Wednesday, November 30, 2005

Chinese Portal Sohu Launches Upgraded Search Engine

Press Release

BEIJING, Nov. 30 /Xinhua-PRNewswire/ -- Inc. (Nasdaq: SOHU), China's leading online media, communications, search, mobile value-added services and commerce company, today announced the launch of Sogou Version2.5, a new product upgrade for Sohu's proprietary search engine, Sogou.
Sohu's all-inclusive, proprietary search engine, Sogou, which means 'Search Dog' in Chinese, was initially launched in August 2004. The Company then launched an upgraded version, Sogou 2.0, in February 2005, which allowed for more than one billion retrieved Chinese language pages, higher updating speed and shorter search time.
The newly upgraded Sogou 2.5 is an even more sophisticated version with advanced spider technology which will increase the search database to two billion retrieved pages and 800 million indexed pages after three weeks following the launch. As a result, Sogou 2.5 will have the largest Chinese language search database in the world. Sogou 2.5's advanced technology also triples page crawling speed and improves the speed of page updates to 100million per day.

SOURCE Inc. (Link)

Yahoo! China Has 8 Months to Top Baidu or It's "Game Over" Re-Launches Yahoo! China As Search Brand
China's Search Leader Baidu Intends to Stay Independent
China's Sina Corp Officially Launches New Search Engine iAsk

China Internet Network Information Center: China Online Search Market Survey Report (PDF file)

Google China Selects Chief Marketing Officer

From ChinaTechNews:

"Former general manager Wang Huainan will join Google in China and work as the search engine company's Chief Marketing Officer.

Wang Huainan's 4-month stint as general manager of online auction website came before the company was incorporated into, following Alibaba's acquisition of Yahoo! China. was originally a joint venture between Yahoo! and Sina."

Google Strengthenes China Subsidiary Management
Google Confirms Appointment of Johnny Chou as President
Kai Fu Lee Follows His Heart to Googles Research Labs in China
Google Gets New China Chief And R&D Center

Tuesday, November 29, 2005

China Plans to Merge 3 Major Networks over 5 Years

From CHINAdaily:

"China plans to merge three major networks - Internet, telecommunications and broadcasting - into one in the next five years, said a telecommunications expert yesterday.

The merger of three networks has been included into the 11th Five-Year Plan (2006-2010), which is still in the making, said Song Junde, professor at Beijing University's School of Post and Telecommunications. He addressed a forum on telecommunication networks in Beijing.

However, with the broadcasting network under one supervisor and the other two under another, their integration is expected to encounter resistance from vested interests."

Anti-Baidu Alliance Wins USD 625,000 Strategic Investment

From Interfax China:

"Fanbaidu, which means "anti-Baidu" in Chinese, was founded in June 2005 as an alliance of webmasters with grievances against, the largest search engine operator in China. Most of the webmasters in the alliance, which now has more than 4,000 members, accuse Baidu of blocking their websites from appearing in online search's because they refused to pay for their links to appear in search results as part of Baidu's bid-for-placement service.

However, as the ranks of the alliance swelled, Guo Zhendong, founder of Fanbaidu, told Interfax Tuesday that he felt the alliance should also benefit its members, not just protest Baidu.

Fanbaidu began working on a website named designed to help webmasters generate revenues by using the large number of websites in the alliance to attract online ad buyers. Companies that sign advertising contracts with can have their ads appear on all of the websites in the anti-Baidu alliance. A Chinese company, which Guo declined to identify, liked the idea enough to invest RMB 5 mln (USD 625,000) to help build up's online advertising business."

China's Search Leader Baidu Intends to Stay Independent
Yahoo! China Has 8 Months to Top Baidu or It's "Game Over" Bull vs. Bear
Quotes on the Baidu (BIDU) IPO

Shanghai Media Group and Shanghai Telecom Launch IPTV Service in Shanghai

From ShanghaiDaily:

"Compared with the testing networks of 100,000 users in other provinces, the network of the Internet protocol TV service in Shanghai will cover Minhang District and Pudong New Area where millions of people live.

The IPTV service will charge 60 yuan (US$7.42) a month, said Shen Hongbo, assistant to the general manager of Shanghai Telecom. But during the sales promotion before March, people will pay only 30 yuan a month to get the service. Shanghai Telecom will also give free set-top boxes to people who subscribe now.

The companies are trying to reach 10,000 subscribers within the year and expand the network to cover the whole city in the middle of 2006.

The IPTV can offer live broadcast channels, interactive services and information services. It has 50 live broadcast channels and more than 1,000 hours of video-on-demand programs including weather broadcasts, traffic and restaurants information."

Huawei, ZTE, UTStarcom Share China's IPTV Deals
The Future of China's IPTV Market
China Awards First IPTV Licence to Shanghai Media Group
China IPTV Leader by 2010

China's Shanda Adopts Free Model for Some Games

From Reuters:

"China's top online game operator, Shanda Interactive Entertainment Ltd., said it will start offering some of its titles for free, sparking a share sell-off over concerns about lost revenue."

"In an announcement on Monday, the company said it has adopted a free-to-play model for "Mir" as well as its newer "Magic Land" game, complementing its existing pay-to-play revenue model. It added it planned to gradually adopt the new model for other existing titles in the future."

"Under the new model, while gamers benefit from being able to play the basic functions of a (game) for free, they could choose to purchase in-game value-added services, including certain in-game items and premium features."

"One analyst said the adoption of a free-play model for older titles like "Mir II" was not unexpected, but that the simultaneous adoption for a newer title in the earlier stages of its life cycle came as more of a surprise.
"It will have a negative impact going forward," he said, speaking on condition of anonymity."

Chinese MMOG Yulgang Amassed 9 Million Registered Players in Two Months

Thursday, November 24, 2005

HK's PCCW Eyes Expanding Internet TV platform to Spain

From Forbes:

"PCCW Ltd is considering introducing its internet protocol television (IPTV) platform, Now Broadband TV, in overseas markets, including Spain, the South China Morning Post reported, citing deputy chairman Jack So Chak-kwong. He said the company is in talks with Spain's Telefonica for introduction of Now TV in that country."

From The Standard: NOW TV attracts 500,000 viewers

"NOW Broadband TV, the pay-television unit of Hong Kong's largest phone company PCCW, said its subscribers have reached 500,000 this month, representing a 13.3 percent increase from June's figure of 441,000."

"NOW TV said Wednesday it will add four new channels including CNN International, two additional HBO channels and STAR Chinese Movie's Video On Demand (VOD) channel over the next two months, bringing the total number of channels to 90.

"[VOD] service will be the main revenue driver for NOW TV because of its flexibility of content selection," Jack So (vice chairman PCCW) said. "

Wednesday, November 23, 2005

China’s Plans for Venture Capital Champions

From the Financial Times:

"As reported by the Financial Times on Tuesday, the NDRC (National Development and Reform Commission), the country’s top economic planning body, has issued rules aimed at encouraging the formation of venture capital firms run by Chinese managers, funded by Chinese investors for the benefit of Chinese companies.

The carrot for the domestic equity firms is the NDRC’s “recommendation” that local governments provide tax breaks, loans and even direct investment.
Chinese venture capital firms would also enjoy less stringent financial and regulatory requirements than their foreign counterparts."

"The initiative – known as “Measure no.39” - has caused concern and disappointment among foreign private equity groups, which dominate China’s venture capital sector, and trade officials.

They are worried that the state initiative may skew the playing field towards domestic investors, reducing opportunities and returns for the foreign firm, which are looking to put an estimated US$5bn into Chinese companies in the next few years."

Top Valley VC Firms to Invest in China

Huawei, ZTE, UTStarcom Share China's IPTV Deals

From Xinhua online (Government media):

"Three domestic telecommunications suppliers have defeated their overseas rivals in the bid for Internet Protocol Television (IPTV) equipment deals offered by China's two leading telecom operators: China Telecommunications Corp and China Network Communications Group Corp, the Beijing News reported today.

For China Telecom, Shenzhen-based Huawei Technologies Co Ltd won the deal for a test IPTV network for its Guangdong branch, while ZTE Corporation, China's largest publicly-traded telecom supplier, pocketed the deal for its Jiangsu unit. Nasdaq-listed UTStarcom Inc won the contract to supply Shanghai Telecom.

The Guangdong Telecom deal is for a network for 100,000 users, covering Guangzhou, Shenzhen and other wealthy areas of the Pearl River Delta. However, industry sources cited by the Beijing-based newspaper indicated Huawei is not the only winner of the bid and will be sharing the deal with other contenders including UTStarcom.

ZTE's deal for Jiangsu Telecom is for China's largest IPTV network, covering the four test cities of Suzhou, Nanjing, Wuxi and Yangzhou and with a capacity of 100,000 users. In addition to it, ZTE has won an order from China Telecom's Shaanxi Telecom unit.

UTStarcom is the biggest winner of the trio, bringing in deals totaling US$45 million to US$100 million. Besides the deal for Shanghai Telecom, it has won the bid for China Netcom's Harbin branch."

The Future of China's IPTV Market
China Awards First IPTV Licence to Shanghai Media Group
China IPTV Leader by 2010
IPTV in China: PCCW’s "Now TV" has over 440,000 Subscribers

Tuesday, November 22, 2005

China's Telecoms Manufacturer ZTE Forges Alliance with Cisco

Press Release

Cisco Systems and ZTE Corporation have signed an agreement to work together in the joint solutions of NGN, 3G and data technologies to develop business opportunities in the telecommunications service provider market in China and the Asia Pacific region, excluding Japan.

"Our two companies have very strong skills and complementary strengths that will provide excellent value to our customers in this region," said Owen Chan, Senior Vice President, Asia Pacific Operations, Cisco Systems.

"ZTE’s strength in both fixed line and wireless telecommunications combined with Cisco’s strength in routing and data communications offers customers a unique and compelling solution, especially if they are exploiting the efficiencies of IP-based communications in their networks," said Mr Zhong Hong, ZTE’s Vice President and General Manger for ZTE’s Data Division.

Source: Cisco Systems

Chinese Telecom Market Overview

Linktone is Recognized as the Best Employer in China

Press Release

Linktone Ltd.(Nasdaq: LTON), a leading provider of interactive entertainment products and services to consumers in China, today announced that it received "TheOutstanding Employer To Work For" award surveyed by Watson Wyatt Worldwide. The outstanding employer survey was conducted by Watson Wyatt Worldwide, a global consulting firm specializing in human capital and financial management. The results will be published in China's Fortune Magazine in November, 2005. Raymond Yang, Chief Executive Officer commented, "We have worked hard to create a company that reflects the strength of our leadership and products. We have built a community of employees that not only share senior management's vision but work hard to achieve the Company's goals. We are honored to be recognized for this achievement and will continue to build our company based on the strength of its employees and leadership."

About Linktone Ltd.
Linktone Ltd. is a leading provider of wireless interactive entertainment products and services in China. Linktone provides a diverse portfolio of services to wireless consumers, with a particular focus on media, entertainment and communications. These services are promoted through the company's own marketing channels and through the networks of the mobile operators in China. Through in-house development and alliances with international and local branded content partners, the company develops, aggregates, and distributes innovative and engaging products to maximize the breadth, quality and diversity of its offerings. Linktone categorizes China's wireless services landscape as "MAGIC" -- Music, Advanced Gaming, Graphics, Instant Messaging and Community.

SOURCE Linktone Ltd. (Press Release)

First China "Google Code Jam"

From interfax China: Google launches coding competition in China

"Google opened the first edition of the search engine's "Google Code Jam" coding competition in China on Monday, the company said.

A number of companies in software and coding intensive sectors, (...) hold annual competitions for engineers in China in an effort to recruit top programmers from across the country. Google is now in the process of hiring staff for the company's new R&D center in Beijing, for which the search engine said it wants to recruit 50 top programmers.

Google will face substantial competition when trying to recruit programmers. A number of multinationals are now setting up R&D centers in China, including Microsoft, IBM, Infosys, and Tata. In addition, is planning to hire several hundred search engine engineers to improve Yahoo! (China)'s search services, which Alibaba took over in August this year.

Although several thousand Chinese programmers graduate from colleges every year, the country is expected to a see a shortfall of 200,000 software engineers over the next several years, according to the Ministry of Information Industry."

Google Gets New China Chief And R&D Center
Google Confirms Appointment of Johnny Chou as President

Ericsson's next target: UTStarcom or Harbor Networks?

From China View:

"Market analysts predict either UTStarcom Inc. or Harbor Networks Holdings Limited may be the next acquisition target for Ericsson AB, following the Swedish telecom giant's latest buy into UK-based Marconi Corporation Plc.

The forecast, cited by today's China Business News (CBN), came after Ericsson's President and chief executive officer, Carl-Henric Svanberg, revealed last Friday in South China's Guangzhou city that his company is engaged in talks concerning an acquisition in China."

Ericsson Plans $1B Investment in China

China's Huawei Receives Approved Supplier Status from Vodafone Global Supply Chain

From Unstrung:

"Huawei Technologies Co., Ltd. (“Huawei”), one of the world’s leading networking and telecommunications equipment suppliers today announced that it had signed a Global Framework Agreement with Vodafone, the world’s largest mobile operator, for mobile network infrastructure. This agreement marks the 1st time a telecommunications equipment supplier from China has received Approved Supplier status from Vodafone Global Supply Chain. The agreement establishes the terms and conditions for the supply of Huawei’s solutions to any one of the Vodafone operating companies worldwide."

Huawei reaches deal with Arcor
China's Huawei Has No Listing Plans for Next 2 yrs
Huawei Scores $4.1B Sales for 1st Half Year

Monday, November 21, 2005

China's Internet Addiction Problem

From More4: Addicted to the internet

"A special More4 News film that looks at China's growing internet addiction programme.

Poppy Sebag-Montefiore films the victims of the internet, as they are treated in Beijing Military Hospital. Many had become violent, becoming so caught up in their virtual lives they try to hurt others and themselves in the real world. We interview's the clinic's mastermind and he discusses how aims to bring the young people back to reality."
>>Watch the report

Former Sohu President Victor Koo Starts 1Verge Search Fund

From Red Herring:

"Victor Koo, who resigned as president and COO of Chinese portal in November 2004, has ended months of speculation in the Chinese media regarding his next career move and said Monday he has ended a six-month sabbatical and formed a new venture.

Called 1Verge, the new Beijing-based company will focus on convergent wireless and Internet media. But Mr. Koo has deliberately left open exactly what 1Verge will do.

Search funds, which originated in the mid-1980s at Stanford University, are investment vehicles headed by entrepreneurs who raise money with the intention of acquiring existing companies or launching new ventures.

1Verge is backed to the tune of “a couple of million dollars,” said Mr. Koo, by eight investors, including angels and endowment funds, all from the United States."

Sunday, November 20, 2005

China's ZTE to Build World's Largest Optical Transmission Network

From ZTE to build world's largest optical transmission network for China Mobile

"ZTE Corporation, a global provider of telecommunications equipment and network solutions, today announced an agreement with mobile operator China Mobile for ZTE to complete China Mobile’s optical transmission network. Upon completion, the network will reportedly be the largest optical transmission network in the world, with over 25,000 kilometres of cable and 521 network nodes covering 18 provinces in Western and Southern China. The network is currently scheduled for completion by March 2006."

Read more:
ZTE Aims to Penetrate North American Market
China’s 3G attack, via Europe - ZTE, Huawei clinching important deals in Europe
China's Largest Telecommunications Manufacturer ZTE Reaches Top

Friday, November 18, 2005

China's Vows to Beat Google

From AsiaMedia:

"Internet firm on Thursday vowed to defeat United States giant Google in the battle to become the dominant search engine for the potentially lucrative Chinese market. chief executive Jack Ma said his company was the undisputed king of the Web in China after seeing off e-Bay and taking over Yahoo's Chinese operations in an August deal that secured US$1 billion (HK$7.8 billion) of investment.
Mr. Ma said Google was vulnerable in China and Alibaba would focus on building up its search engine to keep out Google."

"Asked to spell out's strategy, Mr. Ma said: "We win e-Bay, buy Yahoo and stop Google. That is for fun. Competition is for fun."

He accepted that Google and Yahoo were the dominant Internet powers in Europe and the US but said neither was that strong in Asia.
"I call them sharks in the ocean. We are crocodiles in the Yangtze River. If we fight in the Yangtze River, we have more chances than they have."

Yahoo! China Has 8 Months to Top Baidu or It's "Game Over"

China 'yet to embrace e-commerce'

From BBC News:

"Chinese internet users are wary of buying products online, a survey of Chinese internet habits has revealed.

More than 75% of those questioned by the Chinese Academy of Social Sciences said they had never purchased anything online. Only 10% bought regularly. While internet usage is developing rapidly in China, growth in e-commerce has been much slower."

"The research - the third survey of Chinese internet use since 2000 - revealed that web users are predominantly male, under 25, well-educated and wealthier than average.
China now has more than 100 million internet users, making it the second largest internet market after the United States."

China's Huawei Has No Listing Plans for Next 2 yrs

From Forbes:

"Huawei Technologies, the mainland's largest telecommunications equipment maker, has no plans to seek a listing over the next two years as it has no urgent need for funds, The Standard reported, citing Huawei vice president Wang Liangwen."

"Huawei could raise up to 1.5 bln usd in an initial public offering on the back of its strong growth and high penetration in the international telecom market, the paper said, citing market watchers. Wang said Huawei will seek acquisitions overseas to compete with rivals such as Nokia, Motorola, Alcatel and NEC. He did not identify any potential targets."

From Lightwave: Huawei reaches deal with Arcor

"Huawei Technologies Co., China's largest telecom equipment maker, reached lately a high- profile partnership with German telecom carrier Arcor AG & Co. to supply synchronous digital hierarchy (SDH) transmission products."

"In the meanwhile, Huawei signed with Arcor a latter of intent. Under the letter of intent, Shenzhen-based Huawei will provide Arcor, Germany's second-largest fixed-line telecommunication operator, with a new-generation SDH system for all of Germany."

Siemens has big plans for China

From Forbes:

"Siemens AG said it intends to set up more research and development (R&D) offices and search for merger and acquisition (M&A) opportunities in China in a bid to become a leader in China's market for third generation (3G) mobile technology, the China Daily reported."

"Earlier media reports claimed that Siemens may be interested in buying Harbour Networks Ltd, a Chinese networking equipment company.

Siemens has already established a joint venture with Chinese telecom equipment maker, Huawei Technologies, to develop China's homegrown 3G standard, TD-SCDMA.

In the three years following the issuance of 3G licenses in China, 10 bln usd of new purchasing is expected, the paper (China Daily) said without providing the origin of this forecast. Siemens currently holds six to seven pct of the mobile network equipment contracts for China Mobile and 25 to 26 pct of GSM network contracts for China Unicom, the report said, citing research firm Gartner."

UTStarcom's mVision to Power China Telecom’s IPTV

From TMCnet:

"China Telecom is expecting to launch its new IPTV service by the end of the year and it has chosen mVision from UTStarcom, Inc. to support this new service. As the largest fixed-line telecom operator in China, it will service up to 5,000 subscribers to its IPTV offering scheduled for Shanghai."

"mVision IPTV was deployed by Softbank Broadband in Japan for the launch of the BBTV commercial IPTV service in July. This partnering has proven to be a success and UTStarcom executives believe the same will be true in China. The country represents more 1.3 billion people and has a television saturation of over 90 percent. The launch of commercial IPTV in Shanghai is the result of an integrated commercial trial by China Telecom in five providences throughout the country. The initial package will offer Shangai subscriber’s live broadcast television and videos-on-demand."

"Although this agreement represents very little in terms of the ratio of the affected market in China, the potential for expansion over the next several years is tremendous. China is the world’s largest and fastest growing telecommunications market. With the ability to offer viewers next-generation viewing options on-demand, IPTV could quickly spread throughout the viewing country and produce significant revenues for both China Telecom and UTStarcom. This is one area of the industry to keep watching."

Tuesday, November 15, 2005

Strategic Alliance signed by China Netcom and Telefonica Internacional S.A.


"China Netcom Group Corporation (Hong Kong) Limited (...) is pleased to announce that it formally entered into a Strategic Alliance Agreement ("SAA") with Telefonica Internacional S.A. on 14 November 2005."

"The SAA will become effective after the completion of the acquisition of the additional shares by Telefonica, representing the difference between the existing stake of 5 percent of the outstanding issued Shares held by Telefonica and 9.9% of the entire issued share capital of the Company outstanding from time to time (...).

From Bloomberg:
"The agreement allows Madrid-based Telefonica to strengthen its partnership with Netcom in China, the world's largest phone market by users. The nation had 373 million cell-phone subscribers and 342 million fixed-line users at the end of August. The two companies signed an agreement yesterday during Chinese President Hu Jintao's visit to Spain, which produced contracts worth 900 million euros ($1 billion).

"Telefonica, which provides services to 140 million customers worldwide, will get one board seat with its existing 5 percent stake and a second seat once its interest increases to 9.9 percent, the statement said. The Spanish company's board representatives can sit on any committee of Netcom. ""

Related articles:
Telefónica Buys Stake in China Netcom
China Netcom, Telefonica SA Establish Strategic Alliance

MSN expects China to be top five market by 2010

From Reuters:

"Chris Dobson, general manager of digital marketing sales at MSN International, told Reuters the software giant intended to ride that growth while taking a larger share of the country's nascent but booming $500 million online advertising market."

"In May, the software giant launched MSN China, a Chinese-language portal with content provided by local partners.
The portal is run by Shanghai MSN Network Communications Ltd., a joint venture Microsoft established with Shanghai Alliance Investment Ltd.
Microsoft has said the portal will offer far more communication, information and content than available through the MSN services, such as Hotmail and Messenger, it already runs in China."

"Dobson said Messenger, an instant messaging platform, was especially popular. The service now had 10 million users versus about 7 million when it was launched six months ago."

""Display advertisements, for example, have been growing 50 percent annually and we expect this trend to continue," said Chuan Luo, general manager of MSN's Chinese venture.
But competition on search engines, fought over by Yahoo, Google and local rivals such as Inc, and Sina Corp., remains a big challenge."

Related articles:
Microsoft Prepares to Launch MSN China
U.S. Web Giants Target China

Saturday, November 12, 2005

Diary of a Chinese Startup

From Red Herring:

"In many ways, the 37-year-old Mr. Cao is the quintessential Chinese new economy entrepreneur. Like many of his peers, the native of Xi’an is a “sea turtle”—the word haigui is a homophone for “overseas returnee” in Mandarin—who received his graduate education in the States and worked for a number of U.S. companies before heeding the call of the China market and paddling homeward."

"However, Mr. Cao quickly discovered that the Chinese technology industry can move faster than he had expected. He originally assembled his team to do research and development for Search Party, a meta-search site that launched in May in the U.S., and was planning a similar site in China.

Mr. Cao was confident his company would enjoy a first-mover edge. “Originally I thought we’d wait until the end of 2005,” he said. “It turns out we had to move a lot faster.”

He was stunned when he learned that, another travel meta-search site headed by Fritz Demopoulos, a successful expatriate dotcom entrepreneur, launched in June."

Diary of a Chinese Startup Part 1 Part 2

Friday, November 11, 2005

China's Search Leader Baidu Intends to Stay Independent


"China's leading search engine, Inc. , intends to stay independent forward, its chief executive said on Friday, quashing talk of a future takeover by partial investor Google Inc. .

Google now owns 2.6 percent of Baidu, and was believed to be seeking to boost its stake prior to the Chinese company's hugely successful initial public offering in August. Neither side had ever confirmed or denied they were in talks.

But Baidu Chief Executive Officer Robin Li told Reuters his company has no plans to let Google -- or any other company -- become a major partner, preferring to go it alone in the increasingly competitive China search market.

''Interest by the multinationals in Baidu is very natural. But I think these companies don't recognise Baidu's true potential,'' Li said in an interview. ''Baidu's independent development is the best path for now.'' "

Yahoo! China Has 8 Months to Top Baidu or It's "Game Over" Re-Launches Yahoo! China As Search Brand

The9 Q3 Revenues Jump 230%

The9 Limited (Nasdaq: NCTY), a leading online game operator (e.g. World of Warcraft) and developer in China, announced its unaudited financial results for the third quarter of 2005 today.

-- Net revenues for the third quarter of 2005 grew by 232%
quarter-over-quarter and 2,096% year-over-year to RMB184.8 million
(US$22.8 million).
-- Net revenues attributable to the operation of World of Warcraft®
("WoW") for the third quarter of 2005 was RMB180.6 million
(US$22.3 million).
-- Net income for the quarter was RMB37.7 million (US$4.7 million),
compared with a net loss of RMB23.0 million (US$2.8 million) in the
second quarter of 2005.

Management Comments:
"The third quarter of 2005 was the first quarterly period which fully reflected our operation of Blizzard Entertainment®'s World of Warcraft® ("WoW") in China. In the third quarter, we attained peak and average concurrent WoW users of approximately 467,000 and 240,000, respectively. Notably, after a normalization of customer usage patterns in the third quarter, we have seen impressive metrics in October, with new account activations continued daily and recording peak concurrent WoW user level exceeding 500,000. As of October 31, 2005, more than 2.5 million paid accounts have been activated since launch." (Jun Zhu, Chairman and Chief Executive Officer)

Source: Source: The9 Limited (Press Release)

China Launched Online Game and Animation Development Zone in Shanghai

From ChinaTechNews:

"China has launched an online game and animation development zone within Shanghai's Zhangjiang High-tech Zone. This is the third licensed base for these technology sectors that the country has initiated following the ones in Chengdu and Guangdong. These special zones can offer attractive tax and company setup benefits to game and animation studios."

"Zhangjiang High-tech Zone, which is home to more than 300 high-tech enterprises, including Shanda, the9 and Core; over 50 research institutions; and 10 colleges and universities, provides an ideal atmosphere for the industry's development."

Zhangjiang High-Tech Park

Thursday, November 10, 2005

China's Largest Online Games Operator Faces Challenges

From Forbes: China Shanda's Q3 net profit jumps, shares fall on challenges

"Shanda Interactive Entertainment Ltd, China's largest online games operator, reported its third quarter net profit rose 58.1 pct year-on-year to 261.1 mln yuan. But the drop off in popularity of its game Mir II and a lack of new products in the coming quarters hinted at near-term challenges in its core business, analysts said."

"Online game revenues grew 35.5 pct on a yearly basis, but dropped 6.1 pct quarter-over-quarter to 438.1 mln yuan. Shanda said that the quarterly decline in net profit and revenues was due to weakening performance of its once-blockbuster massively multiplayer online role playing game (MMORPG) Mir II."

"(...) the company's next big sales catalyst, Dungeons & Dragons, will not be out until 2006. Further, the number of concurrent users of Shanda's MMORPGs in commercial service decreased to approximately 630,000 from 763,000 in the previous quarter.

According to analysts, the company's MMORPG business faces increasing competition from the likes of Inc, and The9 Ltd and Tencent."

Asia's Hot Growth Companies

From Business Week online: Special: Check out Asia's hot growth companies

China: Tencent Holdings March of the penguin

"Tencent dominates China's instant-messaging market with a 60%-plus share, and that success is largely due to its cuteness quotient. It derives a big part of its revenue from sales of "avatars," cartoon characters that Tencent users pay to adopt as their online personalities. Tencent's official mascot is a chubby penguin named QQ, a cuddly character that Tencent has transformed into a heavyweight branding tool that's recognized by students nationwide."

"What impresses investors is Tencent's ability to build on instant messaging. The company has increased ad rates by 50% this year, and Morgan Stanley estimates that its advertising revenue in the third quarter was $3.6 million, up 16% from the second quarter. Tencent also charges for online games, dating clubs, and services such as data storage. "If you look at instant messaging and the ability to enhance services and generate revenue from them, Tencent is probably the leader in the world," says Morgan Stanley analyst Mary Meeker."

China: Focus Media Holding Ltd. Fast profits from slow elevators

"Sometimes, boredom is the mother of invention. Back in 2002, Jason Jiang was cooling his heels, waiting for an elevator in Shanghai. The ad exec had been looking for new advertising opportunities in China when inspiration suddenly hit him square in the eye. He was standing in front of a poster of sultry actress Shu Qi plastered on the elevator door. He quickly realized that if he could replace such simple posters with a video screen in elevator lobbies, he could grab lots of bored eyeballs -- and make good money giving them something to focus on. "Elevators in China are slow," says Jiang, now 32. "People spend an average of five minutes a day waiting for them. So Focus Media Holding Ltd. (FMCN) was born. "

"All those bored people watching Focus' screens have added up to big profits. Earnings in the first half of this year soared 159%, to $7 million, on sales of $24 million, up 190% from a year earlier. For the year, Focus could end up making $23 million on sales of $63 million. Next year, it could make profits of $46 million on $132 million in revenues, Goldman Sachs estimates. Those results have generated a lot of interest among investors. In July, Focus raised $172 million in a listing on NASDAQ. Since then, its shares have jumped by more than 50%."

Wednesday, November 09, 2005

China Tests US Software to Block Skype Calls

From IDG News Service:

"Verso Technologies Inc., of Atlanta, Georgia, hopes to soon win a contract to block Chinese Internet users from using eBay Inc.'s Skype VoIP (voice over Internet Protocol) software, the company said Monday.

A Chinese telecommunications operator has begun a paid trial of Verso's NetSpective M-Class filter, a product that is designed to block VoIP calls made using Skype, as well as other peer-to-peer applications, Verso said in a statement. If the paid trial now underway in one Chinese city goes well, the operator will purchase the NetSpective M-Class application filter before the end of the year, it said. Financial terms of the deal were not disclosed.

Verso did not provide additional details of the trial to block Skype or name the Chinese operator behind the project."

"In September, China Telecommunications Corp. (China Telecom), one of two major fixed-line operators in China, began blocking SkypeOut calls made from Shenzhen, a southern Chinese city that lies along the border with Hong Kong. SkypeOut is a service that allows someone with the Skype software installed on their PC to make international phone calls at a fraction of the cost that a telecommunications operator would charge."

MSN and Yahoo Jointly Squeeze Tencent's QQ Instant Messenger

From China Economic Net:

"Despite its dorminant role in the domestic instant messenging (IM) service, Tencent QQ recently becomes uneasy: MSN Messenger and Yahoo Messenger -- its biggest competitor – have announced that the interconnection between their respective products would be realized by the second quarter of next year. Moreover, other instant communication service providers such as Netease, Sina, and Sohu expressed their willingness to join the cooperation."

"Among nearly 40 service providers in the domestic instant messenging service market, Tencent QQ was taking the lead: QQ's registered users exceeded 430 million, among which active users were over 170 million and the record of maximum online QQ users was 16 million with a market share as high as 70%. Coming next was Microsoft's MSN Messenger with a market share of 15% and Sina's UC and Netease's Popo followed with their respective market shares around 5%. Yahoo Messenger, known as having a global user base of 80 million, had not exceled in scale in China."

Yahoo! China Has 8 Months to Top Baidu or It's "Game Over"

From Interfax China: Yahoo! China has 8 months to better Baidu or it's 'game over,' says Alibaba CEO

"Yahoo has eight months to become a better search engine than Baidu or Yahoo will have a hard time surviving in China, said Alibaba CEO Jack Ma, whose company took over all of Yahoo's China-based assets in August.

"Honestly, when we took Yahoo search, it was not good, and today it's not good. This is why we are here, to make it better," said Ma. "If we don't move fast, within 8-10 months, we won't have any chance."

Baidu, China's top search engine, is "really good," said Ma, and Yahoo! needs to launch a service that is clearly superior to Baidu.
"If we launched a product today that is almost as good as Baidu, we won't have jobs next year," said Ma." Re-Launches Yahoo! China As Search Brand Corporation, China's largest e-commerce company, announced today the re-launch of Yahoo! China, with a new home page and business model focused on search.
As part of the re-launch, Yahoo! China's search brands, including, have been consolidated and rebranded as "Yahoo! Search".

"Yahoo! China's new direction can be summed up in one key word --'search'," said Jack Ma, CEO of, which in October acquired the China business of Yahoo! Inc. and became the exclusive licensee to the Yahoo! brand and search technology in China. "This is the first big step we are taking to reshape the Yahoo! brand in China since taking over its operations. We have successfully married Yahoo!'s world-class search technology with's expertise in China, to build the best search engine for China's Internet users."

The New Yahoo! China
The re-launched site, at , provides a simplifiedlook and feel with a home page focused on search.

Yahoo! China already enjoys a strong second place position in the China search market, on the heels of market leader Baidu by only 5% in terms ofmarket share. According to the latest available independent study from iResearch (Q1 2005), Yahoo! China's search properties had a combined marketshare of 32% as measured by search queries, placing Yahoo! China in the No. 2 position behind Baidu (37%) and well ahead of third-place Google (19%) in China. "Search is an integral part of e-commerce," said Ma. "We will soon belaunching an aggressive and innovative marketing campaign to promote Yahoo!China as China's leading search destination. Just as we've surpassed tough competitors to become the market leader in China's business-to-business and consumer e-commerce sectors, we expect Yahoo! China will take the lead in search."

SOURCE (Press Release)

Monday, November 07, 2005

Chinese Portal Sohu Selected as Official Sponsor of Internet Content Service (ICS) for the 2008 Beijing Olympic Games

Source: BOCOG; Inc. (Press Release)

"BOCOG announces today that Inc. (Nasdaq: SOHU) has been selected as the official sponsor of Internet Content Service (ICS) for the Beijing 2008 Olympic Games.

A sponsorship agreement was signed by the Beijing Organizing Committee for the Games of the XXIX Olympiad, internationally known as BOCOG, and, China's leading Internet content service company.
Under the agreement, Sohu will provide exclusive services to BOCOG to construct, operate and host the official BOCOG website, , for this historic event. The contract will be effective through December 2008."

"''We feel privileged to be working closely with BOCOG and are very pleased to have been selected for this strategic sponsorship role,'' commented Charles Zhang, Chairman and CEO of ''To be awarded this prestigious honour and to be so closely aligned with the highly anticipated Beijing 2008 Olympic Games is a testament to Sohu's brand dominance in China, superior technology and commitment to providing the most valuable services and information to the online community.''

China Has the Highest Number of Mobile Phone Subscribers

From TechWhack:

"China is the most populous country in the world. And now it is also the country with the highest number of mobile phone subscribers. An official report by the state media from Beijing has said that the number of mobile users in the country has touched 376 million at the end of September. By the end of last year, the country had 25.7 mobile phones for every 100 Chinese.

This itself exceeds the global average. By the end of this year, the number of mobile phone users in china is expected to touch a high of 380 million. Other estimates say that the number would go up to 520 million by 2008 and 600 million by 2010. China has also shown one of the fastest income growths in the mobile telecommunications market."

Friday, November 04, 2005

The Future of China's IPTV Market

From Interfax China: Interview with Joe Lin, President, CEO and co-founder of Streaming21

Streaming21 provides broadcast and media-on-demand software solutions used to deliver broadcast-quality video and audio over IP networks. The company is already working with Shanghai Media Group (SMG), the only IPTV license holder in China, on the Shanghai-based broadcasters IPTV field trials. The company is also working with Shanda to provide content for the online gaming firm's new IPTV gaming console.

Interfax: What are the major differences between the Chinese IPTV market and other Asian markets?

Lin: (...) In terms of China, I see ongoing trials next year, in 2006. My prediction on China's IPTV market is about 2007. The reason for this is the Olympics in 2008 in Beijing and the World Expo in 2010 in Shanghai. IPTV will be a multimedia communication tool, and definitely will play a crucial role in these two events. All the IT people, even the government, will throw in the resources to make it happen.

Interfax: Do you see a dominant IPTV provider emerging in China?

Lin: No. Nobody yet. It's an interesting world. I think that a lot of providers, they are real serious on the market, but at this time they are just waiting and preparing for the trials. Everybody, I think, is waiting for a big move. The deregulation is the first stage on IPTV. I do believe Shanda, with their penetration in online gaming, goes beyond just being a carrier and providing access. They provide services. This type of player has a good chance of being successful. Shanda will be an interesting party to watch with their home entertainment system, and later on may be merged with IPTV.

Interfax: Will there be a killer application in China's IPTV market?

Lin: One thing very interesting happened in the past year - the take-up of karaoke. This is a special culture in Asia. It's the same in Taipei, Hong Kong, China, Japan, Korea and even Singapore. Because of this special culture, and the content is not a big problem you can get it much easier than Hollywood content, I believe karaoke on demand, we call it sing-along on demand, will be a killer application way before IPTV.

The whole interview

Silicon Valley Loves – and Fears – China

From The International Herald Tribune:

" Yet Silicon Valley's views of investment in China have tended to swing between wild optimism and deep anxiety - with the anxiety going beyond a fear of losing money. Some worry about helping Chinese start-ups move up the technology food chain. These days, the Valley venture capitalists are sharply divided in two camps: one rushing into China and one holding back."

"Still, last year, most of the Valley seemed to throw caution aside as venture firms invested nearly $1.3 billion in China, up nearly 30 percent from 2003, according to Zero2IPO, a venture capital research and consulting company based in Beijing. But in the first half of this year, investment slowed drastically after several changes in Chinese securities regulations. Those new rules caused "a decline of 50 percent in the first two quarters," said Dixon Doll, managing director of Doll Capital Management, based in Menlo Park, California.

But the lull is ending, in part because of the high-profile success of the initial public offering of Baidu, a Chinese search engine company that raised $86.6 million in August, and a securities rule change in October. In September, Sequoia Capital, a major backer of Google, was reported to be planning a $200 million fund and hiring several employees in China. That announcement followed a joint agreement this past summer by Accel Partners, a leading Silicon Valley firm, and International Data Group to set up a $250 million fund."

"Schoendorf, who is an Accel partner, sees benefits in helping China to become a fierce new competitor.
"The Chinese graduate more engineers than we do," he said. "They're smart, they work hard, and so the only way to compete with them is to remain more innovative.""

Thursday, November 03, 2005

Shanda Starts Limited Sales of IPTV Gaming Console "EZ Station"

From Interfax China:

"Shanda Interactive Entertainment Limited, the largest online game operator in China, began selling its IPTV gaming console for RMB 6,850 (USD 849) on a limited trial basis this week, Shanda PR Manager Li Lijun said Tuesday."

"Shanda's "EZ Station" has been highly anticipated since the gaming company first unveiled plans for the console late last year. However, its price has already turned off many consumers. Chinese gamers have already begun to criticize Shanda for launching what they term a "luxury item." One gamer said that for the price of Shanda's "EZ Station," he could buy a Sony PlayStation 2, a Microsoft Xbox, a Sony PlayStation Portable, a Nintendo Game Cube, and a Nintendo Duel Screen on the Chinese black market."

"Instead of selling disc-based games, Shanda will offer fee-based online and IPTV services to consumers via the console in order to avoid the piracy problem. The "EZ Station" is being manufactured by Chinese TV maker Changhong and Envada Electronics, and comes installed with Shanda's "EZ Center" software package. The console, able to support broadband, IPTV, and cable TV connections, will offer users news, online radio broadcasting, online Karaoke services, stock and financial information, access to 50 TV stations, 50 electronic games, 30,000 online novels via the Shanda-owned literature website, and 800 pay-per-view TV programs and films."

China Becomes Birthplace of New Telecom Leaders

From Top 10 Global Wireless Predictions for 2006

1. New Entrants in Mobile Music Battle the iTunes Model.
2. First Movers Using a New Business Model Disrupt Voice Services.
3. Mobile TV Struggles, Remains an Experiment.

4. China Becomes Birthplace of New Telecom Leaders.
"China breaks out of its constrained role as a destination for technology transfer and “just a big market” and takes a leadership position in telecommunications, a crucial infrastructure area for any developing economy. So far, the Chinese have invested in computing (Lenovo Group bought IBM’s PC business in 2004) and attempted acquisitions in energy (CNOOC’s July bid for Unocal) and consumer appliances (Haier’s June offer for Maytag). Wireless could be next with a network operator, handset or equipment manufacturer falling under controlling interest of the Chinese."

5. 3G and WiFi Duke it Out for Dominance.
6. A New “Converged Virtual Network Operator” Category Emerges.
7. Undifferentiated MVNOs Become MVN“F”s - Managed Virtual Network Failures.
8. First “Bit Pipe” Operators Emerge.
9. 3G Takes Hold Before Fixed WiMAX.
10. EV-DO Complements RIM’s BlackBerry™, Eventually Kills WiFi Data.
11. Fierce Competition Brutalizes Handset and Infrastructure Equipment Markets.