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Stretching Across Chinese Communities

By Ron Chepesiuk

The Asian American market is hot. APIs have embraced the Internet. They have the highest median income and education levels of any ethnic group in the country. And their buying power in North America is more than $150 billion-plus annually.

With the larger goal of maintaining its position as a leading Internet media and infrastructure company for Chinese communities worldwide, SINA.com is well aware of the market’s potential. To convince advertisers, it sponsored a study on the Chinese American population specifically.

“There really isn’t a lot of specific information on the Chinese population in North America,” Karen Brux, director of marketing for North America at SINA.com, explained. “You can find a lot of information on Asian Americans, but an Asian American can be a Filipino, Korean or Japanese.”

SINA.com — Fact Sheet CEO: Wang Zhidong Ownership: The company is publicly traded on the NASDAQ exchange under the ticker symbol SINA. U.S. Address: 1313 Geneva Drive, Sunnyvale, Calif. 94089 Phone: 408-548-0000 Fax: 408-548-0068 Web address: www.sina.com Mission: A full-service web portal offering news, finance, lifestyles, entertainment, e-mail, shopping and community services to a global audience. Employees: As of September 2000, the company had 650 employees worldwide, including about 100 in the United States. Audience: As of September 2000, SINA had 11 million registered uses and an average of 46 million daily page views Advertisers: 400, including Charles Schwab, Motorola, Sprint, Ford

She added: “We needed to produce hard data [from the North American Chinese market] to get the advertising dollars.”

SINA.com did just that. In September the company hired the research firm, Interviewing Service of America, to conduct an Internet usage study of Chinese residents of the United States and Canada. From July 25 through Aug. 17, a total of 1,005 25-minute telephone interviews were conducted among Chinese American and Chinese Canadian adults.

“The information we gathered was quite impressive, even when you compare it to the general Asian American population using the Internet,” Brux revealed.

According the survey, the North American Chinese population has been smitten by the Internet, and uses the media extensively: in making travel plans, investing, buying cars, and most notably for communicating. The study showed that six out of 10 Chinese American and Chinese Canadian households have Internet connection at home, and about 75 percent of Chinese Americans and 67 percent of Chinese Canadians use the Internet daily.

Hard data aside, the study has helped validate SINA.com’s business model in North America: go after advertising dollars by leveraging the potential of the Chinese market in North America.

“The study shows that U.S. corporations should have faith in the North American Chinese market,” Brux said.

JUMPING IN

A Profile of Internet Users Among North America’s Population of Chinese Descent • About six out of ten Chinese households in the United States and Canada have an Internet connection at home. • Among Chinese adults, 47 percent in the United States and 44 percent in Canada have been on the Internet within the period of July 25-August 17. • The vast majority of Internet users access the Net at home. • Among Chinese Americans, more men are Internet users than women are, and they are more likely to live in smaller rather than in larger households. • E-mail is the main online activity followed by reading the news/sports/weather reports. • The majority of both U.S. (73 percent) and Canadians (63 percent) Chinese Internet users visit Chinese language Web sites. • Chinese North American users differ from non-Internet users in that they tend to be better educated and more affluent. • More than half (58 percent) of Chinese Internet users in the United States have investments, and of those, 70 percent trade stocks online. • Sixty percent of Chinese American and 45 percent of Chinese Canadian Internet users have made a call over the Internet. • Two-thirds of all Internet users have handled some kind of travel related activity on the Internet, while 40 percent of Chinese Internet users have done so. Source: SINA.com study by Interviewing Service of America.

SINA.com’s influence as a gateway to the Chinese online population was evident last month when Merrill Lynch, a leader in the international financial market, joined with the company to sponsor an investment seminar for high-net worth individuals in Silicon Valley. The seminar discussed issues, trends and strategies in wealth management during a volatile market.

“Through SINA, we can utilize the Internet to provide specialized services to the investor savvy Chinese online audience, blending global resources with local Chinese expertise to meet the individual wealth management of the group,” explained Winthrop H. Smith, Jr., chairman of Merrill Lynch International.

SINA.com is also working in partnership with BestEDeal, a price-comparison shopping site. Through the deal, BestEDeal hopes to strengthen its position in China with a co-branded shopping Web site, which can be accessed through SINA.com. It provides the same service in Chinese as BestEDeal does in English.

“SINA has the leading Web site in China, and we are excited about what the partnership will do for our marketing efforts in China,” said David Carroll, chief financial officer for BestEDeal.

LOOKING BACK, LOOKING FORWARD

SINA.com was created in March 1999 when the Sunnyvale, Calif.-based Sinanet.com, a company that began in Stanford University in 1995, merged with Stone Rich Sight Information Technology Company, the Beijing-based software and technology company founded by SINA.com’s current CEO and president, Wang Zhidong.

Today, the company’s management splits its time between offices in Sunnyvale and Beijing, China. In addition to the Chinese market in the United States, the company has three other localized markets targeting mainland China, Hong Kong, and Taiwan — the region commonly known as Greater China.

“We have the technical expertise and local talent to meet the specific needs of each of the local markets,” said co-founder Jack Hong, who, as vice president of advanced products at SINA.com, oversees production and engineering activities in the company’s U.S. office.

Hong has helped foster company growth by developing technology to support SINA.com’s Web services, including SinaXpress publishing engine for production of universally viewable Chinese-language text.

SINA.com also offers news, entertainment, finance and lifestyle content, as well as e-mail, shopping and community services. In the last two years SINA.com has been the most popular site for Chinese Internet users worldwide. Among Chinese American viewership, it is the second most popular site. In fact, SINA.com statistics show that for 31 percent of Chinese American Internet users, it is one of the five sites visited the most often.

“Through technology and our marketing strategy, we have worked hard to connect with the online global Chinese community,” Hong said.

GREATER CHINA

SINA.com’s North America market is growing, but the company focuses much of its resources on tapping the huge potential of the Chinese markets in Greater China. There, 100 million households can potentially afford Internet access. Already, the Internet population has doubled every six months over the past three years.

Mainland China has caused the greatest buzz. BOAChina, an Internet consulting firm, forecasts that the number of Internet users in mainland China will jump from 12 million this year to 33.6 million in 2003. Meanwhile, InternetData Corporation estimates that e-commerce could generate $3 billion by year 2003.

A Profile of Internet Users in China • There were 14.2 million Internet users in Greater China at the end of 1999. • Over 32.5 million Chinese will be online by 2001. • The Asian Pacific region will become the world’s second largest online market by 2005. The Internet population in China, by far the largest segment of the Asian Pacific market, is growing at a 200 percent annual rate. Sources: Computer Industry Almanac, Hong Kong Bureau of Information. Chinese Ministry of Information Industry, China Internet Network Information Center.

In establishing its market position in China, SINA.com has forged a number of key partnerships with Chinese companies and government agencies. In September, for example, SINA.com announced an initiative that will help ease the online payment procedure in China through the country’s leading banking institutions, including the Industrial and Commercial Bank of China (ICBC) and China Merchant Bank. The arrangement will allow Chinese consumers to make online purchases on SINA.com’s Web site with ICBC credit cards, currently used by 65 million members.

In October, SINA.com entered into a partnership with China Telecom, the country’s leading telecommunication carrier, to promote Internet usage throughout the country in a campaign called “Home Online.”

Both companies will also partner with Sinohome, a Chinese e-commerce and Internet solutions provider, to deliver over 10 million CD-ROMs, enabling free online connectivity to families across China.

With 200 million potential mobile subscribers in China by year 2001, SINA.com expects to develop additional strategic alliances as the wireless market grows.

“We will develop partnerships with a wide range of companies, from manufacturers that make and distribute cell phones to operators who are responsible for content,” Hong said. “Those partnerships will provide us with an opportunity to establish our brand among the Chinese who aren’t on the Internet yet.”

WORKING WITHIN THE SYSTEM

Doing business in China has never been easy, and recent rules issued by the country’s government may make it even more difficult. Last October, China announced new regulations that will govern news and chat rooms on Chinese Web sites. According to the rules, sites not run by the state media must get approval from the government before publishing news. Moreover, the sites are required to hire a team of editors with “Internet experience and mid-level or higher expertise” for major media outlets not run by the state. Finally, bulletin boards and chat rooms may not be created without state approval.

Analysts say that those new rules have significantly raised the risk of investment in China. Last October, after the rules were announced, SINA.com’s stock price dropped 12.4 percent.

However, SINA.com officials remain optimistic. “We had already anticipated the rules before they came out and had entered into discussions with Chinese officials,” Hong said. “In fact, we were already satisfying the rules’ requirements, so we haven’t had to adjust our business strategy.”

NEW KIDS ON THE BLOCK

Competitors, Chinadotcom and Yahoo!Chinese, may pose another threat to SINA.com’s dominance, according to some analysts. But SINA.com’s officials have downplayed the competition by pointing out that it has a two-year head start in the China market. Furthermore, it has cash reserves to last another seven or eight years.

“If there’s a shake out and some of the players fall by the wayside, it won’t be us,” Hong predicted. “We’re right on schedule to start making a profit by 2003, but we hope to beat that target date.”