Boom Times For Chinese Internet Start-Ups

China's vast and growing number of web users is driving demand for tech services.

HONG KONG -- In a crowded office in suburban Beijing, a dozen young computer programmers are busy trying to make their first million with an Internet startup.

An Ran founded website design and develop company Alltosun two years ago. He formerly was R&D supervisor at Sina SINA ( SINA - news - people ), one of China’s most-visited online portals, and the project director at UUSee, one of China’s largest live TV broadcasting websites. “Most of our clients are young start-ups," said An, whose clients include Chinese, British and German companies.

An’s Alltosun is a snapshot of what is taking place in China’s Internet business landscape.

The IT design and development sector alone reaped 7.27 billion yuan ($1.1 billion) in revenue in January and February, with an annual growth of 24.5%, according to the latest government data. Alltosun’s revenue last year reached nearly 400,000 yuan ($58,000) is expected to exceed one million yuan ($146,000his year. Urbanites in China’s 60 biggest cities spent over 70% of their spare time on the Internet, according to a March survey by McKinsey & Co.

China’s expanding internet users’ guarantee potential success for the country’s internet start-ups. Official statistics showed that China’s internet users have reached 384 million by the end of 2009, more than the total population of the United States.

American International Data Group saw an investment opportunity in China’s Internet industry back in 1992, when Patrick McGovern decided to set up IDG Venture Capital and invested in start-ups like Tencent QQ and Baidu.com, ( BIDU - news - people ) which have since grown into China’s leading internet services portal and search engine, respectively.

DG VC now manages a $2.5 billion fund in China with a large proportion in the IT sector. Of the 200 companies it has backed, fifty have gone public or been bought by other companies.

Another Chinese start-up is Nanjing-based china-tomb.cn, an online mourning website.

“I saw people discussing where they could sweep their ancestors’ tombs without going back home on an overseas online forum four years ago, and that’s how I got the idea of setting up an online tomb-sweeping website.” said Yuan Jun.

For 10 yuan ($1.40), mourners can set up online memorials and tombs for their late relatives, upload photos and videos of them and burn virtual incense and offerings of money. Page views per day reached over 10,000 during the Qingming festival, when Chinese families traditionally visit their relatives' gravesites and practice rituals such as kowtow and money offering.

“Our customers are primarily from Japan, U.S., and Chinese coastal cities like Fujian, who cannot get back home during China’s tomb-sweeping festival,” said Yuan. “They are happy to pay for online mourning as they find it convenient and easy to use.”

Jennifer Po-ying Chueng, 04.23.10, 12:30 AM EDT

Source: http://newscri.be/link/1080471
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Mobile propping up enterprise IT

Commentary
Despite Gartner projecting a 5.3 percent increase in IT spending in 2010 over 2009, and IT vendors reporting rosy earnings, venture capitalists have been moving away from investing as much in enterprise IT in the past several years. As The Wall Street Journal reports, IT represented 53 percent of VC deals in 2001 but it has plummeted to 33 percent in 2009.

It's not as if those VCs are holding their money. They're actively investing in health care, green tech, and other sectors...
...like mobile.

The irony with mobile is that while it's siphoning away VC dollars from IT, it may actually be fueling enterprise IT spending. Mary Meeker suggests that with the mobile Web we're entering the fifth major technology cycle, eclipsing the desktop Internet era, an era of personal computers driven by enterprise IT.

But mobile is very much a heavy hitter in enterprise IT, even if it didn't start there.

For a variety of reasons, enterprise IT is rapidly co-opting mobile. It has to: employees are demanding that IT support their device preferences.

Hence, while companies may have been relatively quick to adopt the BlackBerry ("Hey, I can keep my employees working 24/7, constantly tethered to e-mail!"), even the "toy" iPhone has won over the enterprise, and employees are already inventing arguments why the iPad should be next.

Why? It's the apps.

E-mail was the initial killer app for mobile, but we've moved well beyond that. From Foursquare to mobile search to Facebook Mobile, the enterprise is increasingly running through consumer-esque applications that connect employees to business partners, fellow employees, and vendors of essential services.

Even traditional IT increasingly will run on consumer-driven mobile technology. MeeGo, the amalgamation of Intel's Moblin and Nokia's Maemo mobile Linux initiatives, is making its way onto enterprise-friendly laptops. The same holds true for Google Android.

In other words, even as VCs shift their investments to mobile, their money is likely helping to drive enterprise IT. It's not a direct investment, to be sure, but no less effective. Enterprise IT is alive and well. It just looks more mobile now, and less tied to the desktop.

(Credit: Dow Jones VentureSource)

Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay. 

 Source: http://newscri.be/link/1080275

Concern over rising prices of houses

Speculators believed may be taking advantage of easy financing

PETALING JAYA: The jump in home prices lately has raised concern that speculators may be taking advantage of the easy home financing scheme.

Since the introduction of the scheme early last year, property sales have improved considerably while prices in some locations in the Klang Valley and Penang have edged up by between 10% and 20%.

Under the housing facility, buyers only need to fork out a small deposit of 5% or 10% of the property price and do not need to make any further payment until after their property has been delivered to them.

Developers are absorbing the stamp duty, legal fees and interest cost during the construction stage.

While some industry players agree that there is cause for concern, most feel the housing facility is still needed at least over the next 12 months until the market is back on a stronger footing.

Ireka Development Management Sdn Bhd chief operating officer Lim Ech Chan said easy-payment schemes had its pros and cons.

With the low entry cost, such schemes enabled those who have difficulties buying a house to put down the initial 5% or 10% downpayment and have their own roof over their heads two to three years later.

“When SP Setia first came out with the scheme, it helped the mass market a great deal,” Lim said.

He said the drawback was that since buyers did not have to pay anything for the next two to three years, they may sell their units when the project was completed.

“If the project is handed to them during a boom, they can sell it. But if the project is handed to them during a weak economic environment, they will have to pay for the mortgages.”

ECM Libra head of research Bernard Ching said the recent 25 basis point increase in overnight policy rate had prompted more buyers to buy and lock in at the current interest rates as they might expect the cost of fund to rise further.

“This is the best time to buy a property for own occupancy as entry cost is at an all time low. As seen in the high buying interest in the past six months, many buyers are buying to hedge against rising inflation down the road,” Ching told StarBiz.

According to Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector president James Wong, developers need to catch up with “lost time” when launches had to be deferred for more than a year as a result of the global financial crisis.

“Buyers were facing cashflow problems then and needed to watch their spending. Buying big-ticket items like a house is the last thing on their mind. There are merits in the scheme as it has lowered the entry cost and make house purchase more affordable for buyers.

“Such financing schemes require a lot of resources and only the big developers with strong financial resources can afford to adopt them. In a way, it is a variant of the build-then-sell concept,” Wong said.

He said there was still no risk of overheating in the market as the double-digit rise in property prices was registered only for very niche projects in very-sought-after locations where demand far surpassed supply.

“Property prices on the whole are still much lower compared with those in other countries. While there is still upside potential, prices will not spiral out of control,” Wong said.

Since buying interest recovered in the past few months, developers are no longer offering the housing facility across the board but only for selective projects.

“Besides, Bank Negara is very stringent and only eligible buyers who have the required minimum income level will be able to sign up for the housing packages,” Wong added.

On its downside, he said while the scheme might had drummed up sales, it could give the wrong indication of the real or effective demand for houses.

Admitting that there would always be speculators in the market, SP Setia Bhd president and chief executive officer Tan Sri Liew Kee Sin said as long as speculation was not rampant, it was actually good for the market as it demonstrated confidence and would improve market liquidity.

“The key is for banks to be vigilant in their credit assessment to determine the borrowers’ ability to service the loan. They should also be selective in terms of the projects and developers to whom they extend the scheme.”

Liew said the higher prices reflected insufficient supply to meet the strong demand for projects in good locations and there was ample room for further price appreciation for good landed residential property.

Since the scheme was launched early last year, SP Setia’s monthly sales averaged more than RM190mil between January and July 2009, which was a new sales benchmark for the company.

Mah Sing Group Bhd president Tan Sri Leong Hoy Kum said of the company’s RM727mil sales recorded last year, 51% of the buyers signed up for the easy financing facility. The sales was much higher than its target of RM453mil.

By ANGIE NG and THEAN LEE CHENG starbiz@thestar.com.my

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