Chinese web firms aim to expand abroad

09 May 2012

BEIJING: Companies like UC Mobile, NetQin Mobile and the Hainan Tianya Online Network Tech Co are seeking to blaze a trail for Chinese internet firms overseas, but some major challenges remain.

UC Mobile, which has designed a web browser for wireless devices, intends to invest $5m in India this year, and aims to take the number one position in the category locally by 2015, with 100m users.

Since 2010, UC Mobile has accrued a 20% market share in India, leaving it behind only Opera in its sector. The company also plans to open an office in Silicon Valley in 2012.

"I firmly believe that it's time for Chinese internet companies to expand overseas. UC Mobile has demonstrated that Chinese enterprises have the ability to achieve global success, similar to that of giants such as Facebook and Google," Yu Yongfu, the CEO of UC Mobile, told the China Daily.

NetQin Mobile, a mobile security specialist, now yields 45% of its sales from outside China, an amount due to top 50% in 2012. The organisation also already has 5m users in the US, its fastest-growing market.

Henry Lin, NetQin Mobile's CEO, said: "We expect to gain the top spot in the US smartphone security market in less than three years."

Elsewhere, the Hainan Tianya Online Network Tech Co, which owns, one of the most popular internet forums in China, currently has units in Singapore and Silicon Valley.

These centres are tasked with increasing both its user and advertiser bases in Asia and North America, and Hainan Tianya secured 20% of traffic from foreign nations last year.

Richard Ji, managing director of Morgan Stanley Asia, revealed Chinese internet firms normally have a lifespan of three to five years, and typically lack rigour when making international plans.

"I don't say that Chinese internet companies cannot expand overseas, but I hope they can do it in a selective and systematic manner. I don't think any company can be a global champion if it performs poorly in its home market," he said.

Many of China's main online operators, such as Tencent and Alibaba, have only made limited steps abroad. Baidu, the search engine, launched a Japanese site in 2009 with mixed results, and is targeting areas like Brazil, Thailand and Vietnam.

Low brand awareness and the need to create truly differentiated services from existing platforms are among the primary obstacles for Chinese players, although they do possess certain strengths.

"The main advantages for Chinese companies when expanding overseas are that they have engineering resources and a large domestic market where they can roll out products. Plus, they are well capitalized and have cash," Duncan Clark, chairman of BDA China, the consultancy, said.

"[However,] Western perceptions, such as issues over censorship or privacy, are going to be difficult for them to overcome," he added. "And more important, I think it's just an HR challenge - do they have the people who can operate well internationally and can they communicate well with foreigners?"

Data sourced from China Daily; additional content by Warc staff