Back to China

Alright, finally I will leave to Beijing tomorrow and plan to stay in Beijing and my hometown for about three weeks in total. So the post here may not be as frequent as before. So excited to go back to check what's going on in Beijing and in China as a whole...

I wish you my dear reader a great holiday and vacation!

Entrepreneurship in China

Today, I got the following from Pacific Epoch, a leading English market intelligence research company based in China.

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I. Venture News

ATTACK OF THE CLONES 21 Dec 2007 - There was famous joke in the 1990s that C2C stands not for "Consumer to Consumer," but for "Copy to China." When I look at China's internet industry today, I realize that this is still very much the reality.

I do not want focus on the old story about how sohu.com (NASDAQ: SOHU) began its website with the ¡°sohoo.com¡± domain name and pretty much attempted to clone the look and feel of Yahoo.com (NADDAQ: YHOO). Instead, I'll focus on the Web 2.0 space. Now that Facebook has become arguably the most trendy internet website in the world, hundreds of Facebook clones have sprung up in China in the past year. In fact, some of these entrepreneurs have copied Facebook not once, but twice! Below is a quote from the blog of Elias Glenn, one of our analysts who covers emerging media companies in China.

Wang Xing, the Chinese entrepreneur known for cloning popular overseas Web 2.0 sites in China, has recently launched his newest C2C (copy-to-China) site. After starting Xiaonei.com (a Facebook copy which he sold to Oak Pacific Interactive) Wang founded Twitter knockoff Fanfou. I guess Wang decided to stick with what works, because he has recently started up ANOTHER Facebook clone: Hainei.com The design and layout of Hainei is an almost exact copy of Facebook, just like Xiaonei was. Hainei does seem to be targeting a larger audience than Xiaonei - Xiaonei means "on campus" and is still only open to college kids; Hainei means country- or worldwide. I keep thinking it has got to be some kind of joke, but if Wang is able to sell two Facebook copycat sites before Facebook itself gets acquired, he will be the one laughing the hardest. Wang has got to be one of the most intrepid characters in China's Internet industry - I really do need to meet him.

I actually know Wang Xing. I met him at an industry gathering, and found him to be a really smart entrepreneur. After becoming his "friend" on his website, Hainei.com, I have learned that Hainei.com already has attracted more than 10,000 registered users since its launch two months ago.

Although some companies like Hainei.com might "Copy to China" and implement Western businesses here, others take it even a step further and copy domestic Chinese market leaders. For example, the number of clones of Yesppg.com (an e-commerce company that sells about 1 million RMB of men¡¯s shirt every day) skyrocketed in 2007. Yesppg.com competition now includes Vancl, founded by former Joyo CEO Chen Nian, and Bono founded by former Yahoo China CEO Tianjian.

I have asked some of these entrepreneurs why they are copying existing businesses instead of starting something new and different. The resounding answer was that investors are more likely to invest in businesses they both understand and have proven success stories.

Perhaps this is true, and perhaps copying the market leader also enables the investors to have a more certain exit strategy. Just think about how many Focus Media (NASDAQ: FMCN) clones have been bought by Focus Media. Last week, the company purchased Cgen for $US 168M in cash and up to $US 180M in stock. Exit stories like this encourage other entrepreneurs to copy market leaders instead of innovating.

The New Year is upon us and it is time for all of us to take a break from our 80 hour work weeks. Perhaps over the holiday we all can spend some time thinking about investment ideas for 2008 that are actually new innovations and are not merely clones of someone else's creativity and hard work.

Frances Du
Partner, JL McGregor & Company
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There is one way that you create startup to please potential investor so that we can have Baidu (Google in China), Sohu/Sina(Yahoo in China), Dangdang/Joyo (Amazon in China) and the list can go on and on. And it's very true that "that investors are more likely to invest in businesses they both understand and have proven success stories."

Not to claim I am smarter, I do think this what hinders why China cannot stand for its innovation. Rather, we stands for our ability to manufacture or reengineer or copy. It's a quick way to make money to copy those models, esp. if you also have a sound resume including universities or companies that investors trust as well such as Harvard and IBM. As my professor said in the "entrepreneurial financing" class at Babson: "..reduce the perceived risk.."

The investors put money into those clone startups clearly have a strong business acumen but also indirectly are HURTING the real innovative ideas that may emerge in China. And the success stories of those clone startups and entrepreneurs will also "discourage" other Chinese would-be entrepreneurs to put effort to develop creative and innovative Chinese business models, something that investors without a sound Chinese business and social background may not get it.

There is easy money. There is hard money. Overall China is suffering a "short-sight" mania. Who cares about tomorrow? Who cares about long-term thing? Who cares about things may have a long-term impact such as environment?

If China really wants to match the creativity and innovation development at US, please devote the effort towards "local" innovation. Otherwise, the introduction of VC in China will be very similar to the introduction of stock market in China decades ago. We had the domestic stock market but we didn't have the foundation underneath it such as American legal system and fully empowered security regulation watchdog. It's like we have the top of Pyramid which is most noticeable from far away but lack the base. How stable this pyramid could be? Today, while the Chinese domestic stock market had been greatly improved, I see the Chinese VC industry is repeat the same "mistake". Yes, we have government regulation of VC and its partnership structure. We have tens of, if not hundreds of, local and oversea VC firms. But what are we lacking? We are lacking the true spirit of VC/Startup movement in the US. The system, courage and spirit that honors and support true innovation.

It takes decades for Chinese stock market to work hard to build fundemental blocks. I hope it would take shorter for the startup way.

Technorati Tags     china;entrepreneur;entrepreneurship;startup;vc;epoch

Travel related event I would like to attend

 Social Media Strategies for Travel 2008
and
CRM in Travel USA 2008

Both organized by www.eyefortravel.com

Technorati Tags     travel;eyefortravel;event

Marketing Research vs. Market Research

One of my research  paper at Babson is about the recommended marketing research practice for startup planning. Along my research, an interesting question is about the difference between "marketing research" and "market research". Following are a few explanations I found online:


From "Branding & Marketing" Blog:

Marketing research is sort of a communication link between company and customers, market and environment: marketing research generates and gives company information to help companies make better marketing strategies and plans.

Market research (compared to marketing research) is the part of marketing research that is about researching the market place (customer needs, competition, opportunities, changes in the marketplace).


From MarketingTeacher.com:

Market research and marketing research are often confused. 'Market' research is simply research into a specific market. It is a very narrow concept. 'Marketing' research is much broader. It not only includes 'market' research, but also areas such as research into new products, or modes of distribution such as via the Internet.


From QuickMBA.com:

Marketing Research vs. Market Research

These terms often are used interchangeably, but technically there is a difference.

Market research deals specifically with the gathering of information about a market's size and trends. Marketing research covers a wider range of activities. While it may involve market research, marketing research is a more general systematic process that can be applied to a variety of marketing problems.

From Marketing Planet:

• Should you require qualified data on your own offer (product and services) or your current customers, then the marketing research will apply.
• Should you require more information on the market situation, non current customers or linked offers (competitive or substitutes) you’d direct your research to market research.

Finally, via Wikipedia:

Market research
vs.
Marketing research

After all, I think the "Marketing Planet" explanation makes most sense from literacy perspective: Marketing is a verb that defines an action and is taken by businesses so more like from inside. Market is a noun that defines a part of the whole society that shares certain common characteristics.  Practically, the "Marketing Teacher" one makes sense as to do "marketing research", you have to have market research information first.


Technorati Tags     marketing;,market;research;babson;

Business Plan Competition

Next Wed I will be in Beijing. After 2 years away from the fastest growing economy in the world. Had read so many news about China. Good, Bad, Positive, Negative. Finally I can see it through my own eyes.

But never really a vacation. My travel startup also reached a critical point. MB and I decided to totally focus on our alpha version development and business plan writing. The former will greatly help us to do 1) fund raising; 2)key feature testing and 3) business development. It's such a pain to explain our flash based application. Who can really get the picture about iPhone before seeing one? It's understandablly difficult to imagine something conceptually. The latter will allow us to enter a few business plaln competition. It's good since we only need to prepare business plan once and could do free marketing for us. The 3 we are going to attend are:

2008 University of San Francisco International Business Plan Competition

2008 NECINA Brown Rudnick Business Plan Contest


The Rice Business Plan Competition

Moot Corp Competition from UT Austin maybe another option.

All in all, the take is when you resource is tight, both time and money, then please allocate to the most important thing for a startup. Clearly your product as in most case.

Ottawa trip and Amazon Kindle

Such a (weird) feeling but I realize I don't have a website that I feel I belong to at this moment. I am thinking maybe dealsea.com is one because I am trying to buy a laptop at a good deal. I think wenxuecity.com with those whatever news is one that makes me feel relaxed. I think military.china.com is one to do the same. I used to read techcrunch.com everyday then I deleted it from my RSS a few weeks ago.


This moment reminds me the fact I never really devoted myself to any sport club. Be it NBA or Italian/English soccer club. I just want to watch the best play that takes either my time or my money. I would enjoy a great game between Arsenal and Manchest United or Lakers vs. Mavericks.  But there are three things I devote to: my Chinese passport, startup and my simple friendship with others.

Now a side line. I was reading the 01/2008 issue of Esquire this morning and it has a few great interview with Bob Dylan, Johnny Depp etc. Then I saw the postcard insert that "persuade" me to subscribe for $10/12 issues. Btw, my current subscription of Esquire is a $3/12 issue promotion from Amazon.com. Why should I pay? 1) the stories are good but not non-replaceable;2)advertising pages account for a big part of the magazine? If Amazon Kindle can embrace features like those:

1.integrating user review/recommendation from amazon.com to it;
2.let user exchange e-book for a limited time with friend (like iTune allows you to burn a song to CD for 5 times)
3.let reader doing web 2.0 features such as adding user review, rating a book/article, voting for/against easily
4.let user access email via Spring wireless network!
5.let user manage SMS via Spring network!
..

After all, not sure if already in Amazon's future plan for Kindle but please make it a lighter-than-laptop, wireless-enabled super PDA! In this way, I may buy a Kindle to replace my Dell X51 PDA rather than an Apple iTouch!



Technorati Tags     1,amazon,kindle,ottawa

Life without Google - Part 1

Finally my final was over and I can back to my normal life including blogging, twitteringand riliking(yeah, I know the name of my new startup will become a verb too just like Google did)..

 

One interesting thing I am experimenting now is to have an Internet life without Google. Why? I just bought a new Compaq laptop for my cousin in China at a very good price and playing with it now. It has Yahoo! everywhere: In the desktop search bar and in the default IE tool bar. So I think "ok.Let me play with Yahoo for awhile to see really how it is since everything/everyone is almost moving to Google. Let me do something different." Actually, I am a long time yahoo mail user so I knew yahoo pretty well. Also had met a good friend of mine via Yahooo classified (sadly, yahoo totally changed it afterwards...)

 

 

Let's see how it goes.