6 C H A L L E N G E S U S W E B F I R M S M U S T M E E T T O S U C C E E D I N C H I N A

Going .CN

What This Is

A Report for US Senior Executives at Web Firms trying to leverage

  The largest Internet audience in the World   The largest commercial market   BUT an immature online advertising environment

Whose Revenue Model is based on Online Advertising

What We Did

What We Found

  Six Unique Challenges   US Firms Are Unaware or Ignoring these issues   Bottom Line: No US Web Publisher Is Leading In

China Today   They have no natural advantage in China

Overcome Fear of Labor

  China has a lot of people who need jobs   Brute force labor in lieu of infrastructure

  Government likes massive headcounts   Cultural expectations mean face to face is important

  Automation is not a virtue

  Contrary to typical US firm focus on labor cost saving

The Government – Obey, Lobby but Move Ahead

  Multiple government (national and provincial) authorities and influence

  Multiple, often conflicting, rules and regulations   Close ties can be beneficial   Get over the uncertainty and move ahead

  Ask forgiveness if questioned   But See the Great Firewall

China Has the Largest Online Audience. So What?

  China Internet Audience is 100+% of US Audience   But China Ad Spend is 5% of US   And 80% of that goes to 6 players

  Ad Models are unsophisticated   Ad Buyers are different

  Focusing on brand awareness   Users Aren’t Transacting

  Set Your Expectations Accordingly

Start at Zero – Build Up to What Makes Sense

  No US Based, Cookie Cutter Solutions   Rethink Everything for China

  Offering   Brand   Model   Systems

  Local Leadership And Autonomy Is KEY

Deals Are Person to Person, Bargained For, and You Buy What You Can See

  Even Online, Guanxi Matters

  Everything Must Be Negotiable

  Advertisers Don’t See Value Unless They See the Ad

The Chinese Internet Will Not Become the US Internet

  Clutter Is Expected   Entertainment   Youth   Community   Provincial   Mobile   Café

Final Thoughts

  IF Your Goal Is to Compete in China’s Online Ad Space, Don’t Wait…

  Don’t Wait Because of These Challenges   Chinese Internet Is Moving Even Faster than U.S.

  Don’t Wait Because of Ethical Issues   Ethical Issues Surrounding Media Especially Difficult   But Not Going to Fundamentally Change; Make Go/No-Go

Decision

 Compete Now

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