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Making the Online Connection in China

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China and its one billion-plus population have long been the envy of the business community, ranging from huge international consumer goods companies to feisty entrepreneurs with an idea to sell or a niche to exploit. Nowhere is the potential for gain more evident than the lucrative Internet business.

But for those who find it difficult just to navigate the Internet revolution in the U.S., understanding the Chinese market can be overwhelming. Experience from the Internet frontier can be invaluable.

On Feb. 2, Wharton's Global Chinese Business Initiative (GCBI) brought together three executives from three types of Internet companies: a community site, a portal and a business-to-business (B2B) e-commerce firm.

Anthony Cheng is president and COO of renren.com, a bilingual online meeting place for the global Chinese family; Kenneth Farrall is CEO of VirtualChina.com, a virtual community offering comprehensive coverage of China's markets and culture; and James Chyn is vice president of ChinaMallUSA.com, an e-commerce company providing Internet marketing, information and Web hosting services designed to facilitate trade both within China and between China and the U.S.

The three men, whose presence kicked off the GCBI's East-West.com series on the Internet revolution in greater China, offered insights into an industry that is not only volatile but also faces unusual obstacles. These range from unpredictable government regulations and no online payment system to poor distribution channels and a population with little understanding of, or access to, computers. Yet each of the speakers chose to focus most on the opportunities that the Chinese market offers.

Cheng began by outlining Internet space in Greater China. Before he launched his firm in May 1999, the Chinese market had a number of portals, content providers and some niche sites, but lacked Chinese-language content. Cheng's previous experience at McKinsey, and his instinct that community sites would be most financially viable, inspired him and a McKinsey colleague to develop the first bilingual community Web site for the global Chinese.

Renren.com - named after the Chinese word for "everyone" - caters to the Chinese people and Chinese enthusiasts worldwide and intends to create a diversified international presence through a well-coordinated branding strategy. Featuring homepage space, e-mail, chat forums and classifieds for its members, renren.com brings people together by serving as a catalyst for personal user content and providing an interactive community. Half of its users live in the People's Republic of China, 20% live in Taiwan, 20% in Hong Kong and the rest in Europe and the U.S. The company, which has grown from 7 employees to 120 over the past nine months, recently raised $6 million in venture capital.

The inspiration behind VirtualChina.com was the growing number of Westerners interested in learning more about China. Founded in May 1999, VirtualChina.com is an English-language portal dedicated to breaking down barriers and stimulating exchange between China and the West. There's a growing interest "not only from big companies but from small and medium-size companies who see a tremendous market potential but are constantly stopped from doing business because of" distance and language barriers, says CEO Farrall. As a news source and content provider, VirtualChina.com bridges these barriers by offering broad coverage of finance, culture and information technology, as well as access to business directories, investment guides and reference materials, he notes. Company headquarters are in New York, with branch offices in Beijing, Hong Kong and Shanghai.

Unlike the consumer-oriented sites described above, ChinaMallUSA.com links buyers and suppliers. According to Chyn, vice president and director, the site delivers value-added business information related to the Chinese market, a comprehensive database of company profiles, and product offerings from Chinese suppliers. Established in 1997, ChinaMallUSA.com is one of the few companies licensed to conduct retail operations throughout China, notes Chyn.

Last updated: Mar 1, 2000




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