Pros and Cons of Web Products in the Chinese Market

By Niniane

In recent years, there has been a good deal of talk about the rising importance of the Chinese market. Companies hold seminars on how to conduct business in China. Many of my American friends took Mandarin classes. Given the attention, I am surprised at the relative lack of web sites made in Silicon Valley focusing around the Chinese market; the blogosphere proliferates with coverage on US-centric products.

Recently my college friend and I made a web site to accumulate user reviews and photos of Chinese hotels. In going through this process, I came up with a few thoughts on the pros and cons of making a software project focused on the Chinese market.

A couple of the benefits:

1. If you base your engineering in China, talent is cheaper to recruit. From salary numbers that I’ve heard, I estimate that it is six times cheaper to hire an engineer in China vs. the US. This means you can stretch out an angel round for a year or two. Although we did not take advantage of this perk, many of our friends have talked about it.
2. The potential market is large. The number of Chinese internet users rose 42% in 2008 and now surpasses the size of the American internet population. This number is also growing more quickly in China than the global average, especially in rural areas.

A few thoughts on the challenges:

1. CPM from AdSense and other sponsored ads are often lower on Chinese-language sites. This is a common way for smaller sites to generate income, so it can be a hurdle. However, other methods of income (virtual goods, lead generation) are as viable in the Chinese market. Our site employs both Adsense and lead generation.
2. The best products are made by people who understand the customer. Some developers have voiced a concern that they lack this intuitive knowledge of what draws a Chinese user to the site. The most visible manifestation centers around how Chinese web sites appear cluttered with links compared to most American web 2.0 sites.

There are other perks and obstacles that I haven’t addressed. If you have thoughts on this subject, please chime in on the comments!

Niniane is the co-creator of hotelfoo.com. Previously she worked as an engineering manager at Microsoft and Google. She resides in Mountain View, California.