Monthly Archives: October 2013

There are grounds for scepticism. The Chinese gaming and social media firm started in the same way many local internet firms have: by copying Western success.QQ, its instant messaging service, was a clone of ICQ.And unlike global internet giants such as Google and Twitter, Tencent still makes its money in its protected home market.

Yet the Chinese firm’s stockmarket valuation briefly crossed the $100 billion mark this week for the first time.Given that the valuation of Facebook, the world’s leading social media firm, itself crossed that threshold only a few weeks ago, it is reasonable to wonder whether Tencent is worth so much.However, Tencent now has bigger revenues and profits than Facebook.In the first half of this year Tencent enjoyed revenues of $4.5 billion and gross profits of $2.5 billion, whereas Facebook saw revenues of $3.3 billion and gross profits of $935m.

The Chinese firm’s market value reflects the phenomenal rise in its share price.A study out this week from the Boston Consulting Group found that Tencent had the highest shareholder total return( share price appreciation plus dividends) of any large firm globally from 2008 to 2012 -topping Amazon and even Apple.

Tencent has created a better business model than its Western peers.Many internet firms build a customer base by giving things away, be they search results or social networking tools.They then seek to monetise their users, usually turning to online advertising.Google is a glorious example.Other firms try to make e commerce work.But as the case of revenue rich but profit poor Amazon suggests, this can also be a hard slog.

Tencent does give its services away: QQ is used by 800m people, and its WeChat social networking app has several hundred million users.What makes it different from Western rivals is the way it uses these to peddle online games and other revenue raising offerings.

Once users are hooked on a popular game, Tencent then persuades them to pay for” value added services” such as fancy weapons, snazzy costumes for their avatars and online VIP rooms.Whereas its peers are still making most of their money from advertising, Fathom China, a research firm, reckons Tencent gets 80% of its revenues from such kit( see chart).

There are some problems too.Tencent is too big and bureaucratic to create things themselves.A more pressing worry for Tencent’s shareholders is that its lavish spending, on top of heavy investment in improving its unimpressive e commerce offerings, will eat into profits.Worse, the m commerce arms race risks distracting it from gaming and value added services, the cash cows that are paying for everything else.A $100 billion valuation might then seem too rich.

http://tech.sina.com.cn/i/2013-10-03/09428788006.shtml

http://mi.techweb.com.cn/tmt/2013-09-30/1339967.shtml

“Xiaomi”, often described as China’s Apple, is actually quite different from Apple.

                    It was more like a rock concert as the casually dressed chief executive unveiled his firm’s  new smart phone to crowd on a darkened stage. Yet this wasn’t the launch of the new iPhone , but the Mi–3 handset by “Xiaomi”. With its snazzy design, no wonder “Xiaomi” is often compared to its giant American rival.

Xiaomi sold 7.2m handsets last year, in China, Hong Kong and Taiwan, earning 12.6 billion yuan( $2.1 billion).Apple sold 125m smart phones globally, earning about $80 billion of its $157 billion sales. But since it was founded in 2010, Xiaomi has grown fast. In the second quarter of 2013, Xiaomi’s market share in China was 5%, is more than Apple’s( 4.8%) firstly.Yet” we have never compared ourselves to Apple. We are more like Amazon.” says Lin Bin, Xiaomi’s founder, who once worked for the Chinese arms of Microsoft and Google. Crucially, Xiaomi’s business depends on selling services to its users.

Another big difference is their openness to users’ feedback. Apple takes a stalinist approach to its handsets, limiting user’s customisation . Xiaomi is guided by its users, releasing a new version of its MIUI software ( based on Google Android operating system) and response to their suggestions every week. In some cases, Xiaomi asks users to vote via microblog, the Chinese equivalent of Twitter, on whether particular features should be included or how they should work.

http://www.cnbeta.com/articles/254727.htm

Castigated for serious privacy failings ,Facebook is facing with some difficulties.On November 29th America’s Federal Trade Commission (FTC) announced they had reached a draft settlement  with the social networks over allegations for Facebook misleading people.

The details of the settlement sued that Facebook deceived its users’ .It is also notable because Facebook appears to be a part of broader attempts by the FTC to craft a new privacy framework to settle the swift rise of social networks in America.

The regulator’s findings came at a sensitive time for Facebook, which is said to be preparing for a public offering,valued $100 billion., next year. For its blockbuster flotation, the firm needs to resolve its privacy tussles with regulators in America and Europe.Hence it’s willing to negotiate the settlement unveiled this week, which should be finished after public comments.

Announcing the agreement, the FTC had found some cases that Facebook had made claims for “unfair and deceptive, and violated federal law”,for instance, it passed personally information to advertisers.And it failed to keep a promise, making photos and videos inaccessible for deactivated and deleted accounts .

The settlement doesn’t constitute an admission by Facebook for braking the law,but the regulator are embarrassing for the company nonetheless.In a blog post, Mark Zuckerberg tried to reduce the impact of the deal.Firstly he claimed that “a little high-profile mistakes” were overshadowing the social network’s “good history” on privacy.Then he said, Facebook could improve and he had hired two new “chief privacy officers”.

http://www.chinadaily.com.cn/hqzx/2013-09/29/content_17003294.htm