Pacific Business News (Honolulu) - October 9, 2000
http://pacific.bcentral.com/pacific/stories/2000/10/09/focus2.html

In Depth: Advertising & Marketing

From the October 6, 2000 print edition

Serving Clients in Hawaii and Asia Pacific Since 1980

ChinaNet a study in Web marketing

Heather Tang   PBN Staff Reporter

For those hoping to reach the booming Chinese business market, you may have to wait awhile, says Johnson Choi, president of the Hong Kong Business Association of Hawaii.

"A lot of people are trying to provide information for American firms doing business in Asia," Choi says.

Few have managed to turn profits. The most known is San Francisco-based Ren.com. That company now has offices in New York and Hong Kong but recently laid off several workers.

Now more companies -- including many Hawaii-based -- are jumping on that bandwagon.

The latest is 5-month-old ChinaNet.Com, a tiny start-up operated out of a home office in Kahala by longtime Asia consultants Michael and Kalen Cooper.

Every week ChinaNet.Com registers some 350,000 hits to its Honolulu-based Web site; daily, that translates to about 50,000, despite no marketing, advertising or promotion for the site, Managing Partner Michael Cooper says.

"Chinese Web sites, for the most part, have esoteric names, like 3GC. Who would go to that? History tells us that people are not clicking into those; they find the obvious names," Cooper says. "Our ChinaNet name seems innovative; people come to [us] on their own head."

Most people who visit the site are large China-based companies or foreign companies in China looking for business information.

"The Chinese-focused business community is our prime audience," Cooper says. "Chinese people are in every country in the world. The common denominator is business."

Now the company hopes to add more features to bring even more people -- and even more dollars -- to its Web site.

Since launching the company in mid-May, the Coopers have run their site in English with some Chinese language content. They hope to beef that up to full Chinese and Japanese language functionality early next year.

They say the success of the site and high traffic volumes will help the company make the transition from just another dot-com to a practical, and profitable, business solution.

Asian connection

Tending to Asian business services is hot for many Internet companies, says Ann Chung, executive director of the Hawaii Technology Trade Association.

"There's a strong growing trend and completely necessary trend to look into Asia. A lot of our member companies are looking at expanding into Asia,"

Chung says. "Companies are definitely understanding that Asia is one of the most important places to look into expanding."

The Asian market is a growing subsector of the tech industry, she says, one that is shaping up to be a viable part of the local sector. One example is 4-year-old AccessAsia.com, a Honolulu-based yellow-page-type directory of Asian businesses and provider of business information services. The company now has nearly a million listings throughout Asia and 500 subscribers, says project manager Kathy Neary.

The company will offer its subscribers a host of new products including an Internet fax system and free homepages. A complete overhaul of its Web site will also go online in about a month.

"We'll be ready for prime time soon. The next generation of our site will be out," Neary says.

For now, about half of its customers are foreign-based; the rest are American firms, she says.

Although these Hawaii-based Asian-focused dot-coms face much of the fragility of the information technology industry, they may also have some inherent advantages, the technology association's Chung says.

"Because of [Hawaii companies'] own familiarity with Asian culture, there's less risk aversion to going to Asia as opposed to Silicon Valley companies," she says. "We're so in tune with our Asian ties, it's natural for local companies to think about expanding into that region.

Uphill battle

Dealing with Asia, especially China, is not without challenges, says Hong Kong Business Association's Choi.

"There are... firms trying to target the Chinese market. Most of them are losing money except the ones in financial service, trading stocks," he says.

"Dealing with China, sometimes you don't even know who the real decision makers are; that's the roughest part," he says. "In China you have to go through the provincial, county, national governments, it's very tricky. Sometimes it's better to talk to a `big six' accounting firm who's already in China. Otherwise it can be very dangerous."

What makes the market so risky are factors like limited Internet access and censorship. In China, Internet access is still limited to the bigger cities like Beijing, Shanghai and Guangzhou. Government censorship of content is also common.

"A lot of American investors are nervous about it; they don't want to invest a lot in China portals," Choi says.

Choi himself is an aspiring dot-commer. He and two others hope to launch a construction portal <http://www.projectonnet.com>/; in three months. His site would link standardized Chinese building material suppliers to American contractors. Chinese products are often priced at half the cost of American-built supplies but quality is questionable, Choi says.

Push for profit

Meanwhile, association with Yahoo! -- and the hits that come with that -- will be one of ChinaNet.Com's strong points. When entering the request for "China Due Diligence" on Yahoo!, the No. 1 referral is ChinaNet.Com.

Cooper and his wife are busy using such competitive advantages in their current pitch to angel investors. They're looking for their second round of financing -- $1.5 million -- enough to push them from an operational multilingual portal to a profitable trilingual video-powered source.

The company is hoping to break even in its sixth quarter.

"We've been incubating, now we're looking for investment," Cooper says. "If we're successful in our angel capital, we can move into our second stage of marketing."

The money will transition the company from a home-based operation into a mobile one with consultants, technicians and operational staff in Honolulu, Hong Kong and Japan.

"We're not a business yet," Cooper says, adding that they are hoping to add as many as four to their staff.

If financing goes through, the company's centerpiece streaming media could be online in a month, he says.

The company's video-powered Internet portal will serve the world's China-focused international business community. Such a medium could reach not only a large audience but also has the potential for rapid profit growth. Cooper, a former producer for EUE/ScreenGems, a division of Columbia Pictures, says he has credentials and contacts to make his streaming video a must-see.

That will pay off if ChinaNet.Com can garner a piece of the global market for streaming media content delivery, which is projected to grow from $78 million this year to $2.5 billion by 2004. Estimated future ChinaNet.

Com revenues of $9 million to $10 million weigh on these criteria:

  • Advertising: Internet advertising revenues surged 140 percent from 1998 to hit $4.6 billion last year. Online advertising will reach $24.4 billion by 2004.

  • Membership fees.

  • WebVideo programming: corporate profiles, executive features, promotional shorts.

  • Multilingual WebVideo commercial production and broadcast.

  • Clearinghouse for linking buyers and sellers online.

  • Affiliations: click-through commissions. ChinaNet.Com currently has affiliations paying commissions ranging from 2 percent to 20 percent of sales referred.

  • Domain name registration in Chinese, Japanese and English.

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