By Perry Wu
While many media outlets publish their annual re-cap lists a couple weeks before the end of the year, I like the idea of waiting for the year to end, then digesting it, before creating a list.
Now that 2007 is 100% complete in all areas of the globe, I think it was a decent year — not great and not horrible — for technology companies in China. Some sectors like those involving wireless-value added services and mobile handsets saw a shake-up, but others involving Web technologies, digital payment, and consumer retail had good growth. Dazhong, Suning, and Gome were often in the news and innovative standards continued to be formulated for electronics, networking protocols, and laws. I was generally pleased and would call 2007 much more of a stable year than 2006.
So here are the top five China tech stories I saw for 2007:
1) Alibaba IPO: I chose Alibaba's IPO as the top China technology news story for 2007 because of what the company and its business model represent.
Alibaba's shares almost tripled on its first day after an initial public offering in Hong Kong at the beginning of November 2007 — it closed at HK$39.50 from their HK$13.50 offer price. The company's listing prospectus said it would triple profit to CNY622 million in 2007, making the stock very palatable for investors.
The company is unique among Chinese Internet services in that it has few equals. Whereas Sina.com, Sohu.com, Netease.com, and Tom.com all compete for the same Chinese Internet consumers by providing similar services, Alibaba is unrivaled in China. Sure, there is Global Sources pecking at its heels, but Alibaba is different in that it really focuses on Internet-only activity (yes, it does have a print magazine and is starting to do conferences, but it is really a different animal than GSOL).
Jack Ma, Alibaba's founder, speaks in grand, patriotic terms about how Alibaba is bridging the divide between China and the outside. He speaks so much of Alibaba being the bond among people around the world and of Alibaba bringing new kudos to China, that it's easy to forget Alibaba thrives on the same capitalism that was a crime a few decades ago. Alibaba straddles both New and Old China.
I am not saying Alibaba is the top Internet company for 2007 — the company still has a long way to go to prove good governance, a sustainable model, and the ability to mutate as times change. Instead, the buzz around its IPO coupled with its hold on Yahoo China (and the furor around that entity in U.S. courts); its dynamic business model; and the growth of its subsidiaries like Alimama and Alipay in 2007 make the Alibaba IPO my China technology news story of the year.
2) All Things Digital Video: Video on desktop and mobile interfaces hit a solid stride in 2007. Internet video was so sizzling hot in 2007 that even a Chinese mining company decided to place its bets on the sector's action.
Chinese upstart Tudou.com received US$19 million of investment, and Youku.com received US$25 million to fund its own expansion. The year ended with worries that new legislation would hinder growth for these companies in 2008 and an example of the exact power of Internet video in China.
3) Tech Grows China's Northeast: Intel's opening of operations in the Dalian High-Tech Industrial Zone ushered in a new wave of investment in China's northeast. Oracle then announced its Shenyang plant, and all the excitement caused Shui On Land to break ground on a new software park in Dalian called Dalian Tiandi Software Park. British Telecom also pledged about US$70 million for development in China, with the money split between Shanghai and Dalian.
I think this is an important story because of the development of new technology talent outside of the major areas like Beijing, Chengdu, Guangzhou, and Shanghai that frequently are targets of foreign companies. China is a big country — a second-tier Chinese city like Hangzhou has the same amount of people as a global metropolis like Hong Kong — so continued development of these outlying areas and pushing that growth into rural areas is important in shrinking China's digital (and economic) gap.
4) Online Gaming: I am bearish on the Chinese gaming sector (there are too many start-ups publishing too many titles for gamers who concentrate on only playing a handful of games) but I can't deny that gaming in China is huge and we covered many stories in 2007 about this sector.
Listed companies like Shanda, Netease, The9, Giant Interactive, and CDC Games offered gamers a higher level of playability in 2007. Sohu.com claimed online gaming pushed its third quarter revenues higher, while CDC Games finally settled a squabble with a Korean business partner. Privately-owned company 99Bill inked a deal to promote games in China and also offered online payment services to gamers, while the Online Games Alliance Against Piracy was formed to protect businesses and consumers in China. Tom Online earmarked CNY200 million to revitalize its own game services and Perfect World went public.
5) WVAS/MVAS Failure: I feel like a broken record, but companies in the Chinese mobile and wireless value-added services sector had a very rough year in 2007. Sina.com reported sliding mobile revenue in November 2007 and China.com also had downward revenue because of drying mobile aspirations.
Hurray tried to thwart the trend by buying non-mobile businesses — it went for music. But rival Linktone still had wax in ears and could not hear the emptiness of its coffers. At one point Linktone even tried to buy a British company for about US$77.8 million. Kongzhong signed deals with MSN and the NBA, but this was frosted by an executive departure at the end of 2007.
About the author:
Perry Wu is a writer and correspondent for ChinaTechNews.com and can be reached here at the site. Perry Wu does not hold any positions, long or short, on any of the Chinese or American company securities mentioned in this article.