Understanding the Chinese Hockey Stick

February 3rd, 2008

baidu.jpeg

One of the things past experience has taught me that while it is possible to guess that some business will take off in China, it is almost impossible to tell when. The most common scenario is that for many years, a western business will devote its people and resources to making its business popular with Chinese, it will not show results. Frustrated, it will depart China with nothing to show for its hard work and investment. (This happened frequently in the eighties and nineties; now it is much more rare.)

This rule does not just apply to business; it even applies to Chinese government policy. For years, the Chinese government actively urged the Chinese people to travel more; it even increased the number of public holidays, creating the Golden Week holiday around the May Day holiday in the late 90s to get Chinese to travel more, and spend some of their savings. For years, the policy yielded no solid results.

But later it worked, and beginning this year, the May Golden Week holiday will be abolished. Put simply, it’s no longer needed. Chinese now travel freely, are willing to spend their savings, and the incentive is now no longer needed.

The same phenomenon occurred in the auto industry. For years, local Chinese automakers were unable to get Chinese to spend money on automobiles; most of their production went to taxis and to Chinese government ministries and officials. These habits changed suddenly with the SARS crisis in 2003. All of a sudden, Chinese were afraid to take public transport and started buying cars. And unlike in the west, they paid for their cars in cash.

This trend, which started in 2003, has continued to this day. Now, if a young man in China’s cities wants to get married, more and more young brides are expecting an apartment and car to go with their husband-to-be. Today, in Beijing, 1,000 new cars are being added daily to the city’s traffic woes.

This creates a phenomenon which I call the “Chinese hockey stick”. In simple terms, this means that “It is likely that a new business/service/product will take off in China, but it is hard to say when.” This can be endlessly frustrating for businesses which need to plan their expenditures on an annual or quarterly basis. When are they going to see some of their investment money come back? Country heads need to tell their head offices when the hockey stick will finally take off, and more often than not, it is very hard, if not impossible, to tell.

Part of my rationale for the Chinese hockey stick is that Chinese consumer spending patterns will track more closely to the spending habits of their Asian neighbors in South Korea, Japan, Hong Kong and Taiwan, than to the west, as Chinese society becomes more prosperous. If you want to understand how Chinese spending habits are likely to develop, take a close look at these places. You will learn a lot. In culture and language, these places are closer to how Chinese think, act and behave than the societies of North American and the EU.

Most frequently, the businesses which are able to time the rise of the hockey stick are local Chinese entrepreneurs. Unlike western companies which try to sell their foreign-designed products in China; these Chinese entrepreneurs stand in the wings, just waiting to swoop in at just the right moment. Unlike western corporations, these companies do not have the big budgets of western companies, but their knowledge of their countrymen’s thinking and spending habits more than compensates for this. This is why many leading Chinese Internet companies such as Tencent, Baidu and Sohu have been able to prosper, while their much larger and richer western competitors have been unable to gain traction.

With the dramatic growth of the Chinese consumer market in the past five years, you would think that western observers would learn to be quiet instead of sticking their necks out and betting against the spending power of Chinese consumers.

Apparently not.

David Wolf’s Silicon Hutong has pointed to an article by Donald dePalma in which he claims that China’s buyers account for only 1.1% of what he calls “online GDP”. Unfortunately, he does not explain his methodology as to how he gathered his numbers.

In the west, the Internet led to the creation of some whole new businesses, with Amazon and Google being the best examples. In China, many Internet companies are front-ends for established brick and mortar businesses. For many Chinese consumers, the Internet is like a shop window; when they buy, they still prefer to buy from a person in a store.

These fundamental differences in consumer spending habits make me question the value of even measuring something like “online GDP”. And as David Wolf alludes to, the eGDP is a static number; it does not capture or reflect trends. It is like trying to understand a movie storyline from a still photo.

That’s why I’ll stick with my analogy for the Chinese hockey stick, at least for the time being.

Chinese-Language Search Grows, and the Mobile Internet…

January 28th, 2008

Rupert Murdoch and wife

Everything else being equal, it is safe to assume that human language-specific search should closely map to populations. For example, the US population is 300M, Canada’s is about 30M, the UK is about 60M, and Australia is about 15M and New Zealand is about 4M. These are the main English-speaking populations, and they total about 4.1B, and make up most English-language search. Of course, there are many other English speakers living in other countries, and there are many non-native speakers who also choose to search in English for their own reasons.

Most of them use Google as their leading search engine.

There are about 1.3B Chinese who use Chinese as their language of choice for search; for the most part, they use Baidu.

If the Chinese searched as much and as frequently as Americans, Canadians, Britons, Australians and New Zealanders combined, it is safe to assume that Baidu’s Chinese-language search would have about three times the volume of Google’s English language search.

This has not happened yet, but this report shows that the growth trend for Baidu’s Chinese language search is beginning, since it has already overtaken Microsoft, according to this report from Techcrunch. In China, Baidu commands more than 60% of the search market share, while Google’s Chinese-language search in China has only 20+%, and the gap appears to be growing…

In the US, Google is putting its efforts into the mobile Internet, and sees the mobile phone as soon replacing the PC-based Internet as the access device of choice for most people, even in the US. In China, South Korea, Japan and Europe, the mobile phone already is the access device used by most people, which accounts for the huge volume of SMS traffic.

Google Android is the major part of Google’s effort to define a mobile platform for communications. Since the Chinese carriers, especially China Mobile, and Baidu, have not yet defined an SDK for the mobile platform, many assume that Google will soon have a mobile strategy in China which will turn the tables on its Chinese competitors.

My answer to this: “Dream on…”

China Mobile has a well-deserved reputation as a very tough company to deal with in China, but they are not stupid…

The Economist has an excellent article on Rupert Murdoch which is in fact a review of a book titled: “Rupert’s Adverntures in China: How Murdoch Lost A Fortune and Found A Wife”.

All’s well that ends well…

It makes me wonder if the presence and performance of many western companies in China can be explained as company-financed executive wife searches?

Maybe Google should take heed.

What’s Global and What’s Local?

November 18th, 2007

With all the talk about globalization, as well as what is working and what isn’t about it, it’s time to drill down and find out what businesses are global by nature, and what businesses are local by nature.

For companies who are entering China, or are planning to go from China into international markets, this is a very important issue. There are some businesses which by their nature are global and others which are more local.

There are several businesses which by their nature are global. They are:

  • Raw materials and commodities
  • Transport, logisitics and distribution
  • Manufacturing
  • Commoditized services such as back-office operations and software outsourcing
  • Finance, especially wholesale banking
  • New technology development and research

Then there are other businesses which are more local/national in nature:

  • Retail and brand marketing
  • Most legal services
  • Internet services
  • Accounting services
  • Foods and food-related services

My experience is that the businesses which are more wholesale in nature tend to cross national borders and become more global in nature, while those which are closer to end consumers tend to be more local and national.

If there is an irony, it is that the least sexy businesses are the most global in nature, while the more sexy brands and Internet businesses are in fact, local. I believe that there are several reasons for this:

  • The large global businesses operate on smaller margins but make up for it on volume
  • Local businesses are more relation dependent. Most relationships are locally-based.
  • Relationships are location and context-dependent. Often this means culture.

    • Some of you may be surprised to note that I include Internet services in local businesses. If fact, they are. The struggle between Baidu and Google is largely a struggle over who has the larger local language search advertising market, Google, which gets most of its revenue from its home US market in English, or Baidu, whose services are almost entirely in Chinese. Even though China has four times the population of the US, the time when Baidu will overtake Google in terms of advertising revenue is still far far away.

    One of my pet peeves is the amount of hype first-time visitors to China swallow, thinking that they can plan their retirement on a “China strategy” without in fact coming and living in China and making an effort to understand the people and culture and building relationships on the ground. More often than not, the people who have dollar (or yuan) signs in their eyes come from the services sectors, which are in fact, more local in nature. The ones who are making the money in China are the big wholesalers, but they have enough presence of mind to keep their mouths shut.

    Lately, Dan Harris of China Law Blog has been talking about the opportunities opening up in the Chinese services sector because of policy changes. Most likely these changes will be led by another wave of service entrepreneurs coming into the country, or as is more likely, a new batch of local Chinese entrepreneurs offering services to China’s urban middle class. After all, they know the language, have the opportunities and can make the fast move.

    For businesses which are local by nature, and are mostly in retail, the challenges come in several forms. The costs of crossing national boundaries to establish a name presence are always huge. This is an area global ad agencies are designed to address, even though their market has undergone huge changes.

    The other huge challenge is human talent. How do you find the human talent who understand the needs of the parent company, and at the same time, can build relationships in a new market and understand what consumers want?

    This is the real challenge of globalization.

    Biz Opportunity: Rolling Up and Franchising China’s Internet Cafes

    October 11th, 2007

    In my previous post, I talked about the dark side of China’s Internet cafes. I was surprised at how quickly I got responses to the posting; there were more than six comments in less than two hours.

    Now, I would like to talk about a business opportunity in China’s Internet cafes. One of the biggest problems with Internet cafes is the uneven quality of the management; most are terribly managed, some are managed pretty well. Overall, the well-managed cafes suffer from the poor image problem associated with the whole industry. In a comment following my post, Fons Tuinstra says that the numbers of people going to Internet cafes are falling sharply, citing CNNIC figures. I suspect that this is because of a combination of factors:

    • Educated Chinese families don’t like them because of their bad reputation
    • With laptop computer prices coming down to 7,000-8,000 yuan for a fully equipped notebook, prices are coming with the range of most urban Chinese
    • With monthly DSL prices between 100-200 yuan; broadband access is now affordable

    In spite of all this, the Internet cafe still has attraction as a social and recreation area for young people who are looking for places to meet which don’t cost too much.

    So why hasn’t someone come in with a roll-up strategy, buying up the good Internet cafes, offering professional management and a franchise package, and turning the whole thing into a franchise like Starbucks, McDonald’s or KFC? After all, that is how Ray Kroc started with McDonald’s in the 50s in the US.

    These Internet cafes should offer clean well-lit areas which are frequently cleaned, fresh food and drink, clean bathrooms and a good overall experience. Just think of what could be done if a Chinese Internet cafe experience could be as good as an Apple store! Yes, prices would be higher but it would attract a much better demographic group. And a better demographic would make for a better advertising market.

    Events could be planned for the stores educating people about online buying and selling, and to demo new products and services. Game contests could be held in a much better environment than are available now.

    If I were an advertiser, I would really love to reach this demographic group. They would be upwardly mobile, not like the permanent urban underclass we now see in so many Internet cafes.

    In short, make the Internet cafe a place where Chinese parents would not be ashamed of letting their child go to, and a place where the child could tell his parents he is at, without having to lie or admit to shamefully.

    This would help to clean up the image of an industry which badly needs to improve its image. It would even make sense for an advertising company to get into it, as the advertising opportunities in a wholesome Internet cafe franchise are huge. I can think of several companies which should seriously consider doing an Internet cafe franchise in China:

    And now, here’s the company I’d really like to see do a Internet cafe franchise in China because it really knows about making cool stuff and it understands lifestyle marketing. If they did it, and did it right, they would own the Chinese Internet cafe experience.

    Now wouldn’t that be something! You saw it here first.

    I can always wish…

    In Business, Becoming Fearless Is What Makes You Great

    October 7th, 2007

    For most of my career, I have been looking for patterns to discover why some companies come out of nowhere and become big and great, and why others who have dominated the market lose market share and users to the newcomers. More often than not, the newcomers are entrepreneurs who had a vision, while the established companies were as Lou Gerstner called it in his book, “Who Says Elephants Can’d Dance?”

    I have looked at startups and established companies, and if there is one word which separates the hungry newcomers from the established, shall I say it, dinosaurs, it is fear. It is not so much the emotion, but how they react to the possibility of failure. More than anything else, this strikes at the heart of what differentiates the entrepreneur from the established firms which frequently end up belonging to another age, and usually end up being swept into the dustbin of history.

    Most successful Internet companies, whether they are Yahoo! or Google in the US, and Shanda, Baidu, Alibaba or Tencent in China have one common theme in their histories. At some low point in their early years, their founder/s almost gave up, and they almost sold their companies at a low price to another company. When this happened, the founder/s would seriously consider their options. Sometimes they would lay off people, cut down their costs, maybe fight with their spouses who wanted them to quit and work for IBM or Microsoft or somehow throw in the towel and give up, or sell out. Then, when things were at their lowest point, their user numbers would go up, or they would secure funding and they would turn the corner and start to grow dramatically.

    It is all about fear, and overcoming fear. When you have reached a low point, there is no more fear.

    “What is the worse thing that can happen to you?”

    That you will lose your house? Your car? Your spouse and family? That you will die and be forgotten? Are you willing to take these risks?

    When you have reached that point, there is nothing more to fear. It’s all about willingness to sacrifice today in the belief that you will succeed tomorrow. What is there to lose? Money? That has already been invested. Quitting would only be a recognition of the loss; most entrepreneurs refuse to recognize the loss. This is what makes entrepreneurs special; the best ones are truly fearless.

    On an individual basis, this is called a near-death experience. If you are not sure what I mean, watch the movie Fearless (1993).

    And it’s not about money. They know that money buys the trappings of success such as a big house and trophy wife or mistresses, but that they are just trappings of success. After they become successful, they frequently look back on their “good old days”. And what are their good old days? When they didn’t know whether they would make the month’s payroll, or were living in their car, or eating instant noodles because they could not afford anything better.

    This is not something which can be taught in business school. And this is why the US was, and now China is, a great place for entrepreneurs. It’s easy when you are starting from zero. More than any other markets, American business investors believe in the value and experience of failure; this is where Japan and Europe cannot compete with the US and China.

    And this is why is it so difficult for large companies to make the leap or cross the chasm. The only way for a successful marketmaker to bridge the gap is to give up all its revenue, all its investments and to start over again.

    That has not happened yet. Microsoft has tried to do it, but they cannot sacrifice revenue; their investors won’t let them. Yahoo! was a great Web 1.0 company with great assets but has had significant challenges reinventing itself from the glory days when banner ads were king. When companies become successful, they attract people who wish to avoid risk and who want to make money to buy their big homes, drive big cars and to have their status. They are risk avoiders, not risk takers. Once a company starts to attract this kind of person, it cannot re-invent itself.

    It fears failure and won’t take risks.

    Entrepreneurialism is all about finding success or failure relatively quickly by putting everything on the line. What the Internet has done in the US and now in China is it has sped up the failure and success cycle, collapsing the amount of time it takes to discover what works.

    In my articles I am frequently critical of large businesses which cannot adapt to new changed situations; this is because they are afraid of fear and failure. They want to be market dominators at a time when the market is changing beneath their feet. They have meetings and talk and grumble and analyze, but most of the time they are not able to do much. They acquire small companies to maintain growth, and more often than not, they destroy the spark which made those startups successful in the first place. Or the smart people who have entrepreneurial talent and are willing to take the risks see market opportunities and become entrepreneurs in their own startups themselves.

    That is why successful change always comes from the bottom, not from the top. And that is why the cycle of change will continue, only faster.

    UPDATE: Frank Yu pointed me to this article by the consistently good Paul Graham who says a lot of the same things.

    Alibaba Chooses Google Over Baidu For Main Advertising Partner

    August 30th, 2007

    Alibaba has chosen Google China as its main advertising platform partner for its online advertising service Alimama over Baidu.
    Alimama provides roughly the same advertising campaign targeting and service delivery capabilities to advertisers as Google’s Adword service worldwide, with the biggest difference being that Alimama is targeted at the Chinese domestic audience.

    Alibaba had been in secret discussions with both Google China and Baidu. The discussions with Baidu broke down for undisclosed reasons, and soon after, Alibaba announced its partnership with Google. This agreement is important because Alibaba is the owner of the largest B2B platform, Alibaba.com, and also China’s leading online auction firm, Taobao. Taobao has successfully defended its online auction presence in China, forcing eBay China to hand over its operations to Tom Online while it rethinks its China strategy.

    This is a major blow for Baidu since Alibaba has the capability to spend a significant amount of revenue targeting search users and publishing networks with ads. In the US, eBay is one of Google’s biggest Adword’s clients, but the relationship has recently become rocky because the two companie’s have competing online payment systems. While online payment systems are not the most sexy online products, they are highly profitable since they usually operate on a commission system, taking a cut of the total transaction, instead of a flat fee.

    Google has introduced Google Checkout in China, and Alibaba has its own payment system, Alipay. It is likely that in the advertising agreement both payment options will be offered to campaign buyers. For observers, it will be interesting to note whether Google Checkout or Alipay will achieve “preferred service provider” in future revs of the service. This will obviously be a source of major competition between Google China and Alibaba even though they are cooperating on this advertising solution.

    Baidu has 62% search marketshare in China and is the market leader, while Google has only 20%. Baidu, even though it is widely seen as China’s native son in the search market, has significant problems which I have discussed at some length in an earlier article on the Chinese advertising market.

    Baidu’s single greatest challenge is coming clean about click fraud. A major reason for its inability to tackle the problem is that as a public company, any attempt to clean up the problem would hit its earnings, and may even lead to litigation about past performance. It would naturally avoid coming clean about the issue and push it off to future management to tackle. The trouble with this approach is that click fraud becomes a slow rot, and advertising clients will choose to shift their adspend to competing search engines which have more effective anti-click fraud mechanisms in place.

    Click fraud has become a major drag on the development of the Chinese online advertising market, which is poised to pass 90 billion yuan this year.

    This may well be the background to Alibaba’s decision to partner with Google China. Alibaba is planning for an IPO listing later this year.

    Why Most US Market Entries Fail in China

    August 17th, 2007

    The consulting industry in China is flourishing. After all, it is the largest potential single market in the world, and everyone is flocking to it. New companies need information and advice about how to tackle the unique challenges of this market. For any MBA who is fluent in Chinese, or who has grown up in China, and is familiar with the tools of the trade, such as financial modeling, business negotiations and company valuations, China represents an “iron rice bowl” which will make their careers for years to come.

    Or is it? My experience is that there are errors which are repeated over and over again. It gets like being condemned to watch a single Broadway show, over and over again, where the only things which change are the sets and the actors; the lines are the same.

    I have covered one of the major fallacies in a previous posting, Getting Past the China Market Hype, which covered their initial reasons for entering China. This posting will cover some of the reasons for failing post-entry.

    Since most of my experience has been with technology/media/startups from the US, I am naturally biased towards those companies in my evaluation. There have been many success stories from the financial sectors, engineering and consumer goods. These areas, unlike hi-tech, have had decades, and in some cases even more than a century of experience, building their China presence, and understanding the challenges involved. They have the money, and have built up a knowledge base of experience which they can draw from, and because of the large scale of their businesses, even if they cannot draw from in-house experience, they know how and where to get it when needed.

    Some of the US technology companies which have come to China and have failed to succeed in the Chinese market are eBay, which basically had to hand over its operations in China after running into the strong local player, Taobao.com, in the auction field. Yahoo! had to basically pay a China partner, Alibaba.com, US1B to take over its China operations. More recently, Google, the US search advertising firm, has had to fight an uphill battle against the largest Chinese search firm, Baidu.com. Online gaming is a new area which does not exist in nearly as large a form as the US, with Shanda being the granddaddy in China, while newer players such as Perfect World (PWRD) have sprung up with new and different business models, and successfully going public on the Nasdaq. In instant messaging, Tencent’s QQ has been able to rack up 600M registered users, and unlike any US IM clients, become profitable.

    Because most US startups come from technology backgrounds, they tend to believe that their business is scalable. The word “scalability” is in itself, an engineering term, which means that an architecture can go from 1 user to one billion (or infinite) users, or across national borders and into different languages and markets, without any major architectural hiccups. For this reason, they tend to play down distribution and cultural differences in their most initial stages. Most of the time, they have people on staff or in management who know something about the local market; more often than not, they are not in senior decision-making roles.

    Then, when they get to China, they try to do what they did in the US, and quickly discover that the rules in China are very different. Whereas labor is very expensive in the US, with each hire drawing the attention of different company committees, in China it is one of the single cheapest expenses. (Except for senior and executive management, where highly qualified individuals cost just as much, if not more, than in the US.)

    The most common failing comes in the area of product management, when the US insists on controlling the product development and launch schedule, with local product launches coming only after the US is ready. In smaller markets, that’s fine, but in fast-moving large markets, especially one as large as China’s, it’s a killer. (Even in fast-moving small markets it’s a dubious strategy; in South Korea, Google has been consistently beaten by Naver, a highly successful Korean company.)

    This puts the China office in a continuous battle with the US headquarters for resources; the Chinese local competitor has no such restrictions on what it can do, and the Chinese company surges ahead in capturing market share, and eventually, revenue. The American company then organizes what can best be called a “strategic withdrawal”, as did eBay.

    In more mature industries where there is some kind of brand equity, product lines are already fairly mature, and headquarters makes resources available to country managers as needed. Because of the fast-changing nature and relative immaturity of hi-tech, this has not yet happened.

    When the American companies fail, the blame is usually assigned to some form of Chinese government protectionism, and favoritism to the local companies. Of course, this explanation is more palatable to Congress members seeking re-election and US TV talk-show hosts, but more often than not, it is a vast over-simplification of a complicated issue.

    Online Ad Exchanges Are the Next Stage of the Long Tail

    August 6th, 2007

    Microsoft’s recent purchase of online ad market platform AdECN Exchange highlights the rise of neutral ad market platforms as a new venue for the buying and selling of ads between content publishers and advertisers.

    Online ad market platforms represent the next stage, or second generation, of ad networks. The first generation was represented by Google Adsense, the company’s successful platform for publishers, which provided ad inventory from independently-published websites for Google Adwords, the ad targeting and delivery system, and Google’s cash cow.

    First generation ad platforms such as the Adwords/Adsense platform have used real-time indexers, or spiders, to scan content for keywords, and then match up advertisers with inventory. Technologically, this is great non-trivial technology, but there are also problems with it.

    • If you are an ad publisher or advertiser, you need to join a network (Google, Yahoo!, MSN, Baidu, etc.). By joining a network, you automatically lose advertising and revenue opportunities with other prospects who may not be members of the same network.
    • Advertisers and publishers are entrusting a third-party to act as their facilitator and to act in their best interests. While search engines make claims to be objective and neutral; this is in fact impossible. Just do a search on a term of your choosing across several different search engines, and compare the search results.
    • As search engine companies go public and come under pressure from Wall Street and investors, management’s strategy is always to blur the line between organic (free search) and pay-per-click (PPC) search. As revenue becomes more important, search results become more skewed to favor sites which belong to their publishers’ network.
    • Click fraud is a major problem which the search engines have never been able to come clean about. Aside from waffle statements to the effect that “click fraud is a minor problem which does not affect most users”, all search engines, even Google, have been reluctant to provide independent third-party statistics about click fraud. This reluctance to come clean has led many to believe that the problem is greater and would affect their revenue more than they want investors to know. In a worst case scenario, it could be manipulated into a Ponzi scheme.
    • In certain markets such as China, where keywords are sold through distributors, there is even wider room for abuse through distributor collusion. This is why advertiser groups have formed organizations such as Fanbaidu who have challenged charges for advertising clicks made to their accounts.
    • As the Cluetrain Manifesto made clear, along with Seth Godin, marketing and blogging are becoming increasingly about conversations. Blogs are nothing more than linked conversations on a given topic, and sometimes they ramble on by themselves. For this reason, blog content resists a “one size fits all” approach, hence the attractiveness of the long tail approach. For unique content, neutral ad platforms where buying and selling is done by human buyers and sellers online work better than networks which have their algorithms continuously tweaked. Since the most knowledgeable seller is the creator of the content, this means that more and more, content creators will become marketers and publishers of their own content. After all, the main task of a publisher is to attract good content creators and market their work.

    This is why the ad exchange system is the trend of the future; it works best for unique content and for the long tail. Compared to ad networks, they are more transparent. Click fraud collusion is made much more difficult because the market is real-time and more dynamic, and the content creators and publishers would have it in their own best interests to fight and resist click fraud. Transparency rewards the honest over the long term. Exchanges are not perfect and Ponzi schemes can also develop in exchanges, but this has more to do with human nature than exchanges.

    The problem with the advertising industry, as it exists today, is it is built for a world where advertisers and inventory are comparatively static, and where audiences are defined as being “mass market”. In today’s online market, where peoples’ needs, care and interests are constantly changing on a real-time basis, the question should become “Is there a mass market anymore, and what is its definition in quantitative and qualitative terms?” If the answer is no, then the main currency of advertising becomes attention, which would then have to be translated into monetary terms not only on an individual, but on a time basis. Pushed to its logical outcome, advertisers would need to pay consumers for their time and attention.

    In an article on Ogilvy China Digital Watch, Kaiser Kuo raised the question about why ad exchanges were slow to take off in China. Although there may be many reasons, I believe the most important single reason is that content creators want to just create content, and don’t like the idea of marketing, buying and selling their own content or becoming publishers. They want to write for someone else and be paid, and don’t want to take the risk themselves. This problem is not unique to China; it will affect takeup of the online ad exchange model all over the world.

    Of course, the market always tend to reward the individuals who see and act on opportunities before others.