The global ambitions of China's internet companies - China Weekly Hangout

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The China Weekly Hangout on Thursday 15 November is going to discuss the growing global ambitions of China's internet companies. For almost an decade China's growing internet population offered enough room for expansion. But as China's internet connects already close to 600 million domestic users, its internet companies are looking for expansion globally.

Baidu was the latest on the headlines, with the plan to issues US$ bonds worth US$ 500 million to purchase companies on the international market, but not the only one. Tencent and Alibaba are just a few others with global ambitions. How can they avoid the failures companies like Google, Ebay, Groupon and Yahoo made when they entered unchartered water in China? What might be their strategy? Are they, like the telecom companies like Huawei and ZTE, first enter marginal market, before taking on the US and Europe?

You can register for the upcoming China Weekly Hangout at our event page, leave a note here, or drop a note. 

Paul Denlinger will join the discussions, as might Andrew Hupert, and we are still trying to invite people from the companies itself. Moderation will be in the hands of Fons Tuinstra, of the China Speakers Bureau.

This week's China Weekly Hangout on nuclear power was unfortunately aborted this week as we missed the change in daytime saving in the US, and our panelists only emerged an hour later. The subject is on the agenda again for November 22 with Richard Brubaker and Chris Brown as participants.

The China Weekly Hangout is held on Thursdays, now at 10pm Beijing Time, 3pm CET (Europe) and 9pm EST (US/Canada).

Previous editions you can watch at our YouTube channel. 

Our previous Hangout on the question what Huawei can do, with David Wolf, Fons Tuinstra and Andrew Hupert.

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China keeps Western geniuses away - Paul Denlinger

Paul Denlinger

The US have a special visa to lure foreign talents,  the H-1B visa, but China is doing exactly the opposite, giving foreigners a hard time to come to China, writes China analyst Paul Denlinger on his weblog the China Vortex.

Paul Denlinger:

At the same time, there has been some hostility to westerners in China, which was highlighted earlier this year by Yang Rui’s famous remarks. Yang Rui seemed to reveal certain feelings which don’t lie far beneath the surface in China, and can come out in a very unmanaged fashion. 

In contrast, while there are occasional calls to restrict immigration policy in the US, there is very limited personal anger to immigrants among better-educated Americans. (The exceptions can be deadly, such as the attacks on Sikhs.) There is almost no support for calls to repeal the H-1B visa which come around election time. 

So why don’t the US and China talk to each other about how their citizens are treated and employed in each others’ country? Shouldn’t that be part of the globalization conversation?

More at the China Vortex.

Paul Denlinger is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

On Thursday November 8 the China Weekly Hangout (10pm Beijing Time, 3pm CET, 10am EST) will focus on the future of nuclear power in China, what are the risks after Fukushima, and might a succesful NIMBY protest be possible? Here you can register at our events page. Or see the announcement here.

Why are foreigners leaving China, was one of the questions the China Weekly Hangout addressed last month:

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With the Chinese, also their start-ups move abroad - Paul Denlinger

Paul Denlinger

Conventional wisdom says China-focused online operations need to be solid China-based, with compulsory governmental and political controls. China expert Paul Denlinger challenges that concept and as influential Chinese leave China and new start-ups will based elsewhere, he writes in the China Vortex.Paul Denlinger:

Up till now, most Chinese websites based in the US focused on political and literary issues which were barred from public discussion in China, such as Boxun. Now though, with a very large wave of recent Chinese immigrants, there is a significant opportunity for an overseas-based Chinese language service which is based on advertising, and delivers its content on mobile. 

Since it is based overseas, it would not have the need for a very expensive content-filtering mechanism, and it would also operate outside the political controls deemed necessary from Beijing. At the same time, it would have access to an excellent demographic group from China, which would make it very attractive to luxury and brand advertisers from overseas who want to reach a young and growing overseas-based Chinese demographic. Many among this group may return to China, and would carry these brand affinities with them when they return. 

Up till now, most western investors have thought that investing in China required a company registered in China. Now though, since there are so many Chinese all over the world, and because they have so much buying power, it really isn’t necessary to have a company in China in many industries. This is especially true for retail businesses which rely on marketing and advertising to get the word out. 

For years, Chinese government officials and China-based consultants have told western companies how important it is to have a China-based company. While the western investment money was coming into China, many of the same Chinese officials were moving their own private money to Hong Kong and the west. 

What do the Chinese officials know which the western investors don’t know?

Paul Denlinger is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

The China Weekly Hangout is planning to set up a discussion with Paul Denlinger about this latest take on Chinese start-ups, starting outside China. Timing and format are still discussed, but if you want to participate in one way or another, drop us a line. Earlier the China Weekly Hangout already discussed the issue of why Chinese are leaving their country:

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Why this crisis is tougher on China - Paul Denlinger

Paul Denlinger

Bear and bulls are fighting each other on the effects of the global crisis on China's economy. Business analyst Paul Denlinger explains on his weblog China Vortex why this crisis is worse for China than the previous one. 

Paul Denlinger:

In late 2008, when the global financial crisis broke, local government tax offices in China routinely visited larger employers to find out about their employment situation. The implicit threat was that if they laid off people at this time they would be inviting a tax audit which obviously would not work in management’s favor. Employers struggled, but the economy recovered, and through 2009 and 2010, it looked like China’s economy had dodged the bullet. 

This time, it’s different. China’s domestic growth and consumer spending have continued to grow. If there are significant layoffs though, it will hit Chinese consumer confidence hard, especially when people hear stories about other people being laid off from their jobs. Immediately, Chinese will go into savings mode again, which will put a damper on domestic economic growth.

More at the China Vortex.

Paul Denlinger is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.  

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China's leadership: caught between inflation and deflation - Paul Denlinger

Paul Denlinger

Cooling down inflation, stiff rising wages: China's leadership has a hard time to steer between two evils, writes business analyst Paul Denlinger in Forbes. Things do not look well for the new leaders in 2012.

In effect, Beijing is trying to repeat what the four dragons (Taiwan, South Korea, Hong Kong and Singapore) did when oil prices went up in the eighties: it is trying to move to higher value-added industries. But because China’s production base is so large compared to those economies, it raises another question: Who is going to buy all those nice new Chinese products? The export markets of the US and Europe have largely disappeared after the Wall St. meltdown of 2008, and the new Chinese middle class which was going to become the savior of the world has not yet appeared...

In 2009 and 2010, China looked like a genius for its bold action with a stimulus package and investment in infrastructure. In 2011 though, it looks more like China bought extra time for the US economy to recover and US consumers to start spending again. But waiting for Americans to start spending like before is looking more and more like “Waiting for Godot”. But what about China’s middle class? China already has more than 1M persons with individual net worth of more than US$1M, and Chinese are now the leading buyers of luxury goods worldwide.

In fact, these are the people who have made it, and are now buying real estate in the US, Canada, the UK, and Australia. Many of them feel more secure flaunting their wealth overseas and retiring overseas than in China, because they don’t know how the political winds in China may change...

In 2012, a new leadership will come to power in China. In China, these power transitions are carefully orchestrated so that the new leadership can come into power at the best of times, strengthening the legitimacy of the government and party and showing their power in a positive light.

For the first time in the past 30 years, the stars are not lining up the way they should.

More in Forbes.

Paul Denlinger is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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Is Groupon conquering China? No way - Paul Denlinger

Paul Denlinger

"From the perspective of those who have experience with the brutally competitive Chinese market where virtually no non-Chinese companies have succeeded, Groupon's management seemed to make all the wrong moves." Paul Denlinger tells in the Business Insider why Groupon is on the wrong track in China.

Instead of hiring local Chinese who had rich experience in the local Chinese market, it instead went to Harvard recruiting MBA graduates. From what everyone had seen, Groupon was setting itself up for a fall in China. 

But then, Groupon announced that it would partner with Tencent to develop the social buying market. Tencent, based in Shenzhen, has long been the instant messaging and virtual currency leader in China, with more than 600M registered users in China.

The not-yet closed deal is an effort to let Groupon look nice for a possible IPO, focuses on the US market, rather than on a good China strategy. Tencent is a huge company, but has a bad reputation on e-commerce.

Another unmentioned player is Alibaba/Taobao, led by Jack Ma, which is the undisputed leader in e-commerce in China. For many in China, Jack Ma is a marketing genius, regularly inviting former US presidents and business leaders to major marketing events in China at the company's headquarters in Hangzhou. In addition, he has a close and cordial relationship with China's premier Wen Jiabao. For the Chinese government, Taobao's business platform has the advantage of being able to provide important leading information about the state of China's exports, in a way which is even more accurate and reliable than the government's own Bureau of Statistics. Without a doubt, Taobao/Alibaba would take a dim view of Groupon and Tencent's attempt to elbow in on their e-commerce space. Jack Ma has a famously long memory, and while he may not seek to hit back at Tencent and Groupon immediately, he may well wait for the right opportunity.

More in Business Insider.

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Paul Denlinger is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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Why Yahoo cannot ignore China - Paul Denlinger

Paul Denlinger by Fantake via Flickr

China's leading eCommerce site Alibaba.com is in another spat with its largest shareholder Yahoo (neatly summarized here in the Wall Street Journal) because it started to recruit advertisers on the mainland. Business analyst Paul Denlinger explains in the Business Insider why Yahoo has to reclaim lost ground in China.

Things were fine as long as the two companies didn't enter each other's territory: For Alibaba, this was the China market and for Yahoo , this was everywhere else. (Yahoo has a significant presence in Hong Kong, and commands more than 95% of all traffic in Taiwan through Yahoo 's acquisition of Kimo in 2000, and Yahoo founder Jerry Yang's Taiwan roots.)

Alibaba is entering the global market, taking on Yahoo outside China. So, Yahoo entering China, led by its current headquarters in Singapore, is unavoidable, writes Paul Denlinger.

That's a mighty big hole. With China's economic dynamo, it's impossible to sell a real ad package if China is not included. This is why Yahoo needs to move into ad sales in China. 

But the problem, from the Chinese government's perspective, is that the ad sales center is based in Singapore, which is not a part of China. When Google skedaddled out of Beijing to Hong Kong in March, it could at least claim that Hong Kong was a part of China, and that it had not in fact left China, even though Hong Kong is not covered by the Great Firewall of China which censors content in the PRC.

But that is not the case with Singapore, which China recognizes as a sovereign nation, even though more than 70% of its population are ethnic Chinese. And diplomatically, China and Singapore, along with the other countries of Southeast Asia, have been going through some rough patches lately.

In short:: Yahoo is not only taking on Alibaba, but also the Chinese government, warns Paul Denlinger.
More at the Business Insider.

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Paul Denlinger is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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Green tech: China's only way - Paul Denlinger

Paul Denlinger via Flickr

Business analyst Paul Denlinger explains in Forbes why China has to go green, for offering its citizens a Western lifestyle, while preserving the environment at the same time. Becoming a dominant player in green technology is the country's only choice, argues Denlinger. It might not make China popular in the rest of the world, for example by its recent efforts to retain rare earth resources for itself, rather than export.

At the same time, Beijing wants to cut back rare earth exports to the rest of the world, instead encouraging domestic production into wind and solar products for export around the world. With patents on the new technology used in manufacturing, China would control the intellectual property and licensing on the products that would be used all over the world. If Beijing is able to do this, it would control the next generation of energy products used by the world for the next century.

More arguments in Forbes.

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Internet censorship as an economic indicator - Paul Denlinger

Paul Denlinger  via Flickr

Business analyst Paul Denlinger makes at his weblog China Vortex a smart connection between the recent upsurge in internet crackdowns and the expected economic uncertainty caused by an expected economic downturn and China's leadership swap in 2012. China's leaders turn to more control in times of economic uncertainty:

When you put this into the Chinese context of domestic politics, and see that the Chinese leadership will be handed over to a new president and premier in 2012, what is happening on the Internet makes perfect sense. The current leadership of President Hu Jintao and Premier Wen Jiabao are due for retirement then, and will hand over leadership to a new leadership team. With two years left in their term, it is safe to say that world markets look unstable, with another wall of debt about to hit the US and Europe in the next year, further dampening consumer spending in the west. How can they manage a smooth handover without things getting unstable?

More at the China Vortex.

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Paul Denlinger is a speaker at the China Speakers Bureau. When you want to share his insights at your meeting or conference, do get in touch.

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Most-sought speakers for July 2010

Warren Liu     via Flickr

Major changes this month in our line-up for the top-10 most-sought speakers in July 2010, actually half of them is new. Highest newcomer of this month is Warren Liu, author of the best-selling book "KFC in China: Secret Recipe for Success (Paperback)", We only expected him to rise in our rankings by August or September, since we are almost done in releasing his new book, as a part of our publishing service. But you do not hear us complain, when the interest in our of our celebrity speakers goes up.
Warren Liu's next book, "China Key Success Factors. Past and Future rules for succeeding in China" (ISBN 978-0-615-37306-5) analyses eight key industries and their strategy of entering China. Its World Expo Edition will be available in August, and of course we will announce the book here too.
Two other relative newcomers deserve attention here. With the World Cup 2010 in South Africa behind our belts, it is no wonder Rowan Simons, our own soccer specialist, rose in the ranks. Many mainstream media found him to explain, why China has not been making it to the world cup.
Back from a long-term absence is also Paul Denlinger, who has not been really away, but until a few months ago been working outside the publicity he was used to. Now Paul Denlinger is back, and how.
Kaiser Kuo is back on the top-position, and not surprisingly, since he landed earlier this month into an interesting job at Google's major competitor in China, Baidu.com, where he is now director international communication. Fortunately, he is also available for speeches.
Now, without further delay, the top-10 most-sought speakers list for July 2010 (June 2010 in brackets).

1. Kaiser Kuo (6)
   
2. Warren Liu (-)
3. Shaun Rein (-)
4. Arthur Kroeber (5)
5. Paul French (7)
6. Victor Shih (-)
7. Rowan Simons (-)
8. Rupert Hoogewerf or Hurun (3)
9. Paul Denlinger (-)
10. Tom Doctoroff (-)

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All is not fine for Google in China - Paul Denlinger

Paul Denlinger via Flickr

Google might have gotten its one-year extension of its internet license in China, but that does not mean all its troubles are over, writes business analyst Paul Denlinger in the Business Insider. A smart move by China's government to avoid a head-on clash, but the real struggle is certainly not over.
Google is to blame, says Denlinger:

The whole Google China confrontation has made one thing clear: Google did not have a channel for dialogue with the Chinese authorities since the company issued its statement in January, saying that it would refuse to censor content on its Google.cn search engine. By taking an uncompromising stance on censorship with the Chinese government, Google made it very hard, if not impossible, to sit down and negotiate with any Chinese government counterparty, since this would have amounted to the Chinese side implicitly acknowledging that censorship could be negotiated with Google. No matter how you looked at it, this was a poor negotiating strategy, making a climbdown for both sides almost impossible, and an uneasy confrontation unavoidable... 

Now, even though Google has its ICP license, it can only provide music and products search, not Web page search. Among China's urban intelligentsia, Google was popular because of its web page search; now that service is not available.

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Paul Denlinger is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do let us know.

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