I’m in a China mood lately. I’ve got Chinese class tomorrow, and on Friday we had a presentation at work which mentioned taobao.com. Plus I just finished the Mr China book. So here are some random points about China and the internet that I have come across recently.

Taobao

Taobao is the largest ecommerce website in China. It sells everything! Its basically a Chinese version of Ebay. I actually came across it a few months ago, when this Chinese girl mentioned it to me as the place where she shops for books. Taobao is a subsidiary of Alibaba, which is a huge B2B website.

Let me give you some perspective about Taobao.

Though just six years old, Taobao (Chinese for “to search for treasure”) already has 120 million registered users and 300 million product listings. Its merchants produced nearly $15 billion in sales last year.

The company claims that sales through its Web site are already larger than any Chinese retailer. And, Internet analysts say, sales on its site this year will surpass Amazon.com’s expected sales of about $19 billion.

– New York Times

I came across a tweet from someone at an Alibaba presentation that Taobao is set to overtake Ebay AND Amazon in revenues next year. That’s insane! Consider how big Ebay is and how big Amazon is. Combine them. Then you’ve got Taobao.

Check this for more evidence:

The unique host of Taobao.com has topped 40 million, surpassing that of Amazon.com Inc. and eBay Inc., making the Chinese online marketplace the largest e-commerce Web site around the world in terms of traffic, disclosed Zhang Yong, its CFO.

By far, Taobao.com has had 190 million registered users, accounting for half of China’s total Internet users and 4.1% of the world’s total, according to Web information company Alexa.

– TradingMarkets.com

My understanding of the unique hosts stat is that it refers to unique visits. Having just finished Mr China, lets not get all hyped up considering how much of that information might be true. All I’m saying is ecommerce is big business in China and Taobao is #1 and its huge.

Busting up the search industry

Now in most Western countries, users have choice as to which search engines they can use. There’s Yahoo / Bing and Google. Realistically, most people use Google. However,  if you go to Google.cn, you are shown a picture of Google HK and when you click on the picture you are redirected to Google HK.

Google was supposed to renew their search license, but they haven’t done so. They also have not renewed their map and location license. It appears that Google is pulling out of China, and moving its search service to Hong Kong.

They had their recent blowup about abandoning China on ethical and principles, since gmail users were having their accounts hacked allegedly by the Chinese Government. They didn’t mention it specifically, but they hinted at it fairly heavily in this blog post called “A New Approach To China“.  Realistically, I don’t think Google would ever pull out of the biggest market in the world.

The big search engine player in China is baidu. There are local players in the China search market, but I’m not too familiar with them. What I did come across recently is that the Chinese Government is entering into the search market by backing another player.

The second, and more surprising deal was a link-up announced two Fridays ago between Xinhua and China Mobile to start yet another search engine. Xinhua, a news agency belonging to the central government which also acts as a propaganda organ and sometimes intelligence gathering body, and China’s largest cellular carrier seem like unusual partners for an Internet venture, and the exact terms of the transaction have yet to be announced.

The New York Times described the deal as follows: “In an apparent bid to extend its control over the Internet and cash in on the rapid growth of mobile devices, China plans to create a government-controlled search engine.”

– via techrcrunch

Its very intriguing. Would you ever see the Australian government busting into the search market like that, creating a state sponsored search engine? I don’t think so. They were trying to introduce an internet filter but this is a relevant and related discussion but for another day.

This move is to introduce competition into the search market, to ensure one player does not become too dominant and to be able to control where people can search and what information can be given to them. The Chinese government wants to be able to do that =)

Having a dominant search engine (even Google) is not a good thing either. Search, like any industry needs competition but from the free market. Why do you think Google come out with Instant Search? So they can blow Yahoo/Bing out of the water with yet another innovation they hadn’t thought of. Search needs to be competitive but also people should have the freedom to find any information they want. Its akin to freedom of speech. How can I form a reasoned, independent and well thought out opinion without the availability of information?

CCTV iPhone app

Speaking of State sponsored propaganda media, CCTV has an iPhone video app blows the water out of any iPhone video app. The quality and speed at which it streams video (Chinese news) is amazing. Hat tip to @vincentzhou for showing me the app.

So why did they do this?

According to Computerworld:

China’s film and TV regulator late Tuesday praised the growth of an iPhone application from state broadcaster CCTV as the country looks for new ways to project its political views abroad….

China is investing heavily to expand the overseas reach of its state-owned news outlets, which often air official Chinese political views strongly at odds with mainstream Western views. The Dalai Lama, for instance, is frequently attacked as a dangerous separatist in Chinese state news reports, while the exiled Tibetan figure is seen more as a saintly religious activist in the West. The first section of CCTV’s major evening news broadcast is always dry footage of top leaders meeting with officials from other countries or with smiling farmers in rural Chinese areas.

Of course, lets throw the State budget at creating an iPhone app to further push their views. I mean, even I am considering watching CCTV to improve my Mandarin. Its one of the few dedicated Mandarin chanels on my Chinese tv at home.

The Wash Up

There are many opportunities in China, particuarly given the size of the market. There are more internet and mobile users in China than anywhere in the rest of the world. Taobao is currently bigger than Amazon, and could be bigger than Amazon AND Ebay. But as you can see in the search sector, its not easy doing business in China especially with the Chinese government moving in to create competition. And yes, they’ll do that with killer iPhone apps too.

I’m out like Google in China,

Matt Ho