The recent discovery of Chinese authorities snooping in on Skype communications is big news in the English Internet.
However so far the issue has received little coverage in China; it’s likely to be censored. I noticed a single news article about it on the Chinese portal tech.163.com, it looks like the link doesn’t work anymore though - I’m guessing the article probably got deleted quickly after being noticed by higher-ups or the authorities.
I’m not sure how much people in China consider this “news” anyway - it’s well known in China that all electronic communications is censored and monitored. Online privacy is regularly trampled upon. What’s going on with Skype is only the tip of the iceberg:
It’s scary that goverments all around the world, not just China, are snooping in on electronic communications. In China, the difference is in scope and sophistication (or lack of it).
Ever heard of PPG? I’m guessing not, unless you live in China or follow the VC scene there. I thought I’ll talk about them since it’s reported that they just got another 100 million US dollars of funding (their 4th round of funding). News reports claim that the majority of this funding will be used to expand PPG’s operations to the United States.
PPG is a relatively young Chinese company (founded in 2005) that sells men’s apparel directly to customers through the telephone and Internet - they have no physical stores. They grew sales very quickly in the past 2-3 years by employing massive advertising campaigns where they offered “high-quality” shirts and pants for low prices. PPG can offer lower prices because they cut out many layers of middlemen and the overhead of physical stores, delivering ordered product straight from factories to the customers’ doorsteps.
Due to their advertising blitz and because they were widely lauded in many Chinese business publications for their apparent meteoric success, it didn’t take very long for a few PPG “clones” to appear - today PPG faces strong competition from VANCL and eBono, who also have a similar business model and received venture capital funding.
Interestingly if you search for “PPG” in Chinese search engines, it doesn’t take very long to find online articles and blog posts bashing PPG for the poor quality of their shirts, shirt’s colors fading after washing, how difficult it is to return products, etc.
Well I hope it all works out for PPG - they seem to have a decent direct-sales business model, although it looks like they have quality issues to work through and have some strong competition (read: price wars) to fend off.
According to iResearch, the total volume of consumer transactions online in China during the first half of 2008 was 53.1 billion RMB - not far off from the 56.1 billion RMB total for all of 2007.
During the first half of 2008, China’s leading online shopping website Taobao.com alone commanded a transaction volume of 41.3 billion RMB, which translates to a 77.7% market share. This the about double the transaction volume for the same period last year.
The most popular goods traded online were: 1) Clothes, 2) Cellphones and 3) Housewares. The prices of online goods also seems to have defied China’s general inflationary trend - instead prices have remained the same or even decreased, e.g. clothing prices online have dropped about 10% compared to last year.
Internet forums and bulletin boards occupy a very unique and important place in the Chinese Internet, much more so than I’ve noticed in the English-language Internet. To truly understand the nature of the Chinese Internet, you need to regularly read posts in the most popular Chinese Internet forums. Chinese Internet forums are also an interesting window into the minds and attitudes of China’s younger generation (students and young professionals), who form the majority of China’s Internet users. Some key things you should be aware of about online forums and bulletin boards in China:
They are a powerful counter-balance to the official media
Although a lot of media/news reforms are happening, the Chinese government will always hold a tight rein on official media and publications. This drives Chinese Internet users to bulletin boards to voice or read different viewpoints and disclosures by whistleblowers which would normally be censored or ignored in the mainstream media. For example the 2007 Shanxi slave incident moved into the national spotlight after being disclosed in Tianya, a popular Chinese internet forum.
A tendency for mob/herd mentality
Many comments on posts take extreme or simplistic viewpoints (e.g. you are either right or wrong), many are also vulgar. This makes forums a prime breeding ground for rumors, half-truths or gossip that can be manipulated to sway public opinion. Heard of the so-called “Human flesh” search engines? This is a phenomenon where vigilante users go online/offline to search out and publicly post information on a targeted person. Grace Wang was a previous victim - many users had accused her of being a traitor during a protest at Duke University. I’ve also heard of Chinese companies employing people to write favorable posts in bulletin boards to promote their products - I guess this would be called “bulletin board marketing”?
Internet forums are also subject to censorship
While scandals involving provincial-level or city-level officials are discussed on Internet forums, censorship still often occurs when discussion topic is about the national government, national leaders or important national issues. For example you will almost never see any criticism of members of the PoIitburo – any discussion of these individuals is usually in praise. All Internet forums at least implement simple keyword filtering.
In a country that has so many people and is undergoing such rapid change, there never seems to be a shortage of issues to talk about in online forums, e.g. Baidu supposedly censoring news about Melamine in milk powder, a University student getting poisoned, a security guard beating a poor person, girls posting pictures online to get famous, ….
China’s rapidly growing computer gaming industry is currently facing a shortage of 600,000 game development professionals according to this report. In the ChinaHR.com ranking of the most in-demand jobs, “3D/2D developers” are currently the most highly sought after employees. “Game developers” and “Game product managers” are also ranked in the top ten.
The average monthly salary of gaming professionals is more than 5000 RMB (about US$ 735) - relatively high by Chinese standards. The best gaming professionals can earn about 25,000 RMB (about US$ 3675) a month.
One company well positioned to benefit from the high demand for gaming professionals is GAMEFE - they run training schools and provide certification exams for individuals interested to work in the gaming industry. For example, they have classes in computer game development, computer animation and video production.
In case you were wondering why gaming is so hot in China - it’s because most computer/Internet users in China (China has surpassed the USA in computer/Internet users) are young people - students form a large majority.
The C2C (customer to customer) ecommerce war in China is in full swing - the website of Baidu’s new online payment system Bai Fu Bao (百付宝) is now online. It currently only displays an announcement banner though and does not expose any functionality yet.
In the past week, it was announced that Taobao (the current leading China C2C e-commerce shopping/auctions site that potentially has the most to lose if Baidu’s e-commerce site is successful) has started blocking Baidu’s search engine spiders from indexing content on Taobao.com. I guess that by announcing this, Taobao is trying to tell its users to bypass Baidu’s search engine and go directly to Taobao.com.
Currently the most successful online payment systems are Alipay (owned by Alibaba, Taobao’s parent company) and Tenpay (owned by Tencent, who also owns a C2C shopping site Paipai.com). Baidu’s online payment site’s success will likely also depend on the success of it’s soon-to-be-launched C2C e-commerce website.
According to a June 2008 CNNIC report, 71.3% of online shoppers in China use online payment solutions. 35.7% do Cash-On-Delivery and the remaining 14.7% of online shoppers remit money to the seller at post offices.
Here’s a breakout of the current most popular forms of online payment (amongst users who pay online):
|Alipay (affliated w/Taobao)||76.2%||
|Tenpay (affliated w/Paipai)||5.8%||
|Mobile phone payment||1.8%||
Conspicuously missing here is Yeepay, which launched with alot of fanfare in 2006 with funding from Draper Fisher Jurvetson and Intel Capital. It looks like smaller players like Yeepay got outflanked by big e-commerce sites like Taobao and Paipai, who promoted their own payment solutions - Taobao (owned by Alibaba) promoted Alipay and Paipai (owned by Tencent) promoted Tenpay.
|Beijing||Shanghai||Guangzhou||Other municipalities and
|Internet users (million)||7.37||8.30||3.95||37.57||57.19|
|Internet shoppers (million)||2.87||3.75||1.26||8.10||15.98|
|Online shopping peneration rate||38.9%||45.2%||31.9%||21.6%||27.9%|
|Half-year online shopping expenses per person||1098 yuan||1107 yuan||856 yuan||966 yuan||-|
|Half-year online shopping expenses||3.1 billion yuan
(453 million USD)
|4.2 billion yuan
(614 million USD)
|1.1 billion yuan
(161 million USD)
|7.8 billion yuan
(1.1 billion USD)
|16.2 billion yuan
(2.37 billion USD)
*These cities are Chongqing, Tianjin, Harbin, Changchun, Shenyang, Dalian, Nanjing, Hangzhou, Ningbo, Xiamen, Jinan, Qingdao, Wuhan, Guangzhou, Shenzhen, Chengdu and Xi’an
Source: CNNIC June 2008 online shopping research report
I recently wrote about CSDN (one of China’s biggest software developer community websites) being taken offline during the 0lympics because a single user uploaded an unauthorized 0lympics related video. About ten days later the website was back online. Here are some of the comments left by CSDN users after the resumption of service -
Note: In China, harmonized is an euphemism for censorship
The Chinese Internet is very different from the American Internet. Anyone who believes that succeeding in the Chinese Internet is as easy as localizing their website to the Chinese language is in for a big surprise.
For example you need to consider that Baidu is the search leader in China, not Google - so your search engine optimization strategies will be different. You should consider filtering for offensive content as the authorities will not hesitate to block your entire website if any objectionable content is discovered. The demographics of Internet users in China are also very unique: Chinese users are younger, earn less income and spend more time online that users in the USA.
We’ve created this new page that compares the Internet in China and USA – it will help you understand some of the key differences and top websites in these very different markets.