Not to replace the noise of my fellow bloggers on this one, I thought I would just write a quick one. It seems absurd that many are attributing mediocre $7.8 billion evaluation to Alibaba based on its 17% IPO release of 1.3 billion shares of stock. Why? For one, Alibaba has a closer correlation with Western pricing due to its primary function as a b2b export platform - i.e. higher revenue margins. And judging by Baidu’s market cap (NASDAQ:BIDU) of 10 billion, the calculations are simply absurd. After all Baidu’s revenue is still 100% tied to Chinese yuan and China’s online advertising growth (which is behind U.S.), thus valuing each click at about 10-15 less that of Google’s. Moreover, whereas Baidu’s revenue for 2007 only reached around 400M, Alibaba already surpassed 1 billion–with Goldman Sachs’ prediction for 3.13 by the end of 2008. Finally, what is Alibaba? Alibaba is a b2b platform with over 1 million business customers that charges a base of $5,000 in addition to a range of other services (ranging from document translation to on-site photo shooting, etc). It is a leading SB2C/C2C platform in China through Taobao. And of course, it is a future PayPal of China with its new AliPay system.

Oh well, I always knew those stock guys are full of.. - I digress.

On a second note, 247RealMedia is making attempts to show how big it is on a China scene. All of this is nice but if they were really serious about that I would think their new office would be openning up in Beijing not in Seoul. Don’t they know better? They do–in fact know quite well how big (revenue-wise) search marketing will be in China within the next 5 years (everyone knows it). So why aren’t they there? Simply because the money they would like to be making now are not there yet. Unfortunatelly (or otherwise), by the time they money is there it might be already too late.

Update: Just found out about this: Alibaba.com Opens European Office In Geneva - right before IPO, interesting

Update 2 (Nov 06): at the close of trade Alibaba.com stock was HK$39.50 ($5.09). Market cap is now $25.17 billion.

Filed under: China Market | »

China’s leading Search Engine, Baidu, yesterday launched an Olympic channel (2008.baidu.com) that combines everything about Olympics in one space (chats, videos, news, etc…). Having seen Sina.com and Sohu release their Olympic brand channels long ago, this is clearly a strategy to win the big buck from huge advertising sponsors.

Sohu’s CEO Zhang Chaoyang

Association with Olympics games is currently a big brand game in China, with many companies using Beijing 2008 logos illegally. Sina’s CEO, Cao Guowei, repeatedly made claims arguing against Sohu’s exclusive rights (as a web company) to 2008 brand association. Yet, Sohu still remains it priveleges and is currently the provider for the official olympic site: BOCOG.

Similar to Google’s recent development, Baidu is increasingly stepping out of its pure search engine presence into the world of portals. Makes one wonder whether perhaps the traditional advertising bucks just feel more comfortable been poured into flashing images on portals (as opposed to text ads under the search bar).

Filed under: China Market | »

Notable Facts:

• Baidu and Google have grown their market share at the expense of the smaller players like Yahoo! and Sogou
• Sina (with 49% share) dominates traffic to web sites for non-search purposes with Sohu & Netease following the lead
• Google Vs Baidu demographics show close correlation in age, gender and education level
• The Survey only covered Beijing, Shanghai and Guangzhou - all very different from general market (and future growth)
• Google’s market shares have increased in all the three cities over the last six months, with the strongest recovery in Shanghai

For more information: download a China Search Engine Report(pdf) or contact Peter Bowang Lu at iaskchina.cn

Filed under: Reports - China, Internet Development, Globalization | 2 Comments »