Research and Development Sector News
- China tech giants look to Japan for expansion
Date: 10-Apr-2007 Sources: (Xinhua Online)
Tokyo-based Japanese reporter Shinya Enomoto doesn't read Chinese, but has been frequently using Chinese website Baidu.com to download his favorite songs.
That's music to Baidu's ears as the company prepares to launch a Japanese website this year, an event eagerly awaited by Enomoto.
Robin Li, chairman and CEO of NASDAQ-listed Baidu.com Inc, said in February that his company has developed the necessary technology to start a Japanese website and will spend $15 million to log into the Japanese market.
Meanwhile, Alibaba.com, China's largest business-to-business (B2B) e-commerce company, will also reportedly start offering Japanese services in the second half of 2007.
Baidu and Alibaba aren't exactly blazing a trail. Chinese technology companies like Lenovo Group, Neusoft Group and Kingsoft have already made significant inroads into Japan.
As Chinese tech companies get bigger and look for more room to grow in overseas markets, Japan has become a must-tap.
A suitable market
Lu Bowang, a senior Internet industry analyst in Beijing, says an enhanced capability and a competitive domestic market along with a similar language and culture are the main reasons for Chinese dotcoms' yen for Japan.
Since the Internet bubble burst in 2000, many Chinese companies have given up business models aping United States counterparts, and have developed their own, which have helped them beat global giants like Google, MSN, Yahoo! and eBay in the Chinese market.
Companies like Baidu and Alibaba, with hundreds of millions of dollars in hand and pushed by investors to find new growth engines, are thus turning to Japan.
Japan is the world's second-largest economy and also the second-largest technology market More importantly, it's blissfully devoid of strong local players, dominated as it is by US conglomerates like Yahoo! and Microsoft. The growth of local leaders has also been hindered by the practice of outsourcing that many Japanese companies resort to.
The fact that both Chinese and Japanese are two-byte languages, which means high similarities in computerspeak, is seen by Chinese firms as an added advantage.
Beijing-based Kingsoft, which competes with Microsoft in China's office automation software market, established a Japanese venture in 2005. 'We started probing the Japanese market, whose office software segment is 20 times that of China. But we have been waiting for an internationally competitive product,' says Lei Jun, CEO of Kingsoft.
In September, the company started to charge on its anti-virus software Duba, after a year of free service. In four months, Kingsoft broke even. Buoyed, in February, it released office software WPS in the Japanese market.
In January, Japanese venture capital heavyweight JAFCO invested 2.5 billion yen ($21.02 million) in Kingsoft's Japanese arm eight times Kingsoft's original investment. Neusoft Group, the largest Chinese technology service outsourcing firm, last year generated 60 percent of its offshore revenue from Japanese customers and every week, hundreds of its Chinese and Japanese employees shuttle between its Shenyang headquarters and Tokyo.
Its chairman and CEO Liu Jiren, who started the company with a contract from Japanese firm Alpine, flies to Japan every month to meet customers and oversee the operations there.
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