"Kao-Ya" Innovation and Chinese VAS Market - Insider's View

"Kao-Ya", as they say it in Chinese, or "Peking Duck", is a beautiful and delicious dish, a roasted duck with especially tender and crispy skin. The legends trace its history to the Qing Dynasty in China. To prepare "Kao-Ya" you need a full duck with its head attached. Then, if you are strong enough, you need to inflate it through a straw (that's how they did it centuries ago) or use a pump to separate the duck skin from the body. After that you have to pour some boiled water and brush it on with some sweet substance, like molasses, honey, or plum syrup depending on your preferences. That allows the duck skin to acquire the light caramel taste. After drying it for about 12 hours, place it in a large oven to roast it over apple wood charcoal (the best choice!) for a couple of hours, and finally you will have a crispy and tasty Chinese delicacy. (Now don't try to do it in your home oven, you will need to build a special traditional oven for that!)

While wrapping finely sliced duck pieces into pancake, and mixing them with a plum sauce, I want to introduce you to Ben Joffe, CEO of Plus Eight Star Ltd. (www.plus8star.com), who invited me to the "Kao-Ya" feast in one of the central Beijing restaurants. This French guy with a shy smile created a very interesting company that in his words is "engaged in helping Western companies to understand the technology innovation process in Asia, and how these innovations can be applied in their home countries". In other words he will even make "kao-ya" work in your steak recipe, just watch!

With seven years of Asian experience and fluent in Mandarin and Japanese, Ben is very confident about his company's future. When I asked him if he was interested in new clients, he quickly said "sorry, not for a few months, we are completely booked with a number of projects". Nevertheless, he still finds time in his busy schedule to organize highly popular "Mobile Monday" (www.mobilemonday.cn) events in Beijing, which gather enormous crowds of "mo-co" people, operators, software developers, journalists and bloggers. If you are in Beijing, don't miss the next "Mobile Monday" as you might well meet your future business partner there!

Over the dinner we discussed some peculiarities of doing business in the mobile content sector in China, the secret life of Chinese content providers and many fruitless attempts to enter this market by some Western companies. My "whys" and "hows" were answered with patience and good humor, while "Kao-Ya" quickly disappeared just to be replaced by a nice Chinese ice cream. Finally I asked Ben to respond to some of my questions regarding the VAS market in China, and you can find his answers below. In short, his recipe for success is working with a local partner and tuning in to the local culture and preferences.

Current state of the VAS market in China. What are the hottest trends?

AG: Ben, what are some innovative technologies that Chinese CPs use to engage new subscribers?

Ben: The current state of the VAS market in China is both great and terrible: Great because it's growing overall at a fast pace: 20% of China Mobile's ARPU comes from data, also the mobile content market was estimated close to 1 billion USD in 2006 and keeps growing.

Now, it's terrible because the market is very opaque: operators' regulations keep changing and rocking the life of the thousands of VAS service providers in China. Also, most of the offer is rather commoditized (ringtones, screensavers, ringback tones, SMS jokes) so it is very hard for them to differentiate. Also, operators tend to develop their own service every time they see a service is picking up: mobile music, mobile IM, etc. So life for local mobile entrepreneurs can be fairly depressing as China Mobile reaps the rewards of SP's market building efforts. Very few foreign companies dared to enter the market (only 6 officially have a VAS license) and apart from major record companies, none is really making money in China.

All hope is not lost, as many companies now concentrate on the off-portal market, with advertising models or cross-media cooperation. In China, technology is not the key. Smart combination of ideas and proper execution are way more critical.

AG: What are the top Chinese CPs? What are their strengths?

Ben: Top 8 ones are easy to list as they are also listed on NASDAQ or HKSE:

- Tom Online: leading VAS SP, they entered JVs with Skype and eBay. None is really delivering much, though.

- KongZhong: top WAP provider. Trying hard to push its independent mobile portal, Kong.net via offline advertising (on bus, billboards, etc.). Not much result yet.

- Linktone: partners with record labels and brands. Had a lot of changes in top management and no clear direction at the moment.

- Hurray: moving up the music value chain by purchasing record labels. Its strategy might pay off if they don't damage those companies and integrate with mobile VAS for monetization.

- Sina: leading Internet portal. Makes money also through mobile services.

-Sohu: #2 Internet portal. Official partner for Beijing Olympics 2008. Not clear yet what kind of results it will bring.

- Tencent: leading IM service in China called QQ. Hundreds of millions of registered users. Monetizes through a healthy personalization model and casual games. A very good and healthy company that is almost a new media by itself.

- Netease: dropped most of its VAS activities to concentrate on online RPG and casual games. Doing pretty well since then and its top management probably sleeps much better. Most VAS companies do not manage to differentiate or monetize properly yet.

AG: China Mobile and VAS: what are some examples of interesting VAS campaigns?

Ben: China Mobile do not really focus much of its marketing on VAS. We are still in a fairly unsophisticated market where people buy hardware...

AG: China Unicom: how does it BREW its stuff?

Ben: China Unicom has difficulties getting traction with BREW. Also, the future of CDMA as a whole is a bit unclear in China. SK Telecom (Korea's leading operator) invested 1 billion USD in bonds and is building some cooperation, but overall the market creation effort around mobile services is insufficient.

AG: Internet market in China: major trends

Ben: Internet in China is still a lot about page views and number of subscribers. Most of the US-based services have been adapted to China ('Copy-to-China' or C2C) but very few actually deliver the same results as the online advertising market is still small.

There is a web 2.0 and online communities fever, and a lot of venture capital fueling it, but I don't see so many profitable companies around. Some interesting sectors such as online travel or online real estate are doing well, though.

Online video you-tube-like services are still largely a money-wasting area. Last, the user-generated content trend is definitely here to stay: from online karaoke to video creations, a few artists actually came out from the Internet in the past 2 years.

AG: What is so unique about your company? How can you help Russian CPs or techno companies in China and Asia?

Ben: We do 'Innovation arbitrage', meaning we help companies operating in foreign markets to understand why and how leaders in Japan, Korea and China became successful. Especially, we go beyond the cultural layer to highlight fundamentally good ideas and the way to implement them in other markets. As of today, there is little room for foreign CPs in China and Korea, but top-notch technology companies might stand a chance. In Japan, high quality content also has opportunities and the market is much more transparent.

Unfortunately, starting cost is much higher. I believe however we bring a lot of value to our customers when we bring them ideas that work from Japan, Korea or China, to improve their business in their home market.

AG: What is the secret of your success?

Ben: I spent over 7 years in Asia. First in Japan, then Korea and now China.

What I noticed is that:

(1) Very little of what happens in those countries, including their most incredible successes, is known outside;

(2) Most reporting about those countries will tell you maybe the result but not the process and will often explain them with cultural reasons. The problem is that if you say "it works because they are [whatever country]" you stop thinking and will likely fail to see how a good idea could be adapted to your own market.

This has happened repeatedly over time: from text messaging to camera phones, to flip-phones, to ringtones, etc. The West eventually 'rediscovers' those ideas much later and then forgets the whole cultural debate. Such attitude cost Nokia a lot of market share as they could not see the good idea behind flip-phone design and stuck to their 'candybar' for too long.

Eventually, I think the key of our work - aside from our talented multicultural team - is our cross-cultural and cross-market expertise. Something that takes quite a bit of time to develop.

Exporting Your Broadband Access Equipment in Russia - List of Russian Distributors

According to an iKS-Consulting report, there were more than 300 BWA operator networks in 2006, while in 2002 only 120 networks operated in Russia. Despite its dynamic development the market size remains modest: the sales of BWA equipment doesn't exceed USD 20 million annually. While on a corporate level BWA share is growing, yet it remains a niche solution. The following market segments share in the BWA market in Russia:



Dial-up - 30%


BWA - 5%


Broadband Fixed Access - 65%





BWA generates over 7% of revenues from the broadband Internet market. The lion's share of operators service less than 100 clients, and ARPU remains low – about USD 200. Moscow and regions boast a large number of clients for whom broadband wireless is the only preferred choice for Internet access. An average annual growth in 2002-2004 exceeded 50%, and remained high in 2005-2006.

To export your broadband access equipment to Russia you will surely need to partner with established Russian companies, be they system integrators or distributors. These companies can help you through uncertainties of the certification process, help you to find the right clientele and channel your business throughout Russia. Here is a list of some reputable Russian companies that can work with you on this:

Avalcom


40, Bld. 1, Bolshaya Semenovskaya Street, Office 601, 603, 605, 607


107023, Moscow, Russia


Tel: 7-495-785-1498


Fax: 7-495-785-1489


E-mail: info@avalcom.ru


www.avalcom.ru


Contact: Mr. Igor Dyadyuk, General Director







Informsvyaz


1 Olympic Village, Michurinsky Prospect


119602, Moscow, Russia


Tel: 7-495-797-8899


Fax: 7-495-437-5298


E-mail: root@informsviaz.ru


www.informsviaz.ru


Contact: Mr. Mark Kuperman, President







CompTek


3 Gubkin Street


119991, POB-1, Moscow, Russia


Tel: 7-495-785-2525


Fax: 7-495-785-2526


E-mail: sales@comptek.ru


www.comptek.ru


Contact: Mr. Maxim Alzoba, Manager







CTI


29/7, Bld. 1, Krzhizhanovsky Street


117218, Moscow, Russia


Tel: 7-495-784-7313


Fax: 7-495-784-7314


E-mail: info@cti.ru


www.cti.ru


Contact: Mr. Alexander Volodin, General Director


Activity: CTI (Communications. Technology. Innovations ) system integrator specialising in IP-communication and IP solutions.







Diamond Communications


33 Kashirskoe Shosse


Moscow, Russia


Tel: 7-495-727-4400


Fax: 7-495-727-4401


E-mail: info@diamond.ru


www.diamond.ru


Contact: Ms. Inna Steinberg (Plotnikova), President

INLINE Technologies


29 Vernadskogo Prospect, Office 1104


119331, Moscow, Russia


Tel: 7-495-721-3505


Fax: 7-495-131-4529


E-mail: info@in-line.ru


www.in-line.ru


Contact: Mr. Vladimir Varivoda, General Director





For more information on the Russian telecom sector, be sure to buy my upcoming book "Riding the Russian Technology Boom" at www.futuretext.com

A Handheld GPS Unit Gives You A Portable GPS Pocket-Sized Global Tracking System

A Handheld GPS unit gives you a Portable GPS pocket-sized global tracking system so you won't get lost

Older, bulkier handheld GPS receivers are being replaced with a smaller pocket-sized GPS units. The construction of GPS receivers has changed phenomenally. To keep from getting lost in the wilderness, the demand for handheld GPS tracking systems by cross-country skiers, bikers and hikers has increased. Though some may not use a GPS receiver on a regular basis, they do like to have one handy in the event of an emergency. These smaller portable GPS units are inexpensive enough to easily have on hand. The global GPS software tracking system can hone in on your gps receiver and give your location based on things like elevation and combinations of other factors in your vicinity with near pinpoint accuracy. This lets you traverse almost any terrain with the help of your handheld GPS unit. Along with the ability to assist you in pinpointing your global location, the pocket-sized GPS unit has the advantage of being small enough to easily fit in a suitcase or backpack without taking up much room. Travelers and campers will find that the portable GPS receiver is simplicity itself to use. Different models will vary according to the GPS software and database installed. To facilitate the enjoyment of the interactive GPS unit, all the models have the basic instructions on the display screen. Most handheld GPS models come with instructions that will enable you to hear the information put out as well as read it on the screen.

How can a handheld GPS receiver help you?

The activation of GPS voice and tracking options is one of the best ways to get the most out of the handheld portable GPS unit in assisting through voice so you can locate your global position. A friendly voice will lead you to where you want to go. Giving you a sense of security in stressful times is one of the benefits of GPS voice guidance. When you want and need to keep yourself and your family safe, using a portable GPS tracking receiver is a big help as you will be able to find where you are and what is nearby in the event you need help. As voice activated portable GPS guidance systems become more readily available, many businesses use them to track their fleets and emergency personnel, like firefighters and paramedics use them in various ways. Even your cell phone could have a GPS tracking ship installed so when you call 911, your global position can be used to find you if you aren't sure of your location. There is the option of a number of different features with the high tech handheld GPS services available.

Portable GPS features may include:

Availability of additional GPS software

Map database

Voice activated GPS

Waas technology

Reflectionless screen

Theft prevention functions

Option for personalized screen icons

MP3 capability

What does a portable GPS offer?

The particular handheld GPS receiver you choose is personal and will depend on the type of gps software and gps mapping programs best suit your needs. The size of the receiver, its weight and the antenna are things that can affect the mobile GPS unit. What you want or need in these areas will determine what options will come with your choice of model. If you opt for the smaller, cell phone sized unit, you know the viewing screen will likewise be small. Be sure that you select a portable GPS receiver that has mapping capabilities, updateable software and the ability to download from your computer. You will also want to make sure that the unit you are considering is waterproof or water-resistant and it should also be shock resistant just in case it is subjected to being dropped. Asking the right questions will assist you in making sure you get the handheld GPS receiver that will fill your wants and needs and, at the same time, fit your budget. Some PDAs are being made with GPS antennas and some maps and GPS software are now available so your PDA is more functional than ever before. The PDA units are not nearly as rugged, though they do provide you with very good basics for GPS navigation whether you are in a car, SUV or on foot.

What it really comes down to is that the handheld GPS receiver that best suits your needs is entirely up to you. To make it easier on your budget in the long run, it is best to decide what is the absolute maximum you can spend on a portable GPS unit and buy the one with the most features, whether you can use them right away or not, that you can afford with your budget. This way, you won't find yourself buying a new one very soon because you need more features. It is better to start with a bit more than you need at the time and already have what you need later than to have something that you 'outgrow' almost before you get it home.

Broadband - Location Matters

You've probably not given much thought to who owns what in your local telephone exchange but unknown to many of us; broadband providers have added their own equipment into your local BT exchange. This direct access enables them to give their customers many different services and reduce cost.

So, what does this mean to the average consumer?

Well a few years ago, when signing up to broadband deals, you would be effectively running solely on BT's wholesale network branded as another supplier. BT sells these services via their wholesale arm and internet service providers (ISPs) go on to brand and manage the services on their own.

Times have now changed and regulator Ofcom has set in place something known within the industry as "Local Loop Unbundling" or LLU. This means that broadband providers can bypass the BT network and install their own equipment in your local exchange.

You may think of this as good news, potentially reducing the cost of your broadband connection but unfortunately this isn't always the case and has led to different prices for broadband in different areas and also huge differences in quality of service.

The majority of complaints about pricing and poor service come from people living in rural areas because providers have rolled out their LLU networks in urban areas where they can cover the widest number of people in the UK and also control cost, (i.e. it's more cost effective to have LLU in urban areas as they can maximise the number of potential customers and maximise revenue).

The likes of AOL and Talk Talk (Both owned by Carphone Warehouse), Tiscali and UK Online are charging over the odds to customers outside of their LLU network and this is usually in rural parts of the country.

Other providers such as Orange and Pipex have chosen to take a different route and are winning customers by choosing not to pass this charge onto their customers.

With the difference of around £10 per month, it's not wonder customers are up in arms and worth checking to see if you're affected before choosing your new provider.