Exploring Shanghai startups with China 2.0–Part 2

What follows is the continuation of my recent tour of Shanghai’s burgeoning collection of innovative Web companies as part of the China 2.0 tour (see Part 1).

Friday morning I caught up with the rest of the crew for an enlightening breakfast meeting with Gary Rieschel, founder and managing director of Qiming Venture Partners, where we discussed some of the major differences that foreign businesses face when doing business in China. One of the most interesting topics that came up revolved around the fact that Chinese tend not to host company in their home like we do in the West.In addition to a flourishing collection of massive restaurant chains, this also has an effect in the online world, as gaming and social-networking sites look for ways to monetize. With few guests at their home, many Chinese will look for other ways to impress their friends and illustrate their status, explaining why a site like 51.com can charge for pimp’d-out, accessorized avatars.

Spil Games Asia–Casual games with donuts

After breakfast we headed to Spil Games Asia where we were met by the company’s CEO Marc van der Chijs (also co-founder of Tudou.com). Marc treated us to a table full of donuts while he gave us an overview of his company and the casual gaming market in China.

Spil Games Asia, which is a subsidiary of Spil Games, owns 11 casual gaming portals throughout Asia, with its two largest being Game.com.cn and Xiaoyouxi.com here in China. Marc explained that though casual games for the Chinese market are largely the same as games in other countries (simple instructions, noncommittal game time, etc.), particular attention is given to community features such as chatting and forums.

As a Web designer, I found it particularly interesting to hear Marc talk about how he applied his Western design ideals to the first version of the company’s China-focused gaming site. When starting, he viewed the Chinese gaming portals as an overly busy and chaotic collection of activity–much like any Chinese portal you visit. He wanted to bring a clean design ideology to China, and joked that he had assumed the Chinese would be a bit grateful for his insight. It was a complete failure. A quick tweak of the site, using all the same content but busying it up a bit, and suddenly traffic leaped up. One more example that China is very much its own unique animal.

Tudou–From potatoes to black beans

From the Spil Asia offices, Marc led us a few blocks over to the offices of Tudou.com, China’s premiere video-sharing site, for Shanghai Lunch 2.0–an opportunity for Web startups to present their ideas to an audience of their peers.

Tudou CEO Gary Wang kicked things off with an introduction to Tudou as we stuffed ourselves with pizza and burgers. Gary explained that the idea for Tudou came about after listening to Marc talk about podcasting back in 2004. Gary had been looking for a vehicle to break open the strict video/TV market in China, and knew it wasn’t going to be done by traditional means. Tudou was born.

The site received modest growth in its first year, but it was a spoof of the Promise, a big-budget Chinese film, which quadrupled Tudou’s traffic overnight–illustrating the power of viral UGC videos.

Tudou remains one of the top video-sharing sites in China (neck and neck with the somewhat newer Youku.com). And though the company will remain focused on the UGC side of things, it recently launched Heidou (black bean), a sister site that will allow it to further develop professionally created content (much like Hulu.com does).

Gary explained that this is essential, as users turn more and more to the Internet for all their video needs (TV shows, movies, etc.). It also provides the company with a more stable platform to offer advertising on, as advertisers like to know what their products are being set next to (UGC can be a bit unpredictable). He also shared that he is not looking for Tudou to become just an aggregator of content (he doesn’t want to be the “HBO of the Internet”), but rather is helping to encourage and finance original content that might not have a method of distribution otherwise.

Startup pitches

After Gary’s presentation, Web2Asia‘s George Godula gave us a very informed rundown of the Chinese online industry and how domestic companies are beating big Western brands across the board, which seemed a suitable lead-in to presentations by three China-based startups:

  1. AskForm: A simple, professional survey platform that allows users to easily create surveys and charts for business, research or university projects. Has been in operation for about six months and has had 20K+ forms created.
  2. Qoo Lu: A company developing a virtual playground for adolescents (10-18) called ClubFish–which currently has 100K registered users, with absolutely no money invested in marketing yet.
  3. Qifang: An exciting stealth P2P lending site for Chinese student loans. The startup is looking to give every student in China a way to pay for their education by providing them with online-based group lending, something that is even more important in China where bank loans are difficult to impossible for most students to get.

italki.com–Speaking 100 languages in one small office

From Tudou’s offices we hopped into the tour van and headed west across town to the headquarters of italki.com, one of the world’s largest language learning sites. We were greeted by the company’s CEO Jiang Yong Yue, COO/President Eric Pang and board director Kevin Chen.

Eric explained that language learning has gone through three stages, v0.0 being traditional book and teacher method, v1.0 being the creation of language software but missing a human element, and v2.0 which utilizes the power of social networking and computer-based tools.

italki.com launched in December 2006 and now features members in 200 countries speaking 100 languages. Primarily, the site allows members to connect in a language exchange, but also offers contributed and wiki-generated resources.

Despite being located in China, only 15 percent of the company’s users are Chinese, with the other 85 percent made up of a wide variety of other nations’ peoples. Unsurprisingly, the majority of the site’s users are looking to learn English, with Spanish and French being other popular choices.

Currently, the site has about 2,000 users logging in per day, which puts italki.com a close second behind US-based Livemocha, a position it is actively looking to reverse.

You can follow italki.com on Twitter at twitter.com/italki.

Also while at italki we were given quick presentations by two other Web businesses (the “quick” part being somewhat essential at this point, as most of us were presentationed out). The first was by Kevin Chen, founder of Famento.com, an SNS focused on telling family histories.

Like italki, Famento is a China-based SNS focusing on a global market. Though most of the companies we visited on the China 2.0 tour were specifically targeted to the domestic Chinese market, there are more and more companies like italki and Famento that are using the low costs of China to minimize their burn rate and prove that you don’t need to be in Silicon Valley to launch a Web startup.

The last presentation of the day went to eBay and Yahoo veteran Mark Inkster and his site Yiqilai.com.cn, a Trip Advisor-like site for China. With China poised to be the second-largest travel market over the next decade, Yiqilai is providing the country’s new generation of travelbugs with more than 100,000 travel reviews, pricing, hotel information, etc.

After finishing up at italki.com’s offices, the members of the tour were given some much needed downtime to relax, blog and just generally process the mountains of information we had been presented with.

I do have some regrets for not having been able to attend the Beijing and Guangzhou legs of the tour, but also have a fair bit of admiration for my fellow tour-goers, as just the two days in Shanghai had me completely teched out.

Still, it was an invaluable experience and I thank those that made it possible, particularly Christine Lu at The China Business Network, Elliott Ng at CNReviews, George Godula and Markus Gruber at Web2Asia, and all the companies that let us fill up their boardrooms and ask them rather probing questions.

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