Aoi.

Unfortunately for Gong, her ploy to play to the hometown crowd seems to be a bit too on the nose, and in the comments on QQ games several readers point out that it was porn videos, not sexy photo shoots, that originally won Sola Aoi the adoration of Chinese gamers. And while Gong’s photo shoot is pretty damn porny (so much so that the link below is probably NSFW), she can’t go so far as to do actual porn because that’s illegal in China.

(via QQ Games)

Gamer Attacks Owner, Police After Being Told He Can’t Live in Internet Cafe

Mr. Wang was on a gaming binge, and after three or four days straight in an internet cafe in Shanghai, taking naps by putting his head on the desk, he apparently figured why not just cut to the chase and set up shop permanently? He left and came back a few hours later with a pillow, comforter, and some daily necessities in hand, intending to become a more permanent fixture in the cafe. The manager, concerned that this would drive away other customers, immediately stopped him and asked him to take his sleep breaks in a local motel rather than on his keyboard.

Wang wasn’t into that idea, and immediately began arguing with the manager. The argument escalated to a shouting match, and then a physical fight as Wang began to hit the manager in the head with his fists. The manager fled to call the police and Wang went back to his game, but when the police arrived, they too suggested that Wang couldn’t live in the internet cafe, starting another argument. Wang refused to cooperate, and when an officer told him that if necessary, they could bring him by force to the local police station for questioning, Wang grabbed the man’s scrotum (seriously, you can’t make this stuff up) and pinched it, causing a minor injury.

Needless to say, the police subdued Wang and brought him back to the station for questioning. Ultimately, a judge decided that due to the injury he had caused during his attack on the police, Wang should be formally arrested. Luckily for Wang, he won’t need to carry around his pillow and comforter anymore — I’m pretty sure the prison will provide that free of charge.

(JusticeNet via QQ Games)

Gamer Fakes Kidnapping to Cover Up Card Overdraft

Earlier this month, Chongqing police were utterly baffled by a kidnapping case they just couldn’t seem to figure out. Over the course of a ten-day kidnapping that apparently involved taking the victim to an ATM and forcing him to withdraw cash, the kidnappers somehow managed to completely avoid appearing in any surveillance camera footage.

Ultimately, it turned out that this was because they actually didn’t exist. 23-year-old gamer Liu — the supposed victim of this kidnapping — had gone on a binge playing an online game called Shen Wu, and after charging 6000 RMB ($952) in the game and withdrawing another 6000 RMB for life expenses, Liu discovered to his horror that he now had an overdraft of nearly $2,000. He didn’t have the money to repay this on his own — he’d been skipping work to play the game — so he knew his only option was to go to his parents. But he also knew they wouldn’t be pleased to learn he’d blown so much on a computer game, so he invented the kidnapping story.

He didn’t expect that his mother would drag him to the police station and force him to report it, but that’s exactly what she did. And Liu’s rather specific story, which implicated a classmate named “Li Hongwei” in the crime and ended with Liu’s daring nighttime escape on May 12, fell apart under the scrutiny of a sustained police investigation. Needless to say, Liu is now in police custody.

(Chongqing Morning Post via QQ Games)

A week later, that question remains unanswered, as GREE’s proposed settlement has left many employees unsatisfied. One worker told the Beijing Times that part of the problem is that many employees put in massive amounts of overtime with the expectation that this dedication would be rewarded in the long run, and that GREE’s compensation plan doesn’t account for that. But a company spokesman told the paper that dissatisfied employees were a small minority of the total staff at GREE China.

But the real trouble for GREE from a PR perspective is that one of the laid-off employees is eight months pregnant. According to her, the loss of her job means the loss of access to pregnancy insurance she’s been paying into for ten years in addition to a maternity leave allowance, and GREE executives and the company’s lawyer have reportedly said they will not be offering her any additional support. (We’ve contacted GREE to see what they say about this and will update this post when we hear back from them). The woman says she has already filed a labor dispute with the relevant authorities in Beijing. A Beijing-based lawyer told the Beijing Times that GREE’s refusal to offer her additional support may violate Chinese labor laws, which make it difficult to terminate the contracts of pregnant women without offering significant additional compensation.

Whatever GREE ultimately decides (or is forced by the law) to do, the report has already damaged the company’s reputation. On weibo, the pregnant woman’s story has been reposted hundreds of times, and almost all the comments are in support of her rather than the company. It’s hard to believe that GREE couldn’t have seen this coming.

Frankly, whatever the law says shouldn’t matter much one way or the other; GREE stepping up to help out this woman ought to be a no-brainer, and I expect we’ll see it do that soon. Even if the law is on your side, it’s never good to bully a pregnant woman, and if paying for one birth and some extra months of maternity leave is what it takes, then GREE should just chock that up as part of the cost of shutting down its China office rather than trying to fight it in the legal system (and destroying its own reputation in China in the process).

(Beijing Times via Sina Tech)

Qihoo (NYSE:QIHU) already has a search engine and Alibaba already has a product search engine, so it makes sense for the two to work together. And that’s what they’re doing.

The tie-up between the two Chinese web giants effectively gives Qihoo a new shopping search option on its 360 Search site, which exploded onto the scene in China last summer. Thanks to Qihoo’s huge traffic from its established web browsers and web portal, Qihoo’s 360 Search instantly became China’s second largest search engine last year.

Basically, it looks to be just Alibaba’s existing eTao shopping search ported over to Qihoo’s site. That’s even evident in the URL 360.etao.com. So it’s not fundamentally new. But it means that Qihoo’s originally spartan search offerings (initially it had just ‘news’, ‘web’ and ‘video’) have now expanded to 11 options.

This partnership gives Qihoo access to everything on eTao, which is perhaps China’s most comprehensive product search engine. Though Alibaba itself has numerous e-commerce companies, eTao indexes content from nearly all of China’s e-stores, not just Alibaba’s own properties. It also gives Qihoo a big boost relative to its nemesis Baidu (NASDAQ:BIDU), which arrived alarmingly late to to this shopping search battle, only launching its own dedicated portal in February this year. ETao and other such sites have been running for years.

For Alibaba, this should be a big shot in the arm for eTao’s traffic and visibility.

Price comparison and shopping search sites are a big battleground in China, covering numerous startups and some other major web portal companies as well. Last year the startup site B5M raised over $7 million in series A funding to grow its own product.

(Hat-tip to Sina Tech (article in Chinese) for spotting this)

The many faces of Jack Ma.

Apparently retirement isn’t doing much to keep former Alibaba CEO Jack Ma out of the limelight, or out of the center of controversy. In a recent interview with China Entrepreneur, Ma was asked why banks are afraid of Alibaba, and this is how he responded:

Why are banks afraid? Because we’re doing it right. If [we] weren’t doing it right, what would they have to worry about? If you’re doing things wrong, you can do whatever you want, the bigger the better; either way it’s no threat to me. Am I worried about about what [Jingdong CEO] Liu Qiangdong is doing today? I’ve never even met that guy, he can do whatever he wants for all I care. If the banks start to target you, it’s because you’re doing something right. Ma Yuhua’s thinking on web finance is very true; it’s better to embrace than to resist, because you can’t resist the future. [Resisting e-payment] is like the cart drivers of old Shanghai smashing the taxi cabs when they began to appear. Did that work?

In other words, Ma is saying that Liu Qiangdong’s Jingdong (the artist formerly known as 360Buy) isn’t a threat to Alibaba at all. And while he didn’t put things very nicely, it’s hard to deny that what Jack Ma is saying is true. Alibaba services like Taobao and Tmall dominate the ecommerce market on the web, on mobile, and Jingdong is even further behind many of Alibaba’s other offerings, like payment service Alipay or music service Xiami.

(China Entrepreneur via TechWeb)

Image via Reuters

Like I said last week, it never seems to be good news for Huawei and ZTE, does it? The companies already stand accused in the EU of taking unfair subsidies from the Chinese government, and now the EU has opened second line of investigation in the form of an anti-dumping probe into the two Chinese companies.

Chinese Commerce Minister Gao Hucheng has already responded to the news, giving an interview to state wire service Xinhua in which he says the move would inevitably harm the interests of both sides and making finding a solution more difficult.

Elements on both sides are hoping to deescalate the situation with continued talks, but that looks increasingly unlikely, and the Telegraph quotes EU trade commissioner Karel De Gucht as saying: “We have already had three rounds of negotiations, but without any satisfactory outcome. It is better for the whole world economy to come to an amicable solution, but you need two to tango.”

But if a trade war is on the way, European companies may find they don’t like the way China does the tango. Late last year after ongoing negotiations seemed not to be shifting public opinion, China responded to American concerns about Huawei and ZTE and the potential security risk they pose by blasting American company Cisco in a full-on attack on the company in Chinese state media. It’s the trade equivalent of an eye for an eye: ‘if you smear our companies for security flaws, we’ll smear yours for the same thing.’

So if the EU really does levy trade duties on the Chinese telecoms and launch a full investigation into whether they’re violating anti-dumping regulations, is China likely to respond in kind? Very possibly. Several Chinese commenters on the Xinhua article have already pointed this out. “If you tax others, do you think they’re not also going to tax you in return?” wrote one. “No one takes a beating without trying to hit back,” wrote another. And there are several European telecommunications companies with interests in China that might be vulnerable to new trade duties or whatever other form of retribution China plans to bring to bear. Ericsson, Alcatel, and Siemens all have operations in China that could now be at risk.

The EU seems poised to fire the first shot, but whether or not the battle over Huawei escalates into a trade war will depend on where things go from there. At this point, China’s government is unlikely to ignore attempts to restrict or penalize Huawei and ZTE, but when it responds and comes to the aid of the companies it further reinforces the idea that they have closer ties to the government than they let on in public. Even so, China is unlikely to stop defending its largest and (in the case of Huawei) most internationally successful tech companies. And so, although no one really wants a trade war, one seems to be in the offing.

I wrote about this problem a while ago in the context of Huawei’s troubles with the United States; I think the mutual suspicion and distrust is so deep at this point that conflicts like this one are virtually inevitable. Huawei, ZTE, and China’s government have proved fairly unwilling to accept that other countries do have legitimate reasons to be concerned about some of their practices; at the same time, though, most other countries are so wary of China that any Chinese company looking to move abroad already has a significant competitive disadvantage. As time goes by, both sides seem to be willing only to dig further in, so I expect the high profile disputes like this to continue. That’s bad news for Chinese companies, and bad news for foreign companies wanting to do business in China.

The phone is, once again, rumored to be pretty powerful especially at its paltry $320 price point. In fact, if the leaked benchmarks are to be believed, the phone will once again be one of the most powerful handsets in existence. That probably won’t surprise Xiaomi fans too much, but music fans will be glad to know that the latest round of rumors also suggests a new “Mi Hi-Fi” feature. Exactly what that means or what it will do isn’t clear yet, but it’s meant to cater to music fans so if you listen to a lot of music on your phone it’s likely to be a neat new addition.

If leaked photos (like the one above) are to be believed, the new phone is also a tiny bit bigger and boxier than previous versions. But of course, all of this information should be taken with a sizeable helping of salt until we’ve heard the official word from Xiaomi about the new device.

(iMobile via TechWeb)

Parineeti Chopra and Varun Dhawan add star power to WeChat in India.

Early last month we mentioned that WeChat, the China-made messaging app, had 40 million users outside of the country. Today Tencent (HKG:0700) tells us that this global overseas number has now risen to 50 million registered users beyond China’s borders.

That 50 million figure is from a registered total WeChat user-base that will soon exceed 400 million. Of all those, the company said last week that 195 million are active on WeChat each month. It’s not clear if these overseas users are more or less likely to be active on the social messaging app.

While WeChat is growing pretty well overseas, its outside-of-mainland-China user-base of 50 million is still dwarfed by that of Whatsapp (200 million active users, most of whom are not in mainland China), and by Line’s approximate 105 million registered users outside of Japan (from a total of 150 million signed up to the Japan-made app).

Tencent indicates strong popularity in the iTunes, Android, and Windows Phone app stores in Singapore, India, Indonesia, Malaysia, Mexico and the Philippines.

WeChat is being marketed pretty aggressively across Southeast Asia by Tencent, with markets like Singapore, Hong Kong, Taiwan, India, and Indonesia being targeted with the help of local pop and movie stars in each nation.

The clear market leader for mobile-based shopping in China is Taobao, the iconic consumer-to-consumer shopping mall from Alibaba that’s been rocking China for a decade. In terms of the value of mobile purchases among Chinese consumers, Taobao leads with 75.1 percent market share. Some of that is from the parent company’s B2C marketplace Tmall.

In second place in this sector is Jingdong (formally called 360Buy), which is also China’s second largest B2C e-tailer. Its share of the mobile sector is a lot lower than its share of the overall China B2C shopping market, suggesting that Jingdong – and, indeed, all other such Amazon-like brands – needs to seriously sharpen up its mobile strategy. I notice that, if we again compare mobile spending share with overall market share, it’s only two fashion e-commerce companies that are punching above their weight when it comes to mobile shoppers – own-brand clothing e-store Vancl and specialist handbag site Maibaobao.

Here’s the market share pie chart:

A fairly slow shift to m-commerce

iResearch estimates that Q1 2013 will see Chinese mobile netizens spending a total of RMB 26.6 billion ($4.29 billion) in all of these e-commerce companies. That indicates that 2013 will indeed be the biggest ever year for mobile commerce in China – possibly exceeding the research firm’s earlier estimates of $15.7 billion for the entire year:

In Q1 2013, we see that PC-based shopping still dominates the country’s e-commerce sector , but mobile is rising fast, anticipated to reach 7.6 percent of purchases in the first quarter:

If you can handle any more massive numbers you might like to know that China’s entire e-commerce industry looks set to be worth $177 billion in 2013. Keep an eye on our ‘e-commerce in China’ tag to get more news on this massive market.

(Source: iResearch)

In my first interview as part of our new student entrepreneurship series, I speak with SpeakingMax.cn co-founder Jason Lin (pictured right) on his thoughts of stopping school to create a startup. He tells us of his journey as a Singaporean student venturing into Chinese waters and gives words of wisdom from what he’s learnt thus far.

Tell us more about yourself.

Jason: I am the co-founder at SpeakingMax and am also in my final year at National University of Singapore majoring in political science, with a minor in technopreneurship at Tsinghua University under the NUS Overseas Colleges Program (NOC). I took an additional year off on top of my NOC program to embark on SpeakingMax.

What does SpeakingMax do, and what is your role?

Jason: SpeakingMax is a new and unconventional English language learning tool. Our team aims to revolutionize mobile English education and pioneer the future of mobile english learning in China through the use of unique content and innovative learning methods. Users, through thousands of recorded real-life situations, would be able to learn how to speak close to how a native American would.

Also [being] the VP of product at SpeakingMax, I manage almost all aspects of product development, from day-to-day operations, website management, business development, to fund-raising.

SpeakingMax.cn was also one of the finalists at Beijing’s Global Mobile Internet Conference G-Startup Growth Stage competition (pictured right).

What were the challenges faced at SpeakingMax?

Jason: There are three problems faced while penetrating into the Chinese online education market (SpeakingMax.cn screenshots below):

1. Chinese habit of learning online. Most users are used to a classroom education and think that one-to-one and face-to-face would be the most effective way to learn. The general perception of online education is that it cannot be seamless and effective online. Until they are in contact and exposed to the idea of online education, they will not realize how effective it can be. In fact, the Chinese market for online education is still in its infant stages. Korea turned to online education back in 2008. Offline language education firms such as Wall Street English have been constantly fighting a price war but are now eventually losing their Korean market share to online players.
2. Online paying habits and trust issues. Most Chinese do not have the habit of paying large amounts online for intangible goods, services such as ours. Also, people tend to be more wary when it comes to paying online due to the high number of fraud cases in online transactions. We do get calls time to time asking if we are a real operating company, and if there’s the possibility that the company could close down. Also, it gets difficult to make payments online. There are too many different restrictions and conditions for credit cards, such as the amount you can pay per day for different banks. It is also not a habit to pay online using credit cards.
3. Slow internet speeds. All I can say is, welcome to China! Slow internet speeds and bad 3G networks. But we are looking forward to better improvements in internet speeds in the future.

How are your user demographics?

Jason: Our users are mostly white-collar professionals in the bigger cities within China, such as Beijing, Shanghai, Guangzhou, and Shenzhen. There are three reasons for this: One, such cities tend to be more cosmopolitan and have a greater influx of foreign talents. Hence there is a higher demand and need to learn the English language. Two, they tend to have higher spending power, and are more willing to spend on self-enrichment courses which they believe will give them an edge over others in the future. Three, the internet conditions in these cities tend to be better. They tend to be the early adopters or early majority within the adoption curve, and are more receptive when it comes to trying out new technology.

What is your revenue model?

Jason: It is a subscription-based model, which averages out to about RMB 2,000 (US$326) to RMB 3,000 (US$489) per year.

What are the upcoming plans at SpeakingMax that you can share with us?

Jason: We are focused on expanding our user-base in Mainland China before moving to other markets. We will also be expanding our product line, adding a variety of online teaching tools to learning english.

Was it difficult navigating the Chinese waters as a foreigner?

Jason: Yes and no. Ultimately, I am a Singaporean Chinese and look just like anyone [there]. I also have Singapore’s bilingual education system to thank for being fluent in both English and Chinese. In fact, if your Chinese is good enough, they will see you just like one of them.

But the way they do business is still very different. Singapore, as a whole, is still very much influenced by the West. So there is definitely a learning curve in terms of the business culture. It is pretty much a taboo to have confrontations. People hardly say no upfront and in your face.

As much as foreigners may hold an advantage knowing a different language, often the Chinese market is so big that firms do not have to expand overseas in order to be successful. Many of the local firms here are looking to expand within the Chinese territory even before thinking about international expansion plans.

But of course, being a foreigner gives a different slant and fresher perspective on matters, which might blend into a nice fusion of new and innovative ideas to solving problems.

Not to forget, dealing with business in China, as cliché as it may sound, depends on guanxi (关系), which means the connections and networks that you have. As a foreigner, you may not have those kind of renmai (人脉) and contacts, so it is really helpful if your co-founders have that for a start. Be careful never to close doors on people and keep your options open, because you will never know one day you might just need it.

Perhaps one thing I learned that I’d like to pass to the readers at Tech in Asia would be one given to me when I first arrived in Beijing in 2011. A taxi driver said this to me: 办法总比困难多. Short and simple, but it meant a lot to me. It means there are many ways of solving a problem, and one should always think of different methods should one not work. We as Singaporeans are often too used to being black and white, in its absolutes. But we need to acknowledge that there are in-betweens, or what we call gray areas. It depends on the context to the way we solve problems in China, but I guess that should be applicable even in other countries as well.

I understand you are still a student. What made you decide to stop your studies temporarily for this venture?

Jason: Two reasons for this.

One, it was an opportunity that came knocking on my door. The market, when we first entered, was just timely and might be one that if we miss it, it will never come again. Coincidentally, a couple of days back, my team and I were looking back on the past efforts and realized that we had it spot on. We’re pretty glad we entered because the industry is currently at its peak.

Two, I wanted to be part of the early development phase of the product, where I could participate in all aspects of the business from scratch. Most of the my other partners (team pictured below) were much older and more experienced, and I saw it as a privilege and an exponential learning opportunity where I could obtain much from this stint. It saves a lot of trouble since they have “been there, done that”, where I can easily learn from their mistakes.

Would you encourage other students to stop school temporarily, as you did?

As I mentioned earlier, there’s no definite yes and no. It depends on the situation.

For my case, I am left with a semester to complete at school, where I can make sure that the business is smooth before completing my studies. I think the team that you’re going to work with matters as well. If you are not contributing much and will be very much replaceable, then there’s not much point.

Whether one should leave the comfort of his or her home to embark on an entrepreneurial pursuit overseas, depends on your personal goals and [from] weighing the opportunity costs.

Would you give up your studies for this?

Jason: No. I thought about it before, people have been saying I will lose an opportunity if I don’t give up my studies for this. On the contrary, I see it as a lost opportunity if I give up my studies for this.

Yes, there are a few successful cases, such as Mark Zuckerberg and Bill Gates, but there are also many examples out there who have quit and failed are not being taken seriously. For every successful entrepreneur, there are at least 10 out there who have failed. Why look at the one, and not the millions?

In my opinion, getting a degree isn’t just a piece of paper. The entire process of learning, co-curricular activities, and being in a strong student network are part of the package of a student life. For instance, being on the NOC program at NUS has put me in this opportunity to take my career further. Without this platform, I would not be exposed to such opportunities. You will only be able to take part in such programs which are uniquely available to students.

Would you encourage others to give up their studies to pursue entrepreneurship?

Jason: This might sound a little unrelated, but I would think that finishing what you started comes as a form of responsibility to your parents. How I would put it is that a society is made up of many basic family units. Fulfilling my role within a family unit is a good indicator as to how I would fare within the society. Hence, no. I will not encourage others to give up their studies to pursue [entrepreneurship].

Having the perseverance to complete the degree, to me, is also a form of mental endurance which I think is a skillset required during the startup journey. So when the going gets tough, the tough get going.

This is part of Tech in Asia’s series on student entrepreneurship.

Alibaba Chairman Jack Ma singing at Taobao’s 10th anniversary celebration

With founder Jack Ma stepping down from the role of CEO, skeptics will doubt whether Alibaba can continue to grow strongly without its founder’s leadership. It’s perhaps normal to have such a reaction given that the founders are usually the most important people in a company.

Ma has been an inspirational figure for folks inside and outside of the company. Alibaba without him in the CEO’s seat just doesn’t feel complete. But is it going to have a major impact on Alibaba? I don’t think so. In fact, I believe Alibaba’s future is brighter than before. Here are four reasons why that’s true:

China hasn’t reached its full potential

With over 1.3 billion in population and 564 million internet users (about 42 percent penetration) China’s internet is still considered young. Alibaba has grown with China’s internet boom and will continue to grow because there’s still so much room for growth in China. Though the annual growth rate for e-commerce market size in China is expected to slow year by year, Alibaba should experience healthy growth over the next two to three years. Emarketer forecasts that by the end of 2013, there will be 271 million Chinese spending $265.1 billion on B2C e-commerce platforms and by 2016 there will be 423 million online shoppers in China spending a total of $457.6 billion on B2C platforms. Note that this doesn’t count C2C platforms like Taobao. The Economist also wrote that “by 2020 China’s e-commerce market is forecast to be bigger than the existing markets in America, Britain, Japan, Germany and France combined.” I think you get the point; China is big now and it will only get bigger.

State-owned news agency Xinhua said recently that the growth of other e-commerce giants like eBay and Amazon has plateaued and thus implied that Alibaba could face the same problem. But both companies originate from the US, which already has a matured internet ecosystem with a 78.2 percent online penetration rate back in 2011, according to World Bank data. Even though eBay and Amazon have already expanded outside of the US, their combined sales still can’t match Alibaba’s.

Alibaba’s Taobao has only just started thinking international so the potential is surely there. Plus, the local Chinese market remains lucrative as more internet users jump on board and become more affluent. The market conditions seem great for strong growth for Alibaba.

Forward thinking, international ambition

Alibaba has invested in some high-potential companies that could fuse well with its e-commerce business. In recent months, Alibaba has invested in China’s popular microblog Sina Weibo and also mapping service company Autonavi. Surely, Alibaba must have thought about how to bring e-commerce to the next level, be it social commerce or location-based commerce. My colleague Charlie has penned his opinions here and here on why the deal makes sense and I encourage you to give them a read.

As a PC first company, Alibaba has had to adapt to mobile, and has done so fairly early and well. Taobao, for example, is extremely dominant not only on PC-based shopping but also on mobile. Plus, the company is extremely data driven and continues to invest and make decisions based on data. A lot of people perhaps don’t know that Alibaba is sort of like a combination of services of Amazon + eBay + Kakaku, which is Japan’s most popular price comparison search engine. It runs a series of e-commerce and online services including Alibaba.com (B2B), Tmall (B2B2C), Taobao (C2C), Alipay (e-payment), Aliyun (cloud computing), and eTao (price search). That covers a lot of bases, and they all translate easily to mobile.

While fighting to stay at the frontline in China e-commerce, Alibaba also has ambitions of going international. Its initial strategy to bring Taobao abroad is clear: target Chinese users outside mainland China. Naturally, Hong Kong and Taiwan are the markets that it has started to expand into without facing too much of a language barrier. Malaysia and Singapore are next with the latter serving as a testbed for how it will deal with an English audience. Many Chinese in Southeast Asia are excited to be able to buy things on Taobao.

The company mission, values, and culture

I have been following Alibaba’s progress closely for the last two years. The company mission is “To make it easy to do business anywhere.” One of its values puts the customers first. However, I was initially a little skeptical.

But watching the company long enough I came to realize that its actions reflect its message. I was mostly convinced after watching Porter Erisman’s documentary film Crocodile in the Yangtze, a movie documentary on Alibaba through Porter’s lens during his eight-year stint at the company. The mission that Jack Ma set in 1995 in his failed China Pages venture remains consistent up to today. Ma wanted to build a company to help China’s internet industry grow. Today, as internet becomes more mainstream, Alibaba wants to be the online platform to make doing business easy for people.

That culture seems to be sticking. Jonathan Lu, who took over from Ma as CEO this month, communicated the same idea in his first speech as CEO: to make customers the company’s number one priority. I have had the chance to visit the company several times myself and I’m fairly confident that without Ma, the company will still be guided by the same mission, values, and culture.

Jack Ma isn’t going anywhere, yet

Even if Alibaba were to go off course, Ma will be there to steer the course right as chairman. I’m not sure how involved Ma will be, but I’m betting that he will be very active to ensure that the company he founded is safe and sound under Lu’s leadership. At least in the short term, I suspect Ma will still be sticking around to help make strategic decisions.

Admittedly, Lu didn’t give a convincing speech during the closing part of Taobao’s 10th anniversary celebration earlier this month. I’m not sure how Alibaba’s employees felt after his speech, but I do know that people were leaving a couple of minutes into it, with many deciding to leave after Ma’s speech. Lu’s oratory skills pale in comparison to Ma’s. But then again, Ma personally picked Lu as Alibaba’s CEO. He may not be a great speaker, but he probably can lead and execute well. The future will tell.

Conclusion

All in all, I believe that the market conditions are right for growth and Alibaba has an admirable mission and set of values that has guided the company to success over the last 14 years. It should continue to do well, even without Ma as CEO.

That said, what I suspect might be poisonous to its culture is the eventual IPO that Alibaba Group is probably preparing. With Wall Street pressure on higher margins and profits, I don’t have total confidence that the company can truly stick to its values by putting its customers first.

Nonetheless, it will be great to witness Alibaba, a made-in-China internet company, publicly listed – in a massive offering that might value it as high as over $100 billion – as it marks another milestone for China and the company. It will also provide the long-awaited returns for its investors and employees who have put in so much trust and perspiration to make Alibaba the great company it is today.

A few months ago we spotted that Tencent’s WeChat app was censoring certain ‘sensitive’ political words. That turned out to be temporary, but the company was clearly capable and ready to implement such blocking. Today it emerges that Japan-made Line app is primed and ready to censor users of its social messaging service as well.

Line app contains a string of code that looks for “bad words” and connects back to a server to cross-check those terms with a list of politically sensitive words. That directory contains a lot of inconvenient truths that Chinese authorities would like air-brushed from history, such as recent revelations about the personal wealth of Party leaders, and historical incidents such as a certain something that happened at Tian’anmen Square.

The Line censorship machine was found by Twitter user @hirakujira and detailed by TheNextWeb this morning. The word filter is currently not activated, but as with WeChat’s it seems all ready to be turned on at any moment. If it were turned on and a sensitive word were to be sent via the app, it would be blocked and the user would see an error message saying “Your message contains sensitive words, please adjust and send again.” @hirakujira was able to hack the app to replicate that scenario:

This is what the code looks like within the app (and here’s the current list of banned words):

Watching you chat

Made by NHN (KRX:035420) by teams in both Japan and South Korea, Line currently has just over 150 million users worldwide. Line launched officially in China in December last year with the Chinese name ‘Lian Wo’, but there are no statistics available for its progress in the country. On the plus side, this bit of censorship shows that NHN Line is serious about succeeding in China, because that kind of suppression is a fact of being an online or offline media business in the country.

The findings seem to suggest that Line app is monitoring all of its users around the globe despite the filter not being turned on. That’s likely the case with WeChat as well. So while WeChat and Line are not technically censored at present – not even in China – it’s clearly ready to do so. Note that in both apps it applies to Chinese text only.

For users in China who have signed up for either Line or WeChat via SMS, it means that authorities can easily piece together your full identity. That’s because purchasing a SIM card in the country can only be done (in theory) by showing your national ID card or passport, which is then recorded.

China’s most heavily censored social network is undoubtedly Sina Weibo, which is hit with directives from authorities almost daily on what it should erase from the Twitter-like service.

(Source: TheNextWeb)

But among other things, the company seems to be troubled by the apparent personal problems of its CEO. Sohu head honcho Charles Zhang only this year returned from a yearlong sabbatical taken for personal reasons. In an interview published by Bloomberg last week, Zhang said of the sabbatical:

I missed out on some things, but that’s life. My goals in life have changed, and work is very important now.

But investors could be forgiven for wondering how focused Zhang really is on work when just a couple months ago (well after he returned from his sabbatical) he told an interviewer:

I think there’s something wrong with me. I truly have everything, and yet I am so miserable. Happiness is totally unrelated to how much money you have.

He also spoke about how success had changed him into a perfectionist and maybe even made him a little crazy — he says he thought he could live to age 150. One has to wonder, then, what exactly happened between March, when he gave that interview, and this month when he talked to Bloomberg. Has he really gone from being totally miserable and worried about success to being focused completely on the business and success again? It seems hard to believe, and it also makes you wonder what Zhang will be saying a couple months from now.

You also have to wonder where Sohu and Sogou are going to be in a couple of months, if the latter even still exists. Bloomberg’s report suggests that Sogou is looking for strategic investment to challenge Baidu more strongly in the search and advertising markets, but the Chinese press has been full of rumors that the company is on the verge of being bought out by Baidu or Qihoo (something that no one seems willing to directly deny).

So is Sogou about to use the $500 million it has in cash to take a shot at grabbing a larger slice of the search market, or is it about to get absorbed by competitors? Is Charles Zhang back and ready for action again or is he still fighting whatever personal demons led to his sabbatical and his more recent admission to being “so miserable”? I have no idea.

I do know, however, that it would be foolish to write off the company given that it came up with what’s probably the most unique search product I’ve seen in the past year. Unfortunately, it seems search input hasn’t yet caught on the way I think it could — and perhaps should — but nevertheless it’s a revolutionary idea and a company that can produce this kind of innovation may have a good shot at grabbing a bigger slice of the search engine market over the long run. I’m not sure what the heck is going on behind closed doors at Sohu, but even so, I wouldn’t bet against it.

It’s an issue that seems to pop up for every developing social platform that doesn’t spell things out clearly at first: who owns all the content that’s posted to the platform? That’s a question that Chinese WeChat users — especially users of WeChat Open Platform — have been asking since last week, when Open Platform user Wu Hanqing posted on Sina Weibo about the following clause he’d discovered in WeChat Open Platform’s user agreement (our translation):

The intellectual property rights for the content provided by Tencent on this platform (including but not limited to websites, text, images, audio, video, charts, etc.) belong to Tencent in their entirety, but users of this platform already have an exception to [this] IP law prior to posting their content.

If you didn’t completely follow that, well, neither did anyone else. It sounds a bit like Tencent is saying that it owns all content posted to WeChat Open Platform, but that content creators have an exception that allows them to use the content they create, too. It’s vaguely-worded enough that even in the original Chinese, people have had trouble figuring out what it means. “Does this imply the IP rights of the things I’ve written all ultimately belong to Tencent?” asked Wu. “I naively thought the content I was working so hard to write belonged to me!”

Surprisingly, Tencent doesn’t seem able to offer a clear answer either. An IT Times reporter contacted the company for clarification, and was told (this quote is from the article, not necessarily a direct quote of what the Tencent representative said):

The clause primarily concerns the intellectual property that Tencent provides as [the operator of] the platform. As to users’ legal rights to the intellectual property of their content, Tencent protects its legal rights.

Obviously, this doesn’t really clear up the question of who ultimately owns WeChat content. We’ve contacted Tencent for clarification as well, and will update this story when we hear back, but we also thought it might be prudent to check the terms and conditions for WeChat globally. These may differ from the terms users of the app must agree to in China, but the global terms don’t seem to address the question of who owns the content users create and transmit through WeChat one way or the other. Hmm.

The one thing that is clear is that users overwhelmingly (and unsurprisingly) think they should own the rights to the content they create. In a poll conducted on TechWeb, more than 80 percent of respondents said users should own their own WeChat content, and only 6 percent feel the content should belong to Tencent.

China tech watchers may recall a similar debate about Sina Weibo unfolding after a magazine stole a writer’s weibo posts and republished them without permission. That scuffle went all the way to the courts, but ultimately led to the decision that Weibo posts are the sole property of their creator.

And ultimately, the law may decide who owns WeChat content too, at least in China. Legal experts contacted by the IT Times suggested that under Chinese law, the clause in question might well be considered unreasonable and thus unenforceable, even though users have agreed to those terms. With that said, no one has actually taken this to court yet, so there’s no way to be sure how a judge would rule.

It’s also not clear how international users fit in. Tech in Asia has its own WeChat account; does the content we post there now belong to Tencent? I’m genuinely not sure, but I can tell you for certain that if it does we’re not going to be posting there much longer, and thats why I suspect that whatever Tencent originally intended, it will soon come out and say that all content posted to WeChat by users belongs to the user who posted it. To do anything less would be to sentence its own monetization plans to an early death. After all, who the hell is going to post news or games on the platform if that means sacrificing exclusive IP ownership rights? Absolutely no one.

(IT Times via TechWeb)

With China Mobile thought to be keen to launch its 4G network nationwide later this year, the behemoth telco is prepping its biggest ever city-wide 4G trial to start soon – this time in Shanghai.

But of the metrpolis’ 23 million inhabitants, only 5,000 Shanghai citizens will be selected to take part in China Mobile’s (NYSE:CHL; HKG:0941) trial, which will begin on June 1st. The telco already has 700 outdoor TD-LTE base stations in place across the city, complemented by 300 indoor ones focused on transportation and business hubs. That should cover most of the sprawling city.

Shanghai-based testers will either make use of 4G-equipped smartphones or 4G mobile wifi dongles.

Sun Yun, the product manager of that telco’s local subsidiary, Shanghai Mobile, told Chinese tech blogs that while the company is not ready to reveal 4G tariffs for users, “4G rates will not be higher than for 3G, and they could be cheaper”.

China Mobile has been doing trials in smaller cities for the past couple of years.

Since China Mobile is using the country’s homegrown TD-LTE band, the carrier’s 4G network is not compatible with any current iPhone or iPad models. But TD-LTE will be rolled out by other carriers worldwide, so there will be more and more quality smartphones available that support the network in due course. Those include handsets from LG and Huawei, with Nokia, Samsung, and perhaps even Apple likely to support the protocol in future.

As we reported earlier this month, China Mobile will invest US$6.7 billion to build 200,000 4G base stations that will cover 344 Chinese cities this year. Though there’s no clear date from China’s tech ministry, MIIT, on a nationwide rollout, it seems that China Mobile is being given an unfair advantage and a head-start in rolling out its TD-LTE services; rivals China Unicom and China Telecom will likely not receive any permits for their FDD-LTE networks until months or possibly even a year after China Mobile.

(Source: New Business Daily – article in Chinese)

Meituan’s T-shirts for gay couples.

Today and tomorrow is a sort of Chinese Valentine’s, so it’s an apt time for couples to be thinking of one another. That explains the timing behind China’s most surprising daily deal being offered by a Groupon-style site. The homegrown deals startup Meituan is offering a free trip to Vancouver, Canada, for one gay couple to go get legally married in that country.

The deal is being offered for free (see it here) to one Chinese gay couple. While Canada has legalized same-sex marriage, China hasn’t, so the resultant marriage certificate will be just a fancy piece of paper once the couple returns to Big Red.

Meituan’s free deal will cover travel expenses and one night of accommodation for the couple in Vancouver. Only one couple can win, with a draw to be held tomorrow to choose a winner. So far, nearly 80,000 people have entered to win.

As the site points out, same-sex couples do not need a Canadian residence permit or any such paperwork in order to get hitched there, and it can be done in a “very convenient” way on a tourist visa. Other cities and nations have been encouraging gay tripper tourism like this. I’m not sure why Meituan chose Canada over the US, but perhaps it’s because maple syrup is awesome – or because a wedding day can be rather ruined by being shot in the head.

As a sign that China’s youngsters are a lot more open than the traditionalism displayed by authorities, Meituan’s deals page hails “true love, regardless of gender” and calls on gay Chinese to “bravely get married”. Last year Meituan gave out free rainbow T-shirts for the two Chinese Valentine’s days. Today is the day for men to profess their love, while tomorrow is for women to reciprocate.

Meituan is China’s largest indie deals site right now with 13.1 percent market share in the highly fractured market. It pulls in over $150 million per month in transactions.

(Hat-tip to @bokane for spotting this)

Qihoo’s new search engine emerged nearly one year ago.

China’s Qihoo (NYSE:QIHU), a software maker and web portal turned search engine, has reported its Q1 2013 financials this morning. The company hailed a record number of users across its services – a total of 457 million active users in March 2013 – but saw mixed financial numbers.

Revenues were up slightly quarter-on-quarter to $109.9 million (up 58.6 percent in the past year). Operating income fell to $6.8 million in Q1, nearly half that in the previous quarter (and down from $14.4 million a year ago). Operating expenses crept up yet again to hit $89.2 million in the first quarter, nearly double the expense of Q1 2012.

Qihoo, which launched its search engine last summer to capitalize on all the traffic from its web portal and Windows PC software, also revealed a bunch of updated numbers:

• Total monthly active users of Qihoo’s products and services reached a record 457 million in March 2013, compared to 411 million in March 2012.
• Monthly active users of Qihoo’s ‘360 Browser’ across PC and mobile reached a record 332 million in March 2013, compared to 273 million at same point last year. User penetration of these web browser apps in China hit 69.6 percent.
• Average daily unique visitors to Qihoo’s “personal start up page” (hao.360.cn) of paid links rose to 94 million. That web portal generated approximately 489 million clicks.
• Paying users of Qihoo 360’s web game platform were approximately 281,000 in Q1.

Qihoo’s report made no detailed mention of the progress of its search engine (said by CNZZ to be at 12 percent market share in China), nor made any reference to all the company’s iOS apps being banned by Apple. Those issues will surely come up in the conference call later.

Qihoo expects a stronger second quarter with revenues between $142 million and $144 million.

See the full earnings report on the Qihoo IR homepage.

Antivirus products and services have been a renewed battleground in China in the past couple of years, enveloping several of the country’s top web businesses. According to rumors in the industry heard by TechinAsia, that battle is now taking the form of these companies vying to acquire NetQin (NYSE:NQ), a China-based expert in mobile antivirus apps. Both Baidu (NASDAQ:BIDU) and Tencent (HKG:0700) are thought to be in the running, but the market value of NetQin is proving to be a bone of contention.

NetQin executives even addressed the rumors late last week in the earnings call after revealing their Q1 2013 financials. Directly alluding to the suitors, NetQin co-CEO Omar Sharif Khan said during the call:

Over the past several months, NetQin has been approached by both strategic and financial investors for potential investment opportunities with us, while we appreciate this interest. We remain focused on delivering shareholder value to successful execution of our strategic planning initiatives. We will not fail on delivering shareholder value.

A few minutes before saying that, Khan lamented “a significant gap that exists between the market valuation and our business results”, which could well be the sticking point in negotiations with potential major investors or acquirers. NetQin is currently at $8.25 per share with a market cap of $363 million. Khan elaborated on this pricing:

We’ve also always believed that if we continue to deliver stellar results and growth, the market valuation of the company would appropriately reflect the fundamentals of the company. As both the shareholders and executive management of NetQin, we are not at all satisfied with a significant gap that exists between the market valuation and our business results. Frankly, it’s unacceptable. I want to be crystal clear, we are absolutely committed to creating shareholder value and we will put in a relentless effort to closing the before mentioned gap.

Asked by Oppenheimer analyst Andy Yeung about a 100 percent acquisition, Khan declined to reveal more except for saying that “multiple parties” had shown interest in both financial and strategic investments.

We’ve reached out to Baidu and Tencent about these rumors.

Tencent began pushing strongly into the antivirus market in China in 2010, setting themselves up on a collision course with well-known software maker Qihoo (NYSE:QIHU). After Qihoo launched a search engine last summer, Baidu has retaliated in recent months with antivirus products for Windows PCs aimed at both Chinese and overseas consumers.

Acquiring NetQin would propel Baidu into mobile antivirus products on the Android and iOS platform (where it currently has nothing), and would boost what Tencent already has in terms of mobile antivirus offerings.

NetQin shares fell 14 percent from Wall Street seeing its Q1 financials on Wednesday night to close of trading on Friday. That’s despite revenues rising to $33.2 million in Q1, with operating income up to $2.3 million.

This week we saw all kinds of interesting stuff happen in China. A king stepped off his throne, we talked about 1970s pornography, and QQ got a makeover that made everyone sad. So what are the top stories this week? They are these:

1. Jack Ma’s Last Speech as Alibaba CEO

The king of Chinese e-commerce stepped off his throne after one final oration, and while we’ll still see Jack Ma around, I think it’s definitely worth reflecting on. Also worth checking out the first speech from Alibaba’s new CEO.

2. China’s Top Chat-App Gets a WeChat-Like Makeover, But Everyone Hates It

Well, people like chatting with their friends, and people like WeChat, so making QQ Mobile more like WeChat is a great idea, right? What could go wrong?

3. GREE Shuts Down China Branch

In news that could also go in the Japan This Week list if that was something we actually did, GREE’s China office will shut its doors for good next month, bringing GREE’s China dream to an end.

4. Huawei and ZTE Face More EU Scrutiny: What Are They Doing Wrong?

It’s never good news for Huawei and ZTE, is it? Following the latest news that the EU has threatened the companies with trade duties for illegal subsidies from the Chinese government, we take a look at what has gone so wrong with their overseas ambitions.

5. How China’s Top Video Site Battles the Pirates

Chinese video sites used to be known as a haven for piracy, but these days sites like Youku take piracy very seriously. But how do you stop pirates on a site that gets tons of videos uploaded every day?

6. Netease Planning the World’s First Crowd-Designed FPS Game?

It’ll be hard to know for sure until the game comes out, but I think this post didn’t get the attention it deserved. This is really a unique approach to game design from Netease, something I’ve never seen before at any major developer, and it has the potential to pay off big time in the long term.

7. Tencent Posts Rocketing Profits, Sees 195 Million Active Users on WeChat

If Tencent is making boatloads of money for its other business, it means that it has the needed fuel to pump up WeChat, which now has over 195 million monthly active users.

That’s all for this week, folks. For our full spread of China coverage, you can click here or subscribe to our China RSS.

Beijing’s App Annie is growing rapidly with over 80 team members located at Beijing, Hong Kong, Tokyo, San Francisco, and London. Today it serves over 220,000 apps with 85 percent of the top 100 iOS publishers using its service.

App Annie is largely serving clients from the US, Europe, China, and Japan and hasn’t really gotten into Southeast Asia yet. But the team just might start to look at Southeast Asia as it is seeing growth in this region. Vice president of APAC at App Annie Junde Yu said in an email:

Google Play is growing very fast in terms of downloads in the region, especially in countries like Indonesia, Thailand, Vietnam and the Philippines, where downloads are much higher than iOS.

Even though Android downloads are much higher, revenue from iOS is still higher in Southeast Asia. Junde also commented that things will get exciting when Google Play manages to establish local payment options as it has done in South Korea and Japan. He added:

Additionally, despite of the growth in downloads, most of the apps downloaded in the SEA markets are published by foreign publishers. There are local publishers, but most of them have more of an international outlook for content and distribution as opposed to local. It will be interesting to observe the rise of the local players for the local markets, as the local markets grow in downloads and revenues.

(Also read: The Story of App Annie)

A Singaporean in China

Junde takes extra interest in Southeast Asia since he was born in Singapore, which is part of the region. Having worked in China for several years now, Junde says that he still has much more to learn from both markets. But from what he has observed, he sees great connection between China and Singapore, noting that SingTel Innov8 (who also invests in China startups) and ACE Beijing Chapter have done a great job bridging the two regions. In China, he sees Innovation Works and the Great Wall Club (which runs GMIC) also having links with Southeast Asia and Singapore.

Junde says people often mistakenly think that Chinese aren’t paying customers. He notes that iOS revenue isn’t significant even with huge downloads because most iOS users in China do not own a foreign credit card to pay Apple. “It is also inconvenient to use local bank cards to top up their iOS credits,” he added.

For Android, Junde says that most revenue-making apps make their bucks from second and third-tier cities, supported by carrier billing that makes paying just an SMS away. He explains that consumers in these cities do not spend much on entertainment outlets like cinemas, pubs, and clubs and thus they are very much content to spend on mobile content.

If you are very serious about the Chinese market, you need to be physically here. If not, you can also work through a distributor/publishers; there are good options available, like iDreamsky, Yodo1, Cocoachina etc.

Coincidentally, Junde will be back in Singapore for the upcoming Casual Connect conference on May 21 to 23. He will be speaking on the topic “Global Trends in App Store Monetization” on May 22, 11.00am where he will be sharing the latest trends about the app store economy and also interesting tips about marketing mobile apps in Asia.

While his work and heart is now mainly in Beijing, Junde does plan to return to Singapore someday to start a game studio, a pub, or a chicken rice franchise.

(Image credit: Startapp.com)

App Annie is a mobile app store data provider with its headquarters in Beijing, China but it is operated with an international team and vision led by founder and CEO Bertrand Schmitt.

Not many people know but App Annie was actually first started by an offshore outsourcing development company in Beijing called Exoweb in March 2010. Unfortunately, the Exoweb team didn’t have any idea on how to monetize it. But Bertrand saw the potential, he spun-off the company from Exoweb (they remain as minor shareholders), and took over App Annie’s operations in April 2010 with around five people in the team. He told me:

The people at Exoweb are friends of mine. App Annie was a free product. They were focusing on other stuff, software products, and not working on App Annie. I was also very frustrated with the lack of market data on the stores. So I felt as a marketer, I was missing a lot of information about what are the most interesting markets, how much are others doing in terms of downloads etc.

Bertrand who has been in the internet and mobile industry for 14 years also said that the early version of App Annie, though it only had basic data, could serve as a base for premium market data in the future. It first started tracking iOS applications but it now also tracks other app stores such as Google Play and Amazon.

While other data providers provide SDKs to track what’s happening for apps in terms of usage. At App Annie, Bertrand says that things are done different because it is connecting to the backend of the stores to get the data. To put it simply, App Annie works with Apple and Google directly.

For its premium product, App Annie has developed a statistical model with 90 percent accuracy that estimates an app’s revenue opportunity, market share etc and is today used by companies such as Gameloft, Microsoft, Nokia, Google, Tencent, and more. Bertrand assures that the top ten apps are well-measured since they are used by most users.

Today, the App Annie team is made up of about 85 people across 16 nationalities. 70 of them are based in Beijing who largely focus on the product. The others are in San Francisco, Japan, and London who focus on sales (Update: SF is a secondary headquarters for App Annie’s sales, marketing, and market insights.). The App Annie team uses English across all team members and that includes its Beijing headquarters. When asked why China, Bertrand said:

We like it in China and China is a fast growing market. It is hard to get into the market so starting in Beijing is easier.

Despite being a fast growing market, the large publishers who are willing to pay for App Annie’s products are mostly still international companies. 90 percent of App Annie sales are generated outside of China with US and Japan its biggest markets.

To date, App Annie has raised $7 million of venture capital in total and is already cash flow positive. Over 220,000 apps are using App Annie with 85 percent of the top 100 iOS publishers using its service.

“At some point, we’re also interested to do digital content, not just apps,” said Bertrand.

That would certainly seem to be a denial. But interestingly, reporters got a somewhat vaguer text from Sogou CEO Wang Xiaochuan, who told them simply that nothing had yet been finalized. On his microblog account, Wang has denied rumors that he’s slated to join Alibaba. And Sohu CEO Zhang Chaoyang stressed earlier this week that the company has enough cash in the bank that it doesn’t need to put Sogou up for sale.

None of these statements have done much to quash the rumors, however, because it seems no one is willing to come out and directly say: “We’re not selling (or buying) Sogou, period.” Whether or not a deal is ever finalized, the lack of absolute language in all three statements suggests that there is, at the very least, some consideration of an acquisition deal going on behind the scenes. And with Qihoo hoping to pose a more serious threat to Baidu, and Baidu wanting to prevent that, it certainly makes sense that both companies would be looking at Sogou and other minor search players as potential acquisitions to bolster their search offerings.

For now, though, we’ll just have to wait and see. Perhaps someone will outright deny the rumors, or perhaps in a few weeks or months we’ll find out that there was some truth to them when Sogou announces a new investment or merger.

(Tencent Tech via TechWeb)

Beijing may be China’s capital, but as we saw last month, it’s still not winning any races when it comes to internet speed. But the Beijing subsidiary of China Unicom may help to change that today, as it launches a new broadband connection scheme that ups speeds and makes 4 Mbp the slowest connection in the city. Given that Beijing’s average broadband speed right now is 3.5 Mbps, that’s pretty good.

So, if you have a Unicom broadband connection, here’s what’s changing for you, starting today:

• If you had a 512 kbps or 1 Mbps connection, then your connection speed is being raised to 4 Mbps.
• If you had a 2 Mbps connection, your connection speed is being raised to 10 Mbps.
• If you had a 4 or 8 Mbps connection, your speed is being raised to 20 Mbps.
• Fiber-optic customers may be able to get speeds of up to 100 Mbps.

In short, it’s good news all around, with everybody’s internet getting faster while prices stay the same (at least for now).

The move is in part a response to China’s Ministry of Industry and Information Technology’s goal of having 75 percent of Chinese broadband users on 4 Mbps or higher connections this year (up from its 50 percent goal for 2012). Given that seems likely that Unicom may roll out similar plans in other cities across China, so even if you don’t live in Beijing, you can hold out some hope that someday soon, your internet speed will get kicked up a notch too.

(Tencent Tech via Techweb)

Youku is seeing users go mobile – but so are the web pirates.

After merging into one company last year, Youku Tudou (NYSE:YOKU) further established itself as China’s top online video business with its two sites. Combining user-generated videos and licensed movies and TV shows, Youku and Tudou collectively spent over US$100 million last year on securing the rights to an array of Chinese and overseas streaming content. It’s a significant investment (with studios like Sony Pictures and Warner Bros) in capturing the attention of China’s web users – and it’s a treasure they need to protect from web pirates.

In this battle against piracy, Youku Tudou is up against illegal downloading sites that rip licensed content from the company’s sites, and rogue video streaming sites that seek to profit from uploading these rips. And not to forget the ample number of rival Hulu-like services in the nation, like the fast-growing Tencent Video, Sohu TV, and Baidu’s iQiyi (which recently made a major acquisition to expand even further). Yes, they also pay for the rights to content – thereby pushing up the price of licensing – but I get the feeling that they all keep a keen eye on each other.

Overseeing all this for Youku Tudou is Carl Lu, the company’s legal supervisor and leader of the anti-piracy team. Carl tells us that as the site has grown to 150 million daily views from mobile devices, the pirates are going mobile as well. That’s a phenomenon we’ve also seen with Chinese authorities struggling to take down mobile-only porn sites. He explains:

Ever since the establishment of our anti-piracy team in early 2012, […] we have seen a quick expansion for anti-piracy fronts from mainly PC to include mobile devices. Additionally, the fast growth in small piracy video sites is astonishing. The team in July and August 2012 recorded around 500 to 600 such video sites, yet the latest monitoring – now we have to outsource to a third-party agency – in mid-April reported as many as 1,995 such sites, many of them not registered [in China], or with their servers overseas.

The pirates are going mobile

The company’s apps for Tudou (left) and Youku.

Carl points out that Youku Tudou’s “content cost in 2012 was $118.3 million, representing 41 percent of our consolidated net revenues.” The anti-piracy team is there to protect those assets. That team, we’re told, expands as needed, and also loops in outside agencies for added support. Exclusive licensed content is inevitably the most closely guarded:

As a standard procedure, the team will issue warning letters to our contacts, to inform them the upcoming exclusive copyrighted content we carry. Once we detect any [copyright] infringement, we will send them take-down notices. Attorney letters if no response. If we need to prepare for more serious steps, we will take notarized evidence. The last resort is an official lawsuit.

The Youku and Tudou sites have to monitor what their own users are up to because an individual uploading, say, another site’s licensed content in bite-sized chunks will cause problems. Carl says, “For that, we have an in-house fingerprinting system, and another third-party system to detect pirated content in addition to our team’s manual review.”

Despite China’s top web companies pushing forward licensed content – like Baidu’s revamped music streaming portal, and many of China’s top video streaming sites converting their movie and TV serials content into kosher copies – there’s still plenty of offline and online piracy in mainland China. From the country’s notorious DVD shops, to P2P platforms like Xunlei, to blatant direct download pirates, there are still plenty of dodgy ways of watching a new movie or an entire season of a popular TV show.

Last month, authorities took down two of China’s biggest media piracy sites, conveniently enough on World Intellectual Property Day. But one of then, YYeTs, is now back online.

Chinese TV dramas make up 60% of traffic

Despite the challenges, it’s clear that web video is now a crucial draw for major web companies in China. A total of 4.1 billion hours of online videos were watched in one month last summer, and that number has plenty of room for growth as smartphones gradually become more ubiquitous across broader swathes of China.

Of all the licensed content on Youku and Tudou right now, 60 percent of total traffic on the sites stem from Chinese TV serials. US dramas – I see that The Vampire Diaries is the hottest right now on Tudou – represent, Carl says, “one of the fast growing categories” but still only account for three percent of traffic.

While much of the streaming is free, some require a fee as part of the Youku Premium package. That service has seen two million transactions since its beta launch, but that’s a figure which hasn’t been updated by the company since last year. While the transition to mobile seems to be going well for Youku Tudou and a few other such sites, it’ll be tougher to get consumers to pay for the latest movies or TV shows. In order to capture the fast-growing mobile user-ship, Youku is launching mobile ads this month.

Youku Tudou plans to ramp up its battle with the web pirates even more this year, so we’ve not heard the last of this fight.

CEO and Founder at InMobi, Naveen Tewari, speaking at the Global Mobile Internet Conference 2013 in Beijing

Founder and CEO of mobile ad network giant, InMobi, Naveen Tewari, has come a long way. Naveen is an engineer by training, studied at Harvard Business School, and worked at consulting firm McKinsey. In between all that, Naveen also had some experience working in startups while he was in Silicon Valley.

Entrepreneurs being entrepreneurs, Naveen was very fascinated with the rapidly changing mobile internet. He wanted to build something which he could call his own. Naveen and his team started to dabble and among their first few projects was a VOIP application and also a chat application. But it was too early for the market back then. So the team started to question, “What are the things that could work? Maybe there’s a play for us if we were to build a fundamental service?”

These fundamental services range from mobile e-payments to advertising platforms. Therefore, with more interest in the advertising side of the business, mKhoj was founded in 2007. The name was later rebranded to InMobi to suit the international audience better. Naveen told me:

Over the period of years, we started to see success. We decided to go broader and into different markets and not just stick only to Asia. That’s how we expanded.

InMobi has had many turning points. Naveen pointed out three. The first was when the team decided to pivot when their chat application wasn’t gaining traction. “Pivoting really lead to the next level of growth for us,” he added.

The second one was when InMobi received funding from Kleiner Perkins Caufield and Byers (KPCB), a renowned global venture capital firm. The investment, said Naveen, gave InMobi a lot of confidence to grow and compete globally. The vote of confidence from KPCB also helped InMobi attract more talent to join the team. The third turning point was when InMobi received $200 million in funding from Softbank which really helped the company scale quickly in various markets.

We have doubled or tripled down on technology. We have built multiple platforms to go after the entire value chain of the ad business. We made acquisitions too to fill that up. We have also deepened our strengths in local markets – in the UK, Europe and launching ourselves in Korea, China, and Japan.

“We’re one of the largest mobile ad networks in China”

Today, InMobi can pat its chest and call itself a global company. Outside of India, it has offices and operations in Australia, Taiwan, the US, the UK, France, Italy, Russia, Germany, China and more. Despite launching in China only in late 2011, Naveen says that InMobi is “one of the largest mobile ad networks in China.”

An InMobi China PR representative later filled me in that the company is seeing 400 million impressions a day, serving 30,000 applications in China. Naveen believes that by the end of 2013, InMobi will be the largest mobile ad network in China.

We have aggressively invested into China. It’s a big market, we can’t just fiddle around with it. We don’t want to lose.

InMobi has offices in Beijing and Shanghai with more than 50 people running its China operations. When looking for talent, Naveen says that hunger and passion are the key things he is looking for.

Growing from a startup to a multi-national corporation, InMobi faces challenges like any fast growing young company would too. Naveen told me that as a young organization with little processes it was tough running a global operation with 25 offices while keeping one culture, one system, and communicating clearly with everyone. He also said:

As a company what we faced was to showcase and tell people that we have a great product. People expect great products coming out of Silicon Valley, innovations coming out of Silicon Valley and probably didn’t expect that innovation to come from an Indian company.

Despite the problems, InMobi has had a great reception around the world. Today, the company is close to reaching 700 million smartphone users across the world. InMobi was also recently crowned by MIT Technology Review as one of the 50 most disruptive companies in the world.

The new page asks players “How else can you play an FPS?” and then presents them with a eight this-or-that voting options, each relating to a particular element of gameplay design. The percent of votes each option has accrued is prominently displayed, and while the site doesn’t explicitly say so, it certainly implies that the higher-voted options will be implemented into the game.

If Netease really plans to abide by these votes — we’ve contacted the company for comment — then I believe this will be the world’s first FPS from a major development studio to crowd-source such huge aspects of its game design. It’s a bold move, and one that likely means we won’t be seeing this game anytime soon, as based on these questions it seems like the game must be in a very early phase of development.

So what choices are gamers being given, and what are they choosing so far? The page has only been up for a day, but it appears to have already attracted thousands of votes, resulting in these choices:

Aim-assist vs. pure skill: Here, 83.69 percent of respondents so far have voted for having some degree of aim-assist to make shooting more precise. This shouldn’t come as much of a surprise as many modern shooters including Call of Duty and Battlefield have aim-assist mechanisms so that aiming is not 100 percent manual.

Progressive characters vs. static characters: Here, players are pretty torn, with 45.67 percent voting for progressive characters that can be leveled-up, specialized, and personalized, and 54.32 percent voting for static characters whose only differences are their external appearances (which makes the game fairer in multiplayer matches).

Responsive maps vs. static maps: Players overwhelmingly (89.09 percent) prefer responsive maps that may change over the course of gameplay (for example, a hole gets blown in a wall or a building collapses).

Story-based single player vs. arcade-style single player: When asked whether they preferred a single player mode with characters and a story or an arcade-style single player mode that just focuses on fun carnage, voters so far definitely prefer the game to tell a story (87.71 percent).

Large-scale battles vs. small-scale battles: Do players want Battlefield style engagements, with huge maps, vehicles, and long range engagements, or Call of Duty style smaller maps that are more focused on speed and foot battles? Voters so far prefer the former (82.74 percent).

Varied actions vs. traditional actions: Players have thus far indicated that they’d prefer playable characters to have varied actions (running, crouching, walking, creeping, assassinations, etc.), rather than have a game with fewer actions that’s more focused on pure speed and skill (83.9 percent to 16.09 percent).

Character classes vs. All-around warriors: Voters are split on whether they want different character classes with different skill sets (for example, a medic whose stats are geared towards healing, a heavy whose stats are geared towards causing maximum damage, etc.) or characters who are equally capable of doing anything so long as they have the right equipment, with the former option thus far garnering 46.98 percent of the vote and the latter 53.01 percent of it.

Upgradeable guns vs. standard weapons: Having ‘standard’ guns that can’t be upgraded ensures fairness and emphasizes the differences between each weapon, but so far gamers still prefer weapons that can be modded and upgraded, with 83.73 percent of respondents voting for that option.

As you can see, some of these options certainly indicate that not much work has yet been done on the game beyond the apparent creation of a new game engine (for example, the fact that Netease is asking if gamers prefer a story mode or an arcade mode for single player would seem to indicate developers haven’t really started work on the single player sections of the game yet).

We’re not completely certain that Netease is totally committed to abiding by these votes, and we’re hoping to hear back from the company soon with more details about how the game will be designed. If major design decisions like this really are being crowd-sourced, that would seem to be an industry first, but I wonder whether it will make for a good game. There is always the risk that when you try to please everyone you end up pleasing no one, and the crowd-sourced approach to design could certainly lead to a Frankenstein-style final product with lots of interesting bits but no cohesive whole. Either way, it’s a fascinating idea and we’re going to pry as much detail as we can out of Netease about it, so stay tuned!

Image via Reuters

I’m beginning to think we might as well just consider Huawei and ZTE, given that they seem to pop up together constantly in the news. And, unfortunately for both companies, it’s never something good. When we last checked in with the dynamic duo it was because they were (and still are) under investigation by Indian Intelligence authorities, and now there’s more bad news for the Chinese telecoms in the form of this Reuters report suggesting the European Union may levy trade duties against Huawei and ZTE over what it considers to be illegal subsidies from the Chinese government.

Needless to say, Huawei and ZTE don’t see it that way and deny any wrongdoing. Chinese foreign ministry spokesman Hong Lei told reporters on Wednesday:

We hope the EU can proceed from the standpoint of protecting the stable development of trade relations with China and not make promises to undertake protectionist measures or adopt restrictive measures.

I have a feeling that having an official government spokesperson step in to defend the companies is not going to help dissuade the EU or anyone else that Huawei and ZTE are entirely too closely tied with the Chinese government. And indeed, the EU is apparently as concerned about security as the US and India are:

An internal EU report last year recommended that the 27-member bloc should take action against Chinese telecoms equipment makers as their increasing dominance of mobile networks made them a threat to security as well as to home-grown companies.

The increased scrutiny bodes poorly for both Huawei and ZTE, as both companies do significant business overseas, although ZTE is probably worse off since it is already losing boatloads of money. But the concerns expressed by lawmakers in the US, India, and the E.U. should give the companies pause — if they’ve managed to scare three of the world’s biggest markets on three separate continents, perhaps there really is something wrong with the way they conduct business.

Or perhaps it’s just a PR problem. Certainly neither company could be accused of having mastered international public relations, and the occasional revelations that they’re doing things like working with the Iranian government on “big brother” domestic spy equipment haven’t helped. As I pointed out above, it also isn’t helping when the Chinese government jumps to their defense — all that does is reinforce the perception that it’s a de facto state-run company, even though that’s not the case. Obviously Huawei and ZTE can’t really control what the government says, but if China wants its tech brands to succeed abroad, it might want to consider letting them sink or swim on their own, because the current method clearly isn’t working very well.

(via Reuters)

China’s biggest web company by revenue has just posted its Q1 2013 financial report. Tencent (HKG:0700) reports rocketing revenues and profits for the whole group, which covers products across social media, gaming, advertising, e-commerce, media, and more. Tencent’s quarterly revenues hit US$2.161 billion, up 11.5 percent on Q4 last year, and up 40.4 percent from the same period last year; net profits reached $649.4 million in Q1, up 17.3 percent QoQ or 37.4 percent YoY.

Tencent makes China’s biggest social export, WeChat. In today’s report, the company revealed that it now has nearly 195 million monthly active users on the social messaging app (194.4 million to be precise); that’s up 23.1 percent on the previous quarter, which is up 228.4 percent in a year. WeChat has over 300 million registered users, and is likely to exceed 400 million some time this month. As we noted last week, WeChat’s significant number of active users puts it close to surpassing Whatsapps’s 200 million actives, though about 90 percent of WeChat’s user-base is within mainland China, so it’s not that much of a global success yet.

Other social numbers:

• QQ instant messenger hit 825.4 million monthly active users, up 9.8 percent on Q1 2012. QQ’s peak simultaneous users reached 173.0 million, which was down 3.3 percent across the year.
• Qzone, the broader social network around QQ, got up to 611 million monthly actives, up 5.9 percent in a year.
• QQ Game Platform saw peak simultaneous users of 9.2 million, up 5.9 percent over the same period.

In other financial data, value-added services accounted for 78.7 percent of revenues in Q1 this year, reaching $1.72 billion. That’s up 13.6 percent from the last quarter. Online gaming revenues increased 19.3 percent over the same period to amount to $1.21 billion. That was mostly down to China-area gamers on things like Crossfire, and was boosted by increased gaming activity during Chinese New Year.

Founder, chairman, and CEO Pony Ma says in today’s report:

During the first quarter of 2013, we saw broad-based growth in user engagement and revenue across our key activities. This growth has enabled us to fund investments in longer-term opportunities such as WeChat international user acquisition, online video content aggregation, and e-commerce footprint expansion, while maintaining a healthy expansion rate in earnings and cash flow. We saw both strategic and financial benefits from our portfolio of investee companies, including a further special dividend from Mail.ru.

We will continue to invest proactively in innovation and technology, and to cultivate our open platform, in order to capture the mobile opportunities ahead and strengthen our position as the leading internet platform company in China.

WeChat hasn’t really been monetized so far, but Tencent will soon endow it with social gaming integration similar to what has been done by rival apps Line and KakaoTalk.

Find the full report on Tencent’s investor relations page.

WeiboSuite should prove an invaluable tool for China researchers and journalists who don’t speak Chinese but still want to keep track of what’s happening on China’s most happening social network. Obviously, with billions of posts, WeiboSuite hasn’t — and cannot — translate every single post into English, but it indexes and auto-translates the 1,000 most recent deleted posts, which makes it valuable for journalists who generally only need to see recent posts anyway. For example, when I searched for “Tibet,” WeiboSuite turned up an interesting post from yesterday alleging that there was a fairly major anti-government protest in Naqu Biru County in Tibet on Sunday.

WeiboSuite also includes an image-to-text translator that should be effective in helping journalists deal with those pesky “long weibo” posts that include long sections of text uploaded as an image to circumvent Weibo’s character limit (not to mention its keyword blocks).

Finally, WeiboSuite also comes with an image splitter. Weibo users often upload multiple photos in one long image, and while that format is convenient for Weibo it’s not great for other platforms. WeiboSuite’s image splitter helpfully breaks those images down into separate image files for each photo without the need for any editing software or tiresome cropping.

In short, WeiboSuite is an awesome tool for journalists or anyone with an interest in following what’s going on on Weibo. My hat is off to the team at Hong Kong University that created these tools; they have really done something quite cool here.

(via SCMP)

Internet cafe or fight club?

Last week, an argument between some patrons at a Chinese internet cafe ended in violence when one man smashed another in the face with an empty beer bottle. The victim was hospitalized; the aggressor arrested. The sum they were arguing over? 1 RMB ($0.15).

The dispute arose when internet cafe cashier Song Na accidentally charged a Mr. Cui’s card with 1 RMB more than he had paid. Since her wages are only 30 RMB per day ($4.76) and her boss deducts any errors from her wages, she sought out Cui in the cafe to ask him to return 1 RMB. Cui was playing games with his friend Jin and Jin’s girlfriend, and he refused to return the money, saying that she hadn’t charged his card with any extra money. An argument started, Song’s husband ran in to defend her, blows were exchanged, and the parties were ultimately pulled apart relatively unscathed. Song and her husband gave up on getting the 1 RMB back, and Cui and his friends left the cafe.

But Cui’s friend Jin apparently couldn’t get over the conflict, and doubled back to the cafe, grabbing an empty beer bottle along the way. He came up behind Song’s husband as he was getting onto his bike, tapped him on the shoulder, and then smashed him in the face with the beer bottle when he turned around.

In the subsequent interrogation with police, Cui and Jin said that the initial dispute arose in part because they were right in the middle of playing a game and Song had asked them to stop, putting them in a bad mood. Jin also said that Song had cursed at his girlfriend, which pissed him off. Cui was released after a 500 RMB ($79) fine, but Jin has been detained by police. Song’s husband, meanwhile, was hospitalized and racked up a significant medical bill.

Internet cafes are a great way for people without the resources to buy their own computers to access the web, but they can also be a breeding ground for violent disputes, including murders, and they’ve also proved a good hunting ground for pedophiles and serial killers. I have argued before that China’s internet cafes are not a good place for children, and violent disputes like last week’s bottle-smashing certainly seem to support that hypothesis.

But I also wonder whether internet cafe owners might be better off investing in some security, or alternatively whether they’re something that Chinese police ought to keep a closer eye on. Granted, disputes like this happen all over the place in a country as large as China, but perhaps because of the dark, smoky atmosphere or the often-tired patrons who’ve been gaming for hours on end, internet cafes seem to be particularly fertile soil for conflict. I continue to believe China would be well-served if the government offered some better-lit, better-policed alternatives to internet cafes.

(via QQ Games)

We are reviewing our business to optimize our global game development operations through a process of selection and concentration, and this has led us to the difficult decision to close our China office and studio. GREE Beijing has developed several excellent games and the talented people who made up its staff have made a valuable contribution to GREE. We regret that we have had to make this closure and wish all the best to everyone affected.

Japan’s GREE has been a dominant force in mobile games on its home turf, and over the past few years has overseen an aggressive expansion overseas. But late last year the company was forced to lay off employees at its North American office, and now it has apparently shuttered its China branch completely.

We have contacted GREE for comment on this story and will update it if we hear back.

According to an internal announcement at GREE China yesterday (as reported by Sina Tech), the branch will totally cease operations on June 28th, and all of its employees will be laid off. The company has not yet announced a compensation plan for employees, but it should have plenty of time to roll something out over the next month and a half before the shutdown actually takes place.

The reason for GREE China’s demise — and the company’s declining fortunes in general — is generally believed to be its failure to recognize and commit to the global movement towards smartphones quickly enough. 60 percent of GREE’s revenue is still coming from feature phone users, but feature phone users are getting scarcer and the company has not carved out a dominant position as a smartphone gaming platform on either Android or iOS.

Of course, this is not to say the company is about to collapse. GREE is still projecting a net profit of around $300 million this quarter, but then again, if the company’s projections are correct it will be the first time since 2008 that GREE has seen its profits drop. It seems likely that given this shift, the company has decided to concentrate on its strengths on its home turf of Japan and reduce the degree to which it’s extended overseas. That’s probably a smart business move, but it’s a bummer for everyone working in the GREE China office.

Related: GREE’s founding story

(via Sina Tech)

Yesterday, Sina Tech sub-site Startup Stories posted an interesting op-ed from T.H. Capital CEO Hou Xiaotian entitled “Why is Sina’s Stock Undervalued on Wall Street?” In it, Hou argues that given that Alibaba valued Sina Weibo at $32.56/share for its big Weibo investment, when you add in the value of Sina’s (NASDAQ:SINA) other services, the company’s stock ought to be up around $73, yet it continues to languish in the $50-$60 range instead.

Of course, some have argued that Alibaba gave Sina a pretty sweet deal in terms of Weibo’s valuation, but Hou asserts that the Alibaba number is actually quite reasonable, and lays out five reasons why this is the case:

1. “Weibo has a monopoly on the market.” Hou says that 85% percent of all time spent microblogging in China is spent on Sina Weibo, and it has more than 500 million registered users. Tencent Weibo has big numbers too, of course, but Hou says that it’s much less actively used.
2. “Weibo is a real-life platform.” Hou argues that beyond real-name registration, users actually build real “micro-lives” on Weibo complete with their own social circles, entertainment, news, and a lot of voluntary sharing about their real lives. It’s almost like an online journal in some ways.
3. “Weibo creates web 2.0 content.” To explain this, Hou compares Weibo search — where users can find the answers to questions (because the hottest posts on any given topic tend to be what most people are looking for) — to traditional search where users find “a pile of indexed links” that can be hard to sort through”. Weibo, Hou argues, produces a ton of content that sorts itself more or less automatically, and it’s always timely and based on what users want.
4. “Weibo is an entrance point for the mobile web.” Hou says Weibo’s daily traffic exceeds 1 billion pageviews per day, and that 75% of it comes via mobile clients.
5. “Weibo is a kind of self-run media.” Hou points out that Weibo has been exceedingly valuable as a way of spreading information and has arguably increased transparency in Chinese society, even if the information it spreads is sometimes of dubious veracity.

I’m not an investor, or an expert in how companies are valued, so I won’t dispute any of Hou’s specific numbers. But I do think that she’s viewing Weibo with a particularly rosy set of glasses — perhaps it’s not a coincidence this article was published on Sina Tech — and there do seem to be some legitimate reasons to think Alibaba’s Weibo valuation was a bit over the top.

To begin with, some of Hou’s numbers are pretty shocking. She doesn’t cite sources for any of them but I’m guessing most of them come from T.H. Capital’s own research, but even so a few jump out as questionable. For instance: Sina Weibo gets more daily traffic and pageviews than Baidu? That would be pretty surprising. And while yes, Weibo does have 500 million registered users, only a small fraction of them are active (a study published in March found that only 200 million or so users had ever posted, and only 30 million users wrote unique posts in a given week).

Hou’s point about Weibo’s search being more valuable than Baidu’s is interesting but, I think, misleading in some ways. Weibo search is extremely effective at helping users find certain kinds of information. If you want the latest trends, to see what people are saying about a particular actress, or to hear the latest about a political scandal, for example, Weibo search is probably better than Baidu. But at the same time, if you’re looking for biographical information about a historical figure, a link to a popular e-commerce site, or information about the lineup of an NBA team (for example), Baidu is going to be far more effective than Sina. At one point in her article, Hou asserts that Sina’s Weibo search should be valued at double what Baidu’s search is worth per capita because it is more effective, but that is only true for a specific sort of search. Personally, I do a fair amount of searching for my job, and while sometimes Weibo search is the right tool, most of the time my search begins and ends with Baidu.

Finally, I think Hou is understating the threat that Weibo faces from WeChat. Granted, WeChat doesn’t offer the quasi-journal-like features Weibo has, but frankly Weibo isn’t that great for journaling either. Both platforms are best at communicating the here and now, what’s happening within your circles of contacts, and while there are significant differences between the services, WeChat’s growth should still be pretty alarming to Sina — even CEO Charles Chao has said WeChat poses a threat — and it’s no surprise it’s also affecting Sina’s stock price. Users, after all, only have so much time in the day, and the more time they spend on WeChat, the less time they’re spending on Weibo.

There are other reasons to be bearish on Sina — Weibo faces regulatory threat constantly, Sina has had a really tough time monetizing it — but generally speaking, I do think Weibo is a very valuable service. Is it as valuable as the $32.56 per share that Aliababa paid for it? Right now, I’d argue it’s definitely not, but then again, Alibaba didn’t invest just to make a quick buck, and over the long term if it can help Sina make Weibo profitable, the service certainly could be worth that, and a great deal more.

(image via Sina Tech)

A new report in the Beijing Times quotes police as saying that in their investigation of Silu HD following its takedown, they found not only 22,296 instances of IP violation, but also that the site was hosting what the article calls “obscene pornographic films.” We’re not sure whether those are any worse than regular pornographic films, but since any kind of porn is illegal in China, the folks behind the site are likely in a lot more trouble for this than the piracy aspect.

Interestingly, it seems the site was mostly hosting quasi-historical-themed pornography from the 1970s, as the two titles mentioned specifically in the article are The Opening of Misty Beethoven (1976) and Caligula (1979). These films and a few others were deemed to be pornographic “after police appraisal,” and we imagine that police are currently combing through the rest of Silu HD’s catalogue in search of other films to, ahem, appraise.

Double-entendres aside, the news that Silu HD was hosting pornography ensures that “China’s first HD video portal” (as the site billed itself) is dead for good. YYeTs may have survived the crackdown, but apparently Silu HD’s apparent affinity for 1970s pornography has ensured the site will definitely not be coming back online.

(Beijing Times via Sina Tech)

Tencent’s (HKG:0700) chat service QQ is used by over half a billion people and is China’s top app for iPhone and Android. When the QQ mobile apps got a radical update and make-over recently to make them look more like WeChat, Tencent probably thought it was a great idea. But the vast majority of QQ users disagree – to the point of anger, hatred, and vitriol.

The new QQ v4.0 for iPhone currently has an average user rating of one star. Of 41,482 reviews of the updated app in the iTunes App Store, an astonishing 39,298 people (that’s 94.7 percent) have given it the lowest star rating. Prior to the WeChat-inspired update for QQ, the instant messaging (IM) app had been enjoying mostly five-star feedback. This is the scene now:

The anger is mostly about the looks – with users mockingly calling it a “second hand WeChat” – as the QQ v4.0 update for iPhone (or v4.1 for Android) has taken on less of a traditional IM user interface. For example, there’s no longer an indicator light besides contacts’ names on your QQ contacts list, so you can’t see who’s online until you click their name. Also, the chat window now looks more like a new-style messaging app – ie: more like WeChat or Whatsapp – which means that there’s a lot of wasted space in between users’ words (pictured top).

It seems that Tencent has not taken into account that their two very popular apps – WeChat will soon hit 400 million users – are used quite differently. QQ tends to be activated when someone specifically wants to chat, so that necessitates clearly seeing who’s online and being easily able to view a fast-paced conversation in one window. WeChat, in contrast, is for more casual messaging, sort of like a replacement for SMS.

QQ users are certainly making their displeasure known wherever possible. On the official ‘Mobile QQ’ account on Tencent Weibo, worried iPhone users are asking how they can downgrade to the previous version; others are telling Tencent that the update is “garbage”, “disgusting”, and “dogshit”. Over on the third-party Baidu Android app store, commenters are being more polite, asking and pleading for previous IM-like features to be restored.

One very useful feature from WeChat that’s in the new version of QQ is that it now supports group chats for up to 50 people. These can be accessed by sending invites through the app, or by sharing a QR code. I’ve been at a conference where this WeChat group chat feature was used to let audience members ask questions to onstage speakers, which was fun; that could also be put to great use in QQ. That is, if QQ has any users left after this kerfuffle.

(Hat-tip to Sina Tech for spotting this – article in Chinese)

Alibaba CEO, Jonanthan Lu and his management team

Now that we’ve heard Jack Ma’s final speech as Alibaba’s CEO, we can focus on his successor, Jonathan Lu. Compared to Ma, fewer people will have heard of Lu. But Ma’s last big decision at Alibaba as CEO was perhaps to appoint Lu as CEO.

In his first speech as Alibaba CEO last Friday, Jonathan Lu thanked Ma for giving the one-time waiter at a hotel a chance to shine under Alibaba’s wings. Lu’s leadership quality and great execution has seen him in several leadership positions within Alibaba. 13 years in Alibaba made him one of the early team members to have followed Ma’s journey, seeing the e-commerce firm grow from a David to a Goliath.

I have translated most (like 90+ percent) of his speech. If anything, his speech somewhat echoed Ma’s thoughts which centered around Alibaba’s mission, values, responsibilities, and customers.

“If not me, who? If not now, when?”

Jonathan Lu: Hi family and friends. Today marks my 13th anniversary working with Alibaba. I’m very thankful, as Mr. Jack Ma says, “We are lucky.” But for me, I think that I’m extremely lucky. Because from tomorrow onwards, I’m taking over Alibaba’s mission, our values, responsibility. Taking over our vision of having an open and responsible internet spirit.

I worked at Alibaba’s B2B website for more than three years […] and Taobao for about four years and then back to B2B (Alibaba.com), and then on to big data and also managed our mobile operating system, Yun OS. Through this journey, I learned a lot. But I feel more gratitude. It is because of all of you, that’s why I’m able to learn and grow. It is because of our customers who have helped us grow. I’m very thankful to everyone and Jack Ma. Before Alibaba, I was working in a hotel as a waiter.

Jonathan Lu and Jack Ma saying their thanks with a hug

But today, I have this chance to take over Alibaba’s culture, fight for our dream. This is really an honor. Alibaba been through a lot and our mission and values are what we need to uphold. We insist that customers are our number one priority. In the future, we will continue to uphold and pass on our values and mission. […]

Today, because we have so many customers and so much data, we have a chance to let every customer be on the platform and have their own space and growth opportunities. Alibaba and Taobao are built for the customers. I hope our team can achieve our mission and let Alibaba’s customers enjoy the best experience when they are onboard our platforms.

Another thing we need to uphold is innovation. For the last 13 years, from Alibaba B2B, Taobao, Alipay [online payment solution], Juhuasuan [deals site], Aliyun [cloud computing], to AliFinance [micro-financing service], we have been innovating from the very start and will continue to do so in the future. My team and I will push harder for innovation. […]

For the last 13 years, Alibaba has done very well in upholding its belief and executing our plans. […] Everyone has this signature at the end of their emails: “If not me, who? If not now, when?”

This is a responsibility, a task […] A big dream and vision requires good execution to complete it. Because of our great execution, customers trust us better. […] Thanks to our customers, partners, and competitors who allow us to continue fighting. Our customers give us warmth. Taobao went through seven non-profitable years, but it has grown thanks to customers’ trust. In the future, the thing that pushes us forward is our dream and family.

Moving forward, I hope we can continue to gain the support of our customers, friends, partners, and family. And I hope everyone at Alibaba and Taobao can stay happy and lead a fruitful life. Thank you, everyone!

Jack Ma, Chairman at Alibaba

Last Friday in Hangzhou, China, Alibaba celebrated Taobao’s tenth anniversary (pictures below). But it didn’t feel like it was really entirely a celebration for Taobao. I’m sure that while enjoying the songs and dances at this concert-style event, at the back of the mind of everyone at the stadium was that it was Jack Ma’s last day as CEO.

True enough, Jack Ma’s speech reflected that. It felt a little more like a goodbye speech from the founder as he moves on to become chairman. It was a speech that paved the way for Jonathan Lu to take over his position as Alibaba’s CEO.

“Small businesses are where most of the Chinese dreams live”

After a couple of hours of music and extravaganza – including Ma himself singing – he gave his speech to the roaring stadium audience of over 20,000 employees, merchants, and guests. Below is our unofficial translation of Jack’s speech. I do hope it captured a large part of what he communicated:

Jack Ma: In the last ten years, there are many people who have paid a big price to live this dream. For our dream, we have walked ten years. I have been thinking, even if someone had removed 99 percent of Alibaba’s assets, we are still worthy. We have no regrets. We have our team, our partners, and friends. What is the thing that has made Alibaba what it is today? What is the thing that has made me what I am today? I have no reasons to succeed. Alibaba and Taobao have no reasons to succeed either. But today, we have walked so far and for so many years with so many aspirations for the future. I believe, it is trust that has made us walk this far.

When no one believes in the future, we chose to believe… we chose to trust.. that 10 years later, China will be better. We chose to believe that our colleagues will do better than myself. I believe, the younger generation of Chinese will do better than us. I’m very thankful that my colleagues have trusted me. It’s tough to be a CEO but being a CEO’s employee is even tougher. At times when trust was doubted, people actually bought things online, even when they haven’t even seen the items before. Over thousands of kilometers, through an unknown person, the goods fall safely into your hands. Today’s China has trust and belief. Everyday, there are 24 million transactions on Taobao signifying China’s trust.

I’m proud to be everyone’s colleague and working partner. Even after life, we will still be colleagues. Because of you, it allows this generation to see hope. All of you are building a new kind of trust. This trust helps to make the world more open, more transparent, and more responsible. I feel proud of you. Today’s world is ever-changing. 30 years ago, we didn’t expect what would have happened today. We didn’t expect China to be a manufacturing giant. We didn’t expect computers to be part of everyone’s life. We didn’t expect the internet in China could grow so rapidly. We didn’t expect Taobao can rise. We didn’t expect Yahoo could become what it is today. We’re in a rapidly changing world. We didn’t expect we can all sit together today to celebrate and look forward to the future.

Computers are fast, the internet is even faster. When we haven’t really understood what is mobile internet, big data comes along. Times of change are for the younger generation. Today, a lot of young people think that big companies like Google, Baidu, Tencent, and Alibaba took all of your chances to succeed. Ten years ago, when we saw numerous giant companies, we were also once lost and worried. Do we have a chance? But ten years of determination, we have walked to today. If it wasn’t a time of change, the younger generation would not have a chance. We don’t need a rich father to succeed. What we have is determination and a vision. A lot of people hate change, but because we have embraced this change that’s why we have a future. The next 30 years, this world and China, will have even more change. This change is an opportunity for everyone. Grab this chance.

A lot of people complain about yesterday. We have no power to change yesterday. But this very day, 30 years later, is what we can control and decide. Change yourself, take baby steps, and stay determined for ten years. I thank the times of change and everyone’s complaints. Because when everyone is complaining, that is your chance, an opportunity. It’s only in times of change that someone can be clear of what he has and wants, and what he needs to give up.

Building Alibaba for 14 years, I’m honored that I’m a businessman. As we enter the modern age, it’s a pity that business people don’t get the respect they deserve. Business people in this age aren’t just doing business for profits. I think, we are the same as any artist, educator, and politician who’s doing our best to make this society complete. 14 years in business made me understand life, hardship, determination, and responsibility. It also made me understand that when other people succeed it means we have succeeded as well. What we look forward to most is the smile on our employees’ faces.

After today, I will no longer be a CEO. From tomorrow onwards, business will not be my sole focus. 14 years into business, I feel proud. In this world, no one can say that they will not age – make no mistakes, and be undefeatable. To make sure a company doesn’t age and make no mistakes, I chose to believe the younger generation. By believing in them, you also believe in the future. So I will not return to Alibaba as CEO. There’s no use for me to return because all of you will do better.

Building a company to this size, I feel humbled and proud. But what we have contributed to society is only just a start for Alibaba. What we achieved today, has greatly surpassed the efforts we have put in. This society, at this time, for Alibaba to continue to prosper, we have to solve problems in society. There are so many problems in society and these are opportunities for everyone. If there isn’t any problem, then there’s no need for all of you. All people of Alibaba, please continue to serve small businesses. Because small businesses are where most of the Chinese dreams live. 14 years ago, we set a mission that there will be no business too hard to do, helping small enterprises to grow. Today, this mission lies in your hands. People say e-commerce and the internet created an unfair advantage. But my understanding is that the internet created a truly fair platform.

Moving forward, I will be doing things that I’m interested in, such as working on education and the environment. Besides work, let’s work hard together to improve China. Let the water be clear, the sky be blue, and the food be safe. Everyone, please! (Jack Ma kneels down to the audience).

I’m very honored to introduce you to Alibaba’s future leader and team. They have worked with me for many years and understood me better than myself. Jonathan Lu worked for 13 years at Alibaba and has been through multiple positions and hardships. I should say both tears and smiles are equally the same. Taking over Ma Yun’s (Jack Ma’s) position is very difficult. I can walk till today all thanks to everyone’s trust. Because of trust, it has made the journey easy. I believe and I also urge everyone to support and trust Jonathan Lu and the team as you have always supported and trusted me.

Thank you everyone! From tomorrow onwards, I will live my own life of choice. From tomorrow onwards, life will be my work.

AutoNavi is China’s top online mapping company, so the most obvious benefits for Alibaba are mapping-related. If the company is interested in moving into location-based services and commerce — and it obviously is — there’s no better partner in China than Autonavi, as no one has better maps or more location data than the company. And if Alibaba and AutoNavi can integrate their systems effectively, Alibaba will be able to quickly amass a remarkably precise database of things like purchases and consumer behavior based on location.

This data could be used in all kinds of ways. For example, Alibaba could monitor public pollution data and then automatically market air filters and masks to people who are located in the most polluted areas. Its system could analyze trends and notice that people in your neighborhood tend to buy more of one type of product than the general public, and then market that product more heavily to anyone from the neighborhood. It could even analyze AutoNavi’s data to determine which areas lack easy access to which brick-and-mortar businesses and then push those products more heavily online. ‘We see you live six miles from the nearest store that sells maternity clothing; why not buy it online instead?’

But another more easily overlooked aspect of AutoNavi’s appeal may be its userbase. The company has more than 100 million users on its mobile apps alone, and Alibaba certainly recognizes that China’s internet is getting increasingly mobile, so any access the company can get to large groups of mobile users is certainly valuable. And there are certainly ways to integrate location-based marketing like I’ve described above into AutoNavi’s existing apps, should the company choose to do so.

Still, with all these investments it’s starting to feel like Alibaba has some very specific course laid out for itself, the details of which aren’t yet clear to the public. The company has obviously embraced Big Data with both arms (it apparently wants to know what you’re saying, where you’re going, and even what music you’re listening to) but the ultimate endgame remains something of a mystery. Uber-targeted marketing? A groundbreaking new social commerce mobile app? Major changes to its web platforms to make them more social and localized? All of the above? We’ll have to wait and see.

The team has been hard at work this week collecting all the top stories in China, so let’s take a look.

1. Report: More Layoffs at Renren, Signs of a Strategic Shift?

China’s Facebook, Renren, just might be looking at some serious changes to its internet strategy. Charlie speculates that this might be a shift into games and mobile apps.

2. China’s MadeiraCloud Gets $1.5 Million Funding, Opens US Office

Congrats to MadeiraCloud for another round of funding!

3. Alibaba Explores Online Mapping, Takes Stake in Autonavi For $294 Million

There’s rumors of Facebook acquiring Waze back in the Valley but Alibaba has already stepped up to the plate with the acquisition of Autonavi.

4. WeChat Now Has 190 Million Active Users, Close to Passing Whatsapp

Watch out WhatsApp, WeChat is after your spotlight. This chat app battle is happening on so many fronts it’s hard to keep up. There are so many battlefields here in Asia and across the world.

5. Umeng Dominates Chinese Mobile App Analytics, Plots Overseas Expansion

Thus continues the trend of Chinese internet companies increasingly looking global.

6. China’s Top 3 Most Profitable Web Companies

TL;DR: The top three are Baidu, Alibaba, and Tencent. They basically rule over the Chinese internet, but it’s telling to know what business models work in Vietnam.

7. After 1 Year in China, Evernote Reaches 4 Million Chinese Users

Evernote is getting more and more aggressive in Asia and 4 million in a year is quite a lot for the note taking service.

8. Tencent CEO Pony Ma Talks WeChat, Competition, Going Mobile and Global

Click here to get more notes on where Tencent is headed next. It’s fascinating to see the moves this innovative company makes.

9. Not Only on WeChat: Tencent Hints at Integrated Mobile Gaming Platform

And to follow up the last article, let’s look in more detail at where Tencent is really headed.

10. China’s Top 10 Smartphone Apps for Android and iOS

A really nice break down from Charlie on the top apps in China. Of course, QQ dominates both charts.

That’s all for this week, folks. For our full spread of China coverage, you can click here or subscribe to our China RSS.

That number comes from a “knowledgable” but anonymous source and, as usual, it should be taken with a grain of salt. But Renren spokespeople did admit to Sina Tech that some personnel adjustment was happening, characterizing it as being part of “an attempt at an internal startup mechanism [within Renren],” whatever that means. They also suggested that some of those laid off might be re-hired internally for work on more promising projects like Nuomi and Renren Games. (On a related note, Renren denied outright reports that there were also layoffs at Nuomi, saying that the team is actually in the process of expanding and that there have been no layoffs there).

We’ve already seen Renren beginning to move away from traditional social networking and toward games and mobile apps, so it shouldn’t be too surprising that a strategic shift of that magnitude would result in a little internal upheaval and personnel turnover. It seems there have been some layoffs, but I don’t think it’s time for Renren fans to panic just yet.

(Sina Tech via TechWeb)

This is what Alibaba wants: Autonavi’s mobile maps know-how and market reach.

You can wait years for a big deal to hit the Chinese web, but recently the blockbuster moves are coming in thick and fast. The latest sees e-commerce company Alibaba taking an approximate 28 percent stake in Autonavi (NASDAQ:AMAP), makers of online maps and navigation. This comes just two weeks after Alibaba got more social by taking a 18 percent stake in Sina Weibo, the country’s hottest social network right now.

Autonavi is China’s top independent online mapping company, with over 100 million users on its mobile apps, constituting just over 25 percent market share among mobile maps in China. Search giant Baidu is second in this sector, while Google Maps continues to lose market share. This evening’s announcement points out:

The parties plan to share certain data, including AutoNavi’s map data and location-related information of the merchants on Alibaba’s e-commerce platforms, including Taobao Marketplace and Tmall.com. AutoNavi and Alibaba will also cooperate in the areas of map engine, location search, navigation and cloud computing services and will cross-promote their respective products and services, with a goal of developing new location-based business models.

Joseph C. Tsai, executive vice chairman of Alibaba, and Eddie Wu, president of Alibaba’s mobile products division, will join AutoNavi’s board of directors upon the closing of the transaction. The transaction is expected to close in the near future, subject to the satisfaction of customary closing conditions.

Alibaba, which is today celebrating 10 years of Taobao, its eBay-beating C2C shopping site, has been diversifying in the past year. Aside from acquiring the social music service Xiami last year and today’s significant stake in Autonavi, there’s lots of talk that the e-shopping behemoth is planning to do a lot of shopping of its own, with rumors of acquisitions/stakes in Umeng (mobile ads and analytics for app developers) and UCWeb, makers of the hugely popular mobile browser UC Browser. It’s no coincidence that these all relate to mobile.

Everybody loves a good mystery. And it seems the folks at Netease have gotten people talking about one with this teaser page for a new first-person shooter. More about the game will be revealed next Tuesday, but there are some very interesting clues on the teaser page (pictured above).

First is the series of “passwords” used to “hack” into the computer. The three passwords that fail initially are CryEngine, Unreal, and Frostbite. As hardcore gamers know, these are the names of three of the biggest and most modern FPS game engines in the world, and have been used for many of recent globally high-profile FPS titles. But the computer on the teaser site rejects those “passwords” and instead chooses Dynamite. Since that’s not the name of an existing game engine, we can only assume that Netease has developed its own engine for use with this upcoming game.

While it could just be marketing hype, it was definitely bold for Netease to put this apparently engine in the same league as CryEngine, Unreal, and Frostbite. If it really is on that level — and that’s a big if — it could signify an attempt by Netease to move beyond China, or at least to license its new engine to the global game developers who are now using CryEngine or the Unreal engine for their games.

We can also make a few guesses about the game itself from the teaser page. Given that the gun and helicopter on the desk appear to be pretty modern, we can assume the game takes place in or around the present day, and that it probably also involves some vehicle combat. The bloody biohazard symbol is interesting, too — could the game’s plot concern chemical warfare of some kind?

There are also a few guesses we can make about the game based on Netease’s past record of game development. While it seems clear this game is a first-person shooter, Netease’s most successful games have been MMORPGs, and it seems likely that this game may include some MMORPG elements, although it’s hard to say exactly what. More interestingly, though, many of Netease’s biggest games include elements of Chinese history and mythology. Will this shooter also include some China-specific elements to make it more appealing to the hometown crowd?

Whatever it turns out to be, the game is facing what is likely to be stiff competition from the impending release of Call of Duty Online, Activision and Tencent’s interpretation of the global smash-hit shooter franchise as a freemium PC game for the Chinese market. The game is coming out soon, and while I’ve argued that hardcore Chinese gamers may be put off by it, it’s still likely to be very popular, and Netease’s game will need to be pretty impressive to turn heads away from the CoD spectacle.

We’ve been following the progress of Beijing-based MadeiraCloud pretty closely since last year, and today the cloud visualization and management startup has its biggest news ever – a round of series A funding worth $1.5 million from Sequoia Capital.

MadeiraCloud founders Peng Zhao and Daniel O’Prey

The funding will be used to open an office in San Francisco and to enhance its newly rolled out support for Amazon Web Services’ (AWS) Virtual Private Cloud (VPC) service. MadeiraCloud will also grow to 12 staffers.

The simple idea behind the software-as-a-service (SaaS) MadeiraCloud platform is that it allows users to manage their AWS cloud architecture the way you design it – diagrammatically. It’s proving especially useful for startups managing an app backend on AWS as they grow and scale, and MadeiraCloud is currently utilized by thousands of users in 85 countries – from startups to large enterprise – to manage $25 million worth of AWS resources.

MadeiraCloud CEO and co-founder Daniel O’Prey puts the early success down to a “simple, familiar, self-service interface” that allows drag-and-drop re-organization that saves companies “significant time and money” in managing their servers and connections.

It seems that San Francisco will be the new base for this globally-minded startup, with Beijing retained as a development office.

Image via Reuters

On Monday, the US Department of Defense released a report that once again points the finger at China for hacking and other forms of digital data theft that pose a threat to American public and military interests. And although the report doesn’t mention Chinese telecom companies Huawei and ZTE by name, it apparently spooked Indian intelligence authorities enough that Indian intelligence agencies are now undertaking a thorough investigation of the Chinese companies.

According to the Hindustan Times, Indian intelligence has set up a testing facility in Bangalore and plans to run Huawei and ZTE equipment through the ringer.

This isn’t the first time Huawei and ZTE have found themselves in the sights of Indian authorities. Last year, India considered investigations into the telecoms, and earlier this year both were denied ‘domestic telecom’ status in the country over lingering security concerns.

Concerns about Huawei and ZTE stem from their apparent ties with the Chinese government and military. Huawei, for example, was founded by a former military officer and maintains a Chinese Communist Party office within its corporate headquarters.

(Hindustan Times via Sina Tech)

Consisting of an incubator, accelerator program, and a final contest, ChainLabs is now seeking its first ever intake, with applications open until June 1st. It’ll begin one month later, with November 7th slated for the final demo day and competition.

This new incubator is run by Hong Kong-based company Chain Media, which also operates specialist logistics magazines and Chain.net, a “supply chain social network”. Though the program is based in Shanghai, it’s open to startups from around the world.

ChainLabs principal and Chain Media CEO Max Henry says in today’s announcement:

As the first supply chain accelerator in the world, ChainLabs will provide seed funding, a virtual workspace, mentoring program and a demo day that nurtures skills and relationships to enable entrepreneurs to build remarkable supply chain, procurement and logistics solutions.

While it won’t produce any sexy apps or anything that most of us will ever use, it’s an interesting move that broadens the startup landscape in the region.

Interested startups with big ideas for moving stuff around can apply for ChainLabs here.

With 190 million monthly active users on WeChat, that means the fast-growing app is poised to pass Whatsapp, which has 200 million monthly actives in new data revealed in April.

But Whatsapp enjoys far more international success. Tencent recently revealed that WeChat has 40 million users overseas, meaning that its reach beyond China is far smaller than Whatsapp’s – and behind Japan-made Line app as well.

Hou Xiaonan’s number, spotted by Marbridge Daily, was revealed yesterday at the final day of the Global Mobile Internet Conference (GMIC) in Beijing. The day before that, we saw Tencent CEO Ma Huateng explaining some of the company’s strategies and visions for more mobile success.

This is part of our coverage of GMIC 2013 in Beijing, which was on May 7 and 8. For other stories from this event, click here.

One of the hottest startups in China, Umeng (pronounced as “you meng” in English), is run and was founded by Fudan University graduate and ex-Googler in China Jiang Fan.

Umeng is like Google Analytics for mobile applications in China. Founded in 2010, Jiang said that the company came about because there was a need for it. Knowing that mobile will be huge in China over the next couple of years, Jiang believed that mobile developers would require tools to help them understand their users’ data and in-app behavior. He was right. Today, Umeng is serving over 100,000 mobile applications across all major mobile platforms — iOS, Android, and Windows Phone — with more than 50 percent of all Chinese developers using the service.

Umeng’s fast-paced growth was a mixture of timing, luck, a good team, and a solid product. Jiang says that Umeng is the only mobile app analytics company that was first launched in China and for China. Even today, there are very few competitors because making money through analytics is tough. Jiang also says that Umeng started early and grew together with the ever-growing mobile industry in China.

The team at Umeng is made up of folks who used to work at big companies including Google, Microsoft, Baidu, Sohu, and Yahoo. Today, Umeng has over 100 people in the team and has raised more than $10 million from Innovation Works and Matrix Partners.

Speaking about turning points and challenges, Jiang says that there were times when Umeng was tempted to go astray to run other mobile-related businesses which have a more direct way of generating revenue (such as mobile advertising). But he is thankful that Umeng ultimately stuck to its vision to serve the Chinese developer crowd. And being in the mobile space, changes are rapid, especially for mobile games. Umeng, as a startup, has to learn how to keep up with the changing trends. He said (translation ours):

Some developers grew very big very quickly. So it’s always a challenge to keep up with their usage and tracking demands as a startup.

Despite 100 percent of its developers being local Chinese developers, Jiang reveals that 40 percent of their apps are actually targeting the global market. Expanding abroad is part of Umeng’s plan and the team is already strategizing on how to do exactly that.

Jiang told Tech in Asia that Umeng will be releasing its English version by Q3 of this year, and stresses that the service will offer value to overseas developers just as it does to Chinese ones. Since China is an unique market, he says the purpose of an English site is to help overseas developers who are targeting Chinese users track and mine user data better and with more precision. He added (translation ours):

The potential is there. In the future, China could represent half of the entire world’s mobile user population.

In addition to analytics, Umeng also provides developers with an app network service that helps to cross-promote apps. The future of Umeng, as Jiang explains, is that it will continue to provide the services developers need. He believes that if the mobile industry in China continues to grow and mature, Umeng will eventually find a way to build a sustainable business model around its service.

And if you’re wondering about the Alibaba acquisition rumor that is spreading, Jiang confirms that both companies are speaking to each other but nothing has been finalized so far!

The source, who works at an unnamed telecom, says that among other reasons, China Mobile is not currently prepared to launch the network commercially, and is on pace to be ready for launch in October if nothing goes wrong. But the roll-out could come as late as early 2014, depending on how things develop over the summer and into the fall.

And those who’re waiting for FDD-LTE rather than China Mobile’s TD-LTE are likely to be waiting even longer. China’s Ministry of Industry and Information Technology is reportedly unlikely to issue any permits for FDD-LTE networks until months or possibly even a year after China Mobile’s TD-LTE network is launched, as it favors the home-grown TD-LTE technology.

While Southern Metropolis Daily is a pretty reliable paper, this is still just another anonymously-sourced rumor and should be taken with a grain of salt. Rumors about the launch of 4G in China have been flying for more than a year now, and at this point the most prudent response seems to be simply: we’ll believe it when we see it. That said, all signs do seem to point to 4G coming to China at some point before the end of this year if all goes smoothly.

(Southern Metropolis Daily via Sina Tech)

Sina’s report cites a “knowledgable” source in “investment circles” as saying that Sogou is looking for a buyout, and the three aforementioned internet giants have jumped at the chance. According to the source, Qihoo has offered a $140 million deal that includes cash and stock options, Baidu is offering more in cash (he doesn’t cite a specific sum), and Tencent is mostly in the mix because it wants to be sure Sogou doesn’t go to Qihoo.

Furthermore, the report suggests a difference of opinion high in Sogou’s ranks, with CEO Wang Xiaochuan wanting to take the Qihoo 360 deal while board chair Zhang Chaoyang would prefer to sell to Baidu. But as Zhang has reportedly been taking more personal time of late, Wang has been taking the front seat in the proceedings, and Sina’s source says, “it’s a bit more likely that [Qihoo] 360 will win.”

Of course, this is still just a rumor, even if these kinds of rumors do seem to be coming true a bit lately. We’ve contacted Baidu, Qihoo 360, and Tencent for comment, and will update this story if we hear back, but we don’t expect much as most companies have a general policy of not commenting on rumors. All three of them declined to comment for the Sina Tech story (although apparently none of them denied it outright, which is interesting). Sogou CEO Wang Xiaoquan has called the rumor “unreliable” on his Weibo account.

By some counts, Sogou has the third-largest market share in Chinese search, so acquiring it would be a big boost for Qihoo, which has been struggling to close in on Baidu after its initial grab of more than 10% of the market shortly following its launch. But Sogou’s real value may lie in its widely-used Chinese input method software. The company has already begun to integrate search into its input method in a way that I think is potentially very significant. New applications of that concept could be a nice — and very valuable — bonus that comes along with the boost in market share of buying Sogou.

(via Sina Tech, image deleted)

It’s worth noting that compared with Q4 2011, Alibaba also has had the strongest growth both in revenue and profits.

If these numbers are any indication, Alibaba is likely to hold that top spot on the profit charts for some time to come. But of course, all of these companies are making gobs of money, so I don’t imagine any of them are going to be all that upset about who places where on this ladder.

It’s also worth noting that Tencent’s fall in profits could be due to increased investment in WeChat, which is fighting similar apps like Line and KakaoTalk for international users, and which hasn’t been fully monetized yet. Baidu is also moving internationally – we just spotted the company making inroads into Indonesia — and splashed some cash on a big local acquisition, too. And of course, Alibaba is clearly not going to be content to rest on its laurels, as it just invested a boatload in Sina Weibo and rumors are swirling about a number of other acquisitions and a possible IPO on the horizon.

(via Sina Tech)

Brisbane-headquartered game studio Halfbrick is nailing it in China with its Fruit Ninja game. If you think people are sick of slicing all kinds of fruit on their mobile screens, then you’re so wrong.

Speaking with Phil Larsen, chief marketing officer at Halfbrick on the sidelines of the Global Mobile Internet Conference (GMIC) in Beijing today, he told me that Fruit Ninja has been downloaded 500 million times across the world. Out of which, China accounted for 200 million of these downloads with 50 million monthly active users coming from China. Phil told me:

Fruit Ninja is a very simple casual game that has a universal theme. It’s not about shooting, action, or any particular game play. It’s based on fruits and it’s all around the world… So it crosses the language barrier [since] it doesn’t need any text to play. You can understand just from the visuals alone. And that kind of simple arcade gameplay really works well in China.

The Fruit Ninja craze in China is done without having an office in China. Phil says that Halfbrick wanted to keep the company small and lean. Instead of opening an office in China, the Australian company works with iDreamSky who helps Halfbrick distribute their games in China, mainly working with telcos and local Android app marketplaces.

Despite having huge download numbers, the revenue figures from China aren’t proportionally large. In China, the Fruit Ninja Android app generates revenue through in-app purchases and ads. Phil explains that Chinese gamers in general are okay as long as they are able to enjoy 90 percent of the game without spending. If needed, Chinese gamers are willing to farm (without paying) for higher level items. So in the future, Fruit Ninja is looking to draw in paying Chinese users to try the 100 percent full gaming experience for a limited time and hope that they will buy to keep up with that level.

Besides Fruit Ninja, Halfbrick also has other games including Jetpack Joyride, Zombie Dash, and its latest title, Fish Out Of Water.

This is part of our coverage of GMIC 2013 in Beijing, running yesterday and today (May 7 and 8). For other stories from this event, click here.

Earlier we announced the winner of the Seed Stage G-Startup contest at the Global Mobile Internet Conference (GMIC) here in Beijing, and now we are also delighted to know that Israel-based QR code generator, Visualead, has walked away as the winner of the G-Startup Growth Stage competition.

Interestingly, it was also one of the startups which caught my attention during the G-Startup pitches. It converts ugly QR codes into visually appealing ones, and aims to be one of the most effective and useful technologies in leading consumers from offline to online.

How the idea came about

The current Visualead that you see is actually a pivot from the original idea that the startup founders had. It first started out as an image scanning and detection application, where users can scan images and obtain more information about what’s in the picture. However, this poses two problems: First, how would users know that they are able to scan the picture? It would probably require another line which directs users to scan, which could visually ruin the picture. Second, it would require users to download another specific application to scan the product, which could be tedious for users.

They then saw an opportunity in the perfect marriage between QR codes and image scanning, since there was a rise in use of the former. Visualead was the eventual hybrid solution which takes advantage of both technology. Users would be aware (in theory) that they can scan it based on the prior knowledge of QR code scanning.

Click to enlarge.

Engaging consumers

Speaking to Uriel Peled, co-founder and CMO at Visualead, he tells us that QR codes are too ugly and often placed on the side of offline marketing materials. With Visualead, it has been proven, says Uriel, to increase the percentage of scans, which shows that the prettier image is more effective in engaging an audience.

He also reveals that consumers are more inclined to engage with brands that produce visually appealing QR codes, and it makes it more personal for consumers to connect with QR codes that are branded and more creative. In fact, within six months of operation, Visualead is experiencing an exponential growth of businesses adopting its platform, seeing more than 200,000 new business users each month. CEO and co-founder, Nevo Alva, also revealed in his pitch that one particular Austrian firm saw a 200 percent increase in signups using a Visualead generated QR code.

Nevo Alva gives his winning pitch this afternoon in Beijing.

Looking to China and Asia

At present, Visualead is free to use to replace normal and boring QR codes with sparkly new ones. It plans to collect a premium fee as it rolls out new features, such as analytics that enable companies to better understand consumer scanning habits. This would ensure businesses would be able to effectively target its consumers. It also targets advertisers and designers to adopt its platform in the designing of marketing collaterals, acting as Visualead’s ‘resellers’.

Visualead first opened with the aim of attracting business from the US and Europe, but also sees an opportunity in the Chinese market which is experiencing an exponential growth in smartphone usage and QR code scanning. Indeed, we’ve seen that QR codes are an integral part of WeChat, the hugely popular messaging app. It is looking to have some business co-operation with bigger companies, such as Baidu, Alibaba, and Sina. It is also searching for a Chinese partner.

Uriel explained that as much as copying is a concern for many startups when it comes to entering into Chinese waters, he said that its technology has several international patents, with a China patent currently pending.

Apart from China, it hopes to expand into other markets such as Singapore, Japan, and Korea. It is also currently looking to raise series A investment.

This is part of our coverage of GMIC 2013 in Beijing, running yesterday and today (May 7 and 8). For other stories from this event, click here.

While we were doing our usual browsing of the web we stumbled on something very interesting: a new site by China’s Baidu (NASDAQ:BIDU) that’s an Indonesian version of its web links portal Hao123. Just like Baidu’s other Hao123 sites outside of China, the new portal for Indonesia uses Google’s search engine rather than Baidu’s. Baidu declined to comment about this stealthy launch.

Baidu also runs its Hao123 portal – which is a sort of web directory like AOL or Excite – in other Asian and Mid-East countries in their local languages, like Vietnamese, Japanese, Thai, and Arabic. Plus it operates in Portuguese for Brazilian netizens.

Like all such web directory sites, Baidu’s Hao123 monetizes from advertising and paid links. The Indonesian site has links to local web favorites such as Kaskus and Tokobagus, plus lots of other local and global media and social sites. It’s not clear if those are all paid link. Of the five search options on the Baidu Hao123 site, three lead to Google searches, while ‘video’ leads to Youtube, and ‘music’ goes to the notorious piracy site 4Shared.

Earlier this year, another Chinese company made a move into Indonesia when Tencent president Martin Lau was cautious in saying that it’s in talks with local company MNC Media about the possibility of launching a search engine in the country.

While it’s not guaranteed that Indonesia will see the launch of Baidu’s search engine any time soon, Baidu is doing research into Southeast Asian languages at its new Singapore R&D lab, so it’s core search engine could finally expand to somewhere other than China and Japan.

Baidu, which is China’s top search engine, has been looking overseas a lot more in the past year; aside from that lab, it has launched antivirus products for Southeast Asian markets, and zoned in on north Africa and the Mid-East with its mobile browser app.

Whereas the Jawbone Up costs a whopping $130, Codoon’s little clone – which will launch soon, though no date is set – will cost only RMB 299, which is $48. There is some demand for imported Jawbone Up devices in the country, but they sell for RMB 1,100, which is a staggering $177. Here are the two gadgets side by side:

The new gadget will work with Codoon’s existing tracking apps for iPhone and Android to give you analytics about your exercising, movements, and sleep patterns. The Codoon homepage has had a nice, slidey revamp to welcome its new product – and that’s reminiscent of Jawbone’s homepage as well.

The new Codoon Sports Bracelet and its fitness data app.

Codoon was founded in October 2009 and received over $1 million in investment in April 2011.

Aside from sending data to Codoon’s mobile apps, the new Codoon Sports Bracelet will also zap your data to a Baidu Cloud account.

In the past, Codoon’s wearable hardware was optional, as its smartphone app can do a lot of data tracking. But with its new Codoon Sports Bracelet, there’s much more emphasis put on its hardware, which will surely help with the startup’s revenue stream.

Regardless of the derivative design, the price is right on this new fitness-tracking gizmo. RMB 299 is definitely the kind of price-point where a lot of Chinese smartphone owners could think Well, I’ll give it a shot. Perhaps this kind of wearable tech, after a sluggish start in China, will finally pick up pace.

(Hat-tip to QQ Tech for spotting this)

Translated chart via youxistory.com

The rankings are apparently calculated based on the scores of individual students, and I suspect it’s not an extremely precise system, but even so, it’s interesting that some of China’s most elite academic schools are also the best schools at DOTA. I guess when you work hard, you play hard too! It’s also worth noting that Wuhan has two schools in the top six (though having once visited Wuhan, I can’t say I’m surprised students there prefer to stay indoors playing computer games).

(QQ Games via Youxi Story)

LeTV SuperTVs at the launch event, displaying the screen of a smartphone that is connected to them via wifi.

Chinese video and television company LeTV has been talking about its SuperTV (a smart TV) for quite a while. In fact, you may remember that last fall Kaifu Lee’s Innovation Works invested in the LeTV subsidiary that does its television hardware and software. Yesterday, LeTV CEO Jia Yueting announced the final details about the SuperTV at a press event in Beijing.

The SuperTV comes in two models, a 39 inch model called the S40 that will cost 1999 RMB ($317), and a 60 inch model called the X60 that will cost 6999 RMB ($1,111). The TVs both feature 3D 1080p HD displays, and come installed with a LeTV operating system, app store, and streaming video platform that have all been designed specifically for a big-screen ecosystem. They both support wifi, and have some other cool features like the ability to be controlled via mobile phones. They also apparently feature a front-facing camera with some Kinect-like motion sensing capabilities. The televisions are being manufactured by Foxconn.

Taking a page out of Xiaomi’s book, the televisions will only be available directly through LeTV’s online shop when they go on sale sometime near the end of June. Jia says that even the expensive X60 has twice the features of competing products at only half the price, so the company is clearly expecting the TVs to do well. So, presumably, is Kaifu Lee and the rest of Innovation Works.

As with most products, though, it’s hard to forecast what the future might hold for the SuperTV until its out in the world being used every day by people who don’t work for LeTV. Will the apps fly or fizzle? Will the picture quality and color be as good as competing brands? We’ll have to wait until June to find out.

(via Sina Tech)

Yesterday, in an interview with Sina Tech at GMIC, Kingsoft CEO Fu Sheng made an announcement: soon, the company plans to release a mobile version of its popular “Cheetah” web browser. Although he didn’t reveal a precise release date, Fu told reporters that the browser would be available on both iOS and Android in about a month.

Of course, it’s not a huge surprise that a company operating a PC browser would choose to launch a mobile one, but it’s worth pointing out that Kingsoft faces some strong domestic challengers in this space. In fact, as we saw recently in this list of China’s top 10 smartphone apps, UC Mobile Browser and QQ Mobile Browser are among the ten most installed and most used apps on both iOS and Android.

Numerous other Chinese internet companies also offer mobile browsers but have struggled to match the success of these frontrunners, and Kingsoft has come especially late to the party. Fu says that the mobile browser will work to fully support HTML5, and although he didn’t say as much, perhaps Kingsoft hopes that can be one factor that differentiates the Cheetah mobile browser from some of its competition.

But the challenge of launching a new mobile browser clearly hasn’t affected Fu’s good humor. At GMIC yesterday he reportedly joked with condom brand Durex’s Asia director Aditya Sehgal that what Kingsoft and Durex do is actually similar, as Kingsoft works to “make mobile phones last longer.” In a follow-up weibo post, he cheekily added that the similarities don’t end there: Kingsoft also offers a “pleasurable” user experience and noted that its software prevents you from getting viruses.

(image via this awesome cover of 东方企业家)

Last time we got some China numbers from Evernote, makers of the notes syncing service, it had hit 1.1 million users in the country in July 2012, a mere two months after launching its Chinese operations. At today’s Global Mobile Internet Conference (GMIC) in Beijing, Evernote CEO Phil Libin gave some updated figures, revealing that his company now has four million Chinese users.

Earlier today, the Evernote China team in Beijing flipped the switch on the Chinese version of its Evernote Business service (see here). That team has now grown to 17 people.

Aside from the stats and that launch, Phil talked about how China is an integral part of Evernote’s strategy of being a long-term startup that can survive up against the world’s top web giants. Speaking of China’s own web ecosystem, he said that the next decade will see Chinese tech companies going global, and the nation will, as it shifts away from manufacturing and towards a knowledge-based economy, become a creative melting pot. Startups in China will fit into that melting pot, Phil added, by being an innovation furnace.

Evernote still has two rivals larger than it in China: Shanda’s Mknote (five million users last year), and Netease’s Cloud Notes, which reached eight million users in December.

(Source: 36Kr – article in Chinese; Photo by @chadcat)

This is part of our coverage of GMIC 2013 in Beijing, running today and tomorrow (May 7 and 8). For other stories from this event, click here.

Tencent’s Pony Ma (sat on right) takes questions from the host and a panel of industry experts.

This afternoon at the Global Mobile Internet Conference (GMIC) event in Beijing, Tencent’s ‘Pony’ Ma Huateng was on stage speaking about his company’s strategy and future. The first question was about the struggle Tencent’s WeChat has with China’s mobile telcos, which is one of the hottest tech topics in China right now. But Ma seems confident that WeChat isn’t going to charge users.

Ma was questioned how WeChat will be monetized by Tencent (HKG:0700). There are quite a few methods – stickers and games – as the onstage panelists suggest. (Line and KakaoTalk have been doing all these so successfully). Ma agrees that these are indeed the ways to make money for WeChat. Another way to make money, he explains, is via offline to online services and also digital products, such as an artist who could share their art on mobile platforms like WeChat. That sounds a lot like digital publishing which Line and KakaoTalk recently started doing.

The next question asked was if QQ, Tencent’s traditional IM service, will cannibalize WeChat. Pony explained that their functions are different, for example push-to-talk and voice messaging never existed on QQ. QQ’s active users are double that of Wechat. Ma says that companies can’t just have a department that helps desktop products turn into mobile products. Rather, there must be a department that needs to focus entirely on building for mobile from scratch.

Ma says that mobile is a very tricky industry; despite the existence of a lot of giant web companies, many of them may not be winners in the end. Tencent is always not at the start of the wave nor at the end. It always comes in at the right time, the host states.

The onstage host commented that Tencent is winning on every front on the Chinese web, especially mobile. But Ma humbly said that search and e-commerce aren’t successful points for Tencent. Indeed, it’s Soso search engine, and its various e-stores, like Paipai and QQ Buy, have always struggled.

Learning from Facebook

Ma says that overs the years, Tencent learned that it couldn’t do everything and will be working with third-party companies closely in the future. He also confirms that WeChat will have social games and assures game developers that Tencent will not be providing their own games. Ma now sees Tencent as a platform company rather than a content company.

The founder and CEO adds that Facebook is the first successful open platform on the web, and that emerged back in 2007. Tencent only got into this kind of space in 2009. Ma says that doing an open platform is technically challenging and must be done with care. So it took Tencent two years, starting in 2011, before Tencent really pushed itself as an open platform company. If I’m not interpreting this wrongly, Tencent seems to be prepping hard for its mobile gaming platform despite seeing KakaoTalk and Line out in the market already.

Will Tencent go into hardware? Ma says he is interested but doesn’t have a clear plan on hardware. One thing’s for sure, Tencent isn’t going to work on a phone. There’s no clue about Tencent doing a Google Glass-like device either.

Pony Ma is also famous for testing the user experience of his own products. Ma explains that he will try to imagine himself as an average user or a not so savvy user to test applications. He says that besides providing a great user experience in its applications, Tencent’s success factor is to keep innovating.

Competition, innovation

WeChat went global in 2012. It now has nearly 400 million users – but most are in China.

Commenting on Alibaba’s investment in Sina Weibo last week, the Tencent CEO says he doesn’t feel threatened; rather, he feels that it is only natural. Instead of clashing, Ma suggests that the real challenge is to keep innovating and create new technologies to serve people better.

When the host asked the panelists if WeChat can help Tencent get on the global stage, all but one person raised their hands. Ma himself feels 50/50 about this opportunity, noting that there are strong competitors overseas – a reference, I believe, to Whatsapp and Line. But as Ma has always said, mobile has given Chinese companies a good chance to innovate and succeed globally.

Ma actually met the NHN Line CEO this afternoon and revealed that there might be a way to collaborate. Both of them agree that once a chat app is popular in the country, it tends to stick on unless something major crops up. Ma explains that in the future, there could be more collaboration. But for now, Line and WeChat are competitors both in China and in the international markets (also note that Tencent has invested in rival Korean-made app KakaoTalk). And Ma believes that to do well globally, localization is important. For example, some aspects of WeChat in China (where the app is called Weixin), such as the ‘drifting bottle’ with secret messages that go out to random people, have been removed from international versions of the WeChat app.

Ma concludes by saying that he is enjoying the journey now as Tencent’s WeChat expands globally. And, regardless of the result, win or lose, he will be giving his best shot to put Tencent and Chinese tech companies on the global map.

This is part of our coverage of GMIC 2013 in Beijing, running today and tomorrow (May 7 and 8). For other stories from this event, click here.

China’s UCWeb and its UC Browser app for mobiles have more than 400 million users worldwide with 100 million outside of China. Today at the Global Mobile Internet Conference (GMIC) in Beijing, UCWeb announced that it will invest RMB 3 billion (more than $480 million) over the next three years. The project is codenamed/abbreviated ‘GEEK’ and will focus on four things:

• Global expansion: Focusing on Brazil, Vietnam, Russia, and Indonesia. CEO and founder, Yu Yongfu also said that UCWeb will be opening up offices in these four countries very soon.
• Open Ecosystem: UCWeb will continue to strengthen its platform and replicate local success overseas. UCWeb says that its gaming platform has more than 20 games which are generating more than $150,000 each month right now. 200 million clicks are registered every day across all versions of UC Browser.
• Evolved monetization: Searching for new revenue streams while sustaining the growth for gaming content. In 2012, more than $15 million was generated from the games platform.
• Technology Know-how: Integrate with the cloud and scale to support new extensions and services in the future through technology advancement.

UCWeb CEO Yu Yongfu talking at GMIC2013 this afternoon.

To fuel UCWeb’s GEEK plan, CEO Yu said that the company has more than RMB 1 billion ($161 million) in cash and is already profitable. UCWeb’s revenue has doubled in the last three years and is generating revenue from ads (50 percent) and games (50 percent). The profit margin for ads could be as high as 85 percent, he added. If needed, CEO Yu claims that there are a lot of investors who are hungry to invest in UCWeb.

UCWeb, as we have written before, is poised for IPO in 2013. But in the interview with CEO Yu today, he said that he would rather delay going public to avoid unnecessary pressure from investors. Yu also said that UCWeb isn’t interested to get acquired and be part of a larger company. So while Baidu may be actually interested in UCWeb, it seems like Yu isn’t willing to let go.

UCWeb currently has more than 1,500 staff across the world and is looking to add another 1,000 more people in the coming three years.

(Photo of Yu from QQ Tech)

This is part of our coverage of GMIC 2013 in Beijing, running today and tomorrow (May 7 and 8). For other stories from this event, click here.

One of the most popular Chinese-made apps around the world is Camera360, the photo filter app made by a startup team in Sichuan province. Today the crew has revealed that Camera360 has 100 million global users across its three versions for iPhone, Android, and Windows Phone. Of that number, the startup tells us that 30 million of them are active monthly users.

The major milestone comes almost exactly a year after Pinguo, the makers of Camera360, received nearly $10 million in funding. At that time, it had 30 million users across its three mobile apps, Camera360, Photo360, and Movie360.

In the intervening year, Camera360 – which doesn’t have an Instagram-like social element – added its Cloud Albums feature to allow easy photo back-ups. While optional, the team has already seen more than 240 million photos uploaded into Cloud Albums.

Camera360 has also built a platform on its popular photo filters in the past few months, and that SDK is now available for free to other developers. The SDK has been used to put filters into apps made by major web companies like Tencent, Renren, and Kaixin. Camera360 is now in talks with a number of smartphone manufacturers to have its filters preinstalled in some new phones.

Of course, Camera360 is up against a lot of competition in this niche. We recently rounded up 25 Asia-made photo apps, which is a list worth seeing.

First of all, Ma clearly recognizes that some observers have been a little nervous about the e-commerce company’s step in to social media. After all, nobody wants to see Weibo turned into a glorified advertising platform, and Ma knows that. On the topic of how the services will be separated, he said:

If we turned Weibo into an e-commerce platform, we would be condemned by its users and also condemned by history [...] We’re now 18 percent shareholders in Sina Weibo, so if Weibo is doing well that’s good for us. We want Weibo to do well before we discuss what it can give Alibaba. Weibo is Sina’s thing, but if [Sina] needs us to do something, we will support them. That’s the only way this cooperation can continue.

Alibaba didn’t invest in Weibo for no reason. “The investment in Weibo is an important step in Alibaba’s future development,” said Ma. He didn’t name any specific reasons; we can think of a few.

But at the same time, Ma seems to suggest that the investment is also designed to help what he sees as a valuable service that might be in trouble. He says Weibo has increased transparency in Chinese society, and that Alibaba wants to help it be healthier and more successful. It’s no secret that Sina has struggled to monetize Weibo effectively, and although Ma never suggests that Alibaba is the white knight swooping in to rescue a damsel in distress, it sometimes feels a little like that’s what happened.

Everyone — Jack Ma included — agrees that Sina Weibo has really changed China’s society (mostly for the better), and everyone knows it faces a threat in WeChat. Users likely would never have guessed that a partnership with Alibaba might be the thing that really lets Weibo flourish, but that could prove to be the case. In ten years, we may well believe that Jack Ma saved Weibo with the Alibaba investment, allowing the service to continue changing Chinese society.

(via Sina Tech)

Well, the rumors are true. Chinese search company Baidu (NASDAQ:BIDU) announced today that it has acquired PPS.tv’s streaming video service for $370 million. The acquisition bolsters Baidu’s video offerings (it already owns iQiyi) and puts it in a position to challenge market leader Youku-Tudou (NYSE:YOKU) for a bigger share of China’s web video marketplace. By some user counts, this acquisition makes Baidu the proud new owner of China’s biggest video platform. (UPDATE: Unsurprisingly, representatives from Youku-Tudou dispute the claim that Baidu is now China’s largest video platform. Baidu’s official press release states that the acquisition “create[s] China’s largest online video platform” but does not cite specific numbers; however, Tech in Asia believes this claim to be based on data collected by a domestic market research firm.)

PPS.tv will continue to operate as a sub-brand of iQiyi, according to the release, but current iQiyi CEO Gong Yu will also be CEO of the new PPS sub-brand. Current PPS president Xu Weifeng and CEO Zhang Hongyu will remain onboard as co-presidents.

In a TechWeb poll from before the news became official, respondents were split on whether Baidu’s newest acquisition could help it win the video market, but the massive move to mobile is complicating the question further. Chinese net users watch billions of hours of video each month, but increasingly they’re doing it from mobile devices, and on that front Baidu’s iQiyi is already closing in on Youku-Tudou. (iQiyi claims 200 million monthly mobile users to Youku-Tudou’s 150 million daily users).

Even so, Youku-Tudou president Dele Liu says he welcomes the competition. Responding to rumors of the merger two weeks ago, Liu told reporters:

After the success and synergy created by the Youku-Tudou merger, increasing consolidation was inevitable throughout the video industry. We are happy to see this purchase go forward; we expect this acquisition will further rationalize the industry and help reduce piracy in the sector.

Nevertheless, the news poses serious questions for Youku-Tudou, and puts Baidu in a better position than ever to challenge for dominance of the streaming video market, especially on mobile devices.

UPDATE: Updated 11:38 to add “monthly” and “daily” to better clarify the Youku and iQiyi mobile numbers.

We’ve seen crowdfunding been put to use for zany gadgets and enacting positive social change, but we’ve not yet seen it being used for investment purposes. But Crowdbaron wants to change that. It’s a Hong Kong-based startup that wants to make investing in real estate as simple as booking a hotel online. Aimed at folks who want to bolster their personal investment portfolio, the idea is that buying a small stake in one or numerous properties lets you take advantage of surging property prices in several countries.

While you are buying a share in a property, this is not a sort of timeshare for the 21st century and so you won’t be staying in the apartment or villa in which you have a stake. This is purely for the profit. So you can spread the risk, Crowdbaron lets you take as little as a one percent stake.

Crowdbaron is aiming its platform at users across Asia, with an initial focus on customers based in Hong Kong, China, and Indonesia. Founder and CEO Saeed Hassan explains to us that the startup is “targeting a less wealthy target group” than would normally take a 100 percent stake in properties – a phenomenon seen recently with wealthy Chinese snapping up properties (and potential escape routes) in Australia, the UK, the US, and many other nations. Instead, Saeed says the site is good for “middle income families who are saving for the future, and who have been burned by the stock market and are frustrated by low interest rates”. He adds:

For these individuals, there is little chance they can purchase in Hong Kong or elsewhere. This group is very large and are willing to enter shared purchase arrangements – because it opens the door to potentially higher and stable returns they otherwise wouldn’t be able to afford. It’s about lowering the entry barriers and getting more people involved.

Aside from making a profit from rising property prices, Crowdbaron investors can also earn revenues from renting out their properties, which will be unfurnished to save hassle for the crowdfunded landlords. Saeed points out that these properties will remain managed by Crowdbaron through its network of property agents, and is also responsible for finding tenants. In the event of a property being empty, Crowdbaron promises to pay investors their share of rental revenue anyway.

Crowdbaron is split between a team of four in Hong Kong, and a further four in Jakarta, Indonesia. More sales staffers are being added this month, and a Madrid office is being prepared. While its investors are mostly in this region, it’s open to global investors aside from, for tax reasons, the UK and the US. Crowdbaron’s properties are currently spread across London and Jakarta, with more in Madrid and perhaps some US cities being added soon.

Real estate crowdfunding could turn out to be one of 2013’s hottest startup – and investment – trends. I notice that US-based RealtyMogul also looks promising, and recently won a bunch of awards and plaudits.