Exploring Shanghai startups with China 2.0–Part 1

I was recently invited to take part in the inaugural edition of the China 2.0 Tour, an event organized by The China Business Network, CNReviews and Web2Asia.The tour was designed to allow high-profile Western bloggers and industry professionals access to some of the most exciting Chinese Web companies, in an effort to spread better understanding of both China and the Chinese market globally.The tour touched down in Beijing, Shanghai and Guangzhou (melding into the mix at the annual CNBloggerCon); and contained such Web luminaries as Shel Israel (co-author of Naked Conversations), Mike Butcher (TechCrunch UK), and Ernst-Jan Pfauth (Dutch ProBlogger).

I joined the tour for the Shanghai leg two days of company visits, social events and insightful conversations on the shuttle bus journeys between.

Unlike the other guests on the tour, I was the only blogger who lives in China, and so my goals for China 2.0 were perhaps a bit different. Where the other members had to split their time between trying to understand Chinese culture and the position of China in the fast-moving Web world, I needed only to focus on the latter.

That’s not to say there wasn’t an incredible amount to focus on. My brain is still swimming.

The ideas presented, knowledge learned and experience gained are difficult to put into a nice little blog post package, but here we go.

Day One

51.com: 51.com, or wuyao (a fuzzy homonym for woyao or I want), is a three-year-old social networking service (SNS) with big-name VC backers like Intel Capital, Sequoia Capital China, SIG, Redpoint Ventures and, most recently, Giant Interactive Group.

The site, like a plethora of other Facebook-esque SNSes, offers users a home online where they can upload photos, join groups, connect with friends, share music, blog, and play games.

With college favorite Xiaonei and super-hot white-collar newcomer Kaixin owning their respective demographics, it’s little suprise that 51.com is focusing its efforts on the younger crowd.

With 40 percent of 51.com’s massive 150 million registered users being between 17-19, it is easy to see why the company accepted a 25 percent purchase from game maker Giant Interactive Group for the (rather auspicious) sum of US$51 million.

In speaking with Andy Yao, VP product design/marketing at 51.com, he explained that this SNS-Gaming partnership is a common trend. Both industries are looking for ways to join up, as SNSes are always looking for ways to engage users, and gaming networks are trying hard to increase their user base. Due to their nature, gaming networks tend to be very segregated based on the games the user plays, and so a partnership with a wide-spanning SNS is a good way to connect those groups, allowing for increased cross-marketing.

With the announcement in July that 51.com is planning to list on US Nasdaq by 2010, and more of China’s huge population coming online every day, the China SNS wars are far from over.

Dianping: Dianping.com has the distinction of being one of China’s seminal Web 2.0 companies. Founded in 2003 by CEO Zhang Tao, the company is a user generated content (UGC) site of restaurant and city life reviews.

It’s easy to assume that Dianping is simply the copy-to-China version of successful Western counter-parts (most notabely Yelp.com), but the Shanghai-based company is a unique exception to this practice, predating Yelp by more than a year.

Zhang walked us through the company’s modest beginnings, explaining that starting up a Web site directly post-bubble was a challenge, joking that he was somewhat embarassed to tell his friends and family what he was doing.

He also explained that he was initially very concerned that Chinese users might not contribute to the site, as Chinese culture tends to promote reserved, non-opinionated behavior in public. However, what he found was that online Chinese have loud voices.

Dianping is now China’s largest local review site, with more than 5.5 million reviews and about 8.5 million visitors per month. The user base is still hugely tilted to Shanghai (40 percent) and Beijing (20 percent), but is making inroads as more and more of China’s second-tier cities come online.

Dinner with Alibaba: It’s a rare occasion, indeed, that this unkempt blogger gets to rub elbows with executives, so it was quite the treat that I happened to be seated beside Joe Cai, CFO for an Internet company that has been bested only by Google for the size of its IPO sale. But this was dinner, and it’s not appropriate to compare IPO sizes at the table.

Alibaba, who is the largest business-to-business (B2B) service provider in the world, also owns Taobao, China’s leading online auction site. You may remember it as being the death of eBay China back in ’05-06. I simply know it as the place my wife buys everything.

The company also runs Alipay, China’s largest online payment method, comparable on the global stage to PayPal or WorldPay.

Dinner was followed by the tour hauling their well-stuffed selves down to Shanghai’s latest hotspot, M1NT. The bar, which didn’t officially open for another couple days, was swank. I mean, they have a wall of live sharks.

Though the day had me quite tired, and a whiskey and coke is my warm milk, I did stay long enough to see the Who’s Who of the Shanghai Netscene doing some real-life networking.

In part two, I’ll cover the second day of China 2.0: Shanghai, where we eat donuts at Spil Games, paint the walls at Tudou, and get some rapid-fire presentations at italki.

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