CHINA MEDIA REPORT

Volume Two | Oct ~ Dec. 2009

ABOUT METAN DEVELOPMENT GROUP

METAN Development Group (METAN) is a new media company created to develop and
distribute entertainment content throughout China.

Founded by Larry Namer (co-founder of E! Entertainment) and Martin Pompadur (former

Chairman of News Corp Europe), METAN produces, distributes, and markets premium
content for broadcast and digital distribution.

With a staff of over 30 production, brand marketing and strategic planning professionals,
we serve our clients globally from offices in Los Angeles and Beijing.

ABOUT METAN CONSULTING

Although China has recently opened its doors to the world’s business partners and strate-
gic alliances, it remains one of the most difficult countries on the planet in which to con-
duct business successfully. Why?
 
Size.
Culture.
Consumer tastes.
Business rules.
New business models.
 
These are just a few of the obstacles that otherwise savvy and successful executives must
face in getting to the world’s largest and fastest growing consumer marketplace.
 
METAN’s team of China consultants are experts in media, entertainment and new business
development. We are experts in strategy, market planning and development, advertising,
content creation/ distribution and film, television and online production. With offices in both
in the US and in China, METAN is helping businesses navigate the twists and turns of
China’s market and regulatory environments.

METAN DEVELOPMENT GROUP 16542 Ventura Blvd., Suite 203, CA 91436 T 1-818-387-5663 F 1-818-387-6698 info@metanmedia.com
LETTER TO THE READERS
January 5, 2010

Dear Valued Subscriber,

A new year is upon us and I want to first wish each and every one a fantastic start of 2010.

Despite overall decline in the world’s economy, 2009 has been very good for China. We’ve
seen fundamental changes in China’s media landscape and I don’t foresee any different for
2010. My vision for METAN’s ‘China Media Report’ newsletter is to bring these topics and
issues to surface – to discuss and to share how these changes and trends can and will
impact the way we do business today and for the future.

My philosophy on learning is to learn from others. This year, we will start our ‘Executive Se-
ries’ once a month and interview different thought leaders and industry experts on their
take on China’s dynamic market. If you have suggestions and / or recommendations for
our ‘Executive Series’, feel free to throw them my way. I would love to hear from you.

With the newsletters we’ve compiled together over the last quarter, we are sending to you
our second quarterly volume of the ‘China Media Report’ as a way of thanking you in your
interest in what we do. We encourage you to spread the word and forward to your peers
and friends to sign-up for our newsletter or, at the very least, reach out for an introduction.

Thank you for making “China Media Report” a success!

Regards,

Gordon Chu
Vice President of Business Development

METAN DEVELOPMENT GROUP 16542 Ventura Blvd., Suite 203, CA 91436 T 1-818-387-5663 F 1-818-387-6698 info@metanmedia.com
 TABLE OF CONTENTS

Everything
Old
is
New
Again:
The
Global
Move
to
Digital
Entertainment
































































•


•


•


•


•


•




















01

China’s
MulB‐Billion
Dollar
Bet:
TV





































































































































































•


•


•


•


•


•




















04

Brand
Me
if
You
Can:
The
Curious
Case
of
“Sufei’s
Diary”













































































































•


•


•


•


•


•




















07

Journey
to
the
West:
China’s
Move
to
the
US

















































































































































•


•


•


•


•


•




















10

“Because
You’re
Worth
It”
‐
L’Oreal’s
success
in
China























































































































•


•


•


•


•


•




















13

Disney
China:
“The
Happiest
Place
on
Earth”

















































































































































•


•


•


•


•


•




















16

Breaking
the
Fourth
Wall:
Shanda’s
Venture
into
Television






































































































•


•


•


•


•


•




















19

Rock
Music
in
China:
An
Overview

















































































































































•


•


•


•


•


•




















22

The
Animal
of
ExecuBon:
A
Study
of
“Tai
Chi”
Style
of
Management












































































•


•


•


•


•


•




















25

Confessions
of
a
Chinese
Shopper
















































































































































































•


•


•


•


•


•




















28

2010:
My
PredicBons
for
China
AdverBsing




















































































































































•


•


•


•


•


•




















31

Online
Vide:
Present
and
Future







































































































































































•


•


•


•


•


•




















34

lorem ipsum dolor met set

quam nunc parum

METAN Development Group (www.metandevelopmentgroup.com) 00

 CHINA MEDIA REPORT
October 06, 2009

Everything Old is New Again: The Global Move to Digital Entertainment

By
Mellisa
Gillies|
October
06,
2009 actors,
directors
and
 adverBsers.
 The
ad
 cheaper
 and
 befer
 ways
 to
 reach
 their

mgillies@metanmedia.com agencies
 played
 a
 role
 as
 both
 brand
 target
 audiences
 on
 niche
 shows,
 cable

manager
 and
 creaBve
 director
 for
 the
 underwent
 its
 own
 metamorphosis
 over

If
you
think
you’re
witnessing
a
new
me‐ programs,
just
 as
they
 had
 done
 for
 the
 the
next
thirty
years.
dia
 juggernaut
 with
 megashows
 like
 previous
forty
years
on
radio.
American
 Idol,
 So
 You
 Think
 You
 Can
 In
the
1980’s,
as
 cable
homes
 populated

Dance
 and
Survivor,
you’re
 too
 young
to
 In
 fact,
 no
 one
 knew
 how
 to
 treat
 this
 the
 viewer
 horizon
 with
 increasing
 fre‐
remember
the
Golden
 Age
of
Television,
 new
 TV
audience,
because
 no
one
really
 quency,
the
 Golden
Age
audience
began

where
 Texaco
 Star
 Theatre,
 The
 Buick
 knew
 what
 audience
 was
 tuning
 in
 to
 to
fracture
and
fragment,
giving
way
to
a

Circus
 Hour,
 The
 Colgate
 Comedy
 Hour,
 watch.
 Were
 they
 radio
 listeners
 (older
 new
 paradigm
 of
 viewership,
 driven
 by

Pabst
 Blue
 Ribbon
 Bouts,
 and
 the
 Ford
 viewers),
 moviegoers
 (younger
 viewers)
 niche
shows
targeted
toward
 smaller,
yet

Television
 Theatre
 dominated
 the
 TV
 or
 a
new
 hybrid
of
post
 World
War
II
en‐ more
 loyal
 and
 more
 valuable
 consum‐
screen
 with
 exactly
 the
 same
 type
 of
 tertainment
 seekers
 made
 up
 of
 young
 ers.
Those
audiences’
interests
coincided

programming
as
today’s
shows.
How
did
 families
 who
 were
staying
at
 home,
rais‐ more
 closely
 with
 the
 products
 and

the
 content
 and
 adverBsing
 industries
 ing
families
and
looking
for
 cheap
enter‐ brands
 who
 purchased
 the
 shows’
 ad‐
come
full
circle? tainment?
 
 In
 reality,
 the
 audiences
 verBsing
 minutes.
 MTV
 for
 the
 young

turned
 out
 to
 be
 made
 up
 of
 a
 broad
 generaBon,
 E!
 for
 the
 movie
 fan,
 ESPN

In
 the
 early
 1950’s,
at
 the
 dawn
 of
 the
 cross
 secBon
 of
 age,
 race
 and
 gender.
 for
 the
 sports
nut,
and
the
mother
of
all

broadcast
 television
 age,
 nearly
 every
 The
 adverBsers
 had
hit
 the
 mother
 lode
 ideas,
 CNN
 for
 the
 news
 watcher.
 For

primeBme
media
show
was
headlined
 by
 thus
the
introducBon
 of
the
Golden
 Age
 nearly
30
 years,
cable
television
reached

a
big
star,
underwrifen
 by
an
 adverBser,
 of
TV.
 its
 own
 crossroads
 with
 shrinking
 band‐
and
filled
with
adverBsing
from
sponsors
 width
and
audience
criBcal
mass.
lorem ipsum dolor met set
whose
brand
messages
were
shamelessly
 And
 then
 came
Cable
TV.
IniBally
cursed

quam nunc parum
trumpeted
throughout
the
sixty
or
ninety
 by
the
TV
networks
 who
 saw
 their
 audi‐ As
the
21st
century
unfolded,
a
new
me‐
minutes
of
drama,
comedy
or
music
 con‐ ences
fragment
and
show
profits
decline;
 dia
alternaBve
began
to
gain
criBcal
mass

tent.
 Television
 was
 a
 new
 medium
 for
 and
 embraced
 by
adverBsers
who
found
 in
 America,
with
 tens
 of
 millions
 of
 for‐

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: October 06, 2009 01

NEWS IN CHINA:
Recent Headlines:
China Hopes to Create Its Own Media
Empires
China plans to spend billions of dollars
in the next few years to develop media
and entertainment companies that it
hopes can compete with global gi-
ants...
>> READ MORE
China to See 10 Percent Rise in Do-
mestic Tourism
According to a leading Chinese tour-
ism official, China will see a 10-percent
rise in domestic tourism this year...
>> READ MORE
China Unicom starts pre-sale of iPhone
China Unicom has started taking pre-
orders for iPhone handset on Oct.1...
>> READ MORE
China Retail Sales Boom in National
Day Holiday
China's retail sales hit 14 billion yuan
($2.1 billion) during the first three
days of the National Day Holiday...
>> READ MORE
China Top Contributor to World Eco-
nomic Growth
China contributed 19.2 percent of the
world economic growth in 2007, up
from 2.3 percent in 1978...
>> READ MORE
Baidu’s “Morning Star” Shoots for E-
Commerce SMEs
Mengniu encourages Chinese kids to
do what they feel; which means goof
off in class and illegally download
MP3’s and movies...
>> READ MORE
METAN Development Group (www.metandevelopmentgroup.com) China Media Report: October 06, 2009
mer
heavy
TV
viewers
looking
for
a
faster
 and
 easier
 way
to
 control
their
consumpBon

of
 entertainment.
Called
 ‘disrupBve
 innovaBon’,
 a
 term
 coined
 by
 Harvard
 Professor

Clayton
 Christensen,
this
viewer
 habit
 shioing
describes
a
process
by
which
 a
product

or
 service
takes
root
iniBally
in
simple
applicaBons
at
the
bofom
of
a
market
 and
then

relentlessly
moves
‘up
market’,
eventually
displacing
established
compeBtors.

An
innovaBon
that
is
disrupBve
allows
a
whole
new
populaBon
of
consumers
access
to

a
 product
 or
 service
 that
 was
historically
 only
 accessible
 to
 consumers
 with
 a
lot
 of

money
or
 a
lot
of
skill.
 
Think
of
how
 cell
 phones
replaced
fixed
lines,
how
 discount

retailers
replaced
tradiBonal
department
stores
and
 of
how
radio,
television
 and
cable

all
were
disrupted
by
their
newer,
cheaper
and
more
convenient
compeBtors
(including

the
Internet).
Throughout
 the
 launch
 and
 growth
 of
 media
 plaporms,
branded
 content
 has
 always

played
a
criBcal
role
for
 adverBsers,
the
 content
 creators
and
 their
audiences.
As
an

industry
concept,
“branded
 entertainment
markeBng”
integrates
creaBve
content
with

adverBsing
to
 provide
the
consumer
 an
 entertainment
experience
that
 doesn’t
 sepa‐
rate
the
content
from
the
sales
pitch.

Back
to
American
Idol.
It’s
a
perfect
example
of
how
“content
and
commerce”
partner‐
ships
work
in
the
music
industry.
The
American
Idol
producers
integrate
iPods
and
Ford

Mustangs
with
the
songs
and
 performances
of
the
show’s
contestants.
The
show
owns

the
publishing
rights
of
the
songs
that
are
performed
in
and
filmed
in
Fords,
placed
on

iTunes
and
purchased
by
consumers.
The
voBng
results
for
the
contestants
phoned
and

texted
into
 AT&T
wireless
create
revenues
for
 the
show’s
producers,
as
do
the
concert

tours,
merchandising
and
music
publishing.
AcBng
as
 revenue
 aggregators,
American
 Idol’s
show
producers
own
 and
administer
a

percentage
 of
 every
revenue
 stream.
More
 importantly,
 the
 producers
 expand
 and

extend
both
the
‘Idol’
brand
and
its
brand
partners
to
a
larger
universe
of
consumers
in

the
process.
This
“360°
business
model”
 is
a
hedge
on
 any
branding
bet.
With
 music
as
the
driving

force,
markeBng
strategists
are
using
a
business
model
that
provides
brands
with
a
way

to
 achieve
more
market
 share
 and
 customer
 loyalty
without
 having
to
 lower
 margins

and
return
on
investment
along
the
way.
With
 producBon
 costs
 spiraling
 out
 of
 control
 and
 the
 aoermarket
 becoming
 more

fragmented
and
less
lucraBve,
show
owners,
record
labels
and
 movie
studios
are
look‐
ing
for
 new
sources
of
funding.
One
example
of
this
is
product
placement,
which
is
as

old
as
the
 arts
industries.
But
 the
 idea
of
adverBsers
owning
stakes
in
 shows,
record‐
ings,
and
movies
in
 exchange
 for
favorable
adverBsing
posiBons,
exclusivity
and
 script

integraBon
is
the
next
move
This
 business
model
does
not
 yet
 exist
in
 China.
The
industry
is
two
 years
behind
 the

United
States,
but
the
stakes
for
establishing
this
concept
are
a
piece
of
the
$36
billion

a
 year
 China
 adverBsing
marketplace.
 The
 concept
 of
 360°
 markeBng
is
 the
 conver‐
gence
 of
creaBve
content,
media
and
 markeBng
where
 the
 end
result
 is
 a
 consumer

02
 OUR CONTACTS: Los Angeles Office Beijing Office
16542 Ventura Blvd. Cameo Center, Suite 806
Suite 203 No. 16 Guangshun Nan Avenue
Encino, CA 91436 Chaoyang District, Beijing 100102

P: 818.387.6553 P: 86-10-8476.4280
F: 818.387.6698 F: 86-10-8476.4290
E: info@metanmedia.com E: info.beijing@metanmedia.com

difference
that
really
can
make
a
difference. In
 the
 U.S.,
 the
 ads
 are
 being
zapped
 out
 by

digital
 video
 recorders
 and
 online
 sites
 like

As
we
 look
at
 China
 for
 new
 opportuniBes
 to
 Hulu.com
 and
 blip.tv.
 These
 sites
 provide

re‐make
 old
 ideas,
 its
 clear
 to
 see
 how
 viewers
with
shows
that
they
can
watch
 when

branded
content
helps
everyone.
 they
want
to
watch
them.
In
China,
online
peer

to
peer
file
sharing
networks
and
pirated
DVD’s

In
 the
 U.S.,
 the
 music
 industry
is
 now
 limited
 are
causing
similar
headaches
for
adverBsers.

by
dissoluBon
of
its
tradiBonal
distribuBon
and

business
 models
 as
 a
 result
 of
 the
 shrinking
 Through
all
of
the
disconBnuous
innovaBon

radio
formats,
downloading
piracy
 and
 on
 de‐ that
has
occurred
in
the
Western
media
busi‐
mand
 listening
 through
 a
 long
 list
 of
 opBons.
 ness,
there
have
been
winners
and
losers,
as

In
 China,
 there
 has
 never
 been
 a
 successful
 there
will
be
in
China
over
the
next
five
years.

tradiBonal
industry
model. The
survivors
will
be
the
content
creators,
the

adverBsers
and
the
distributors
who
provide

In
 the
 U.S.,
 the
 television
 industry
 is
 con‐ befer
experiences
for
a
fast‐changing
audi‐
strained
 by
 media
 fragmentaBon
 (over
 300
 ence
in
China.
cable
 channel
 opBons,
 VOD,
 IPTV,
 Satellite,

etc.)
 combined
 with
 Tivo‐defined,
on‐demand

viewing
and
viewer
 habits.
In
 China,
a
nascent

four
 year
old
media
business
is
embracing
and

consuming
content
on
more
plaporms
than
we

can
 count,
 from
 television,
 to
 satellite
 TV,
 to

IPTV
and
digital
outlets.

Mellisa Gillies is VP of Sales and Marketing at METAN Development Group. For more information
and past newsletters, visit METAN’s site at http://www.metandevelopmentgroup.com/

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: October 06, 2009 03
October 13, 2009
CHINA MEDIA REPORT

China’s Multi-Billion Dollar Bet: TV

By
Gordon
Chu
|
October
13,
2009 provincial
 players
 (i.e.
 Shanghai
 Media
 government
 control
 and
 simply
 chose

gchu@metanmedia.com Group,
 Beijing
 TV,
 etc.)
 that
 are
 also
 another
 plaporm
 to
 consume
 their
 me‐
state‐run,
internaBonal
media
companies
 dia.
 With
 less
 viewers
 and
 a
 more
 frag‐
Of
all
Recent
news
 came
 out
 from
China
 such
 as
 Time
 Warner
 or
 News
 Corpora‐ mented
 marketplace,
the
flow
of
ad
dol‐
Bon
have
had
many
difficulBes
effecBvely
 lars
are
 eroding
and
 we
can
 see
 how
ad‐
staBng
that
they
plan
to
spend
billions
of

penetraBng
the
Chinese
market.
 verBsers
are
flocking
to
online
markeBng

dollars
 in
 the
 next
 few
 years
 to
 develop
 as
a
way
to
reach
their
target
audience.
media
 and
 entertainment
 companies
 to
 However,
with
this
announcement,
China

that
 of
global
media
conglomerates
such
 is
 taking
 the
 first
 step
 towards
 evolving
 Now
 we
 have
 this
 open
 invitaBon
 for

as
News
CorporaBon
and
Time
Warner.
 their
media
industry. foreign
 investment
 into
 Chinese
 media

companies.
 I
 should
 note
 that
 I
 do
 not

With
 top‐level
 guidelines
 set
 by
 China’s
 What
Does
This
All
Mean think
this
 is
going
 to
 result
 in
 a
flood
 of

State
 Council,
 the
 overall
 plan
 envisions
 these
 big
media
 conglomerates
in
 China

the
creaBon
of
entertainment,
news,
and
 From
 my
 first
 reacBon,
this
 bit
 of
 news
 –
 we
 should
 all
 heed
 Rupert
 Murdoch’s

culture
 companies
 that
 depend
 less
 on
 meant
 one
 thing
–
China
recognized
 the
 conquest
 into
 China
years
back
(Chinese

government
 backing,
 and
 more
 on
 pri‐ need
 to
 change.
If
we
take
 a
look
at
 the
 government
 stopped
 his
 afempt
 to
 go

vate
 investments
 both
 local
 and
 abroad.
 rest
 of
 the
 world
 and
 how
 media
 and
 around
 the
 system
and
 buy
distribuBon)

In
short,
China
will
 finally
open
 up
doors
 television
 has
evolved,
 China
is
 the
 only
 and
understand
 that
a
similar
 fate
would

to
foreign
investments
and
control.
 country
 that
 really
 has
 maintained
 the
 probably
result
 the
 second
 Bme
 around.

same
 business
 model
 of
 government
 What
 this
 does
 mean
 is
more
of
 a
walk‐
A
bit
of
 background
 on
 the
 China
media
 control
for
years.
 before‐we‐run
 approach
 in
 that
 dollars

market
 –
for
 years,
the
 market
 has
 been
 will
 be
 coming
 in
 forms
 of
 partnerships

Bghtly
 controlled
 by
 the
 Chinese
 gov‐ This
 might
 be
 great
 news
 for
 the
 gov‐ with
 these
 Chinese
 companies.
Take,
for

ernment.
 With
 influence
 both
 on
 the
 ernment,
 but
 is
 a
 double‐edged
 sword
 example,
 the
 joint
 venture
 formed
 by

content
 creaBon
 process
 as
 well
 as
 on
 when
it
comes
to
commercial
viability
for
 Gehua
 Cultural
 Development
 Group

lorem ipsum dolor met set
distribuBon,
 the
 Chinese
 government
 the
 television
 industry.
 With
 advance‐ (state‐owned
 media
 company)
 and
 Live

quam
really
 has
nunc parum
had
 full‐reign
 and
 control
 on
 ments
 in
 Internet
 and
 access
 to
 other
 NaBon,
 the
 world’s
 largest
 concert
 pro‐
the
 enBre
 media
 market
 in
 China.
With
 programming,
the
Chinese
 audience
has
 moBon
 company
 back
 in
 2005
 where

CCTV
 on‐hand
 and
 a
 number
 of
 large
 been
 able
 to
 circumvent
 a
 lot
 of
 that


METAN Development Group (www.metandevelopmentgroup.com) China Media Report: October 13, 2009 04

NEWS IN CHINA:
Recent Headlines:
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largest market this year
President and CEO of GM Frederick
A. Henderson said that China has
surpassed U.S. to be the largest mar-
ket for the automobile giant...
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China’s online gaming industry is now
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A week after the 60th anniversary
celebrations of the People's Republic,
China kicked off its first World Media
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METAN Development Group (www.metandevelopmentgroup.com) China Media Report: October 13, 2009
Gehua
has
first
right
of
refusal
for
any
live
event
promoBon
in
the
China
territory.
In
other
words,
while
this
plan
does
not
necessarily
mean
hard
dollars
invested
for
higher

stakes
into
 Chinese
media
companies,
it
 does
mean
 new
business
opportuniBes
that
pri‐
vate
equity
and
investment
groups
can
pursue
and
leverage
in
the
China
market.

What
Does
This
Mean
for
Content
Providers
For
media
companies
such
as
METAN,
this
news
is
great
news
in
both
short
and
long‐term

goals.
In
terms
of
content,
I
do
 believe
that
 these
changes
will
necessarily
loosen
content

control.
Aoer
all,
if
the
whole
goal
is
to
insBtute
a
commercially‐viable
business
model
to

revamp
 the
sagging
television
 industry
in
 China,
content
 will
 ulBmately
need
 to
 change

accordingly.
Note,
I
will
 say
that
this
will
not
 mean
 a
rampant
 and
radical
 deviaBon
 from

today’s
 norm
 –
in
 fact,
I
would
 not
 be
surprised
 if
there
 was
 a
 ramp‐up
 of
 government

scruBny
with
the
programs
on‐air.

What
this
does
mean
 more
money
for
 higher
 producBon
 and
 quality
of
programming.
It

will
mean
 access
to
 appropriate
 programming
never
 been
available
to
 China
before
and

an
overall
facelio
of
today’s
current
shows.

In
terms
of
distribuBon,
I
do
believe
that
these
changes
will
eventually
see
a
consolidaBon

of
 media
 companies
in
 the
 market.
This
means
 befer
 distribuBon,
befer
 control,
and

ulBmately
 flexibility
and
 opBons
 for
 adverBsers.
 And
 with
 a
more
 consolidated
 market,

compeBBon
 for
 befer
 quality
content
 will
 arise
 leading
to
 a
closer
 resemblance
 to
 the

television
landscape
here
in
the
US.
What
Does
This
Mean
for
Adver6sers
For
adverBsers,
this
should
be
sweet
music
to
their
ears
aoer
years
of
playing
by
the
rules

of
Chinese
media
companies.

Aoer
 speaking
with
numerous
brands
about
 their
 experience
in
 China,
I’ve
heard
 my
fair

share
 of
horror
 stories
with
 Chinese
 television.
Not
 knowing
 whether
 the
ads
 would
 be

placed
 next
 to
 the
 news
 or
 in
 a
soap
 opera,
brands
 were
 literally
 at
 the
 mercy
 of
 the

terms
dictated
by
the
 Chinese
 media
companies.
The
 simple
fact
 was
with
only
one
sta‐
Bon
with
a
naBonal
footprint,
CCTV,
brands
were
compeBng
for
ad
space
on
the
network

–
the
law
of
supply
and
demand.
Not
enough
ad
space
for
a
growing
number
of
brands.
With
dollars
 flowing
into
 Chinese
 media
companies
over
 the
 next
 several
 years,
we
can

expect
to
see
more
opBons
open
up
for
 adverBsers
beyond
that
of
 CCTV.
SMG
(Shanghai

Media
Group)
and
BTV
(Beijing
TV)
are
two
very
prominent
media
conglomerates
in
their

own
rights
who
are
right
on
the
heels
of
CCTV
to
bring
brands
new
plaporms
to
adverBse

on.
Not
to
say
we
need
should
discount
the
gravitas
of
CCTV
–
in
fact,
I’m
parBcularly
in‐
terested
 in
 seeing
 how
 they
 will
 arise
 and
 evolve
 their
 business
 model
 to
 compete
 for

their
share
of
the
market.

We
can
also
expect
for
adverBsers
new
programming
strategies
beyond
that
of
current
TV

today.
With
the
likes
of
branded
content
(see
Ugly
Wudi)
and
digital
interacBvity,
not
only

will
programs
be
privy
to
new
viewers
and
 viewer
 experience,
but
brands
will
benefit
 the

same.

05
 OUR CONTACTS: Los Angeles Office Beijing Office
16542 Ventura Blvd. Cameo Center, Suite 806
Suite 203 No. 16 Guangshun Nan Avenue
Encino, CA 91436 Chaoyang District, Beijing 100102

P: 818.387.6553 P: 86-10-8476.4280
F: 818.387.6698 F: 86-10-8476.4290
E: info@metanmedia.com E: info.beijing@metanmedia.com

Conclusion business
 models
 and
 programming
 strategies


in
 order
 to
 make
this
 ‘work’.
For
 content
 pro‐
The
 way
I
 see
 it,
this
 plan
 to
 open
 doors
 for
 viders,
 the
 new
 media
 landscape
 will
 mean

foreign
 investments
is
not
so
much
the
money
 befer
 programming,
 befer
 distribuBon,
 and

(let’s
not
 kid
 ourselves
 –
money
sBll
 has
a
lot
 befer
 future
 for
 Chinese
 viewers.
 For
 the

to
do
with
it),
but
for
 an
overhaul
of
the
media
 brands,
 this
 new
 media
 landscape
 will
 mean

industry
in
China.
 befer
programming,
new
adverBsing
vehicles,

and
 a
 befer
 more
 effecBve
 way
 to
 reach
 a

For
 years,
 the
 Chinese
 television
 market
 has
 growing
Chinese
consumer
 market.
For
 myself

seen
 deep
 erosion
 in
 the
 way
 business
 has
 and
 METAN,
this
only
means
more
 and
befer

been
done
–
a
complete
contradicBon
with
the
 opportuniBes.
 A
 win‐win
 situaBon
 in
 this

rest
 of
 Chinese
 economy
 which
 has
 experi‐ mulB‐billion
dollar
bet.

enced
unprecedented
growth.
The
bofom‐line

is
 China
is
 ready
and
 willing
 to
 create
a
 more

efficient
media
market.
They
are
open
to
 new


Gordon Chu is Vice President of Business Development at METAN Development Group. For more
information and past newsletters, visit METAN’s site at http://www.metandevelopmentgroup.com/

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: October 13, 2009 06
October 20, 2009
CHINA MEDIA REPORT

Brand Me if You Can: The Curious Case of "Sufei's Diary"

By
Ren
Fang
|
October
20,
2009 AddiBonal
Sponsors:
Sony
(Cybershot,

ren@metanmedia.com If
there
is
one
thing
to
be
said
about
the
 VAIO),
51job.com,
P&G
Chinese
Internet
user
(age
18‐30),
they
 Target
Audience:
female
18‐30
years
old
are
resourceful.
Like
every
efficient
mar‐ Total
Views:
20
Million
(4
months
accu‐
Four
 hours
 aoer
 the
 premier
 of
 the
 4th
 ket
and
every
evoluBon
of
technology,
 mulated)

season
of
Heroes
 on
NBC,
the
show
was
 these
users
have
found
a
way
to
circum‐ Avg.
Views
/
Episode:
453,000

vent
the
unwanted,
the
fluff.
They
have

available
for
download
on
all
the
Chinese

become
far
more
skilled
–
nay,
I
will
ac‐ As
an
original
 program,
“Sufei's
Diary”
is

P2P
 websites,
 subBtled
 by
 anonymous
 tually
use
the
word
‘experts’
–
at
detect‐ armed
 to
 the
 teeth
 with
 fully
integrated

'translaBon
volunteers'.
Forty‐eight
hours
 ing,
filtering,
and
blocking
every
known
 brands/products
and
audience
interacBv‐
aoer,
 the
 total
 number
 of
 downloads
 way
of
online
ad
messages.
 ity
 funcBonality.
 Go
 on
 to
 Sufei's
 blog

number
eclipsed
2
million. online
 and
discuss
the
Clinique
products

Like
their
counterpart
in
the
US,
Chinese
 Sufei
 used
 in
 the
show
 or
 parBcipate
 in

I
consider
 myself
 one
 of
 the
 336
 million
 brand
managers
are
scratching
their
 weekly
polls
that
 determine
the
plot
 for

heads
wondering
just
how
to
reach
this
 the
 next
 few
 episodes.
 With
 20
 million

'Chinese
 neBBzens'
hunBng
for
 free
 con‐
elusive
market.
Finally
in
2008,
they
de‐ views
in
a
four‐month
period,
adverBsers

tent
on
every
P2P
corner
(proud
member
 signed
“Sufei’s
Diary”
–
the
first
online
 are
scrambling
to
emulate
this
same
run‐
since
 1997).
 The
 volume
 of
 free
 online
 branded
content.
“Sufei’s
Diary”
is
based
 away
 success.
Here
 are
a
 few
 lessons
 to

content
in
China
is
absolutely
astounding
 on
a
Portugese

series,
“Sofia’s
Diary”
 be
learned
‐
–
 a
 conservaBve
 esBmate
 of
 100
 Bmes
 about
an
18‐year
old
girl
moving
to
the

more
 than
 that
 in
 the
 United
 States.
 I
 big
city
(Shanghai)
for
college.
The
first
 BE
A
FRIEND
run
of
the
campaign
was
as
follows:

really
 shouldn’t
 say
 ‘free’
 really
 –
 aoer

In
China,
even
worse
than
being
hated,
is

all,
there’s
no
such
 thing
as
a
free
lunch.

Webisodes:
40
x
Daily
5‐minutes being
 ignored.
 For
 online
 adverBsing,

In
this
parBcular
 case,
with
all
 this
‘free’
 Run
of
Webisodes:
8
weeks banner
 ads
 have
 been
 classified
 has

lorem ipsum dolor met set
content,
there
are
the
layers
upon
 layers
 Channel/Pla4orm
Partners:
3
video





 evolved
 from
 the
 former
 to
 the
 lafer.

quam nunc parum
of
 adverBsing
 (mainly
 banner
 ads)
 that
 portals,
1
mobile
plaporm Today,
 brands
 need
 to
 realize
 that
 they

these
 digital
 ecosystems
 rely
 on
 for
 Anchor
Sponsor:
Estee
Lauder/Clinique have
 to
 be
 ‘friends’
 of
 this
 ad‐blocker

bandwidth
and
overhead
costs.


METAN Development Group (www.metandevelopmentgroup.com) China Media Report: October 20, 2009 07

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Chinese...
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Private education company New Ori-
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income of $57.1 million for its first
fiscal quarter of 2010...
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Coca-Cola Continues Growth with
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Beijing is planning to raise RMB50
billion for an Animation and Game
City inspired by Hollywood and Dis-
neyland...
>> READ MORE
China to Launch Its Nasdaq-style GEM
on Oct. 23
THE Chinese securities regulator said
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Nasdaq-style Growth Enterprises Mar-
ket will be launched on October 23...
>> READ MORE
METAN Development Group (www.metandevelopmentgroup.com) China Media Report: October 20, 2009
generaBon
in
order
 to
even
be
noBced
–
thus,
by
using
a
more
effecBve
tool,
i.e.
branded

content.
Metrics
of
success
is
typically
measured
by
impressions
/
eyeballs
for
the
program.
While

fine
and
 useful
as
a
mafer
 of
quanBtaBve
measure,
I
personally
think
these
impressions

only
make
sense
 when
 they
are
 gauged
 against
 an
 engaged‐viewer
 which
 is
 a
far
 more

qualitaBve
 quality.
In
 the
case
 of
 “Sufei’s
 Diary”,
the
 aoer‐campaign
 survey
of
 1500
 re‐
spondents
showed
 over
50%
of
viewers
were
more
moBvated
 to
purchase
Clinique
prod‐
ucts
aoer
watching
the
show.

In
my
mind,
this
was
a
way
of
them
to
say
"thank
you
Clin‐
ique
for
not
bombarding
me”.
CONTENT
SCARCITY
Compared
with
many
other
 western
countries
with
well‐developed
media/entertainment

industries,
the
 underdeveloped
 media
 market
 in
 China
has
 been
facing
content
 scarcity

for
 years
and
 the
only
sustainable
business
model
is
adverBsing.
That
 is
to
say,
compared

with
branded
content
in
other
western
countries,
it
 is
logical
that
 with
the
right
 program

and
 brand,
 you
 can
 make
 more
 of
 a
 splash
 in
 China
 compared
 to
 here
 in
 the
 US
 (of

course,
 all
 theory).
 Following
 the
 success
 of
 “Sufei's
 Diary”,
 other
 web‐based
 sitcoms

seemed
 to
 come
 out
 of
 the
 dark
 corners
 of
 the
 Internet.
 Shows
 like
 “Office
 Quartet”

(think
US‐based
 “The
Office”)
 sponsored
 by
soo
 drink
brand
 Kang
Master
 or
 “Color
 La‐
dies”
 (think
a
female
“The
Office”)
sponsored
by
Samsung.
Despite
 the
not‐so‐good
pro‐
ducBon
quality,
these
distant
cousins
of
“Sufei’s
Diary”
reached
similar
levels
of
success
as

their
 predecessor
 indicaBng
 that
 the
 Chinese
 neBzens
 have
 a
huge
 appeBte
 for
 a
 new

model
of
programming.

LOOSE
REGULATIONS
In
China,
SARFT
and
Ministry
of
Culture
(MOC)
basically
rule
what
can
and
what
cannot
be

aired
 on
 tradiBonal
 media
 –
i.e.
television
 and
 radio.
However,
the
 Internet
 is
 another

story
and
is
very
much
considered
the
'Wild
West'
where
content
innovaBon
can
flourish.

I
should
 say
that
it's
not
 that
SARFT
and
MOC
 does
not
 care
about
 online
world,
but
 the

fact
 that
they
lack
the
execuBon
 power
 over
 the
Internet.
Will
this
change
 in
the
future

ahead?
No
 one
really
knows
 at
 this
point
 –
but,
for
 the
 Bme
 being,
these
 loose
 regula‐
Bons
means
a
lot
of
open
opportuniBes
for
content
and
brands.
RETURN
ON
INVESTMENT
(ROI)
Finally
–
 my
favorite
part…
Returns
On
Investments
(ROI).
No
 mafer
 how
 we
dice
it
or

splice
it,
it
all
 comes
down
to
 the
money.
And
 in
our
 (METAN)
 world,
we
spend
a
consid‐
erable
Bme
making
sure
this
works
too.
Let’s
take
“Sufei’s
Diary”
and
breakdown
a
simple

scenario:
With
18
million
paid
views
(453K
views
/
episode
x
40
episodes)
and
esBmated
CPM
(cost

per
 thousand)
 of
 $10,
 the
 total
 campaign
 would
 have
 cost
 $180,000.
 Expensive?
 Yes.

Value?
Hold
that
thought.
The
aoer‐campaign
survey
showed
that
purchase
intenBon
was

nearly
50%
of
the
respondents,
so
a
CPM
of
 those
 who
intend
 to
buy
comes
 out
to
 $20

($10
divided
by
the
50%).
Let’s
 compare
 that
 number
 against
 other
 tradiBonal
 ads
 available
 for
 online,
 namely:

video
 pre‐rolls
 and
banner
 ads.
With
video
 pre‐rolls,
Tudou,
a
 top
 Chinese
 video
portal,

08
 OUR CONTACTS: Los Angeles Office Beijing Office
16542 Ventura Blvd. Cameo Center, Suite 806
Suite 203 No. 16 Guangshun Nan Avenue
Encino, CA 91436 Chaoyang District, Beijing 100102

P: 818.387.6553 P: 86-10-8476.4280
F: 818.387.6698 F: 86-10-8476.4290
E: info@metanmedia.com E: info.beijing@metanmedia.com

has
a
listed
2009
rate
card
of
$17
for
 a
15
sec‐ the
program
and
 the
brand
itself.
For
 the
case


ond
 pre‐roll.
 With
 an
 average
 CTR
 (click‐ of
 “Sufei’s
Diary”,
whether
 you
 are
Sony,
Clin‐
through
 rate)
of
 10%
(based
 off
of
 US
metrics
 ique,
 or
 51job.com,
 the
 idea
 of
 the
 program

which
is
higher
than
that
of
China),
the
equiva‐ and
 your
 brand
 is
synonymous
–
they
are
 one

lent
 CPM
 of
 those
 who
 intend
 to
 buy
 comes
 in
the
same.
For
brand
managers,
you
couldn’t

out
to
a
whopping
$170
($17
divided
by
10%). ask
for
much
more.

Banner
 ads
 fair
 even
 worse
 unfortunately.
 CONCLUSION

From
 my
 esBmates,
CPM
comes
out
 to
 be
 $2

($14,300
 /
 day
 x
 7
 million
 daily
average
view‐ The
other
night,
my
friends
in
China
called

ers)
for
a
homepage
banner
ad
on
Tudou.
With
 asking
about
a
clutch
(apparently
that
is
a

an
 average
 CTR
 of
 0.25%
 (again,
based
 off
 of
 small
 strapless
 purse
 according
to
 my
wife
–
 I

US
metrics),
the
equivalent
 CPM
of
those
 who
 thought
it
was
associated
with
a
car)
they
had

intend
 to
 buy
comes
 out
 to
 $800
 ($2
 divided
 seen
 on
 an
 episode
 of
 “Gossip
 Girl”
 online.

by
0.25%). Lucky
 for
 me,
 my
 guy
 friends
 over
 in
 China

have
 not
 asked
 me
 for
 a
General
 Motors
 SUV

Let’s
compare
–
 branded
 content
 at
 $20,
 pre‐ aoer
watching
an
episode
of
“Prison
Break”.
In

rolls
 at
 $170,
 and
 banner
 ads
 at
 a
 modest
 any
case,
the
message
is
clear
 –
branded
 con‐
$800.
 Doesn’t
 take
 rocket
 science
 to
 figure
 tent
 works
 and
 works
 well
 in
 China.
 And
 for

what’s
 the
 best
 bang
 for
 your
 buck
 in
 this
 myself
and
 the
millions
of
content‐hungry
net‐
situaBon.
 Obviously,
 these
 are
 very
 rough
 izens,
we
are
always
asking
for
more.

numbers
 and
 gross
 esBmaBons,
 but
 it
 is
 a

good
 litmus
 to
 determine
 the
 efficacy
 and

value
of
where
branded
content
is.


Most
 importantly,
 a
 successful
 run
 of
 a


branded
content
program
is
the
associaBon
 of


Ren Fang is a New Venture Analyst at METAN Development Group. For more information and
past newsletters, visit METAN’s site at http://www.metandevelopmentgroup.com/

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: October 20, 2009 09
October 27, 2009
CHINA MEDIA REPORT

Journey to the West: China’s Move to the US

By
Gordon
Chu
|
October
27,
2009 Whether
 through
 an
 acquisiBon
 or
 just
 and
wallets.
A
$5,000
designer
 hand
bag

gchu@metanmedia.com creaBng
 a
 befer
 global
 markeBng
 pres‐ can
 be
 conveniently
 yours
 for
 a
 mere

ence,
Chinese
brands
making
the
 leap
 to
 price
of
$5
if
you
haggle
enough
with
the

the
US
should
 not
 take
 anybody
by
 sur‐ street
merchant.
Si•ng
 here
 in
 Los
 Angeles,
 California,
 I
 prise.
The
 sagging
US
 economy
 is
 strug‐
ooen
 find
 myself
 fixated
 on
 one
 single
 gling
to
 pull
 itself
 out
 of
this
 current
 re‐ Fundamentally,
China
business
has
oper‐
deliberate
 thought
 of
 my
 role
 here
 at
 cession
while
the
 booming
China
market
 ated
 under
 one
 rule
 of
 thumb
 –
 you

METAN
–
how
to
get
into
China.
My
usual
 is
 clearly
on
 the
 upBck.
Think
 of
 this
 as
 compete
 on
 price.
 And
 when
 costs
 be‐
Monday
 morning
 rants
 start
 off
 with
 a
 the
‘perfect
storm’
for
Chinese
brands
to
 come
 the
 main
 driver
 in
 the
 business

“what
if
we
did
this…”
or
“we
need
to
do
 enter
 the
 US
 market
 while
 the
 price
 is
 model,
 the
 idea
 of
 building
 value
 in
 a

that…”,
but
 never
 do
 my
thoughts
 devi‐ right. brand
becomes
low
on
the
priority
list.
ate
 far
 from
 what
 needs
 to
 be
 done
 in

China
 (as
 evident
 in
 nearly
 all
 my
 past
 SBll,
there
will
inevitably
be
hurdles
with
 To
 succeed
 in
 the
 US,
 Chinese
 brands

newslefers). Chinese
 brands
 entering
 the
 US
 market
 need
 to
 recognize
 (and
 quickly)
 that
 the

and
 expecBng
 immediate
 (or
 any)
 re‐ long‐term
 requires
 brand
 value
 and
 not

However,
China
is
 a
 two‐way
street.
And
 sults.
 In
 a
 recent
 arBcle
 by
 the
 China
 just
 growing
 revenues
 at
 marginal
 prof‐
as
much
 as
we
 see
 this
golden
 opportu‐ Market
 Research
 Group,
 it
 reports
 sev‐ its.
nity
to
and
 make
a
splash,
Chinese
 com‐ eral
issues
Chinese
brands
will
face
when

panies
see
us
 nearly
the
same
–
 how
 to
 entering
the
US
market. HUMAN
CAPITAL
get
 into
 the
 US
 market.
 Sure,
 Chinese

BRANDING For
 many
 Chinese
 companies,
 when
 a

brands
 have
 made
 their
 way
 outside
 of

business
 issue
 arises,
 the
 soluBon
 is
 of‐
China
 to
 their
 Asian
 neighbors
 or
 even

It’s
 no
 mystery
that
 Chinese
 companies
 ten
 to
throw
 more
 resources
and
bodies

further
 west
 to
 pockets
 of
 Europe.
 But

have
 tradiBonally
 not
 been
 great
 at
 unBl
 it’s
 properly
 solved.
 It
 might
 be

the
 United
 States
 –
 this
 is
 the
 major

branding
/
markeBng.
Part
 of
this
can
be
 crude,
 it
 might
 be
 short‐term,
 but
 in

leagues
 for
 these
 companies.
 This
 is

lorem ipsum dolor met set
where
 they
 can
 make
 a
 real
 name
 for
 afributed
 to
 China’s
 disconcerBng
 view
 China,
it
certainly
is
effecBve.
quam nunc parum
themselves
outside
of
 their
 four
 walls
 in
 of
brand
value
as
a
whole.
Take
a
stroll
in

Beijing’s
silk
road
market
 and
the
 streets
 Human
 capital
 is
viewed
 more
as
a
com‐
China.
are
lined
with
fake
luxury
bags,
watches,
 modity
than
it
is
an
investment
in
the
US.


METAN Development Group (www.metandevelopmentgroup.com) China Media Report: October 27, 2009 10

NEWS IN CHINA:
Recent Headlines:
Three Myths About Business In China
As China becomes ever more crucial,
here are three myths about business
there that you should avoid falling
for...
>> READ MORE
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Investment
A joint venture partner is often consid-
ered because it is less expensive
than building from scratch...
>> READ MORE
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Baidu recorded net income of RMB
492.9 million ($72.2 million) in the
third quarter of 2009, up 41.7% year-
on-year...
>> READ MORE
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growing luxury market
Remy Martin recently unveiled a rare
cask of its "Louis the 13th" cognac in
the Chinese city of Guilin...
>> READ MORE
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eye global crown
Armed with cash from recent listings,
Chinese online game makers are
gearing up to play in Western
markets...
>> READ MORE
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China will take more measures to
encourage private investment in the
next stage of its 4-trillion-yuan ($585
billion) stimulus package...
>> READ MORE
METAN Development Group (www.metandevelopmentgroup.com) China Media Report: October 27, 2009
Remember,
China
 operates
 with
 quanBty,
not
 necessarily
quality,
and
 this
certainly
ap‐
plies
to
how
companies
treat
employees.
Retaining
quality
employees
is
a
concern
for
any

Chinese
brand
looking
to
grow
in
any
market
–
either
in
China
or
elsewhere.
The
ability
to
leverage
the
knowledge
and
operate
more
efficiently
will
 be
a
major
pipall

for
 many
companies
looking
to
grow
beyond
status
quo.
It’s
no
wonder
there
has
been
a

flurry
of
acquisiBons
by
Chinese
companies
of
US
enBBes
to
retain
 these
assets.
Chinese

companies
are
not
just
buying
brands,
they
are
acquiring
the
experBse
necessary
to
com‐
pete
in
developed
markets.
PATIENCE
Usually,
diversificaBon
is
a
posiBve
afribute
for
any
porpolio
of
companies.
It
hedges
risks

and
builds
a
solid
foundaBon
for
 steady
growth.
However,
in
China,
the
idea
of
‘steady’
is

subjecBve
and
the
mentality
of
‘now’
is
more
 appropriate
of
 how
many
Chinese
compa‐
nies
operate.
The
 exponenBal
 growth
 of
 China’s
 economy
 really
 reflects
 their
 own
 ambiBons
 to
 be

number
one.
Whether
it
is
a
small
company
selling
widgets
for
mobile
phones
or
 big
con‐
glomerates
aiming
to
be
the
next
Google,
the
goal
has
never
been
to
be
second‐best.
The
issue
is
not
so
much
the
ambiBon,
but
in
the
journey
along
the
way.
Companies
such

as
 Toyota
 and
 Sony
have
 taken
 decades
 in
 the
 US
 to
 build
 a
brand
 that
 communicates

value.
Branding
is
ooen
a
mafer
of
paBence
and
Bme
for
consumers
and
foreign
markets

to
 feel
 comfortable
 with
 the
 brand.
For
 many
Chinese
companies,
the
 ambiBon
 to
 grow

and
to
 be
number
 one
ooen
 eclipses
the
subtleBes
between
 brand
markeBng
and
brand

building.
Now,
beyond
branding,
human
capital,
and
the
idea
of
 paBence,
there
are
several
 other

issues
Chinese
brands
need
to
consider
when
entering
into
China
that
the
arBcle
does
not

state.
As
much
 cauBon
to
the
wind
 we
 throw
 to
those
who
look
to
enter
 the
China
mar‐
ket,
the
same
can
arguably
said
to
those
Chinese
companies
embarking
on
American
soil.
CULTURE
The
idea
of
a
business
culture
runs
along
the
same
vein
as
that
of
how
a
company
brands

itself.
Just
 how
there
has
been
 a
lack
of
afenBon
 and
awareness
to
 a
company’s
brand,

the
very
same
can
be
said
to
that
of
the
business
culture.
Some
may
argue
that
the
business
culture
is
organically
derived
and
is
a
bi‐product
of
the

success
of
the
company,
but
 there
are
sBll
 fundamental
 traits
that
 are
consistent
 across

nearly
all
working
class
in
China.
From
the
organizaBon
structure
to
the
way
communica‐
Bon
flows,
there
are
differences
and
subtleBes
that
can
make
or
break
the
funcBonality
of

a
company.
Throw
in
a
US
enBty
that
bares
no
similar
assimilaBon
to
that
of
their
Chinese

counterpart
 and
 the
complicaBons
 of
the
business
culture
becomes
much
 more
tangible

for
many
Chinese
companies.
Bofom
 line,
launching
a
US
presence
requires
 more
than
 occupying
an
office
 space
and

filling
in
the
operaBonal
nuts
and
bolts
of
the
business.
It
requires
the
qualitaBve
aware‐
ness
to
align
both
cultures
to
funcBon
as
one
–
an
area
that
many
Chinese
companies
are

ge•ng
accustomed
to
for
the
first
Bme.
11
 OUR CONTACTS: Los Angeles Office Beijing Office
16542 Ventura Blvd. Cameo Center, Suite 806
Suite 203 No. 16 Guangshun Nan Avenue
Encino, CA 91436 Chaoyang District, Beijing 100102

P: 818.387.6553 P: 86-10-8476.4280
F: 818.387.6698 F: 86-10-8476.4290
E: info@metanmedia.com E: info.beijing@metanmedia.com

INNOVATION dry
 and
 force
 Chinese
 companies
 to
 look
 in‐

ternally
for
their
own
path
forward.
These
 discussions
of
 branding,
human
 capital,

paBence,
and
 business
culture
all
 culminate
to
 CONCLUSION
one
key
factor
 to
 the
 success
of
 globalizaBon:

innovaBon. These
points
are
not
to
say
Chinese
companies

cannot
succeed
exploring
in
the
US.
In
fact,
the

At
 the
 end,
 innovaBon
 drives
 success
 and
 is
 short
 and
 long
horizons
are
 paved
 with
 great

rewarded
in
 nearly
all
developed
 markets.
De‐ opportuniBes
 for
 China
 to
 globalize
 their
 do‐
spite
China’s
 booming
economy
and
ability
to
 mesBc
 brands
 in
the
 US
market.
In
an
increas‐
succeed
on
 the
 laurels
 of
low‐cost,
innovaBon
 ingly
smaller
 world,
 the
 evoluBon
 of
business

is
 a
 void
 many
 Chinese
 companies
 need
 to
 requires
globalizaBon
in
order
to
grow.
address
in
order
to
succeed
in
the
US.
For
 the
 Chinese,
 these
 menBoned
 issues
 are

In
a
culture
where
independent
 thinking
is
not
 not
hurdles,
but
rather
 opportuniBes
to
befer

encouraged
 and
 where
 intellectual
 properBes
 raise
 the
 status
 quo
 for
 a
 growing
 business.

are
 undervalued,
China
 will
 face
 monumental
 And
 as
the
US
 market
 recovers
 from
 the
 eco‐
hurdles
to
develop
their
domesBc
brands
over‐ nomic
 downturn
 in
 the
 near
 future,
 US
 com‐
seas
 that
 match
 their
 own
 expectaBons
 of
 panies
 will
 need
 to
 be
 prepared
 for
 a
 re‐
growth.
 For
 now,
 a
 cheaper
 alternaBve
 vamped
 market
 with
 new
 Chinese
 compeB‐
through
 acquisiBon
 of
 ready‐to‐wear
 compa‐ tors.
nies
 such
 as
 Lenovo
 and
 Hummer
 have
 the

required
 infrastructure
 and
 operaBons
 for
 in‐
novaBon.
However,
as
the
US
market
begins
to

recover,
 opBons
 for
 acquisiBon
 will
 soon
 run


Gordon Chu is Vice President at METAN Development Group. For more information and past
newsletters, visit METAN’s site at http://www.metandevelopmentgroup.com/

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: October 27, 2009 12
November 03, 2009
CHINA MEDIA REPORT

“Because you’re worth it” – L'Oréal’s success in China

By
Lin
Bai
|
November
03,
2009 way
to
describe
their
diversified
brands
is
 ized
bouBques.
Even
 L’Oréal
brands
have

lbai@metanmedia.com that
of
a
pyramid: their
 own
 unique
 ‘personality’
 ‐
 L’Oréal

Paris
 is
 a
 high‐performance
 technology

At
 the
 base
 of
 the
 pyramid
 comprise
 of
 brand,
 Maybelline
 New
 York
 is
 fashion

“Because
 you’re
 worth
 it”
 
 “你值得拥 L’Oréal
 Paris,
 Maybelline
 Garnier,
 and
 driven,
and
Garnier
is
ooen
characterized

有”–
 ask
 anybody
 in
 the
 streets
 of
 Mini‐Nurse
 –
 all
 products
that
target
 the
 as
a
natural
 brand.
Diversity
in
 products,

China
 and
 they
 will
 recognize
 L’Oréal’s
 mass
market. branding,
 and
 sales
 distribuBon
 all
 con‐
memorable
 brand
 tagline.
 However,
 tribute
 to
 L’Oréal’s
 success
 in
 cornering

scratch
 the
 surface
 further,
 few
 would
 Brands
such
as
Vichy,
Kerastase,
and
Ma‐ the
beauty
and
cosmeBc
market
in
China

have
 known
 that
 the
 cosmeBcs
 beauty
 trix
 make
up
the
middle
of
 this
pyramid.
 today.

giant
 L’Oréal
 Group
 also
 owns
 16
 other
 These
 products
 are
 sold
 in
 pharmacies

brands
in
China
since
first
entering
in
the
 and
 hair
 salons
 meant
 for
 consumers
 Local
Acquisi6ons

market
in
1996.
 looking
 for
 that
 mid‐level
 quality
 of

products. As
 in
 many
 large
 corporaBons,
 acquisi‐
China
Looks
Beau6ful
to
L'Oréal Bon
 plays
 a
big
role
 in
 L’Oréal’s
 strategy

The
very
top
 of
that
 pyramid
is
reserved
 in
 China.
 In
 this
parBcular
 case,
acquisi‐
If
you
compare
 L’Oréal
 with
 its
 compeB‐ strictly
for
 the
high‐end
 products
such
 as
 Bons
 of
local
 brands
 help
 cover
 another

tors,
 L’Oréal
 entered
 the
 China
 market
 Lancome,
 Biotherm,
 Shu
 Uemura,
 and
 dimension
 of
 market
 along
 with
 their

late.
However,
compare
L’Oréal’s
growth
 Kiehl’s.
These
 products
 are
 sold
 in
 retail
 other
 global
 products.
 Case
 in
 point,

in
 China
and
 they
are
simply
in
a
league
 outlets,
high‐end
department
stores,
and
 L’Oréal
 China
 acquired
 Mini‐Nurse
 (Chi‐
of
 their
 own.
 Their
 sales
 in
 China
 last
 specialized
bouBques.
 nese
mass‐market
skin
care
brand)
in
late

year
grew
27.7%
year‐over‐year
to
6.95M
 2003
 and
 Yue‐Sai
 (a
 local
 make‐up
 and

RMB
 (USD
 $1.02B)
 –
 a
 double
 digit
 Each
 level
 of
 L’Oréal
 brand
 pyramid
 oc‐ skin
care
brand)
in
early
2004.

growth
 in
 China
 for
 eight
 consecuBve
 cupies
a
certain
 price
area,
which
 meets

years
 (compared
 to
 a
decline
 in
 sales
 in
 the
needs
of
 Chinese
 consumers
from
a
 Mini‐Nurse
 was
 distributed
 in
 280,000

Western
 Europe
 and
 North
 America
 in
 price
 sensiBvity
 perspecBve
 namely
 due
 outlets
 across
 China,
 and
 held
 a
 large

2008). to
the
wide
income
gaps
in
China.

 share
of
the
low‐end
market
at
that
Bme.

lorem ipsum dolor met set
Mul6‐
Brand
Strategy
The
acquisiBon
enabled
 L’Oréal
to
access

Now
 beyond
 price,
 L’Oréal
 products
 go
 mass‐market
 consumers
that
 have
never


 quam nunc parum through
 different
 Bers
 of
 sales
 channels
 been
 able
 to
access
 the
 products
 before

L’Oréal
 uses
 a
 mulB‐brand
 strategy
 to
 including
supermarkets,
pharmacies,
hair
 as
 well
 as
 securing
 local
 distribuBon/
cover
the
mass
market
in
China.
The
best
 salons,
 department
 stores,
 and
 special‐ operaBon
knowledge
to
L’Oréal.

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: November 03, 2009 13
NEWS IN CHINA:
Recent Headlines:
China’s retail revolution: An interview
with Wal-Mart’s Ed Chan
Wal-Mart China’s CEO outlines the
strategy of the world’s largest retailer
in the world’s most populous nation...
>> READ MORE
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Capitalism
Not long ago, Tsoi Chun Bun made
potato chips. Now he designs and sells
millions of mobile phones a year...
>> READ MORE
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Test the Appetite for Apple
As the popular iPhone approaches its
official debut in China—the world's
largest mobile-phone market—consum-
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based entertainment producer Enlight
Media and the publisher of Japanese
manga "Astro Boy,"...
>> READ MORE
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2010
An unnamed Best Buy (NYSE:BBY)
China executive said the company
plans to add four to five stores in
China in 2010 in regions outside of
Shanghai...
>> READ MORE
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first eight months
China has created 7.57 million new
jobs in the first eight months of this
year in a bid to guarantee employ-
ment amid global economic down-
turn...
>> READ MORE
METAN Development Group (www.metandevelopmentgroup.com) China Media Report: November 03, 2009
As
Lan
Zhenzhen
(Vice
President
of
L’Oréal
China)
commented,
nearly
60%
of
the
com‐
pany’s
sales
in
China
come
from
 the
bofom
base
of
L’Oréal’s
brand
pyramid
(i.e.
local

brands
and
mass‐market
products).

It’s
not
hard
to
see
how
important
the
local
brand

acquisiBons
are
for
the
company’s
growth
over
the
long
run.

Localiza6on
Details
As
we
known,
no
mafer
 what
strategies
companies
implement,
localizaBon
is
a
MUST

in
any
foreign
market.

And
for
L’Oréal
China,
they
are
no
excepBon.


R&D
First
example,
L’Oréal
Research
Center
 in
Pudong,
Shanghai.
L’Oréal
invests
over
 3%
of

sales
 every
 year
 in
 product
 R&D
 (industry
average
is
1.5%‐2%).
 This
 research
 center

was
opened
in
2005
in
order
to
get
a
befer
understanding
of
unique
properBes
of
the

hair
and
skin
of
Chinese
consumers.
This
was
“the
first
facility
of
its
kind
to
be
operated

by
a
cosmeBcs
company”.

For
 example,
most
 Chinese
women
like
 skin
 whiteners
 rather
 than
 tanning
 products.

Odd
 for
 us
 folks
 in
 the
 US
 (especially
here
in
 Los
 Angeles),
 but
 a
 sign
 of
 beauty
 for

those
in
China.
Also,
the
texture
of
Chinese
hair
is
thicker
and
more
course
if
compared

to
 typical
 US
 Caucasian
 hair.
This
requires
 different
 product
 mix,
different
 markeBng,

and
 really
 a
 different
 knowledge
 set
 to
 effecBvely
 sell
 and
 move
 these
 products
 in

China.
L’Oréal
 has
dedicated
in‐depth
research
 to
these
and
other
 issues,
and
followed

up
 with
 more
 innovaBons
in
 products
 to
 suit
 the
 needs
and
 preferences
 of
 Chinese

consumers.

Chinese
Employees
Out
 of
 a
 workforce
 of
 nearly
4,000,
95%
 of
 L’Oréal
 China
employees
 are
 local
 ‐
 and

most
 brand
 managers
 as
 well
 as
 markeBng/sales
execuBves
 are
 Chinese.
 Hiring
local

employees
 is
 essenBal
 for
 doing
 business
 in
 China
 ‐
 simply
because
 the
 employees

have
a
befer
understanding
of
the
market,
the
culture,
the
consumer’s
needs
and,
last

but
not
least,
are
more
cost‐effecBve
than
overseas
employees.

Smart
Human
Resources
We’ve
established
that
 most
of
L’Oréal’s
employees
are
Chinese.
The
interesBng
bit
 to

me
 is
 that
 the
 average
 age
 of
 the
 employee
 in
 L’Oréal
 China
is
 actually
less
 than
 31

years
 old
(coincidentally,
the
 same
age
 as
their
 consumer
 target).
In
fact,
their
young‐
est
brand
manager
was
25,
according
to
Jean‐Paul
Ago,
CEO
of

L’Oréal
Group.


L’Oréal
 started
 many
different
 compeBBons
 among
 Chinese
 students
 since
 2001,
 in‐
cluding
the
 “InnovaBon
 Lab
 Challenge”,
the
 “L'Oréal
 Brandstorm”,
and
 the
 “Industrial

Challenge”.
These
various
compeBBons
allowed
college
students
to
not
 only
get
 intro‐
duced
to
 the
cosmeBcs
industry,
but
 more
importantly,
brings
 a
deep
 and
 wide
talent

pool
for
L’Oréal
in
regards
to
creaBve
ideas
and
future
employees.

L’Oréal’s
 conBnuous
 recruitment
 and
 selecBon
 of
 young
 people
 has
 two
 significant

benefits:
first,
fresh
 and
innovaBve
 ideas
for
the
company
(since
young
people
follow

trends),
and
second,
a
savings
on
salaries,
as
young
graduates
means
less
money.

Social
Responsibility
Lastly,
L’Oréal
China
has
always
been
a
good
corporate
ciBzen.
While
fioeen
years
ago

that
 may
not
 have
been
 high
on
 the
priority
list
for
 companies,
today
is
an
important

14
 OUR CONTACTS: Los Angeles Office Beijing Office
16542 Ventura Blvd. Cameo Center, Suite 806
Suite 203 No. 16 Guangshun Nan Avenue
Encino, CA 91436 Chaoyang District, Beijing 100102

P: 818.387.6553 P: 86-10-8476.4280
F: 818.387.6698 F: 86-10-8476.4290
E: info@metanmedia.com E: info.beijing@metanmedia.com

branding
 aspect
 that
 companies
must
 be
 con‐ pacific,
 Kao,
 Shiseido)
 are
 targeBng
 China
 as

sciously
aware
of
now.
Below
 are
a
few
of
 the
 well.

different
 ‘social
 responsibility’
 campaigns

L’Oréal
 China
has
launched
 –
 each
 to
 carefully
 Not
 only
 is
 there
 the
 general
 consensus
 that

brand
L’Oréal’s
 brand
 image
in
the
China
mar‐ Asian
 brands
 are
 more
 suited
 for
 Asian
 skin,

ket: South
 Korean
 and
 Japanese
 cosmeBcs
 also

benefit
 from
 the
 fact
 their
 local
 soap
 operas

- The
 first
 French
 sponsor
 of
 Expo
 2010
 are
 extremely
 popular
 in
 China.
 These
 soap

Shanghai
(2009) opera
 stars
 exhibit
 a
 desirable
 look
 and
 thus

- Donated
 9,000,000
 RMB
 and
 materials
 have
strong
affiliaBon
to
their
parBcular
naBve

worth
 8,000,000
 RMB
 to
 all
 earthquake
 brands.

disaster
areas
(2008)
- Launched
 “I
 Am
 Proud
 of
 Saving
 Re‐ Despite
 the
 growing
 compeBBon,
 the
 overall

sources”
 campaign
 to
 conserve
 energy,
 market
 is
 growing
with
opportunity.
However,

recycle
(2002‐today) for
 L’Oréal,
they’ve
 tackled
 the
 market
 intelli‐
- IniBated
“ProtecBng
the
Yangtze
River
and
 gently
 and
 take
 one
 step
 at
 a
 Bme.
As
 Paolo

Save
 the
 White‐flag
 Dolphin”
 campaign
 Gasparrini,
 the
 President
 of
 L’Oréal
 China

(2005) noted,
 “all
 of
 our
 achievements
 of
 today

- With
 UNESCO,
 established
 the
 “World
 started
from
 absolutely
zero”.
It’s
 just
 the
 be‐
Young
 Women
 ScienBst
 Award”
 (2000)
 ginning
of
the
China
journey
and
there
is
sBll
a

and
 with
 All‐China
 Women’s
 FederaBon,
 long
road
ahead
…
China
 AssociaBon
 for
 Science
 and
 Tech‐
nology,
and
 Chinese
NaBonal
 Commission

for
 UNESCO
established
 the
“China
 Young

Women
ScienBsts
Award”



Future
Challenges


In
 the
 foreseeable
 future,
 L’Oréal’s
 future
 is


opBmisBc
 in
 China.
 However,
 the
 cosmeBcs

market
 in
 China
is
 filled
 with
sBff
compeBBon

from
both
foreign
and
local
brands.
Besides
its

major
 compeBtors
 that
 exist
 today,
 South
 Ko‐
rean
 and
 Japanese
 cosmeBcs
 giants
 (Amore‐

Lin Bai is a New Ventures Analyst at METAN Development Group. For more information and past
newsletters, visit METAN’s site at http://www.metandevelopmentgroup.com/

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: November 03, 2009 15
November 10, 2009
CHINA MEDIA REPORT

Disney China: “The Happiest Place on Earth

By
Gordon
Chu
|
November
10,
2009 
BACKSTORY
OF
DISNEY
CHINA When
 you
 first
 glance
 at
 the
 idea
 of
 a

gchu@metanmedia.com Disney
park
in
 mainland
 China,
the
grav‐
Now,
 I
 should
 be
 very
clear
 that
 Disney
 ity
of
such
 an
 event
 is
not
 obviously
ap‐
China
 is
not
 a
 spur‐of‐the‐moment
 deci‐ parent.
There
 are
over
 300
theme
parks

In
business
school,
case
study
aoer
case

sion
 by
the
Chinese
government
 to
bring
 throughout
 China
 and
 one
more
 to
 that

study,
Disney
was
the
belle
of
the
ball
in

Western
media
groups
over
to
China.
The
 list
 doesn’t
 seem
 to
 be
 all
 that
 ground‐
nearly
all
of
my
classes.
From
markeBng

idea
 has
 been
 percolaBng
 for
 over
 20
 breaking
 of
 media
 news.
 However,
 re‐
to
finance,
you
couldn’t
escape
the
Dis‐
years
 to
 bring
 a
 brand‐new
 amusement
 move
 the
 roller
 coasters,
 the
 different

ney
name
without
seeing
them
in
one

park
 for
 the
 Chinese
 market.
 Previous
 afracBons,
 and
 the
 physical
 locaBon
 of

form
or
another.
And
I
say
why
not
–

afempts
 were
 curtailed
 mainly
 due
 to
 Disney
China
as
a
whole,
and
 the
 details

aoer
all,
they
have
undeniable
brand

perceived
 unwanted
 foreign
 cultural
 in‐ and
 symbolism
 of
 Disney
 China
 takes

power
internaBonally.
Mickey
Mouse
is

fluences
in
 the
China
market
 by
the
gov‐ front
stage
of
worldwide
importance.
synonymous
to
US
pop
culture
and
Walt

ernment.
Disney’s
marquee
signature
is
universally

InvitaBon
of
Western
Media
recognized
in
any
language
around
the

Aoer
 numerous
 afempts
 to
 bring
 an

world.
amusement
 park
on
 to
 mainland
 China,
 UnBl
 recently,
 the
 whole
Chinese
 media

Disney
 eventually
 ‘sefled’
 on
 Disney
 industry
was
very
happy
with
status
quo.

This
 year
 especially,
Disney
 seems
 to
 be

Hong
 Kong
 as
 a
 constellaBon
 prize.
 Un‐ And
 righpully
so.
 With
 state‐run
 money

very
acBve
in
 extending
their
 reach
in
all

fortunately
for
 Disney,
the
 park
 has
 not
 as
 a
 sure
 income
 to
 your
 revenue
 top

facets
 of
 media.
 In
 movies,
 Disney’s

fared
 well
 and
 paled
 in
 comparison
 to
 line,
I
 don’t
 find
 it
 incredibly
difficult
 to

summerBme
 blockbuster
 lineups
 (from

corporate’s
 grandiose
 expectaBons
 for
 understand
 that
 Chinese‐ran
 media

‘Up’
 to
 ‘A
 Christmas
 Carol’)
 show
 lifle

the
landmark. companies
 had
 lifle
 moBvaBon
 to
 go

signs
 of
 wear
 from
 this
 bad
 economy

beyond
that
of
status
quo.
here
 domesBcally
 in
 the
 United
 States.

SBll,
Disney
 Hong
 Kong
was
 a
 great
 first

Then
 there
 was
 the
 $4B
 (USD)
 plan
 to

run
 for
 Disney
 to
 test
 the
 waters
 when
 However,
now
with
less
 reliance
on
 gov‐
acquire

loremall
ipsum
of
 comic
dolor
behemoth

metMarvel’s

set dealing
with
China. ernment
 money
 and
 more
 dependence

assets.
And
to
top
off
this
illustrious
year,

quam news

breaking
 nuncto
parumcreate
 a
 brand‐new

to
 be
 commercially
 viable,
 the
 enBre

SIGNIFICANCE
OF
DISNEY
CHINA Chinese
media
industry
is
evolving
as
we

Disney
China
outside
of
Shanghai
valued

at
over
$3.5B
(USD).

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: November 10, 2009 16

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METAN Development Group (www.metandevelopmentgroup.com) China Media Report: November 10, 2009
speak
and
 have
undeniably
been
more
open
to
 the
ideas
 of
Western
 companies
 and

philosophy.
For
China,
the
nod
and
the
green
light
to
develop
Disney
China
is
really
an
invitaBon
of

Western
 media
companies
to
 the
China
market.
Not
 only
does
this
exude
 miles
upon

miles
of
‘soo
power’
the
Chinese
have
been
very
disciplined
at
pracBcing
since
the
Bei‐
jing
Olympics,
but
this
is
 a
way
of
China
making
their
 footprint
as
a
worldwide
media

player.
Media’s
Two‐Way
Street
It’s
no
mystery
that
 China
is
on
the
rise
and
is
the
fastest
growing
consumer
market
 in

the
world.
While
nearly
the
rest
of
the
world
is
in
 an
economic
 slump,
China
has
been

on
 the
 fast
 lane
 to
 aggressively
 build
 and
 grow
 their
 market
 during
 these
 troubled

Bmes.
Since
even
before
the
Olympics,
China
has
invested
billions
in
infrastructure
to
develop

their
ciBes
to
be
a
global
 spectacle.
It’s
also
no
mystery
that
 tourism
plays
a
big
role
in

China’s
 plan
 (dovetails
 very
 nicely
 with
 the
 2008
 Olympics
 and
 the
 2010
 Shanghai

World
Expo)
to
 extend
their
image.
The
approval
for
 Disney
China
comes
amid
 China’s

ongoing
efforts
to
develop
its
tourism
sector
–
expected
to
grow
3%
in
2009.
However,
the
 build‐it‐and‐they‐will‐come
model
 does
not
 always
pan
 out
 according
to

plan.
In
 this
case,
China
understands
that
 if
 it
 wants
 to
 play
nice
and
 rebrand
 them‐
selves
to
be
more
open,
they
will
ulBmately
need
to
learn
the
first
lesson
in
the
golden

rule
of
sharing.
In
 this
parBcular
 case,
opening
their
 doors
to
Disney
is
a
way
to
exem‐
plify
a
spirit
of
a
two‐way
street
for
Western
companies
and
themselves.
Disney’s
Way
into
China
We’ve
 focused
 a
lot
 on
describing
 the
significance
 of
 Disney
China
 on
a
 more
 macro

level
 for
 all
 Western
 companies
 alike.
 However,
 if
 we
 look
into
 the
 micro,
this
 new

theme
park
is
a
significant
boost
in
Disney’s
presence
in
China.
For
Disney,
every
move
is
a
carefully
analyzed
decision
that
helps
either
build
the
com‐
pany
brand
image
or
 is
a
way
to
 add
 to
the
income
statement’s
bofom
line.
I
person‐
ally
view
Disney’s
choices
as
a
good
 indicator
 of
where
 they
see
future
growth.
In
 the

case
for
theme
parks,
Disney
has
real
estate
in
Los
Angeles,
California;
Orlando,
Florida;

Tokyo,
 Japan;
 Paris,
 France
 and
 Hong
 Kong.
 To
 carefully
 choose
 Shanghai
 (and
 20‐
something
odd
 years
ago)
as
a
near
 $4B
(USD)
bet
is
probably
a
good
indicator
 of
Dis‐
ney’s
thoughts
on
the
Chinese
market.
We’ve
 talked
 a
 lot
 about
 the
 difficulBes
 and
 intricacies
 that
 go
 into
 entering
 in
 the

China
 market.
Many
have
tried
 and
 many
have
 retreated
 simply
because
 there
 is
 no

simple
way
of
doing
so.
Take
Disney
for
example,
in
the
United
States,
Disney
operates

an
enBre
24‐hour
TV
channel
and
radio
staBon
–
not
 to
menBon
the
numerous
movies

it
 produces
 every
 year
 as
well.
In
 China,
 Disney
is
 limited
 to
 sporadic
 blocks
of
 pro‐
gramming
on
local
TV
staBons
and
has
yet
to
capture
the
potenBal
it
 sees
in
the
China

market.
Despite
the
barriers
and
hurdles
to
get
across
the
goal
line,
Western
companies
sBll
try

and
 this
is
an
excellent
 example
at
 how
 Disney
can
 really
make
a
significant
 impact
 in

17
 OUR CONTACTS: Los Angeles Office Beijing Office
16542 Ventura Blvd. Cameo Center, Suite 806
Suite 203 No. 16 Guangshun Nan Avenue
Encino, CA 91436 Chaoyang District, Beijing 100102

P: 818.387.6553 P: 86-10-8476.4280
F: 818.387.6698 F: 86-10-8476.4290
E: info@metanmedia.com E: info.beijing@metanmedia.com

the
media
industry
in
China
going
forward.
It’s
 without
 the
prejudice
 and
without
 the
 noBon


too
 soon
 to
 reveal
 the
 ‘how’
 but
 landing
 a
 of
‘playing
by
the
rules’.
theme
 park
 is
 a
 great
 way
 to
 start
 the
 dia‐
logue. CONCLUSION

Share
in
Financial
Risk The
whole
concept
of
Disney
China
is
sBll
in
its

infancy
stage.
 Yes,
there
 are
 already
 commit‐
In
my
opinion,
the
most
significant
piece
to
the
 tees
 and
 teams
 dedicated
 to
 creaBvely
 start

Disney
China
deal
is
understanding
the
flow
of
 draoing
 the
 ideas
 for
 the
 theme
 park
 alto‐
money.
 In
 this
 case,
 it’s
 rumored
 that
 Disney
 gether.
I
hear
 they’ve
already
tackled
 issues
of

will
only
have
40%
stake
of
the
enBre
deal
with
 localizaBon
 (remembering
 the
 follies
 of
 Dis‐
the
rest
by
Chinese
monies.
 neyland
 Paris)
 for
 the
 China
 market
 and
 are

well
 aware
of
the
fine
lines
they
need
to
 tread

To
 piggyback
 my
 previous
 comment
 about
 when
working
in
China.
‘playing
 nice’
 with
 others,
 one
 of
 the
 most

significant
 ways
 to
 demonstrate
 trust
 in
 any
 

business
transacBon
is
a
share
in
 financial
risk.

For
China,
invesBng
in
60%
in
this
new
venture
 There
 will
 be
 hiccups
 along
 the
 way
 and
 I’m

demonstrates
 a
real
 serious
 nature
about
 be‐ sure
there
will
be
areas
of
disagreement;
how‐
ing
a
 global
 media
 country
 that
 is
 commifed
 ever,
 Disney
 China
 is
 such
 an
 important
 ven‐
to
make
this
a
successful
venture
for
all.
 ture
for
 more
than
 just
 operaBonal
reasons
to

Disney.
It
 symbolizes
an
opportunity
for
 West‐
Especially
with
business
in
China
where
cultur‐ ern
 companies
 to
 partake
 in
 China;
 and
 is
 a

ally,
 transacBons
 are
 commonly
 lopsided
 in
 plaporm
for
 China
to
demonstrate
their
ability

favor
 for
the
Chinese
partner,
this
is
a
posiBve
 to
 exude
 ‘soo
 power’
on
 a
 global
 stage.
In
 ei‐
invitaBon
for
 other
 Western
 companies
to
 cre‐ ther
 case,
 I
 see
 China
 truly
 being
 the
 place

ate
 ventures
 in
 China
once
 again.
This
 Bme
 –
 ‘where
dreams
come
true’.

Gordon Chu is Vice President at METAN Development Group. For more information and past
newsletters, visit METAN’s site at http://www.metandevelopmentgroup.com/

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: November 10, 2009 18
November 17, 2009
CHINA MEDIA REPORT

Breaking the Fourth Wall: Shanda’s Venture into Television

By
Gordon
Chu
|
November
17,
2009 of
 Warcraft’
 until
 regulatory
 restrictions
 both
their
online
game
strategy
as
well
as

gchu@metanmedia.com and
time
lag
significantly
sapped
Blizzard’s
 their
 aspirations
 to
 be
 a
 true
 multi‐
momentum
 to
 continue
 its
 growing
mar‐ platform
 media
 company.
 They
 may
 be

ket
share.
 the
 leading
 entertainment
 media
 com‐
Very
little
surprises
me
about
 pop
culture
 pany,
but
 complacency
is
 certainly
is
 not

in
China,
but
 I
have
to
 admit
 it
took
me
a
 And
 so,
 Shanda
 was
 quick
 to
 pick
 up
 in
 their
 vocabulary
 and
 are
 extremely

very
long
 time
 to
 wrap
 my
 head
 around
 where
 Blizzard
 had
 left
 off
 and
 poached
 active
in
 breaking
out
 of
their
 niche
 and

the
 magnitude
 of
 online
 games.
 From
 the
 online
 community
 with
 Shanda’s
 extend
their
footprint
in
the
media
indus‐
MMORPG
 (massively
 multiplayer
 online
 adoption
 of
 Korea’s
 most
 popular
 try.
role‐playing
 games)
 to
 fun
 casual
 games,
 MMORPG,
‘Aion’.
Just
to
 give
you
an
idea

online
games
are
a
staple
in
the
pop
 cul‐ of
the
magnitude
of
‘Aion’
in
China
today,
 In
 2006,
Shanda
introduced
their
 Chinese

ture
of
China’s
youth.
 in
 a
 corner
 of
 Tai
 Jiang
 City
 (Zheijiang
 version
of
the
set‐top
TV
box
(think
Apple

Province)
 lies
 the
 future
 home
 of
 an
 TV)
 called
 Shanda
 EZ‐Pod.
 The
 concept

The
latest
figure
for
the
online
game
mar‐ amusement
 park
 around
 the
 central
 was
 to
 integrate
 the
 television
 and
 PC

ket
 is
 just
 shy
 of
 27.5
 billion
 yuan
 –
 or
 theme
 of
 the
popular
 game.
In
 the
latest
 experience
 in
 an
 interactive
 entertain‐
close
to
a
little
over
 $4B
(USD).
While
the
 report
released
by
Shanda,
there
are
over
 ment
platform.
Sounds
easy,
right?
Unfor‐
current
 numbers
 fall
 short
 compared
 to
 6.8M
 online
 players
 and
 continues
 to
 tunately,
 the
 EZ‐Pod
 failed
 to
 make
 any

that
of
the
United
States
(currently
first
in
 grow
since
its
beta
release
in
April
2009. significant
 penetration
 in
 the
 China
 mar‐
the
 world),
China
is
expected
 to
 grow
 up
 ket
mainly
due
to
the
fact
 the
China
mar‐
to
 68
billion
 yuan
($10B
 USD)
 accounting
 I
see
the
game’s
growth
as
more
of
a
stra‐ ket
 was
simply
not
 ready
yet.
Regardless,

for
 almost
 half
 of
 the
 world
 market
 by
 tegic
move
by
Shanda
and,
frankly,
am
not
 you
 have
to
 admire
 the
ambitious
nature

2012.
While
I
do
take
these
figures
with
a
 all
 that
 surprised
 by
 the
 initial
 success.
 of
 Shanda
 to
 horizontally
 integrate
 itself

grain
 of
 salt,
 it’s
 hard
 to
 argue
 against
 Looking
 at
 Shanda,
 it
 appears
 that
 luck
 from
PC
to
the
television
set.
general
 consensus
 on
 the
 growth
 oppor‐ always
seem
 to
find
its
 way
to
 them
and

tunity
of
online
games
in
China. with
 the
 latest
 news
 on
 Shanda’s
 joint
 The
 EZ‐Pod
 is
 just
 one
 example
 of

venture
 with
 Hunan
 TV,
 I
 would
 not
 be
 Shanda’s
 business
 history
 (albeit
 a
 good

Currently,
 the
 online
 game
 marketed
 by
 surprised
 if
 luck
 strikes
 again
 and
 could
 example).
 They’ve
 dabbled
 as
 a
 private

Shanda,
 ‘Aion’
is
 the
 latest
 buzz
 –
 or,
at

lorem
least
 ipsum
the
 very
 dolor
least,
for
 the
met set
foreseeable

very
well
be
the
biggest
pay
off
yet. equity
 company
 investing
 in
 emerging

game
studios
as
well
 as
entering
the
mo‐
quam nunc
future.
While
 parum
I
 have
 the
 upmost
 faith
 in
 BACKSTORY
OF
SHANDA bile
market
with
 the
 acquisition
 of
a
mo‐
the
game’s
ability
to
continue
to
dominate
 bile
 entertainment
 service
 company
 in

the
 online
 game
 market,
they
really
have
 I
admit,
I
am
a
big
fan
of
Shanda.
They
are
 June
 2009.
 Some
 ideas
 will
 work,
 some

not
been
around
for
all
that
long.
Just
one
 quintessentially
 on
 the
 cutting
 edge
 on

year
ago,
it
was
all
about
Blizzard’s
‘World


METAN Development Group (www.metandevelopmentgroup.com) China Media Report: November 17, 2009 19

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increased for the third consective
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its unaudited financial report for the
third quarter of 2009...
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METAN Development Group (www.metandevelopmentgroup.com) China Media Report: November 17, 2009
will
not;
however,
I
think
this
new
venture
will
be
the
best
bet
yet.
BACKSTORY
OF
HUNAN
SATELLITE
TV
How
Shanda
is
to
online
games,
Hunan
TV
is
to
television
programming.
Really,
Hunan

TV
(as
 I
know
it)
has
only
been
 around
since
2002
when
 it
transformed
 from
a
news

channel
 to
an
entertainment
 channel
 targeting
exclusively
at
 the
young
demographic.

Since
then,
Hunan
TV
has
pioneered
programs
that
are
still
being
used
as
the
standard

in
excellence
including
‘Super
 Girl’
(Chinese
version
of
US
‘American
Idol’)
and,
my
per‐
sonal
favorite,
‘Ugly
Wudi’
(Chinese
version
of
US
‘Ugly
Betty’).
These
shows
excelled
beyond
just
 that
 of
production
value
and
concept
–
these
shows

revolutionized
different
programming
strategies
that
all
other
TV
stations
are
now
look‐
ing
 to
 emulate.
With
 ‘Super
 Girl’,
the
idea
 of
 integrating
 mobile
 text
 messages
intro‐
duced
 the
idea
of
audience
interactivity.
And,
with
‘Ugly
Wudi’,
the
idea
of
brand
inte‐
gration
is
certainly
the
hot
key
topic
in
nearly
all
programming
discussions.
So,
question
 in‐mind,
what
 does
this
mean
 as
a
joint
 venture
between
 the
two
mega‐
companies?
Too
soon
 to
predict
(beyond
launching
their
 original
 programs);
however,

the
partnership
itself
has
significance
and
will
certainly
be
an
indicator
of
what
the
me‐
dia
industry
in
China
has
in‐store.
SIGNIFICANCE
OF
THE
JOINT
VENTURE
More
Money,
More
Problems
The
 idea
 of
 ‘more
 money,
more
 problems’
really
 applies
 to
 that
 of
 Shanda.
 Shanda

Games
having
gone
public
at
the
end
of
September
on
NASDAQ
(ticker:
GAME),
they
all

of
a
sudden
are
sitting
on
a
heap
of
cash
and
a
very
strong
fiduciary
duty
to
make
good

returns
to
their
investors.
So,
the
billion
 dollar
question
is
–
what
will
 Shanda
do
with

$2B
(USD)
in
cash?
In
this
particular
case,
using
the
proceeds
of
the
IPO
to
fund
non‐game
initiatives
–
such

as
this
 particular
 $88M
(USD)
joint
venture
 with
Hunan
 TV
to
produce
 and
 distribute

movies
/
television
 series.
Will
the
investment

pan
out
as
planned?
Too
soon
to
 make

mention,
but
the
best
way
to
mitigate
risk
is
finding
the
right
partner
(nice
transition
to

the
next
point).
Perfect
Match
If
I
was
maestro
of
this
deal
 and
orchestrated
the
different
partners
who
 would
be
put

into
 place,
I
could
not
 think
of
a
better
partner
for
 Shanda
than
that
of
Hunan
 TV.
It’s

not
just
about
the
innovative
nature
of
Hunan
TV’s
business,
but
it’s
also
about
the
right

timing
of
it
all.
‘Ugly
Wudi’
was
a
runaway
hit
the
last
two
years
and
advertisers
are
flooding
to
Hunan

TV
to
 hopefully
join
the
 branded
 content
bandwagon.
Hunan
TV
already
has
 in‐place

four
 more
original
series
similar
 in
programming
style
and
continues
to
trail
 blaze
new

grounds
 in
Chinese
television.
Now,
here
comes
 Shanda
with
 the
 same
philosophy
to

push
the
limits
of
new
media,
sitting
on
a
$2B
(USD)
heap
of
cash,
and
ready
to
 make

this
work
for
all.
The
 joint
 venture’s
 first
 project
 will
 be
 a
remake
 of
 a
 TV
 series,
 ‘Princess
 Huanzhu,’

which
is
adapted
from
a
Taiwanese
novel
of
the
same
name.
The
second
is
to
produce
a

movie
based
 on
 ‘Xing
Chen
 Bian’
–
 a
popular
novel
from
Shanda
Literature
(how
 con‐
venient)
with
an
adapted
online
game
soon
to
follow.
20
 OUR CONTACTS: Los Angeles Office Beijing Office
16542 Ventura Blvd. Cameo Center, Suite 806
Suite 203 No. 16 Guangshun Nan Avenue
Encino, CA 91436 Chaoyang District, Beijing 100102

P: 818.387.6553 P: 86-10-8476.4280
F: 818.387.6698 F: 86-10-8476.4290
E: info@metanmedia.com E: info.beijing@metanmedia.com

sion
 stations.
 Distribution
 is
 king
 in
 China
 and


From
Games
to
Television has
always
held
 the
power
 when
working
with

both
 content
 providers
 and
 advertisers.
 After

If
 it
 wasn’t
 obvious
 enough,
this
joint
 venture
 all,
they
were
state‐ran
 and
 there
was
no
need

would
 be
 the
 first
 example
of
 an
 online
 game
 to
necessarily
be
commercially
efficient.

company
making
 headway
into
 other
 facets
 of

media.
For
 years,
 online
 games
 and
 television
 However,
 as
 of
 recent,
 there
 is
 a
 new
 world

have
 been
 placed
 in
 their
 nice
 respective
 silos
 order.
 Not
 to
 say
 that
 the
 power
 has
 shifted

separate
from
one
another.
Yes,
there
would
be
 entirely
to
 the
 content
 providers
 /
advertisers,

cross‐platform
marketing
campaigns
 and
 other
 but
 they
are
making
significant
leeway.
Case
 in

channels
 where
 the
 two
 would
 co‐exist,
 but
 point
 –
 the
 joint
 venture
 involved
 two
 parties

never
has
the
integration
between
the
two
very
 investing
 $88M
 (USD)
 in
 total.
 Now,
 what
 the

different
 markets
 has
 been
 so
 incredibly
 splits
 were
 between
 Shanda
 and
 Hunan
 TV,
 I

meshed
together
like
this
joint
venture. really
do
not
know,
but
 the
idea
that
 Hunan
TV

would
 invest
 hard
 cash
 into
 any
 new
 venture

To
 me,
the
deal
 signifies
 more
than
a
mash‐up
 marks
a
big
swing
in
leverage
in
China.

between
industries,
but
is
 the
catalyst
 of
other

companies
 looking
 to
 cross
 barriers
 and
 push
 CONCLUSION
the
envelope
of
media
integration.
Who
 knows

what
the
 next
 ‘big
thing’
might
be,
but
creativ‐ Nobody
 really
 knows
 if
 the
 joint
 venture
 will

ity
is
the
only
limit
and
 this
joint
venture
marks
 really
work
as
they
expect
it
to.
It
may
be
wildly

one
of
the
flagship
times
of
history
in
the
mak‐ successful,
 or
 could
 be
 an
 $88M
 (USD)
 flop.

ing. Whatever
the
future
holds
the
macro
effects
of

these
 deals
 will
 define
 the
 media
 industry
 in

Share
in
Financial
Risk China
(and
 with
 ramifications
globally
 as
 well).

Of
course,
I’m
 fairly
optimistic
 on
the
idea
and

For
 years,
 China’s
 TV
 industry
 operated
 very
 look
forward
 to
 a
 brighter
 and
 more
 dynamic

much
 on
 a
 one‐way
 street:
 content
 providers
 media
future.
and
advertisers
worked
 with
(or
 for)
the
televi‐

Gordon Chu is Vice President of Business Development at METAN Development Group. For more
information and past newsletters, visit METAN’s site at http://www.metandevelopmentgroup.com/

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: November 17, 2009 21
November 24, 2009
CHINA MEDIA REPORT

Rock Music in China – An Overview

By
Harrison
Bobbins|November
24,
2009 Jian
 showed
 apBtude
toward
 music
 at
 a

info@metanmedia.com very
 young
 age.
 At
 the
 age
 of
 fourteen
 In
1986,
Jian’s
hit
song
Btled
“Nothing
to

he
began
playing
trumpet
and
by
the
age
 My
 Name,”
 became
 the
 first
 popular

Today
 in
 China,
 there
 are
 two
 disBnct
 of
 twenty,
 he
 joined
 the
 esteemed
 Chi‐ song
wrifen
 in
China
to
 use
electric
 gui‐
styles
of
music
that
tend
to
dominate
the
 nese
Philharmonic
Orchestra. tar.
Jian
performed
 the
 song
on
 a
televi‐
airwaves:
 tradiBonal
 pop
 music
 and
 sion
 talent
 show,
 and
 became
 an
 over‐
Yaogun
Yinyue
(Chinese
rock
music).
 According
 to
 Jian,
 he
 was
 inspired
 to
 night
 sensaBon.
 The
 song
 is
 now
 widely

learn
 guitar
 by
 Western
 musicians
 such
 considered
 to
 be
 one
 of
 the
 most
 influ‐
“Yaogun”
 literally
 means
 rock‐and‐roll.

 as
 Simon
 and
 Garfunkel,
 the
 Beatles,
 enBal
 songs
 of
 his
 generaBon.
 Even
 to

The
 introducBon
 of
 western
 style
 rock
 Talking
Heads,
and
the
Rolling
Stones.

In
 this
day,
some
even
consider
“Nothing
to

music
 in
China
can
be
traced
 back
to
 the
 the
 mid‐1980s,
 Jian
 formed
 the
 band
 My
Name”
an
“unofficial”
anthem
for
the

early
 1980s.
 In
 Beijing
 at
 that
 Bme,
 “Seven
 Ply
Board”
 (later
 renamed
 ADO).
 student
protestors
during
the
Tiananmen

young
 adults
 became
 increasingly
 ex‐ The
 band
 played
 music
 inspired
 by
 the
 Square
uprising
in
1989.


posed
 to
 Western
 music
 and
 in
 turn,
 Northwest
 Wind
 music
 style
 –
 a
 tradi‐
tried
to
 emulate
what
they
were
hearing
 Bonal
 folk
 style
 music
 originaBng
 in
 The
 brilliance
 of
 Jian’s
 work
 is
 ooen
 at‐
–
and
they
did
 quite
a
good
job.
As
early
 China’s
 northern
 Shaanxi
 Province.
 tributed
to
his
unique
way
of
incorporat‐
as
1980,
the
first
band
to
 ever
play
mod‐ Northwest
 Wind
 style
 music
 was
 pre‐ ing
 the
 sounds
 of
 tradiBonal
 Chinese

ern
 style
 western
 rock
 in
 China
 was
 dominately
 popular
 between
 1986
 and
 instruments
 with
 electric
 guitar
 and

formed
 ‐‐
 Wan
 Li
 Ma
 Wang.
 Their
 first
 1989
 and
was
influenced
significantly
 by
 other
 elements
 he
 admired
 in
 the
 west‐
shows
were
held
mainly
in
foreign
hotels
 Cui
Jian.
 ern
 recordings
he
enjoyed.

In
fact,
when

in
 downtown
 Beijing
 to
 audiences
 of
 Jian
 first
 listened
 to
 western
 rock
 music

mostly
 foreign
 students.
 Wan
 Li
 Ma
 Jian’s
 style
 drew
 heavily
 on
 the
 tradi‐ on
 smuggled
 recordings
from
Hong
Kong

Wang
 was
 famous
 for
 playing
 mostly
 Bonal
 folk
Northwest
 Wind
 music
 while
 and
 Bangkok
 at
 20
 years
 old,
 he
 knew

western‐style
classic
rock.
 also
 incorporaBng
 elements
 of
 western
 that
 he
 needed
 to
 spread
 this
 genre
 of

rock
such
 as
 the
 fast
 tempo
 and
 strong
 music
throughout
China.

lorem ipsum dolor met set bass.
 For
 many
 fans
 and
 listeners,
 his

While
 the
 genre
 of
 rock
 music
 in
 China

quam nunc parum
was
pioneered
by
a
mulBtude
of
talented
 music
 represented
 a
 cultural
 movement
 "We
learned
 a
lot
 by
imitaBng,"
said
Cui

and
 gioed
 arBsts,
 only
 one
 arBst
 has
 –
 one
that
 can
 also
 be
discerned
 in
 Chi‐ Jian,
 "But
 we
 have
 our
 own
 problems,

been
 
 referred
 to
 as
 the
 “Father
 of
Chi‐ nese
 literature
 and
 films
 produced
 our
 own
 feelings
 to
 express,
 so
 we've

nese
 Rock”—
 Cui
 Jian.
 
 Born
 in
 Beijing,
 around
the
same
Bme.

 started
making
our
own
music."

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: November 24, 2009 22
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METAN Development Group (www.metandevelopmentgroup.com) China Media Report: November 24, 2009
If
 we
 explore
 the
 evoluBon
 of
 Chinese
 Rock
through
 to
 today,
the
 first
 part
 of
 Cui’s

words
is
 what
 typically
bothers
many
young
Chinese
rock
bands,
while
the
later
 part

(to
 a
certain
 degree)
give
the
 excuse
for
those
bands
to
 think
that
they
should
not
 be

bothered.
Does
“Imita6on”
Work?
By
most
 accounts,
rock‐and‐roll
 music
 originated
 in
 the
 United
 States
 during
the
 late

1940s
 and
 early
 1950s
 and
 became
 increasingly
 popular
 with
 singles
 such
 as
 Elvis’

“That’s
 All
 Right
 (Mama)”
 in
 1954
 and
 Bill
 Haley’s
 “Rock
Around
 the
 Clock”
 in
 1955.

However,
through
rock
music
in
the
late
1950s
and
early
1960s,
the
Beatles,
drove
rock

music
 into
 the
 internaBonal
 mainstream
 and
 catapulted
 western
 pop
 culture
 around

the
world.
However,
over
 20
years
aoer
Cui
started
his
“rebellious”
 band,
the
share
of

rock
music
 today
in
 the
 Chinese
market
 is
 even
 smaller
 than
 during
the
1980s
 –
less

than
5%.
There
are
many
arguments
for
this;
poliBcal
restricBon,
music
piraBng,
declin‐
ing
record
business,
etc.
However,
in
China,
you
 will
get
 a
simple
answer
when
you
ask

people
 what
 they
 think
 of
 rock
 music:
 it’s
 NOISY.
 And
 the
 answer
 has
 not
 changed

much
even
aoer
20
years.

On
a
very
basic
level,
many
westerners
arguably
develop
an
appreciaBon
for
rock
music

because
 ‐
to
 some
 extent
 –
 the
 so‐called
 NOISE
 saBsfies
their
 need
 to
 express
 their

inner
 cravings
 to
“rebel”.
It
 can
ooen
 be
taken
 for
 granted
 that
 the
Confucianism
cul‐
ture
is
deeply
rooted
 in
China
–
and
is
so
strong
that
it
 makes
people
feel
 that
“to
 re‐
bel”
is
a
bad
thing.
Consequently
“noise”
must
 be
bad
and
 the
whole
“rock”
 idea
is
a

difficult
noBon
for
the
Chinese
to
understand.

So
the
assumpBon
I
am
making
here
is
that,
in
China,
the
youth
don’t
relate
“rebelling”

to
 “noise”
but
rather
to
the
“image”
 of
rock
n’roll.
It’s
the
idea
and
 image
of
rebellion

versus
the
love
for
 the
actual
melodies
and
sounds
itself.
The
fact
of
the
mafer
 is
that

the
Chinese
 prefer
 visual
 communicaBon
 over
 alternaBve
forms.
This
 topic
 could
 be

stretched
 far
 beyond
 rock
music,
but
 we
will
 just
 keep
 it
 to
 the
 topic
 on‐hand:
Does

“imitaBon”
work?

What
are
the
Implica6ons?

Let’s
return
to
the
last
part
of
Cui’s
quote
“We
have
our
 own
feeling
to
express,
so
we

start
 to
make
our
own
 music”.
For
 the
youth
in
China,
the
desire
to
“rebel”
is
certainly

personified
 in
 the
 image,
but
 not
 expressed
 in
 the
 music
 itself.
 If
 we
 look
 at
 some

emerging
pop
trends
below,
you
can
see
how
the
way
to
“rebel”
heavily
relies
on
visual

experiences.

Super
Girl
As
far
 as
 music
celebriBes,
the
“Idol”
 concept
 has
become
an
incredible
phenomenon

in
China.

With
“American
Idol”
dominaBng
the
US
market,
the
Chinese
developed
their

own
 version,
Btled
 “Super
Girl.”
 
To
illustrate
just
 how
popular
 “Super
Girl”
 became
in

China:
 the
 show’s
 popularity
 also
 afracted
 many
 criBcs
 that
 aoer
 2006
 it
 was
 can‐
celled,
and
has
just
recently
been
brought
back
onto
the
air.


Super
 Girl
is,
at
its
core,
a
karaoke
compeBBon
 television
 show.
However
 it
 is
consid‐
ered
the
biggest
music
cultural
 event
in
the
past10
years
as
well.
The
key
to
its
success

23
 OUR CONTACTS: Los Angeles Office Beijing Office
16542 Ventura Blvd. Cameo Center, Suite 806
Suite 203 No. 16 Guangshun Nan Avenue
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E: info@metanmedia.com E: info.beijing@metanmedia.com

is
 likely
 that
 it
 creates
 visual
 experiences
 to
 television
theme
 song
in
China
in
1971
 –
 “The

afract
 the
 youth
 market
 and
 drive
 them
 to
 Yuanfen
 of
 a
Wedding
 that
Cries
 and
Laughs”.

vote,
 which
 is
 considered
 a
 primary
 way
 to
 Following
 the
 overwhelming
 response,
 pop

voice
their
 opinions
and
 to
be
a
“rebel”
in
 the
 stars
 from
 all
 over
 China
 tried
 to
 follow
 suit..


sense
of
 an
 individual
 opinion
 and
 not
 limited
 Theme
 songs
 fueled
 pop
 musicians
 careers

by
authority.
 throughout
 the
 rest
 of
 the
 decade.
 
 In
 the

1980s,
the
genre
really
took
off,
and

remained

Conclusion at
 the
 top
 of
 the
 charts
 Bll
 the
 end
 of
 90s,

when
its
place
is
taken
by
Mando‐pop
Today,
 rock
 bands
 are
 learning
 from
 every

emerging
 pop
 trend.
 The
 television
 reality
 MANDO
POP
show
 "Bafle
 of
 the
 Bands”,
 sponsored
 by

Pepsi
Co.,
has
become
one
the
latest
top‐rated
 Mando‐pop’s
 biggest
 hub
 of
 distribuBon
 has

shows
 in
 China—with
 the
 number
 of
 bands’
 long
 been
 Taiwan.
 Mando‐pop
 aims
 to
 stay

live
performances
 around
 the
country
increas‐ true
to
its
shidaiqu
roots
from
the
1920s,
while

ing
at
a
phenomenal
rate
of
300%
per
year.
For
 incorporaBng
 newer
 and
 more
 modern
 in‐
most
 new
 and
 up‐and‐coming
 musicians,
 it
 is
 strumentaBon.
 Today,
 mando‐pop
 stars
 such

important
 to
 heed
 these
 lessons
 and
 learn
 as
 Faye
 Wong,
 called
 the
 “Diva
 of
 Asia”
 aoer

how
 important
 it
 is
 today
to
 create
visual
 ex‐ she
 was
the
 first
 Chinese
 arBst
 to
 perform
 in

periences
 to
engage
 audiences
and
to
 enlarge
 Japan,
 Jay
 Chou,
 and
 David
 Tao
 carry
 the

a
fan
base.
I
a
broader
sense
perhaps
these
are
 genre.
 
 Despite
 the
 popularity
 of
 canto‐pop

lessons
the
 bands
 and
 label
 managers
 should
 within
 China,
 Mando‐pop
 has
 gained
 a
 great

learn
from
the
history
of
western
rock‐and‐roll. export
value
for
China.

Outlets
in
Canada,
the

U.S.,
 and
 Australia
 all
 have
 great
 markets
 for

mando‐pop
 and
 other
 Chinese
 music.
Moreo‐
Reference: ver,
mando‐pop
 has
proven
 to
 be
an
 effecBve

profit‐making
 industry
 that
 has
 heavily
 influ‐
CANTO
POP ences
Asian
trends

Canto‐pop
 was
thrust
into
 the
spotlight
 in
 the


1970s
 –
 a
 decade
 before
 rock
 music
 was
 on

the
scene
 in
 China.
 
As
television
 sitcoms
 be‐
gan
to
gain
popularity,
it
became
apparent
that

a
“theme
song”
would
be
a
good
way
to
Be
in

music
 to
television.

Sandra
Lang
sang
the
first


Harrison Bobbins
is an intern at METAN Development Group. For more information and past

newsletters, visit METAN’s site at http://www.metandevelopmentgroup.com/

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: November 24, 2009 24
December 8, 2009
CHINA MEDIA REPORT

The Animal of Execution - A Study of "Tai-Chi" Style Management of Taobao

By
Ren
Fang
|
December
8,
2009 ronment
for
 any
Chinese
company;
how‐ fice
the
best
 ideas
for
the
sake
 of
execu‐
ren@metanmedia.com ever,
 with
 a
 market
 share
 of
 86%
 (in
 Bon
is
necessary.’
2009)
and
 a
+10%
year
 over
 year
growth

For
 every
 new
 Google
 employee
 in
 rate
 since
 2005
 –
 you
 have
 to
 wonder
 There
is
no
quesBon
the
fact
the
Chinese

China,
he/she
is
usually
overwhelmed
 by
 what
Taobao
might
be
doing
right.
 market
 is
 one
 of
 the
 most
 dynamic
 and

all
what
 Google
has
to
offer:
free
snacks,
 fragmented
 markets
 in
 the
 world.
 Ma’s

gadgets,
 a
 world‐class
 cafeteria
 with
 a
 I
don’t
 personally
know
 of
 any
scienBfic
 philosophy
is
that
a
reasoning
/
analyzing

renown
 chef,
 annual
 trips
 to
 Google
 or
 in‐depth
correlaBon
 between
a
luxury
 based
 management
 system
 is
simply
too

headquarters
in
 the
 Silicon
 Valley,
and
a
 kitchen
 versus
 a
 handstand
 has
 to
 do
 slow
 to
 react
 in
 a
 market
 like
 China.

nice
 20%
 carve
 out
 of
 their
 work
 Bme
 with
a
company’s
market
share
growth
in
 Good
 ideas
 are
 only
 that
 –
 good
 ideas.

allocated
 for
 anything
 that
 interests
 China,
but
comparing
the
fact
both
Goo‐ Our
 VP
 of
 Business
 Development,
 Gor‐
them
 as
 it
 relates
 to
 Google’s
 business
 gle
and
Taobao
launched
relaBvely
at
the
 don
 Chu,
 likes
 to
 refer
 it
 as,
‘analysis
 to

(ooen
 referred
 to
 as
 ‘self‐projects’).
 same
 Bme
 in
 China,
 one
 has
 to
 ask
 if
 paralysis’.

Some
 would
 argue
 that
 Google
 is
 the
 there
 is
 an
 effecBve
 way
 to
 how
 man‐
‘best
 environment
 for
 nurturing
 and
 agement
 plays
 a
 role
 in
 the
 success.
 In
 Ma’s
 management
 style,
 good
 ideas

managing
innovaBons’.
However,
3
 years
 Google’s
slow
 growth
 in
 China
 is
 not
 an
 are
 important
 and
 innovaBon
 will
 defi‐
aoer
 its
office
opening,
Google’s
market
 anomaly
 in
 China
–
 in
 fact,
 many
 global
 nitely
 be
 the
 driving
 force
 to
 grow
 any

share
 in
China
is
less
than
30%
(in
 2009)
 companies
 face
 similar
 challenges.
 A
 company;
 however,
 it
 should
 only
 play

and
 only
exemplifies
a
3%
 increase
 from
 closer
look
at
 Taobao’s
corporate
ideolo‐ second
role
to
 that
of
execuBon
first.
For

3
years
ago. gies
 and
 management
 style
 may
 reveal
 Ma,
 the
 company
 itself
 should
 move

some
interesBng
insight. from
being
managed
 as
an
‘organizaBon’

On
 the
 flip
 side,
 let’s
 take
 Taobao
 as
 an
 to
 being
trained
 as
an
 ‘animal
 of
 execu‐
example
 –
 China’s
 version
 of
 eBay.
 For
 ANIMAL
OF
EXECUTION Bon’.

every
 new
 Taobao
 employee
 in
 China,

Jakie
Ma,
CEO
of
Taobao,
has
an
interest‐ IDEOLOGY
VERSUS
VALUE
lorem ipsumlearn

he/she
needs
to
 dolor met way
to

the
proper
 set ing
philosophy
 in
conducBng
 business
 in

do
a
handstand
against
the
wall.
No
toys,

quam nunc parum
no
 gadgets,
 no
 world‐class
 cafeteria
 –
 China.
 For
 him,
 an
 ‘execuBon‐oriented’
 It’s
 not
 uncommon
 for
 companies
 to

just
 the
 ability
 to
 perform
 a
 physical
 style
is
the
most
 effecBve
way
to
 grow
a
 have
 a
 set
 of
 corporate
 values
 that
 are

handstand.
Some
 would
 argue
 that
 Tao‐ company
in
China.
In
his
words,
‘to
sacri‐ shared
 by
 all
 the
 employees
 and
 reso‐
bao
 is
 possibly
 the
 most
 bizarre
 envi‐ nated
 every
so
 ooen
 by
 upper
 manage‐

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: December 8, 2009 25


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Downloads
China Mobile's (NYSE:CHL, 0941.HK)
"Mobile Market" application store has
recorded more than 600,000 users
making over 1.3 million downloads...
>> READ MORE
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industry
China's State Council, the Cabinet,
announced Wednesday plans to push
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industry and make it a strategic pillar
industry in the national economy...
>> READ MORE
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>> READ MORE
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The number of online gamers in China
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Sina Corp. said three investment firms,
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METAN Development Group (www.metandevelopmentgroup.com) China Media Report: December 8, 2009
ment.
Everyone
understands
the
common
goal
and
works
towards
meeBng
them.
Yes
–

perfectly
legiBmate
and
perfectly
fine.
Ma
makes
it
more
than
just
a
‘value’
but
wants

to
transform
the
company’s
process
into
an
‘ideology’.

At
 the
 core,
value
 is
a
 set
 of
 ideas
 communicated
 to
 employees
 through
 educaBon.

Thus
the
upper
 management
speeches
and
occasional
staff
meeBngs
to
hammer
home

the
point.
An
ideology
is
built
 on
 a
 transformaBon
 of
the
way
of
 thinking.
At
Taobao,

employees
 are
 required
 to
 learn
 a
 handstand
 to
 enforce
 the
 idea
 of
 ‘thinking
 differ‐
ently’.
As
part
 of
their
 iniBaBon,
they
are
ooen
 given
 a
mythical
 name
taken
 from
 fa‐
mous
Kung
Fu
 novels
(Ma
is
 an
 avid
fan
of
 the
Chinese
marBal
arts)
to
illustrate
their

specialty
 and
 personality.
Rooms
 and
 offices
 are
 also
 appropriately
 tagged
 with
 fic‐
Bonal
Kung
Fu‐inspired
names
to
remind
everyone
just
the
importance
of
their
mission

at‐hand.

Perhaps
 the
 naming
 convenBon
 is
 only
 a
 novel
 part
 of
 Ma’s
 ulBmate
 management

style;
however,
it
 resonates
the
idea
of
an
 alternaBve
way
of
thinking
–
an
 ideology
of

uniBng
his
 employees
 to
 focus
 on
execuBon.
Recently,
surveys
show
 that
 the
 Taobao

employees
have
 the
highest
 loyalty
to
the
company
with
 below‐the‐average
salary
(IT

industry).


THE
TAI‐CHI
OF
MANAGEMENT
There
is
a
method
 to
the
chaos
Ma
has
implemented
in
 Taobao.
Kung
Fu
names
is
not

simply
a
reflecBon
 of
Ma’s
personal
 interest,
but
 is
a
deliberate
 way
to
quickly
and
ef‐
fecBvely
communicate
his
‘ideology’
to
run
a
business.
For
most
 Chinese,
there
is
 a
 long‐lasBng
Be
to
 the
Kung
Fu
 culture
ever
 since
as
kids.

It’s
part
of
every
kid’s
imaginaBon
growing
up
and
is
extremely
prevalent
in
the
culture

of
the
youth.
For
 Ma,
implemenBng
processes
around
the
ideas
of
Kung
Fu
is
a
seam‐
less
way
for
his
employees
to
understand
how
decisions
are
made.
As
for
decisions
that
are
made,
it’s
been
 proven
that
 there
 is
a
direct
 correlaBon
with

how
 long
 and
 difficult
 it
 is
 to
 implement
 decision
 with
 the
sheer
 size
 of
 a
company.

That
makes
logical
 sense
–
the
larger
the
 company,
the
more
decisions
need
 to
be
ex‐
amined
 and
 implemented.
However,
using
terms
from
Kung
Fu
novels
to
stand
for
 dif‐
ferent
‘decisions’
or
how
decisions
are
made,
employees
can
easily
be
understood
and

embraced
 by
 the
 employees.
To
 put
 in
 Tai‐Chi
 terms,
 controlling
 the
 body
 through

breathing
is
faster
than
 manipulaBng
different
 muscles.
In
other
words,
speak
the
lan‐
guage
of
the
employees
and
execuBon
because
all
of
a
sudden
a
whole
lot
easier.
FOUR
OUNCES
TO
YIELD
1000
CATTIES
In
Tai‐Chi,
there
is
a
Chinese
phrase
that
translate
to
‘Four
ounces
to
yield
1000
ca•es’.

While
I
don’t
necessarily
know
what
 ‘ca•es’
parBcularly
means,
the
 thought
 is
about

leverage.
An
opponent
 strikes,
use
his
blow
to
redirect
 back
towards
him.
In
 this
 par‐
Bcular
case,
‘leverage’
is
a
reacBon
and
requires
as
much
observaBon
and
listening
as
it

takes
to
act.
For
many
global
 companies
entering
China,
the
business
reacBon
is
carefully
based
 on

analysis
 and
 understanding
 of
 the
 market.
This
 ooen
 limits
 companies
 to
 base
deci‐
sions
on
current
market
 condiBons
and
taking
facts
as‐is.
However,
in
China
where
the

26
 OUR CONTACTS: Los Angeles Office Beijing Office
16542 Ventura Blvd. Cameo Center, Suite 806
Suite 203 No. 16 Guangshun Nan Avenue
Encino, CA 91436 Chaoyang District, Beijing 100102

P: 818.387.6553 P: 86-10-8476.4280
F: 818.387.6698 F: 86-10-8476.4290
E: info@metanmedia.com E: info.beijing@metanmedia.com

dynamics
of
the
market
changes
within
a
blink

of
 an
 eye,
the
 ability
 to
 react
 quickly
and
 to
 CONCLUSION
leverage
 your
 posiBon
 is
an
 important
 skill
set

to
have
when
dealing
in
China.
 For
 Taobao,
how
does
 this
all
 relate
 to
that
 of

business
 and
 business
 sense.
 A
 Tai‐Chi
 style

For
 Ma,
 Taobao
 takes
 every
 opportunity
 to
 management
 does
 not
 necessarily
 translate

their
 business
 advantage
 –
 both
 from
 a
 rele‐ well
 to
 investors
 on
 Wall
 Street.
 For
 the
 last

vant
 culture
 and
 poliBcal
 standpoint
 o
 help
 five
years,
Taobao
 has
expressed
 no
 plans
 for

build
 their
 corporate
 and
 brand
 image.
 For
 going
public.
For
 starters,
Ma
claims
they
have

example,
 in
 2008,
 amidst
 a
 bad
 global
 econ‐ enough
cash,
but
more
importantly,
he
doesn’t

omy
that
resulted
in
 many
lay‐offs
for
Internet
 want
 his
 management
 to
 be
 affected
 by
 the

companies
in
China,
Ma
invited
 all
his
employ‐ stock
market
at
this
‘early’
stage
of
Taobao.
ees
 and
 their
 respecBve
 family
 to
 visit
 the

company
and
inform
there
would
be
no
down‐ Sure
 Ma
 has
 to
 contend
 to
 investor
 scruBny

sizing
and
 that
everyone
should
 be
considered
 and,
 at
 the
 end
 of
 the
 day,
 results
 and
 num‐
as
family.
Not
only
is
this
a
media
gem,
but
is
a
 bers
 speaks
 volumes.
 However,
 despite
 the

great
 example
 of
 how
 Taobao
 leverages
 the
 business
end
of
Taobao,
there
is
an
admiraBon

current
 condiBons
 to
 befer
 their
 corporate
 for
Ma’s
management
philosophy
and
how
it’ll

branding
 with
 their
 employees
 and
 amongst
 play
a
role
in
transforming
management
 for
 all

other
Internet
companies. of
China.


Ren Fang is a New Ventures Analyst at METAN Development Group. For more information and
past newsletters, visit METAN’s site at http://www.metandevelopmentgroup.com/

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: December 8, 2009 27

December 15, 2009
CHINA MEDIA REPORT

Confession of A Chinese Shopper

By
Lin
Bai
|
December
15,
2009 and
 I’ve
been
accustomed
to
 the
 idea
of
 much
 more
 difficult
 than
 sliding
 ‘back‐
lbai@metanmedia.com very
segmented
shopping
Bers.
 wards’
 and
 more
 of
 the
 polarizaBon
 of

the
 Chinese
 middle
 class
 has
 shioed
 to

In
 the
 US,
 ‘Black
Friday’
is
 the
 unofficial
 For
 many
 retail
 analysts,
 the
 trend
 of
 the
poor.
start
 of
 the
 holiday
 shopping
 season.
 ‘affordable
luxury’
is
the
sign
 of
a
shrink‐
Marked
 as
the
Friday
aoer
Thanksgiving,
 ing
 middle
 class
 ‐
 otherwise
 known
 as
 So,
how
does
this
Be
together
with
 H&M

hordes
 of
 people
 line
 up
 at
 retail
 stores
 the
 M‐shaped
 phenomenon.
 Japanese
 and
 what
 does
 this
 mean
 for
 brands
 in

hours
before
the
store
opens
in
hopes
to
 economist
 and
 strategist
 Kenichi
 Ohmae
 China.
 For
 starters,
 this
 does
 present
 a

be
one
of
the
first
to
get
in
on
early
holi‐ refers
 the
 ‘M’
as
 the
 polarizaBon
 of
 the
 very
 unique
 consumer
 market
 where,

day
shopping.
 extreme
rich
and
extreme
poor
in
society
 like
 everyone
 around
 the
 world,
 these

–
thus
the
‘M’
shape
with
peaks
and
 val‐ lower‐end
 consumers
 sBll
 aspire
 to
 a

In
China,
while
they
may
not
have
‘Black
 leys
in
societal
status. befer
 quality
 of
 life.
However,
they
are

Friday’,
 the
 idea
 of
 bargain
 shopping
 is
 value
 buyers
 and
 have
 monumental
 ex‐
not
 novel
 and
 is
 part
 of
 the
 shopping
 In
a
well‐developed
modern
society,
class
 pectaBons
for
 great
 quality
at
 affordable

culture
that
now
is
prevalent
in
the
mar‐ distribuBon
 is
 ooen
 inverted
 where
 the
 prices.
 For
 brands
 such
 as
 H&M
 and

ket
 today.
On
November
 14th,
there
was
 middle
 class
 forms
 the
 bulk
 of
 society.
 IKEA,
 China
 is
 a
 golden
 opportunity
 to

a
line
600
 people
 deep
waiBng
paBently
 However,
with
China’s
economy
booming
 tap
into
this
enormous
market.
hours
 before
 the
 opening
 of
H&M
 store
 as
fast
 as
 it
is
 as
a
consequence
of
rapid

in
 China
 –
 all
 waiBng
 for
 the
 worldwide
 globalizaBon
 (whether
 for
 good
 or
 bad),
 H&M:
SUCCESS
IN
CHINA
start
date
of
H&M’s
Jimmy
Choo
line. the
 middle
 class
 diminished
 and
 quickly

assimilated
 on
 to
 either
 side
of
 the
 eco‐ I
admit
that
I
am
a
self‐professed
avid
fan

‘M‐SHAPE’
SOCIETY nomic
class
spectrum. of
H&M.
H&M
brings
a
chic
Euro‐style
to

China
 with
 trendy
 replicas
 of
 luxury

For
 me,
 the
 whole
 dichotomy
 of
 an
 af‐ I
 should
 preface
 that
 the
 M‐Shape
 phe‐ products
at
inexpensive
prices,
fi•ng
the

nomenon
 is
 a
 global
 phenomenon
 and
 needs
 of
 the
 majority
 of
 Chinese
 con‐
lorem apparel

fordable
 ipsum brand

dolorwith

methigh‐end

set China
is
not
just
the
excepBon.
Even
here
 sumers
(low‐income
but
pursuing
expen‐
style
 such
 as
 H&M
 is
 hard
 for
 me
 to

quam nunc parum
grasp.
‘Affordable’
and
‘high‐end’
doesn’t
 in
 the
 United
 States,
the
 middle
 class
 is
 sive
taste).
Contrary
in
 India
 where
 only

belong
 in
 the
 same
 sentence
 together
 slowly
 disappearing
 and
 the
 gap
 be‐ upper
 middle
 class
 consumers
 follow

tween
 rich
 and
 poor
 conBnue
 to
 grow.
 Western
fashion,
the
majority
of
Chinese

Unfortunately,
 going
 ‘upwards’
 is
 ooen


METAN Development Group (www.metandevelopmentgroup.com) China Media Report: December 15, 2009 28

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separate into two sites in the future,
one for video sharing and one for high
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>> READ MORE
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Women often complain about the
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METAN Development Group (www.metandevelopmentgroup.com) China Media Report: December 15, 2009
consumers
follow
Western
trends
no
mafer
where
they
fall
in
the
economic
spectrum.
H&M
has
been
one
of
the
most
popular
Western
retail
brands
since
first
entering
China

in
2007.
There
is
a
common
joke
that
says
there
are
only
2
places
in
 Shanghai
that
you

need
to
line
up
for:
in
 front
of
the
bank
to
buy
funds,
and
in
front
of
H&M
to
shop.
Ac‐
cording
 to
 H&M,
 first
 day
 sales
 at
 their
 Shanghai
 store
 reached
 2
 million
 RMB

($292,000),
which
easily
eclipses
the
total
daily
sales
 of
200
Chinese
domesBc
brands

put
together.

It
is
also
important
 to
note
that
 the
price
of
foreign
brands
is
typically
higher
 in
China

than
 anywhere
else
around
the
world
 –
namely
due
to
the
high
tariffs
China
places
on

imports.
However,
H&M
kept
 to
 their
 pricing
integrity
and
 remained
 prices
similar
 to

that
of
Europe.
"Of
course
 I
love
Louis
 Vuifon,
 Chanel,
and
 Dior,
 but
 I
can't
 afford
 their
 prices,"
 25‐
year‐old
 Zhang
 Xi
 tells
 a
 reporter,
"H&M
have
reasonable
 prices,
and
 yet
 keep
 pace

with
the
trends.
You
can
always
find
the
most
fashionable
items
in
their
store."
According
to
market
 research
 from
 China,
H&M
is
priced
 at
 a
fracBon
of
some
luxury

brands
yet
 features
 similar
 trend‐savvy
seasonal
 design
elements
–
 a
 winning
combi‐
naBon
that
has
generated
an
unprecedented
buying
upsurge
in
the
market.
FOREIGN
BRANDS
IN
CHINA
H&M’s
 strategy
is
not
 rocket
 science.
Logic
 is
actually
very
simple
–
 chic
 clothes
 cou‐
pled
with
 affordable
prices
is
a
winning
combinaBon
in
 retail.
However
 in
China,
there

is
more
than
winning
on
price
alone.
Especially
with
foreign
brands
increasingly
enter‐
ing
 the
 China
 market,
 the
 retail
 strategy
 has
 shioed
 from
 focus
 on
 the
 wealthy
 to

where
the
majority
of
where
the
Chinese
market
stands.
Brand
Strategy
For
foreign
brands,
prices
are
 typically
20%‐30%
 higher
 in
China
than
 overseas
due
to

China’s
high
import
taxes
on
foreign
goods
and
to
the
brand
posiBoning
strategy
where

there
is
a
concerted
effort
to
set
foreign
brands
apart
from
their
local
counterparts.

For
example
in
 China,
Starbucks
is
considered
 “a
symbol
of
status
and
success”,
young

people
go
to
 KFC
and
 McDonalds
 to
date
since
it’s
ooen
 regarded
 as
“romanBc”
(but

mainly
because
 it
has
nice
lighBng,
air
 condiBoning,
and
a
nicer
bathroom),
and
 own‐
ing
a
pair
of
Nike
shoes
or
Levi’s
jeans
is
just
a
young
person’s
dream.

“[Foreign
 retailers
 in
 China]
 don't
 feel
 that
 they
have
 to
 compete
 on
 price,
 because

they
are
offering
a
wider
 selecBon
of
goods
and
a
more
pleasant
 shopping
experience

than
 domesBc
 compeBtors”,
 said
 Ann
 Chen,
 a
 retail
 analyst
 at
 Boston‐based
 consul‐
tancy
Bain
&
Co.
Pricing
Strategy
In
 contrast
 to
 the
 overall
 high‐price
 approach,
 some
 foreign
 brands
 have
 recently

adopted
 a
 price‐cu•ng
 strategy
 in
 order
 to
 afract
 more
 customers.
 When
 IKEA

(known
 for
 its
inexpensive
and
 modern
furniture)
 first
 entered
 China
in
 1998,
it
posi‐
29
 OUR CONTACTS: Los Angeles Office Beijing Office
16542 Ventura Blvd. Cameo Center, Suite 806
Suite 203 No. 16 Guangshun Nan Avenue
Encino, CA 91436 Chaoyang District, Beijing 100102

P: 818.387.6553 P: 86-10-8476.4280
F: 818.387.6698 F: 86-10-8476.4290
E: info@metanmedia.com E: info.beijing@metanmedia.com

Boned
 itself
 as
 high‐end
 brand
 and
 offered
 by
 cu•ng
 prices.
 For
 example,
 McDonalds

their
products
at
premium
prices.
This
strategy
 recently
 cut
 nearly
 40%
 off
 its
 prices
 for
 its

failed
 as
 many
 Chinese
 consumers
 crowded
 special
 lunch
 package.
 Even
 premier
 brands

the
IKEA
stores
not
 parBcularly
shopping,
but
 like
 Louis
 Vuifon,
 Gucci,
 and
 Salvatore
 Fer‐
enjoying
 the
 ‘freebies’
 the
 store
 had
 to
 offer
 ragamo
 are
 dropping
prices
 “to
 trim
the
price

(e.g.
 air‐condiBoning,
comfy
chairs).
Needless
 gap
 between
 China
 and
 other
 regions
 and
 to

to
 say,
window
 shopping
doesn’t
always
result
 enBce
customers”.
in
 sales
 and
 IKEA
 fell
 short
 in
 their
 revenue

expectaBons. CONCLUSION

Consequently,
in
 the
 last
 few
 years,
 the
 com‐ What
 does
 this
 all
 mean
 for
 brands
and
 con‐
pany
 has
 adjusted
 its
 markeBng
 posiBon
 by
 sumers
 in
 this
 M‐Shaped
 China
 market?
 For

transiBoning
 into
 a
 mainstream
 commodity.
 consumers,
 even
 the
 lower‐end
 of
 the
 M‐
Because
of
its
success
in
localizing
products
for
 Shape
 consumer
 market
 is
 striving
 for
 excel‐
the
 China
 market
 specifically,
 IKEA
 has
 been
 lence
and
 quality.
However,
they
are
 not
 will‐
able
 to
 cut
 prices
 by
 an
 average
 of
 54%
 in
 ing
at
 premium
 prices
usually
associated
 with

more
 than
 1,000
 categories
 since
 2005.
 IKEA
 many
foreign
brands.

broke
 the
 regular
 foreign
 brand
 pricing
 strat‐
egy
 and
 succeed
 in
 China
 because
 they
 de‐ For
foreign
brands,
both
a
branding
and
pricing

cided
to
“stand
 on
 the
side
of
 the
 majority
of
 strategy
 is
 necessary
 to
 succeed
 in
 China.

people”.
 Given
 its
 ‘M’
 consumer
 distribuBon,
 cu•ng

prices
 to
create
larger
 sales
volume
 is
a
trend

"I
had
to
 make
a
break,
change
[Chinese]
per‐ many
brands
have
adopted
 and
are
successful

cepBons
 that
 Western‐branded
 goods
 are
 at.
Will
this
trend
conBnue
even
as
China
con‐
normally
 more
 expensive…,"
 said
 Ian
 Duffy,
 Bnues
 to
 grow
 economically
 and
 people
 will

IKEA
president
for
Asia
Pacific
said.
 have
 more
 money
on‐hand?
 Hard
 to
 say,
but

as
a
consumer
 who
fits
the
‘mold’
and
mental‐
In
 the
 face
 of
 fierce
 compeBBon
 from
 both
 ity
 of
 the
 majority
 of
 the
 China
 market,
 my

global
 and
 domesBc
 compeBtors,
 more
 and
 thoughts
 gravitate
 towards
 no.
 While
 ‘brand‐
more
global
brands
are
adopBng
this
mentality
 ing’
and
 ‘pricing’
are
both
 very
important
fac‐
of
‘standing
on
the
majority
side
of
the
people’
 tors
in
my
shopping
behavior,
‘value’
drives
me


Lin Bai is a New Ventures Analyst at METAN Development Group. For more information and past
newsletters, visit METAN’s site at http://www.metandevelopmentgroup.com/

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: December 15, 2009 30
December 22, 2009
CHINA MEDIA REPORT

2010: My Predictions for China Advertising

By
Gordon
Chu
|
December
22,
2009 leading
 into
 China
 today,
 there’s
 no
 footprint
in
how
 media
is
consumed
and

gchu@metanmedia.com quesBon
 paying
 close
 afenBon
 to
 the
 preferred.

growing
 China
 market
 will
 be
 a
 criBcal

As
my
primary
role
 in
 business
 develop‐ step
 in
 any
 global
 brand’s
 strategy
 for
 For
 2010,
 Chinese
 adverBsing
on
 televi‐
ment,
 I
 have
 my
 hands
 in
 a
 lifle
 bit
 in
 expansion.
However,
the
idea
of
adverBs‐ sion
will
shio
from
that
of
driving
viewers

every
division
 at
 METAN
 –
 from
TV
pro‐ ing
is
vague.
And
 staBsBcs
are
just
that
–
 to
that
of
media
value.
This
really
should

ducBon
and
markeBng
to
 operaBons
and
 staBsBcs.
 A
 more
 criBcal
 look
into
 2010
 not
 have
 taken
 anybody
 by
 a
 big
 sur‐
digital.
However,
as
 my
New
 Year’s
 reso‐ for
 the
 two
 plaporms
 leading
 the
 way
 prise.
 Aoer
 all,
 in
 the
 US,
 this
 transfor‐
luBon,
 I’m
 pledging
 to
 go
 back
 to
 the
 (television
and
online)
will
unveil
a
befer
 maBon
has
started
long
age
starBng
with

METAN
 basics
 to
 where
 our
 enBre
busi‐ idea
 of
 where
 the
 money
 is
 and
 where
 the
 advent
 of
 online
 videos
 and
 digital

ness
 model
 is
rooted:
brand
 adverBsing.
 it’s
going. video
 recorders.
 These
 technologies
 al‐
This
 is
 our
 forte,
 our
 core
 competency,
 lowed
 viewers
 to
 skirt
 tradiBonal
 adver‐
and
 certainly
 our
 bread
 and
 bufer.
This
 TV
–
KING
OF
THE
HILL Bsing
 and
 put
 more
 pressure
 on
 media

is
 also
 the
 biggest
 opportunity
 in
 the
 value
 and
 brand
 integraBon
 in
 the
 con‐
China
market
today. Television
 remains
 as
 the
 predominant
 tent
themselves.
media
plaporm
with
a
78%
market
share

I
 read
 that
 total
 measured
 adverBsing
 of
the
total
ad
spend
in
China
.
I
will
note
 In
 China,
 although
 technologies
 have

expenditures
in
 the
 first
 half
of
2009
 fell
 that
 although
I
say
sarcasBcally
it
grew
a
 made
a
significant
impact
in
how
content

nearly
 14.3%
 versus
 a
 year
 ago
 (to
 mere
 14%
 in
 the
 first
 three
 quarters
 of
 is
consumed
on
an
 on‐demand
basis,
the

$60.9B
 USD)
 in
 the
 United
 States.
 Com‐ 2009
 versus
the
previous
year,
television
 biggest
 factor
 in
 this
 shio
 comes
 from

pare
 that
 to
 China’s
 ad
 spend
 and
 you
 has
 given
 up
 some
 distance
 to
 other
 that
 of
 adverBsing
 inventory.
 EffecBve

see
 an
 inverse
 of
 that
 figure
 of
 nearly
 forms
 of
 adverBsing
 including
 that
 of
 January
1,
2010,
SARFT
(State
of
 Admin‐
growth
of
12%
 in
the
 first
three
quarters
 Internet
and
outdoor.
I
will
also
note
that
 istraBon
 of
 Radio,
Film
 and
 Television)
is

of
 2009
 (to
 $54B
 USD)
 according
to
 the
 television
 in
 China
 will
 never
 be
 under‐ implemenBng
 regulaBon
 #61
 whereby

mined
 or
 ever
 go
 away
 (at
 least
 not
 in
 TV
 commercial
 airBmes
 cannot
 exceed

lorem ipsum dolor met set
latest
figures
by
CTR
Market
Research.
the
foreseeable
 future)
–
 as
long
as
 the
 12
 minutes
 per
 hour.
 As
 a
 result,
 esB‐
quam nunc parum
Hardly
anyone
will
argue
against
 the
fact
 mass
media
is
under
 current
 regime
and
 mates
 of
 an
 increase
 of
 24‐25%
 on
 ad‐
China
is
becoming
the
global
hot
spot
for
 regulaBons,
television
 will
forever
have
a
 verBsing
 rate
 cards
 will
 ulBmately
 drive

any
global
 brands.
With
 nearly
 all
 roads


METAN Development Group (www.metandevelopmentgroup.com) China Media Report: December 22, 2009 31

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Recent Headlines:
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China Telecom reported a total of
191.09 million fixed-line subscribers by
the end of November...
>> READ MORE
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Media in 3Yrs
China Central Television (CCTV) aims
to generate more than a quarter of its
total revenues from its new media
businesses within three years...
>> READ MORE
Google's China Blues
Rumors have been flying about Goo-
gle's future in China ever since the
company's China head, Kai-Fu Lee,
resigned in early September...
>> READ MORE
Audi continues luxury segment domi-
nance
Audi AG, the luxury arm of Volks-
wagen Group, sold nearly 140,000
cars on the Chinese mainland in the
first 11 months this year...
>> READ MORE
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Hollywood-based Chinese director
John Woo will receive a lifetime
achievement award...
>> READ MORE
China now has 277 million instant
messenger users
China Internet Network Information
Center has released a report saying
that the number of China's instant mes-
senger users is more than 277 mil-
lion...
>> READ MORE
METAN Development Group (www.metandevelopmentgroup.com) China Media Report: December 22, 2009
adverBsers
to
focus
on
ge•ng
more
for
their
money.
With
 more
 adverBsers
 scrambling
 to
 stretch
 their
 adverBsing
 dollars,
 the
 idea
 of

branded
integraBon
will
 conBnue
to
be
the
new
buzz
word
amongst
agencies
and
 con‐
tent
 providers.
Several
 months
ago,
we
talked
about
 ‘Ugly
Wudi’
as
one
of
 the
first
 to

pioneer
 branded
 integraBon
 in
 Chinese
 television
 programming.
Today,
 there
 are
 al‐
ready
new
 shows
 on‐air
 and
 in
the
works
 that
 are
 riding
the
coafails
of
 ‘Ugly
Wudi’.

Yet,
with
over
3,000
TV
staBons
in
China
to
fill
of
content,
programming
sBll
has
a
long

ways
to
mature
before
it
meets
the
branded
integraBon
needs
for
global
brands.

At
 the
 end,
good
 content
 is
king.
I
note
‘good’
only
because
adverBsers
sBll
 need
 to

balance
the
idea
of
brand
image
with
that
of
media
value.
To
put
it
shortly,
I
do
believe

branded
content
will
be
more
readily
available,
but
media
value
is
not
about
availabil‐
ity
but
if
it’s
‘right’
for
the
brand.
ONLINE
–
THE
NEW
KID
ON
THE
BLOCK
Online
opened
up
in
 China
with
a
flurry.
With
over
360
million
Chinese
neBzens
in
just

over
10
years,
online
media
is
a
formidable
alternaBve
plaporm
to
that
of
television.

While
 Internet
 adverBsing
revenue
 growth
 in
 the
 US
has
 hit
 a
 plateau
 of
 under
 5%,

China’s
forecast
 of
20%
growth
 in
2010
 has
 digital
 adverBsing
agencies
appearing
out

of
nowhere
for
 the
first
 Bme
in
 the
past
few
years.
Aoer
 all,
this
is
where
the
key
elu‐
sive
demographic
that
the
majority
of
global
adverBsers
are
salivaBng
to
get
 a
chance

to
market
is
consuming
their
media.

For
2010,
the
big
quesBon
about
online
 adverBsing
is
not
about
 why,
but
how.
Unlike

television
 where
 adverBsing
 has
more
of
 a
defined
 role
 of
 where
 trends
are
 shaping

the
industry,
online
is
sBll
the
wild
west
 for
 adverBsers.
For
 one,
everyone
is
a
content

provider
 whether
 legiBmate
or
 not
which
 really
puts
more
pressures
on
 content
pro‐
viders
to
produce
more
quality
programming
and
on
plaporms
to
create
the
right
mar‐
keBng
and
promoBon
campaigns
to
make
online
adverBsing
a
legiBmate
success.

More
 importantly
for
 2010
on
answering
the
 ‘how’,
online
 is
sBll
a
fluid
and
 dynamic

plaporm.

AdverBsers
understand
the
language
of
ROI
(return
on
investment)
and
with

constantly
evolving
plaporms
without
rules
and
 metrics,
providing
a
 sustainable
busi‐
ness
model
will
constantly
be
in‐flux.
For
 2010,
it
will
be
a
year
of
proving
out
the
valid‐
ity
of
online
as
content
providers,
plaporms,
and
adverBsers
converge
to
figure
out
the

right
business
model
in
the
China
market.
TV
&
ONLINE
–
WHOLE
IS
GREATER
THAN
THE
SUM
OF
ITS
PARTS
From
my
personal
experience,
the
Chinese
have
a
very
‘silo’‐ed
way
of
thinking
of
me‐
dia
plaporms.
 As
 a
 content
 provider,
it
 is
 either
 television
 or
 online
 –
 never
 that
 of

both.
 With
 that,
 adverBsing
has
 evolved
 their
 thinking
 in
 the
 same.
 However,
 from

looking
at
 media
 consumpBon
 behavior,
I
believe
there
 will
 be
 a
convergence
 of
 the

two.
Whether
 that
happens
sooner
than
later,
I
wouldn’t
even
 know
where
to
 specu‐
late;
 but
 this
 inevitable
 convergence
 of
 plaporms
 will
 provide
the
 richest
 and
 most

effecBve
opportunity
for
adverBsers
and
content
providers
alike.
32
 OUR CONTACTS: Los Angeles Office Beijing Office
16542 Ventura Blvd. Cameo Center, Suite 806
Suite 203 No. 16 Guangshun Nan Avenue
Encino, CA 91436 Chaoyang District, Beijing 100102

P: 818.387.6553 P: 86-10-8476.4280
F: 818.387.6698 F: 86-10-8476.4290
E: info@metanmedia.com E: info.beijing@metanmedia.com

For
2010,
plaporm
convergence
will
shed
light
 driving
 sales….”
 –
 a
 statement
 that
 perfectly


to
 a
new
 way
of
 media
is
 consumed
 in
 China.
 encapsulates
the
 idea
of
 how
 online
and
 tele‐
The
idea
of
plaporm
convergence
is
more
than
 vision
can
work
together.
just
 having
 the
 content
 available
 on
 both
 on‐
line
and
 television,
but
uBlizing
both
plaporms
 CONCLUSION
to
 cross‐promote
 the
 content
 and
 ulBmately

enhance
the
viewer
experience.
For
 television,
 From
 online
 to
 television,
China
is
 an
 endless

online
 provides
 a
 whole
 new
 dimension
 of
 market
 of
 media
 opportunity.
 Despite
 the

watching
programs
from
audience
interacBvity
 ever‐changing
 media
 landscape
 and
 the
 diffi‐
and
 behind‐the‐scenes
 footage
 to
 an
 e‐ culBes
 following
 a
 moving
target,
I
do
 believe

commerce
 component
 and
 social‐networking
 Chinese
 media
 is
 evolving
 and
 shaping
 the

aspect.
For
 online,
 television
 provides
 the
 ul‐ right
way.

Bmate
plaporm
for
promoBon
to
drive
viewers

across
to
the
digital
threshold.
 As
2009
dwindles
to
its
final
 days,
I’m
person‐
ally
 encouraged
 and
 excited
 to
 tackle
 2010

In
 this
 convergence
 scenario,
 both
 television
 with
vigor
and
 a
new
focus
on
 brand
 adverBs‐
and
 online
 fills
 the
 void
 where
 neither
 one
 ing.
 Despite
 the
 ups
and
 downs
 of
 navigaBng

could
do
successful
on
its
own
 –
simply
put,
at
 through
the
China
market,
2010
only
promises

the
 end,
 adverBsers
 win.
For
 adverBsers,
 the
 more
of
the
same
–
and
I
wouldn’t
have
it
any

convergence
 of
 plaporms
 is
 the
 pinnacle
 of
 other
way.

media
 value.
 In
 a
 recent
 conversaBon
 with

Kenny
 Bloom,
CEO
of
 Visitek
 Holdings,
Bloom

states
 it
 best,
“At
 the
end,
brands
care
 about


Gordon Chu is VP of Business Development at METAN Development Group. For more information
and past newsletters, visit METAN’s site at http://www.metandevelopmentgroup.com/

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: December 22, 2009 33
December 29, 2009
CHINA MEDIA REPORT

Online Video: Present and Future

By
Max
Klein
|
December
29,
2009 rently
broadcasted
 TV
shows
and
movies

mklein@metanmedia.com This
 December,
 the
 WTO
 ruled
 against
 sBll
showing
in
theaters.


China’s
 appeal,
 thereby
 validaBng
 the

Poli6cal
Context U.S.’s
 complaints
 against
 the
 Chinese
 Overview
 of
 Online
 Media
 Marketplace

government’s
restricBons
 on
 foreign
 en‐ in
China
Aoer
 pampering
you
with
markeBng
and
 tertainment
distributed
on
the
Mainland.


media
 news
 for
 the
 past
 few
 months,
 Aoer
 the
 WTO’s
 Appellate
 Body
 adopts
 A
 few
 giants
 dominate
 China’s
 online

allow
me
to
 begin
this
newslefer
with
a
 the
 measures
 decided
 upon
 by
 the
 Or‐ content
 universe.
 
 Besides
 the
 online

much‐needed
 dose
 of
 poliBcs,
 of
 the
 ganizaBon’s
 officials,
 China
 will
 have
 30
 chat
 kings
 QQ
 and
 MSN,
 China’s
 web

internaBonal
persuasion.
 days
to
 respond
with
what
amounts
to
a
 portals
 (Sina,
 Sohu)
 and
 online
 video

plan
 of
 acBon
 to
 acquiesce
 to
 interna‐ sharing
sites
(Tudou,
Ku6,
Youku,
56.com,

Back
 in
 2007
 the
U.S.
Trade
Representa‐ Bonal
demands.

 Tencent)
reign
supreme.
 
Many
of
 these

Bve
 brought
 a
case
 against
 China
 in
 the
 Was
that
so
painful?

Perhaps,
but
 to
the
 portals
and
video
sites
have
locked
horns

WTO
focused
on
three
primary
concerns:
 extent
it
helps
us
understand
the
current
 over
copyright
disputes
over
the
past
few

first,
 China’s
 restricBons
 on
 imporBng
 state
 of
 China’s
 online
 media
 market‐ m o n t h s ,
 w i t h
 m i xe d
 o u t c o m e s .


foreign
 entertainment
 materials
 such
 as
 place
 and
 where
 it
 might
 be
 headed,
 I
 (hfp://www.media.asia/searcharBcle/20
books,
 CDs,
 movies,
 and
 DVDs;
 second,
 think
we
can
stomach
it.

 09_09/Youku‐files‐dual‐suits‐against‐Soh
China’s
 restricBons
 on
 distribuBng
 for‐ u/37169).
 
 The
 compeBBon
 is
 fierce
 for

eign
 books
and
music
electronically;
and
 China’s
 parBcipaBon
 in
 internaBonal
 or‐ dominance
in
the
marketplace.
third,
 China’s
 lengthy
 government‐ ganizaBons
 means
 it
 must,
 in
 theory,

mandated
 review
 process
 for
 foreign
 protect
 the
intellectual
 property
of
 both
 Earlier
 this
 year,
 Chinese
 online
 gaming

television
shows,
movies,
and
 music
 dis‐ domesBc
 and
 foreign
 enterprises.
 
 The
 giant
 (and
 NASDAQ
 listed
 company)

tributed
domesBcally.

 Internet
has
long
been
a
haven
of
shanz‐ Shanda
 Online
 Gaming
 InteracBve

hai
 (copied)
 content
 readily
available
 to
 agreed
to
 acquire
Ku6,
one
of
China’s
up

even
 the
 least‐savvy
 wangyou
 (literally
 and
 coming
 online
 video
 sites.
 
 The
 ac‐
lorem
These
 ipsum
three
 dolor
disBnct
 met set is‐
but
 interrelated

‘web
 friend,’
 or
 internet
 user).
 
 Video
 quisiBon
 marks
 the
 first
 Bme
 a
 Chinese

sues
riled
U.S.
and
Chinese
trade
officials

quam nunc parum
for
 the
 befer
 part
 of
 two
 years,
 with
 sites
 have
 ooen
 ignored
 internaBonal
 online
video
sharing
site
finds
itself
listed

other
 more
 run‐of‐the‐mill
 disputes
 copyrights
 and
 posted
 versions
 of
 cur‐ on
 a
 Western
 stock
 exchange,
 an
 inter‐
thrown
into
the
mix
(Chinese
Bres?!).

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: December 29, 2009 34

NEWS IN CHINA:
Recent Headlines:
TV Ad Rates to Soar Across China
The introduction of new regulations to
limit commercial airtime across China
is likely to result in a 24 percent jump
in TV advertising rates...
>> READ MORE
CCTV: Internet TV Station Broadcast-
ing
China Central Television (CCTV) an-
nounced December 28 that it had
launched its nationwide Internet TV
station on December 17...
>> READ MORE
Unicom Launches Large MMSs, iPhone
Sales Hit 300K
China Unicom (NYSE:CHU, 0762.HK,
600050.SH) released a multimedia
messaging service (MMS), called "Le
Mei,"...
>> READ MORE
Audi continues luxury segment domi-
nance
Audi AG, the luxury arm of Volks-
wagen Group, sold nearly 140,000
cars on the Chinese mainland in the
first 11 months this year...
>> READ MORE
China's public spending to exceed
$133b this year
China will likely spend more than the
908 billion yuan ($133 billion) the
budget called for in public spending
this year...
>> READ MORE
Xinhua's top ten news events of 2009
Xinhua top ten domestic news events of
2009, in chronological order, are:
>> READ MORE
METAN Development Group (www.metandevelopmentgroup.com) China Media Report: December 29, 2009
esBng
conundrum
for
a
firm
in
this
space.


The
online
video
‘law
 of
the
 jungle’
necessitates
that
sites
will
 post
 content
 which
at‐
tracts
 the
 most
 page
 views
and
 maximizes
 adverBsing
revenue,
 the
 lifeblood
 of
 free

content
 online
video
 sharing
 sites.

 
 Through
 the
merger,
Shanda
expands
 its
already

formidable
 on‐
 and
 off‐line
 media
reach
in
 China,
and
 will
 leverage
 the
 extent
 of
 its

resources
to
ensure
the
budding
site
flourishes.


With
more
 internet
 users
(338M,
and
 growing
by
the
hour)
than
 the
 U.S.
(227M,
and

growing
significantly
slower),
and
a
populaBon
that
increasingly
turns
to
the
internet
as

a
source
of
entertainment
(see
Metan’s
newslefer
on
 Internet
Cafes,
LINK,
and
online

video,
 LINK),
 the
 online
 video
 marketplace
 will
 need
 to
 accommodate
 an
 audience

growing
 in
 both
 size
 and
 sophisBcaBon.
 
 The
 sites
 might
 also
 find
 themselves
 well‐
posiBoned
in
one
of
this
millennium’s
most
lucraBve
adverBsing
revenue
pools.


Online
market,
Announcements
by
Ku6/Sohu
and
Youku
On
 Tuesday,
 December
 22,
 2009,
Ku6,
along
with
 partner
 Sohu,
announced
 that
 the

video
sharing
site
and
web
portal
would
each
invest
rmb
50,000,000
(for
a
total
of
rmb

100,000,000)
to
acquire
legally
licensed
content
copyrights
both
domesBcally
and
from

overseas.

Ku6
and
Sohu
share
similar
blood;
Ku6
CEO
Kevin
(Shanyou)
Li
spent
years
at

Sohu
under
the
portal’s
renowned
Internet
tycoon
Charles
(Chaoyang)
Zhang.


It
appears
there’s
no
hard
feelings
between
the
one‐Bme
colleagues,
as
Mr.
Zhang
par‐
Bcipated
enthusiasBcally
in
Mr.
Li’s
arpully
orchestrated
press
conference
on
December

22
at
the
Grand
 Hyaf
Hotel
 in
Beijing’s
iconic
Oriental
Plaza.

The
conference
featured

a
Chinese
drum
performance
by
qipao‐clad
dancers,
a
laser
light
show,
and
yes,
inter‐
esBng
viewpoints
from
industry
experts.




Tudou,
the
video
sharing
giant,
wasted
no
Bme
in
announcing
the
establishment
 of
its

own
 rmb
 100,000,000
 content
 development
and
 acquisiBon
 fund
 on
 Wednesday,
De‐
cember
 23.

It
remains
 to
be
seen
exactly
what
 content
 these
sites
 have
their
 eye
on,

and
 how
 the
 market
 for
 foreign
 copyrighted
 content
 broadcast
 online
 in
 China
 will

shape
up
amongst
fierce
compeBBon.


Specula6on
for
the
future
of
China’s
online
video
market
These
pledges
by
online
video
sites
Ku6,
Sohu,
and
Tudou
to
take
down
pirated
content

exemplify
a
 trend
 in
 China
 towards
increased
 protecBon
 of
 internaBonal
 copyrights.


That
 being
 said,
 the
 issue
 of
 broadcasBng
 pirated
 content
 presents
 a
 prisoners’
 di‐
lemma
for
 online
 video
 sites.
 
Talk
is
cheap,
and
 despite
 industry
leaders’
signing
the

China
 Online
 Video
 AnB‐Piracy
 Alliance
on
 September
 15,
2009,
 pirated
 content
 has

not
been
altogether
eliminated.

Companies
risk
losing
valuable
adverBsing
revenue
if

appropriate
legal
and
compeBBve
steps
are
not
taken.

Ku6
 and
 Sohu,
 along
 with
 Tudou,
 might
 know
 something
 their
 compeBtors
 do
 not.


Perhaps
they
foresee
a
Bme
in
the
not‐so‐distant
future
when
pirated
content
holds
no

place
in
the
online
video
marketplace.


This
 first‐mover
 strategy
could
 prove
vital
 to
 their
 survival.
 
Or,
 the
 relevant
 Chinese

authoriBes
have
already
made
it
very
clear
 to
the
online
industry
that
it
will
no
longer

35
 OUR CONTACTS: Los Angeles Office Beijing Office
16542 Ventura Blvd. Cameo Center, Suite 806
Suite 203 No. 16 Guangshun Nan Avenue
Encino, CA 91436 Chaoyang District, Beijing 100102

P: 818.387.6553 P: 86-10-8476.4280
F: 818.387.6698 F: 86-10-8476.4290
E: info@metanmedia.com E: info.beijing@metanmedia.com

tolerate
broadcasBng
pirated
content,
and
that
 from
the
government.
 
The
portals
must
man‐

the
sites
 will
 have
to
 find
 new
 ways
 to
afract
 age
 their
 relaBonships
 with
 TV
 outlets
 to
 en‐
viewers
or
 else
 cough
up
 the
 funds
to
 acquire
 sure
 a
 ‘harmonious’
and
 simultaneous
 media

copyrights.

Either
way,
change
is
afoot. industry
growth.



Conclusion Indeed,
 if
 these
 newly‐announced
 funds
 are


any
indicaBon,
China’s
 web
 portals
 are
 on
 the

One
last
caveat
to
this
equaBon:
China’s
state‐ verge
 of
 building
 up
 large
 libraries
 of
 online

controlled
media
starts
and
ends
with
TV.

The
 content,
both
current
 and
past,
to
elbow
their

CCTV
live
 adverBsing
 aucBon
 this
 year
 nefed
 way
 into
 the
 video
 entertainment
 market‐
over
 $1.25B
 in
 a
mafer
 of
hours.
 
 If
China’s
 place.
It
 remains
to
be
seen
exactly
how
these

online
 video
 portals
 grow
 too
 big
 too
 fast,
 portals
 will
 posiBon
 themselves
 against
 each

sucking
 ad
 dollars
 away
from
 CCTV
and
 satel‐ other
 and
 against
 the
 rest
of
 the
industry.

 I’ll

lite,
provincial,
and
 city
 TV
 staBons,
they
 can
 be
watching,
and
I
hope
you
will,
too.


expect
 to
 get
 an
 earful
 (and
 possibly
 more)


Max Klein is Manager of Business Development at METAN Development Group. For more infor-
mation and past newsletters, visit METAN’s site at http://www.metandevelopmentgroup.com/

METAN Development Group (www.metandevelopmentgroup.com) China Media Report: December 29, 2009 36