Social Network Asia - Internet Market

China has its own version of Second Life, the highly popular virtual world created by Linden Lab. It consists of a 3-D virtual world created by its users. The idea is to build three-dimensional reproductions of almost anything in the real world, virtually all of it created by its “Residents”.

The idea is to start with barren landmass divided in plots, where individuals, businesses, universities, arts institutions, pop groups, and industries build and colonize. In the US, companies have found it is a good place to hold international meetings (saving on travel expenses) and thousands of individuals use it to work on projects, often in partnership with people in other countries.

The Chinese version HiPiHi consists of a MySpace/blogger-like mash-up with a 2d Flash chat that integrates with mobile devices. Residents can shape their environment with a library of prefab, customizable artifacts (furniture, homes, etc.), or for the more ambitious, in an atomistic creation system. Where HiPiHi (Pronounced: high-pee-high in English) differs from “Second Life” is that it reflects the Chinese culture. The name itself is partly a wordplay on “pihi,” Chinese for “innocent child,” while the three i’s are meant to resemble the Chinese ideogram for society.

Xu Hui, HiPiHi’s founder and CEO, conceived the system in 2005 after founding a successful ecommerce site. He didn’t have any previous virtual world experience; he just wanted to change the Web from a 2D medium into an “experience center.”

In its promotional clip, a female narrator and avatar emphazes outfits, landscaping, and houses. It seems that HiPiHi goes after women, which might be a brilliant move, since most online games in China are catering to young males between 18 and 35. But HiPiHi already faces competition.

In June 2007, the Swedish virtual world Entropia Universe announced that it was teaming up with CRD, an offshoot of the Beijing municipality, to build a virtual universe able to handle 7 million users at any one moment. David Liu, chief executive of CRD, claimed that virtual worlds would generate about 10,000 jobs in China.

One month before, Shanda Interactive Entertainment, a leading Chinese online games operator (NASDAQ:SNDA), announced that it was looking at Second Life-style offerings to diversify its traditional fantasy MMORPGs.

It will be interesting to see how Second Life-style offerings will catch on in the lucrative Chinese online games market.

A recent survey indicates that hosting the Beijing Games changed some views of China among the 4.7 billion people who watched the event on TV. According to an online survey conducted by the Nielsen Co of viewers in 16 countries after the closing ceremony, 70% said Beijing appeared more modern and high-tech than they had expected. Technology was one of the self-proclaimed pillars of Beijing’s Games, and organizers put it on display during the opening ceremony, which featured a giant digital scroll.

With the current recession, this is also good news for China’s emerging software development outsourcing industry. China’s commercial and technology growth objectives for the next decade are evolving from being the world’s manufacturing assembly hub to becoming a key player in this millennium’s knowledge economy. China’s software product and services sector are well-positioned to realize these goals through the development, marketing and export of high-tech services.

OECD stated in its recent review of China’s technology and innovation policy that the country’s investment in high-tech research and development ranked sixth in the world for total spending. China is therefore firmly on its way to reach its full potential. The main focus of China’s innovation system is the encouragement of enterprise-led ICT sectors, such as software development, along with biotechnology and energy research.

It is therefore advisable for foreign companies to check out China as an option for offshore IT services – China has a huge human resources pool of software skilled resources; has an increasing stream of enthusiastic university graduates; hourly and monthly costs are lower than main outsourcing competitor India; and last but not least an excellent track record in providing offshore software services over many years to both East Asian and American IT companies.

In short, it is worthwhile checking out China, especially since Chinese firms are very serious in their intentions, are committed to forge successful long-term relationships, and are enthusiastic about the opportunities and potential presented to them.

China is the currently the world’s largest cell phone exporter. For the rest of 2008, China will maintain its leading position in both production and marketing of mobile phones according to CCIDConsulting, a major IT industry consulting company.

The numbers are impressive – production of cell phones is estimated at a staggering 605 million units, a growth of 16.9 percent compared to 2007. Local sales are expected to top 205 million - an increase of 17.6% percent. Foreign dales will comprise of 400 million units, up 16.79% compared to last year.

Nokia, Samsung and Motorola are the main players, claiming nearly two thirds of the Chinese cell phone market.

If we look at cell phone carriers, we see that it is a local one that dominates the market - China mobile Ltd., a spun-off from fixed-line operator China Telecom Corp. The key to China Mobile’s domestic success is its achievement to cover urban China, plunging deeper and deeper into the country’s interior, building cell towers from the deserts of Inner Mongolia to the mountains of Tibet. In 2007, 10% of China’s 700 million rural populations had a cell phone. “It is a market with huge potential,” says China Mobile Chairman Wang Jianzhou. To illustrate how important cell phones are in rural China, we only have to look at the village of Dagoucun, which got cell-phone service in 2006. It dramatically transformed the way its residents live and work. With better information about crop prices delivered to their phones, farmers started planting more marketable crops such as Chinese cabbage and herbs for traditional medicines. They no longer need to truck their produce to distant cities in hopes of finding buyers. “Before, we had to travel 20 kilometers to make a phone call,” says village chief Xie Sufang, a 65-year-old mother-of-seven. “Now we contact the buyers, and they come to us.”

With so much market potential still out there, cell phone sales will continue to grow.

Baidu (NASDAQ:BIDU) changed the international Internet search landscape into a “two-engine market” – Baidu and Google (NASDAQ:GOOG).

In contrast to its competitor Google, the leading Chinese search engine Baidu is doing very well. Baidu (“Hundreds of times” in English) currently has over 200 million users, with about 50 products besides its traditional Internet search service. For Q2 of 2008, the Beijing-based Company announced record earnings of 265 million Yuan or $38.8 Million. Analysts predicted that earnings per share would be 97 cents; Baidu surprised them with $1.11 earnings per share.

What are Baidu’s success factors?

· Excellent technology - using flash memory technology instead of hard drives

· Excellent cost management

· New ad sales to larger enterprises

· Increased ad sales to existing customers – mainly small and medium-sized firms

· Adding applications to the search engine to build a community, offering more than just searches

· Adding new products such as online games, anti-virus software, online chat, blogging and bulletin board services to its standard offerings.

· Launching an e-commerce portal, offering independent .CN domain names, free promotions and customized marketing activities

· Global initiatives such as Baidu’s officially launch of its Japanese-language

· Hiring local talent, such as Toshikazu Inoue (ex-Yahoo!Japan) as President of Baidu Japan.

Another example of Baidu’s vision is its cooperation with Omniture, Inc. (NASDAQ:OMTR), a leading provider of online business optimization software. They enabled full integration of Omniture SearchCenter with Baidu.com. Marketers can now manage their ad spend with Baidu.com and increase the yield from their search marketing budgets.

Baidu’s Q3 2008 should look sunny as well – the company forecast is for a strong growth in partly resulting from increased Internet traffic due to the Olympics. The numbers are for sure promising: revenue is expected to increase between $132 million and $136 million.

If Baidu keeps it current pace of expansion, we might soon be seen “baiduing” instead of “googling” someone or something in cyberspace…….

She got the media exposure that many celebs would be jealous of– China’s own iPhone girl.

It all started with Mark M. buying an iPhone in Britain. He noticed a photo on it showing a young woman wearing a pink striped factory uniform with a matching white cap and rubber gloves, smiling and making a “V” sign with both hands as she is leaning over an iPhone assembly line. The Brit promptly posted the photo on the MacRumors forum, setting off a global chain reaction of media interest. Chinese internet users went on a quest to unveil her identity.

This type of mob reaction is referred to as “human flesh search engine” – Internet citizens (or netizens) pooling their collective resources to track a person down.

Apple’s iPhones and iPods are assembled in China by the giant Taiwanese company FoxConn company at their main locations in Shenzhen. FoxConn explained that the cameras in the iPhones are tested by taking pictures, and that in this case, someone forgot to delete them. They confirmed that the young woman is one of their 270,000 employees, but stated that they want to protect her privacy.

This didn’t stop Chinese journalists and bloggers in their search. They have currently narrowed it down to the quality control section on the fifth floor of one of the FoxConn factory buildings - where up to 1,000 employees reportedly work. It will be a matter of time before her identity will be found out and spread around the globe. Her image is already plastered all over the Chinese internet and there are more than 20 million searches for the term “iPhone girl” recorded on Google’s Chinese search site alone.

It might be an idea for FoxConn and Apple to use her in their promotion campaigns. FoxConn spokesman Liu Kun voiced it best when he told news agency AFP: “Small mistakes are unavoidable and I would call this a beautiful mistake.”