Live from Beijing!

Last week I gave a short talk at the ChinICT conference about my observations as a Western net entrepreneur in Beijing.  I won’t bore you with the details, but I am interested to find out what you think about something I said:

 I think that it’s clear that within the world of Chinese internet companies, lying limits growth, but stealing intellectual property doesn’t. 

Here’s what I mean.

Most savvy players within the Chinese internet sphere know that almost every website lies about its traffic and user stats.  The lying is endemic, and at times quite artful.  I’m actually thinking of cataloguing all of the ways I’ve seen it done, since just when I think I’ve seen it all, some more-clever ruse comes to light.

I suppose Chinese net entrepreneurs are lying in order to impress VCs and lure advertisers.  Based on many examples, it appears that this strategy works with many VCs.  However, it’s backfiring with the big advertisers.  Whenever I talk with a major advertiser or agency about their online spending plans in China, this “lack of transparency” is always the top issue (they are more diplomatic than I am).  These companies are already big online advertisers in other markets, and they know that China’s high-spending youth are online (not watching TV or reading newspapers).  But they’re holding back spending because they just don’t trust the online numbers.  That’s what I mean by “lying limits growth”.

I remember that this same dynamic occurred in the US, around 1997/98.  Since there were no clear standards, metrics for the “popularity” of a website were all over the map.  Some sites used “hits”, others used “page views”.  Some counted “all visits” and some counted “unique visits.”  Et cetera.  This confusion was scaring advertisers, so the nascent web industry formed the Internet Advertising Bureau (IAB) to impose standards.  At the same time, third-parties such as Doubleclick came in to take ad serving away from the web publishers, which further  increased comfort levels.

I think China needs to do the same thing.  The industry needs clear standards, enforced by credible third parties.  Until and unless that happens, I doubt we’ll see big-number ad spending online.

Now, on to intellectual property.  I’m not an expert on the law (either in China or the US). I’m also often confused about who is “right” about whether and how intellectual property should be protected.  In any case, however, one thing is clear: if you’re an internet entrepreneur in China, you will be rewarded handsomely for stealing intellectual property.

What do I mean?

Two of China’s biggest video sharing sites just raised lots of money from prominent American VCs.  Yet these sites publicly admit that almost all of their traffic is due to pirated video.  The same is true for similar websites in the music vertical.  Yet these companies keep getting funded, at amazing valuations.

I find this fascinating. 

If these companies were in the US, they would have a hard time getting funded.  And if they did attract money, they would immediately move to get in compliance.  But in China, widespread piracy seems to be accepted as a “cost of doing business.”  Even though it’s very clear under Chinese law that stealing intellectual property is illegal.

Which makes me wonder: if I worked for the RIAA, IFPI or the MPAA, why would I waste my time meeting with Chinese officials and filing suits in Beijing?  Why wouldn’t I call a press conference in LA to announce a major lawsuit against the name-brand American VCs who are funding Chinese start-ups who steal?  And a parallel lawsuit against the American investment banks who take them public?

Even if my case was weak legally, perhaps the resulting publicity would cause some VCs and bankers to conclude that they would be better off looking elsewhere.  And my bet is that if the funding dried up, Chinese entrepreneurs would quickly get the point. 

Thoughts?

The team at CICData keeps blowing me away with their timely and insightful observations.  Check out this useful summary of how Chinese netizens used the net during and after the earthquake: http://www.slideshare.net/CIC_China/iwom-watch-may-special-edition/

You might want to read the numbers outloud to yourself, since they are just so big.

[I wish this post contained all sorts of "a-ha!" insights. Instead, I hope it simply frames some questions that I find interesting].

Whenever I show Chinese websites to American friends who don’t speak Chinese, the friends universally have the same reaction — “Wow! That site sure is crappy-looking! Guess those guys haven’t learned how to design a good website yet, huh?”

I made the same mistake myself when I moved to Beijing 4 years ago, fresh from the “cutting-edge” of web design in the Bay Area. “Surely,” I thought, “my superior design sensibility is a key ingredient to why I’ll be successful building B2C websites in China!”

Boy, was I wrong.

In case you don’t know what I’m talking about, look at the home page of China’s most-popular website (all of these screen shots are a bit old, but things haven’t changed much). You can click on the image to see it in detail.

Above is the home page of Sina.com, showing just what you can see “above the fold” (in other words, without scrolling down).

Now, here’s the above-the-fold home page of my favorite American news site:

For those of you who might argue that Sina is a “portal” and not really a news site, here’s the above-the-fold home page of most popular portal site in the US:

In addition to preferring higher information density per square inch, Chinese readers also seem to prefer higher density per page view. Once again, here’s the home page of Yahoo, showing the entire home page.

Here’s the full-length home page of Sina.com, from the same day:

In case my point isn’t clear, below I’ve placed the full-length web pages of the three sites side-by-side, to scale:

Most Americans are by now nodding their heads: “Yep. Love those US sites. Much more advanced. Clean, simple design. Not cluttered. Guess those Chinese guys will figure that out sooner or later.”

What’s fascinating is that my Chinese friends have a very different take on the US sites: “They look skimpy, and empty. Where’s all the content?? The home page is just navigation.”

After talking about this issue with many friends, it appears that Chinese and American (I won’t say “Western” since I don’t know much about Europeans) look at/read websites in very different ways. [To forestall critics, when I say "Americans" I mean native English speakers and readers who live in America, even though there are obviously many Americans who don't speak English natively].

While it’s clear that both peoples “scan,” and then only sometimes “read”, the way they scan is very different. Chinese people strongly prefer a density that is far beyond what most Americans can tolerate. In addition, Chinese people seem to be scanning for keywords (or more precisely “key-characters”), while Americans like to read “headlines” (aka short pithy phrases) and look at arresting photos.

So here’s my question: “Do Chinese online users and American online users scan/read web pages differently? if so, why? What does that mean for online business?”

It turns out that no one seems to know the answer. I asked Jakob Nielsen, the famous web usability expert, if he knew of any research on this topic. His simple answer: “No.” He suggested I attend his upcoming usability workshop, which looks cool but is (a) beyond my price point and (b) potentially not relevant for the Chinese market (which is the whole point of this post).

I can’t find anyone, anywhere, who is researching this question. If you know someone, please let me know.

I would LOVE to have someone do real research into this issue, using the latest eye-tracking technology. I might even have (gasp!) a shoestring budget to fund this. I’ve approached a friend at the Chinese Central Arts University, but they don’t have the technology. Any takers??

In the meantime, some of my own thoughts on this issue.

First, I decided to compare newspaper front pages in China and the US. i figured that this comparison would yield the same enormous differences in information density. I remembered that Chinese newspapers from years ago were really dense visually. Much to my surprise, though, there are no longer vast differences between the layout and visual density of the top Beijing newspapers and English-language newspapers in New York.

I found this fascinating. Why are the designs of the front pages of the major daily newspapers converging, while the website home pages are not? Does this mean that Chinese newspapers are more, or less, in touch with how their readers want to read?

Then I started to think about what might explain the differences online, since they seem to exist only there. Said another way, are there unique “online” circumstances in China that might be influencing home page design?

I think the answer is yes.

In the US, online advertising is (mostly) sold by “page view”. For example, an advertiser buys a certain amount of page views over time. In China, most online advertising is still sold by time-period, as in “buy an ad on the home page for one month.”

As I thought it through, I realized that these different pricing methodologies created different incentives. In the US, you want “more page views per visit”, because that’s how you create advertising inventory. In China, you create more advertising inventory by making your home page longer.

Is this the explanation?? If so, does this mean that when (if?) China moves to a per-impression model, home pages will get shorter and less dense? Or has the online audience in China become accustomed to super-high density? If so, then how come newspapers are no longer as dense as they were?

By now I hope you’re starting to find these questions as interesting as I find them. I’d love to hear what you think!

After I posted about how the BBS is central to the Chinese internet, the CEO of a company called CICdata commented that they have been analyzing the Chinese BBS-sphere and blog-sphere for 3 years already. 

After checking out his site and the related blogs, I think it belongs on this growing list of “unique to China” websites.  To be honest, I was planning to only highlight Chinese websites, meaning “local” ones.  CICData is a “foreign” website (though it looks as if the team is mostly “local” people).  [I don't like the constant distinction in China between "foreign" and "local", but it persists.  Maybe I'll write about that elsewhere...]

In any case, I’m highlighting CICData here because I think it is something unique to China.  Other markets, of course, have blogs and message boards.  And I’m sure there are other companies that track them for you (would love to know who those companies are, by the way).  What’s unique about CICData is the fact that it is addressing what I think is the essence of why the Chinese internet is unique — it’s fast-moving BBS-based culture. 

This culture is what all China-watchers should be studying, since it truly is a remarkably-transparent zeitgeist of a generation.  In the US, I get the impression that bloggers are a very vocal minority, with outsize influence on the traditional media. In China, BBS-posters are not the minority; they are the majority.  And the traditional media is told to ignore them.  Think about that.

It looks as if CICData is a frontline “eyes and ears” into this zietgeist.  Kind of reminds me of how the NSA translated every Chinese TV and radio broadcast into English, back in the 70s and 80s.  If you wanted to know what was going on in China then, and your Chinese wasn’t good enough, those reports were invaluable.

I’m interested to learn more about how they do it, and what they are learning.  Stay tuned!

I know this sounds crazy, but on days when I get frustrated by living in China (we all have them!), I remind myself that being a foreigner in China is like playing the world’s oldest, biggest, and most complex video game.

Here’s what I mean.

Video games have levels.  You start at level one, and play it over and over until you master it.  This typically requires countless repetitions, since after you finally figure out that you need to “jump” and then “spin”, a big monster comes from nowhere to eat you.  So then you learn that it’s “jump”, then “spin”, and then “punch.”  If you haven’t played many video games, I suspect this sounds stupid.  Trust me, it’s addictive in a mind-numbing sort of way…

Then, just when you think you have it all figured out, you discover some kind of secret door, to a NEW LEVEL.  Suddenly all the rules have changed.  You’re back at beginning, at this new higher level.  Some things are familiar, and some things are not.  So you start figuring out how the new level works. 

And then, right when you’re starting to get bored, you discover a secret door into the NEXT level.

That’s what it’s like living in China, for me.  Doing anything requires making mistakes, and then trying again, without giving up.  Just when I think I’ve figured it out, I find a secret door, and enter an entirely new level.

Except unlike a video game, I have no idea how many levels there are.  And there are no “tips and tricks” websites or books to peruse.  My current guess is that there are more than 1,000 levels, and that the most-sophisticated foreigner I know (guess who!), is at about level 100.  That’s 10% of the way to “mastery.”  I think I’m at about level 20, and that’s after 20+ years trying to learn the language and 6 years of living in Beijing (4 now and 2 back in the 1980s).

The most sophisticated Chinese friend I know is probably at level 600.  I know this because I often don’t understand why he does what he does, but I see that it works brilliantly…

So this part of the blog is dedicated to documenting my own little revelations about the various “tricks” and “secret doors” that were certainly not obvious to me.  They therefore might be interesting to you.

At the very least, thinking about China this way helps me turn those moments of inevitable frustration into bemused resolve to keep playing the game, since it’s never, ever dull.

PPG.cn is another one of my favorite “unique to China” websites.  It falls in the general category of e-commerce sites, and is somewhat similar to American sites such as LandsEnd.com.  It sells shirts, ties, and slacks for men.  The user interface is clean and uncluttered, making excellent use of Ajax to quickly change images based on the colors you pick.

However, the interesting thing about PPG is not its website.  Instead, it’s the whole idea behind it.  They have figured out what young professional men want from an online clothing site: fast, easy, good prices, no hassle.  It’s amazing to me that no one has copied this approach in the US. 

Here’s how it works:

·         When you place your first order, you register to use the site.  From then on, it keeps track of everything you buy.

·         Once you decide to buy something, you give it your address and tell it when you want to have your stuff delivered.  Typically deliveries are made that afternoon if you order in the morning, or the next day.

·         Importantly, when the courier arrives with your clothes, he waits for you to try them on.  If you like how they look, you pay the courier.  If you don’t, you hand the clothes back, and tell the courier whether you want replacements or you’re just not interested.

·         With each order, you receive a coupon for a discount on your next order.  The coupon expires at a relatively early date, so it feels like it’s burning a hole in your pocket.

·         If you haven’t ordered anything in a while, you usually get a message on your cell phone telling you about a special price on the same style shirt you already bought, but in a different color.  In other words, the system knows what kind of shirts you like, and assumes you might be interested in one of a slightly different color at a much better price.

·         In addition, the site makes it very easy to mix and match ties, shirts, and pants so that you pretty much always look good.

·         Finally, the prices are what you would pay for the same items at a midtier department store, including shipping.  In other words, the stuff that isn’t incredibly cheap, but it’s also not especially expensive.  Rest of all, you’re not paying a premium for the much better service and absolutely no hassle.

Because the site recognizes that men typically don’t really like to shop, and because it’s so easy to use, PPG has become incredibly popular among all of the men in my office.  They know they need to buy work clothes, but they simply couldn’t be bothered to traipse around to different stores trying to find, chinos, work shirts, and attractive ties.

My only beef with PPG?  They haven’t opened a US version yet.

P.S.  A friend recently told me about a local PPG competitor called vancl.com.  On the surface, it looks practically identical, proving again that there’s no such thing as a good idea to camp immediately be copied.  However, PPG has already earned my loyalty with its database of my previous purchases and its clever use of incremental coupons delivered by cell phone.  Once again, it’s not the website that is so unique — it’s the deep understanding of the target male audience, brilliantly executed.

When people ask me to name a “unique to China” website, I usually start with Flashempire.  Maybe something like this exists in Japan or Korea, but I’m pretty sure there’s nothing like it in the US.

The site is the central hang-out for China’s Adobe Flash developers.  It has the latest news about Flash, lots of tutorials, and a job board.  None of this is especially unique of course.

The main attraction, however, is the “Top 10″ section.  The site regularly runs contests for their members, asking them to create short-form Flash animations.  The community votes on the submissions, and the winner gets a prize. 

It’s simple, but really worth checking out.  Why? 

• The quality of the posts is simply amazing — the top entries feature rich, sophisticated animations and sometimes original music.  Most are created by bored high-school ad college students who seem to have lots of time on their hands.
• The most-popular posts provide a visual insight into what this young crowd finds interesting.  Not surprisingly, many posts are about unrequited love, but a surprising number are pretty political (couched in historical metaphors, a long-time favorite of skittish Chinese critics)
• Unlike YouTube-like video sharing sites (of which there are many in China), Flashempire’s posts requite a great deal of work to create, and therefore (presumably) reflect deeper thinking by their creators.

Then again, maybe I’m reading too much into all of this…

Most Chinese websites are copies of successful American ones.  This isn’t unique to China, of course.  All over the world, entrepreneurs and financiers look at the success of American websites, and decide to copy them into their local language.  This may be “lame” to purists, or alarming to those who believe that ideas and business models can somehow be protected legally, but it just makes sense.  If YouTube can be sold for billions, why not try a “Chinese YouTube”?  Or a ”Chinese FaceBook”?  Presumably the risk is lower.

But every so often something is invented in China that is unique.  These examples fascinate me, both because they typically provide insight into what’s happening in China today, and because they are candidates to be copied in other countries (such as, ironically, in the good ole US of A).  So this category is about my favorite “unique” Chinese websites.  Let me know if you have your own.

P.S.  Of course, no one has perfect knowledge of all websites in the world.  I certainly don’t!  So if you know of a site that precedes one of my examples of “Unique to China”, please let me know. 

Once you spend some time surfing the Chinese Internet, you’ll quickly notice the heavy use of numbers in URLs.  This has of course been reported elsewhere, since it’s pretty hard to ignore.  But I haven’t seen anyone try to explain why this is so.

The closest I’ve seen is an explanation for the ubiquitous use of “51″ as the first two characters in a site’s URL.  The most famous example is the website called “51 job.com”, which is one of China’s leading “find a job websites”, similar to monster.com.  The reason why sites like this and others use “51″ is that when you say the word “51″ in Chinese, it sounds a little bit like the Chinese phrase for “I want”.  So whenever you see a site whose URL begins with “51″, you can bet that the site has something to do with wanting something, such as a job, a date, an apartment, etc.

This is a nice explanation, but it unfortunately doesn’t explain the preponderance of numbers for all sorts of other websites.  It would be nice to think that whenever you saw a number in a website you could simply ask what’s the Chinese homonym, but I’m afraid that approach won’t work.    

After asking a lot of people in hopes of unlocking the secret, I have finally concluded that there simply is no secret.  It’s pretty obvious: numbers are easier to remember and, importantly, much easier to type on a keyboard.  Let me explain both of these, since I doubt they are obvious if you don’t speak and write Chinese. 

In Chinese, there are ~50,000 unique written characters, but less than 500 unique sounds.  As a result, when you “hear” a character, it’s very difficult to know exactly which written character the speaker means.  In English, this occurs if someone says the word “stake”, and you hear the word “steak.”  In English, however, these cases are relatively infrequent, and it’s typically always easy to know which one is meant by the context.

In Chinese, it’s much harder.  In fact, almost every time you “spell” a word in Chinese, you need to quickly explain which character you mean.  Using the previous example, for instance, if you were telling someone to go to www.stake.com, you would need to quickly say “you know stake, like “stake through the heart”.  If that fails, you’ll see Chinese people hold out their palms and “write” the character with their forefinger.  No kidding.

[Parenthetically, this process happens every time someone tells you what his or her Chinese name is.  The first character is usually easy, since there are only about 300 acceptable Chinese family names (this for a population of 1.3 billion - notice the pattern here?).  The second and sometimes third characters, however, typically carry meanings that are meant to reflect the personality of the person (or at least the personality of the parents when they named their child).  For example, if you're sitting around a conference table, and as an icebreaker you ask everyone to introduce themselves, each person will invariably provide a small story that explains which exact characters comprise their name.  The polite thing to do is remark about how clever their parents were in choosing those particular characters.  But back to the main story.]

Given all of this, the appeal of using numbers in URLs is very strong.  First, when you use a number, there is no ambiguity about which number you mean.  Although there are many characters that have the same sounds as the characters for numbers, once you make it clear that you’re talking about numbers, there is absolutely no ambiguity.  Second (and I think this one is the real kicker) numbers require a single keystroke on the keyboard. 

In contrast, each Chinese character requires at least three and up to 10 keystrokes.  For one Chinese character.  A word (which is made up of 2-3 characters) therefore typically requires 10- 20 keystrokes. So in English, you might type “see dog run” (11 keystrokes).  In Chinese, the same sentence could easily require twice as many keystrokes.

Let me explain.  When I first worked in China for IBM in 1982, the modern method of writing Chinese with a Western keyboard had not yet been invented.  As a result, we sold computers with massive keyboards.  You needed special training to use them, since they had all sorts of complex overlays.  As I recall, very few people could ever master the system.

This all changed when the modern method for inputting Chinese on a Western keyboard was invented (I don’t know exactly who did this and when it occurred, so please let me know if you do).  Here’s how it works: you type the way the characters sounds, using a romanization method referred to as “pinyin.”  As soon as you type in something the computer recognizes, it looks up all of the characters that have that sound, displaying them in a little pop-up interface.  If you’re lucky, the character you are looking for is displayed within the first menu (which is typically seven or eight characters at a time).  However, you often have to scroll through several pop-up menus before you find the character you want.  Once you find that character, you have to click on it or type in the number that’s next to it.

Believe it or not, Chinese people go through this process for “each” character they write in every single document they type.  As a result, typing in Chinese is slow.

So hopefully it’s now easy to understand the appeal of numbers.  They are right there on your keyboard, typically at the top or in a separate keypad.  Typing a number requires one, simple key stroke.  There is no ambiguity, no list of similar sounding characters to choose from, and you can type very fast.

So while I assume there are many other explanations for why numbers are so popular inside the Chinese Internet (no doubt going back thousands of years and referencing all sorts of cultural contexts) I think the most compelling reason is the simplest.  It’s just easier.

In the US, naming a website is a hassle, but it’s pretty straightforward.  By “hassle” I mean that you need to check whether the URL you want is still available, and if not how much it will cost to buy it from the person who is inevitably squatting on it.  Because of this, you typically spend hours trying to find the “best” URL.  Of course, the name of the company is simply an extension of the URL: Amazon.com, eBay.com, yahoo.com, etc.

This process also happens in China, but it’s actually subordinate to something that’s more important: choosing the “name” of the website.  As an American, I found this hard to understand at first.  “What do you mean you have to find a ‘name’?”, I would ask.  “Isn’t that always the same as the URL?”

As it turns out, in China the answer is no.  In fact, most websites in China have a URL that has nothing to do with the name of the website.  Let me give you a personal example.  When I first started Blue Bamboo, one of the original ideas was to create a Consumer Reports -like website focused on home renovation.  Fortunately, one of the first URLs I looked up was available: www.ChinaDeco.com.  I thought this was a great name, since everyone in China knew how to spell “China”, and Deco was short and easy to remember.  I also figured that the upscale Chinese consumers we were targeting would like to type in “DECO”, because it looked kind of trendy.  As for the “name” of the website, I didn’t give it another thought, since the answer was patently obvious: we would call it “China Deco.”

However, once I assembled the team and asked them what we needed to do to improve, I was surprised to find out that the “deciding on the name of the website” was in their top three urgent things to fix.  I thought that perhaps the issue was that the name was kind of long, or that nobody knew what the word “Deco” meant.  But that wasn’t the case at all.  Instead, from their point of view, the site simply lacked a name — a name in Chinese.

The obvious translations of “Chinadeco” were not available. Companies in China can register the name of a website, and this sort of registration is consistently enforced.  In addition, in China you’re not allowed to name something “China” without explicit government approval, since using that word in Chinese connotes some sort of national (read politically sanctioned) online service.

After conversations that seemed to go around in circles for days, our top marketing guy came into the office one day with a simple three character name.  In Chinese: 装聪明 (Romanized it’s spelled zhuang-cong-ming).  As soon as they saw the name, everyone on the team said “wow!  That’s a great name.”  I knew what the three characters meant together, and understood that translated literally it would mean something like “Deco-smart”.  As it turns out, however, there were all sorts of other subterranean meanings to the three characters put together.  Principal among them was the fact that the first character sounds like another character that means “is not.”  So another way to read the name was that the website was about people who were not smart about decorating.  Instead of coming across as pejorative, however, the name would be perceived by our younger, net savvy audience as a very clever play on words.

After we agreed to use this new name, I mentioned that we obviously need to change the URL, since the URL I had chosen was quite different than the name.  My suggestion was met with puzzlement.  “But why do we need to change the URL?  The URL has nothing to do with the name!”  Suffice it to say that this was one of the more fascinating conversations of the week for me. 

The team explained that in China, most people can never remember the URL of a website, unless it is extremely simple and short.  Otherwise, they typically go to the Baidu search engine, type in the Chinese name, and then click on the first result, which is typically the website they are looking for.  This isn’t as strange as it may sound, since people who don’t speak English natively shouldn’t be expected to be able to spell complicated URLs from memory.  Perhaps more importantly, I’ve noticed time and again that it’s much easier for Chinese people to remember the Chinese name of a website than it is for them to remember the English URL.  Once again, this shouldn’t come as a surprise.

As a result of this approach, there are many Chinese websites whose URL has nothing to do with their name in Chinese.  Of course, there are some high-profile exceptions such as Sina.com, which is spelled in a way very similar to the way it sounds in Chinese, or Dangdang.com, which also sounds quite similar.  But there are far more examples of the opposite:

• 163.com (in English called Netease)
• 51job.com (in Chinese it’s 前程无忧, which translated means “guaranteed bright future”)
• QQ.com (in English called Tencent and in Chinese called “tongxun”).

It turns out that the team was exactly right about the Chinese name, and the URL.  Once we started using the new Chinese name, everyone loved it.  No joke: almost every meeting with a journalist or potential Chinese partner would start with a 5-minute conversation about how cool the website’s name was.  To this day people who can’t remember that the company is called “Blue Bamboo” will still ask me, “So how’s zhuang-cong-ming” doing? Noone could remember the URL, but it didn’t seem to remember.  Once they visited the site and decided they liked it, they would add it to their bookmarks, which list sites by their Chinese name, not by their URL.

The bottom line: if you’re planning to set up a website to appeal to Chinese consumers, don’t assume that the URL and the “name” of the website are the same.  I’d suggest first focusing on the Chinese name of the website, and then picking a URL that is somehow related to the Chinese name, or failing that, a URL that is short and simple to remember.  Also, don’t be afraid to use URLs that are based on numbers.  This approach is quite popular.