On March 5, 2013, NetBridge Global (NBG) hosted the first of what will be an ongoing series of informative events on “Doing Business in China.” The event was an overwhelming success with 150 people attending live and 30 people logging in via the webcast.
Here is a full HD video of the event on our YouTube Channel:
Speakers included:
- Mark Beckford, CEO, NetBridge Global — MODERATOR
- Darlene Chiu, Executive Director, ChinaSF
- Qiming Huang, Chair of the Board of Directors, SVCWireless
- Christine Lee, Senior Vice President and China General Manager, Tapjoy
- Xiang Xia, Commercial Counselor, Consulate-General of China for San Francisco
We would like to thank our co-hosts Asia Society and Silicon Valley China Wireless (SVCWireless) as well as the sponsor K&L Gates San Francisco.
China Mobile is feeling the heat from the popularity of the free app-based messaging service WeiBo (Weixin in China) as Weibo cuts into China Mobile’s text messaging revenue. It is planning to fight back with a new push for it’s similar “Fetion” platform. From CAIJING Magazine, March 22, 2013:
China Mobile May Restructure Fetion to Fight back Weixin amid Slower Business - The Chinese mobile operator … developing Fetion into an integrated telecommunication product, according to a leaked document. China Mobile, the world’s largest mobile phone operator, is planing a comeback by restructuring its instant SMS service against the increasing popular Weixin which has garnered over 300 million users home and abroad.
“Been there, done that.” China is promoting the development of a new open source operating system, probably to compete with Android, based on the popular Ubuntu O/S. This is well-travelled territory as China has tried and failed to develop and promote their own “standards,” the microprocessor “Godson” and the WiFi Standard “WAPI)” as the most famous examples. From BBC News, March 22, 2013:
China to create home-grown operating system - China is working with software firm Canonical on an open-source operating system customized for Chinese users. The collaboration will produce a version of Canonical’s Ubuntu operating system called Kylin which will be released in April.
NetBridge Global has recently been listed as a Business Service Provider for China by the United States Commercial and Foreign Service Department (export.gov). U.S Commercial Service provides a surprisingly comprehensive set of services for companies looking to sell their product or service abroad. This includes market research, company due diligence, business matchmaking and more.
NetBridge Global can help companies utilize these services and/or connect them to the right people locally, either in the U.S. or China.
Will a Chinese company save Blackberry? From Bloomberg BusinessWeek, March 12, 2013:
What Lenovo Could Gain From Buying BlackBerry - BlackBerry’s share price is rising because Lenovo Chief Executive Officer Yang Yuanqing suggested his company is seriously considering acquiring it. Yang: “BlackBerry could possibly make sense, but first I need to analyze the market and understand what exactly the importance of this company is.”
The king of Chinese eCommerce, Alibaba, will launch its own credit-line. From The Economic Observer, March 12, 2013: Read More
In an extended visit to Beijing in January this year, we had a meeting with officials from the China Council for the Promotion of International Trade (CCPIT). They have an Economic Information Department which generates copious amounts of data and reports on the Chinese economy. We walked away with at least 10 pounds worth of books and reports on Chinese industry and the economy, in both Mandarin and English.
If you are in any way skeptical about the data that the Chinese government produces (I think everybody agrees that whatever industry or market one is looking at, it’s BIG!), there is a solution for you, albeit an expensive one. Read More
Great article from the Wall Street Journal on the challenges of selling mobile apps in China, hitting nearly all the key points, including challenging business models, piracy, payment systems, local competition, and most of all, how to make money. From WSJ Online Feb 20, 2013:
For App Makers, China Is Untapped and Untamed - China is emerging as the next battleground for global app makers—but cracking the world’s largest smartphone market is proving to be vexing. App makers must navigate dozens of app stores with looser rules than in the U.S., fend off a proliferation of cloned apps, and steer around a thicket of regulations and intense competition from local developers.
China’s smartphone market is now as big as the total population of the United States. Lenovo, Yulong’s Coolpad, ZTE and Huawei round out the top five after Samsung. From the South China Morning Post on Mar 6, 2013:
Mainland China’s smartphone market to top 300 million units this year - The market for smartphones in China is forecast to exceed 300 million units this year, representing an industry-leading 32.8 per cent of total global shipments. The market is also expected to be bolstered by rapidly growing domestic demand for Chinese-brand smartphones.
This week NetBridge Global (NBG) hosted the event “Doing Business in China.” Co-hosting the event with Asia Society and Silicon Valley China Wireless (SVCWireless), and sponsored by K&L Gates, the event was an overwhelming success with 150 people attending live and 30 people logging in via the webcast.
The first speaker was Mr. Xiang Xia, Commercial Counselor for the China Consulate-General o San Francisco. Mr. Xia provided insights into the Chinese government’s position on promoting foreign investment and addressing intellectual property issues, and the importance of picking the right local partner. He emphasized, as we have as well, that understanding the cultural differences between foreigners and the Chinese is very important. He used examples of the importance of “face” and “guanxi.” You can read more about this topic in our article: Building a Successful Partnership: Minimizing Communication Issues.
One of the coolest and fastest ramping smartphone apps is getting a dedicated presence in the United States as China’s Tencent opens a “customer relations department” specifically for the WeChat application.
Tencent, made famous (and wildly rich) from the popular Chinese QQ instant messaging (IM) service, released the English version of WeChat in April 2012 and has since grown to over 300M users globally.
We have been seeing this first hand as airline ticket prices have plummetted in mainland China in the last year due to competitive high-speed train options which are not always the cheaper option. From South China Morning Post on Feb 20, 2013:
Airlines fly into headwinds from high-speed trains
Mainland airlines experienced turbulence at the turn of the year, posting losses for three consecutive months due to low air fares and competition from high-speed railways, analysts said. Air China, China Southern Airlines, China Eastern Airlines and other mainland carriers collectively reported 1 billion yuan (HK$1.24 billion) in losses last month, the official China Business News reported yesterday, citing the Civil Aviation Administration of China.
It may be a crazy market, but you need to be there. From the Wall Street Journal on Feb 13, 2013:
Being in China Is Less Risky Than Not Being There
China’s state-owned enterprises are learning to be more innovative, as are the company’s local employees, General Electric Vice Chairman John Rice said. Despite hacking and other issues in China, foreign companies need to be there, due to the country’s potential as the world’s biggest marketplace, Mr. Rice said Tuesday at The Wall Street Journal’s Unleashing Innovation conference in Singapore. The greater risk lies in staying away, he said. Further, physical location doesn’t dictate whether an organization’s cyber security can be compromised. Instead, GE is improving how it handles threats to its information.
Piracy is still prevalent, but the culture of its acceptance is beginning to change. From the Wall Street Journal, Feb 19 2013.
Microsoft’s Zhang Sees China as Asia’s Innovation Center
Chinese engineers are well equipped to produce the kind of innovative work that their more illustrious American rivals are renowned for, said Ya-Qin Zhang, chairman of Microsoft’s Asia Pacific research and development group. “The scale of innovators and the scale of the market will converge and eventually make China a key [innovation] center in the region,” Mr. Zhang said Wednesday at The Wall Street Journal’s Unleashing Innovation conference in Singapore. “There’s been more copying than innovation [in the past], but that’s going to change.”
Why its hard to make money in social media in China. From the Wall Street Journal, Feb 20 2013.
Sina’s Fourth-Quarter Profit Tumbles
Sina Corp.’sfourth-quarter net profit surpassed the market’s expectations, even as it tumbled from a year earlier because of slow growth in advertising revenue from its Weibo microblogging service and investment losses.
Seems like China has got its oil reserves covered. Via Financial Times Feb 19 2013.
China’s foreign oil output surges
China is on track to produce enough crude oil outside its borders to rival Opec members such as Kuwait and the United Arab Emirates, after its state-owned oil companies spent a record $35bn buying foreign rivals last year. In the first tally of the impact of China’s recent overseas oil investments, the International Energy Agency calculates China’s national oil companies will produce 3m barrels a day abroad in 2015, almost double their 2011 overseas output of just over 1.5m b/d and equivalent to Kuwait’s annual output. (via Financial Times Feb 19)
A very interesting article in the Wall Street Journal last week titled China’s ‘Wall’ Hits Business Firms Say Censorship Slows Web Connections, Curbs Access to Services puts a new spotlight on the impact the restrictions are having on business. As most of our team either lives or has extended stays in China, we live this experience real-time. It is a huge drag on productivity.
An excerpt from the article:
Experts say the blocks that keep Chinese users from accessing services like Facebook (FB), Twitter and Google Inc.’s (GOOG) online-video unit YouTube, are hurting businesses, slowing their traffic and hindering their use of a new generation of cloud-computing services like those offered by Google.
Akamai Technologies, (AKAM)which provides services to help websites speed up connections, says China’s average connection speed ranked 94th globally in last year’s third quarter, well behind Asian rivals like Malaysia, at No. 71, and Thailand, at No. 58.
The American Chamber of Commerce in China said last year that nearly three-quarters of about 300 businesses it surveyed said unstable Internet access impedes their efficiency. About 40% said China’s censorship efforts have a negative business impact.
But for many businesses, there may be ways to avoid this productivity drain. We wrote an article on last year on what businesses need to know about China censorship: What Censorship in China Means for your Business. Hosting your servers in mainland China at an approved hosting service is a big first step.
Understanding how the censorship system works and adopting business practices that are required by Internet and media companies (both foreign and domestic) could help a company avoid these issues.
