The following is a translation of a conversation on the “socialized Web” between three Internet luminaries that was posted on the blog of Mai Tian, the host of this mini-salon. Xie Wen is a major shareholder in Ourgame.com, a popular casual gaming site; he served briefly as head of Yahoo! China and remains at Alibaba; and from 2003-2005 he was with Hexun.com; Mai Tian is CEO of consumer recommendation site Mayi.com and was formerly with blog hosting provider Bokee.com; and Keso (Hong Bo) was formerly editor-in-chief of Donews.com and remains one of the country’s top IT bloggers.

This first section illustrates how some of China’s Internet thought leaders understand the divergent development of Internet culture in the U.S. and in China, before the rambling bit about the intuitively obvious relationship between how Internet stock sites fare and how the market itself fares.

Date: December 17, 2007

Place: The Yilanxuan Teahouse near Rome Gardens, Beijing

Participants: Xie Wen, Hong Bo (Keso), Mai Tian

Addenda: Three PowerPoint presentations on socialized websites and Web 2.0 (2005-2007)

1. China’s situation is one in which PC penetration and Internet penetration are in lock-step.

Mai Tian: It’s the end of the year again, and since last year at year’s end we got together to chat and had a really intense talk. Let’s continue our discussion today

Xie Wen: I’m always reading what the two of you write, and you take it pretty seriously. We all have a lot to say, so today let’s chat together about the things that we like and the things that matter to us.

Keso: Right.

Mai Tian: Good. In a bit let’s talk at some length about the socialized Web and Web 2.0. For the past few years, Xie Wen gave talks based on three PPTs, two of which Keso and I had seen previously and one of which we looked at quite recently. I think it was one that Xie Wen did in 2005.

Xie Wen: That’s right. When I had a discussion with Fang Xingdong [founder of blog service provider Bokee.com], he said at the time that blogs are the nucleus or the end-all of Web 2.0. I didn’t quite agree. So I made that PPT, and gave talks to the employees. That was in the summer of 2005.

Mai Tian: Time really flies. Looking back now at these last two years, many Web 2.0 sites haven’t really hit their benchmarks.

Xie Wen: Actually there’s no problem with admitting to failure. If you continue to fight on after admitting failure, first of all it demonstrates your devotion to the Internet, and secondly it demonstrates your ability to learn. Look at [Baidu chairman and CEO] Robin Li. Back then he tried to sell his company three times and couldn’t find a buyer. He changed his business model three times. Look at [Tencent CEO] Pony Ma. At first Ourgame.com could have bought him for 4.5 million [currency unspecified]. They’ve all had their low ebb. But they stuck it out and plugged away and eventually they build it up.

Mai Tian: Yeah, that’s right. Well let’s get started. Why don’t we start with Keso’s recent blog post. He wrote about the “top ten” critical questions asked on Chinese and American search engines..

Keso: Yeah, the ten questions most frequently asked by Netizens. I did a comparison, and one of the more amusing things was that the things Chinese users asked about most had to do with stocks and mutual funds. [Ed. note: You can find a full list in English at McClatchy Beijing bureau chief Tim Johnson's excellent blog "China Rises" here.]

Xie Wen: That’s because of this year’s stock market explosion.

Keso: That’s right. As for American users’ “top ten,” they were more concerned with emotional and technological questions.

Xie Wen: And what’s your take-away from this?

Keso: I really don’t have a take-away. It’s just lag-time in the development of these societies.

Xie Wen: Yeah. In a stable society, the questions should be evenly distributed–just the sorts of questions they encounter often in life. Search engines should accurately reflect this. China’s society comes in wave after wave, and when one wave crests, it brings that wave’s hot topics.

Mai Tian: But I find this discrepancy relatively strange: Since there are a lot of low-end users among China’s Netizens, therefore queries about mutual funds and stocks shouldn’t account for such a high ratio. This might be due to the statistical method in the way the questions were posed.

Xie Wen: This has to do with the development of the Chinese Netizenry. There were two groups of Netizens in China. The first group were from 1996 to 1999, and they were mainly of two types: people in IT or telecoms–back then they were the only ones with the wherewithal to access the Internet–and college students, but college students were on CERNET, and that wasn’t linked to the public Web. Because of this, a characteristic of the early group of users was that there were many who had money, and when we were at Ourgame, some of our heavy users spent 2000 yuan every month. The second group was the 2000-2001 group. When PC penetration increased–and especially when ADSL penetration grew–the age of Internet users decreased. China’s situation is one in which PC penetration and Internet penetration are in lock-step. In the U.S., PC penetration was complete by the late-1980s and early 1990s. Because of this, a frequent-use population emerged.

Mai Tian: Right. I agree with this. China’s Netizens still aren’t frequent users, and so I believe that statistic isn’t accurate.

Xie Wen: They’re in process of becoming frequent users. Go take a look at the CNNIC annual report [sic - the report is semiannual]. The average age of Internet users is increasing by half a year to a year annually. [Ed. note: I believe he's incorrect here: The average age is actually dropping, at least by the most recent, July report]. To date 100% of students in universities have access to the Internet. High school student penetration is also on the rise. Now we’re adding the 30- and 40-somethings as new Netizens. For example, in stock trading, 40% of traders do their trading online. That’s a big number. Back in the day I would dream about numbers that high. 5% or 10% would have been unbelievable.

Keso: That’s right. When Legend [now Lenovo] acquired Yestock.com that’s what attracted them.

Mai Tian: Yeah. But I still think these statistics have to do with the questions asked. They give the Top 10 “How to” questions. If they were asked to give search engine keywords, I think “Shibin Tuji” [a popular TV serial in China] would definitely be hotter than “stock trading.” But let’s go with this stock market topic. The site Eastmoney.com was really hot this year, and they’ve only been going in Shanghai for a couple of years.

Xie Wen: You’re looking at this from the outside. Actually I know the founder [Shi Qi] quite well. He started the company in 2004. Really he did just two things right: First, he was a stock trader himself, and so he knew what he was doing when he did it. The second thing was at the operational level. He emphasized interactivity, emphasized relationships with the securities trading firms. But if you go and look now, the stock market wave has already past, and so the company’s declining fast. So when I restructured Hexun.com, it was for the same reason: If the stock market’s up, you’re hot, but if it’s a bear market, you’re not. What can you do?!

Keso: That’s right. Moreover I think this kind of Internet stock trading site is too closely tied to the stock market. At the beginning of the year, “Banr Zhuan” posted an Alexa chart from a mutual fund’s website, and it practically matched the stock market’s ups and downs exactly.

Xie Wen: We’ve done these kind of stats before. The relevancy coefficient was 0.7 or 0.8. It was basically the same thing. So if you’re doing business, this is what you have to worry about. Now that it’s a bull market everyone’s on fire. And they all go down in a bear market. Who knows when the next bull market will come? I can’t predict how strong your site is going to be: I can only predict the market, which is unpredictable. These sites rely too heavily on a single product and a single market.

Mai Tian: But it’s true that this year, everyone was playing the market.

Keso: And so if you look at the top 10 keywords from Baidu, a lot of words are related to stocks and mutual funds.

Xie Wen: It’s just as you said earlier, Keso: Chinese society is still in a stage of development.

(Stay tuned for Part 2. I promise this gets more interesting!)