Views on China’s New Internet Economy
The information technology has emerged with the glory of Internet economy and has become an indispensible part of normal life. This article is going to deal with inner factors that drive the Internet economy by analyzing the mode of development of Internet economy and, eventually, helps readers cast a glance at the future.
Key Words: Internet Economy, Carve Out Business, Virtual Economy, Emerging Professions
Internet economy has become glorious and now is associated with online game, searching engine, online shopping and online stock exchanging. Hundreds of websites’ emergence and development has just been out of expectations in the new wave of Internet economy. Let’s take Alibaba.com as an instance. It was founded in 1999 with initial investment
of $70,000; as of 2003 in May, its daily sales hit as much as $140,000, amounting to 5 million in annual sales. From Alibaba’s rapid growth, it is not hard to get the picture of the extremely high potential of Internet economy. That’s also
the case with Google and Facebook that it takes only few years to become a “gorilla” in the industry. What’s their secret of success?
First of all, one of focal symbols of Internet economy is low investment with high returns.
For example, there is only 16 employees in Digg.com, which is rapidly emerging new media website. But the question is, who is going to meet the 1 million eager visitors everyday? The solution is unexpected but simple-the 600,000 registered members of Digg.com. Digg takes the advantage of people’s curiosity so that netizens bring cool news to Digg and share news with other visitors. Its users dig 95% of the news on Digg.
As of 2011, the number of netizens in China has rocketed as high as 485 million. Internet has become part of people’s
life; under such atmosphere, the spirit of sharing, showing-off and even the luring classes and scores in online games has led to the emergence of Facebook, fueled Ask.com, and beefed up Wikipedia. Otherwise, Internet has meant the whole life to those “professional” netizens, who are making a living through eBay; however, some of netizens have
developed addiction to the Internet and chase spiritual sustenance. It is unlikely to deny that the addiction to the Internet has become a serious mental disorder among teenagers, especially online game, which is becoming controversial in China because it has led numerous teenagers to getting addicted to net bar without going home or to school.
All these factors have become the motive power of the development of Internet economy with the mode of low-investment-high-returns.
Second, the supreme doctrine, “Intelligence is power” has founded the support for carving out businesses in the Internet industry.
The emergence of Facebook and hao123.com give not so much credit to technology, based on which Google has come into being, as to creativity and inspiration. The Facebook has been founded by two high school students and was designated as online social network; now it end up with the biggest website in the world. For Chinese Internet users, Hao123.com is an Internet “start page” that shows paid and non-paid links on the home page and category pages. A
manager of a bar originally developed it, to offer convenience to immature customers who have to rely on piloting sites to find websites; and Baidu, the biggest Chinese search engine has acquired it at a price of about 2 million dollars.
These successes drive people to seek new ideas and radical business opportunities. The new era of Web 2.0 has witnessed the proof of the doctrine, “Intelligence is power”.
1. Imitation. Most of successful pioneer Chinese websites have leveraged from imitation. Sohu, Baidu, Taobao is the Chinese equivalent of Yahoo, Google, eBay, respectively. What’s more, those imitators enjoy unique advantages
compared to their predecessors:
1) Home Advantage
Let’s take Baidu as an instance. Baidu defeated Google china, who possessed adequate capital and advanced
technology, due to the fact that Chinese Baidu has better understanding of Chinese language, resulting not only from optimized searching result, but also from the acknowledgement of the nature of Chinese-searching. Besides, home companies do not need to worry about the global strategy as multinational companies do: the compliance of products with local culture and laws or the synchronization of release of products in different countries.
Imitators more often than not add new features of their unique creativity and indigenization into the product while designing it, in attempting to optimize and rectify defects and unacclimatization; and also, imitators can make swift response to demands, compared to their predecessors who, at least lagging behind in response, have been “defined” and
have to pay high price to make an even simple change due to customers’ inertia. For example, Taobao adopted free
strategy to beat off competition from eBay China, or Eachnet, who was then limited to its charge mode and was not able to response to Taobao’s operation; shortly afterwards, Taobao launched Alipay, an online money transfer platform, ahead of Eachnet, who was encountering problems of policies while trying to introduce PayPal into China.
Internet pioneers always better off from integrating various existing resources in the Internet. Like Hao123.com, the founder was paid millions of dollars for such a simple idea of integrating common websites into one page, in which case the founder made full use of the existing resources. As to the emergence of searching engine, it has solved the problem that how Internet users can locate the useful information in the billions of web pages; in this sense, searching engine came from the integration of the existing information on Internet.
From all above analyzed, the mode of low-investment-high-return and the preference of intelligence and innovations has been driving and will drive the future economy. Where will the Internet economy go?
On the one hand, virtual payment will characterize the future. The development of credit card has made our compensation become a figure on the screen of POS machine. And also, the online payment has penetrated deep into every aspects of our life in terms of shopping, paying bills. It is feasible that various type of virtual payment will come into being in an era of more advanced information technology.
On the other hand, the structure of employment will shift. It is obvious, from the analysis above, that millions of future entrepreneurs will definitely dedicate themselves into the new wave of Internet technology. The current successes of websites may encourage pioneers to take a shoot in the Internet industry.
In addition, the labor market is compromised of employees from conventional industries, such as manufacturing, which is the common choice of employees. Few people choose to start their own businesses or join Internet start-ups due to the lack of social capital or the immature of the market. Nevertheless, with the integration of Internet into people’s life, the Internet industry will become a luring alternative for employees. Like the first Industrial Revolution, the Informational Revolution, characterized by the Internet, will become the new focus of employment.