10 February, 2006

china’s internet hype

AsiaPundit has an itch that he, once again, needs to scratch: Please, please, please stop calling China the world’s second largest internet market!

The above link is to a CBS report, but AsiaPundit could have picked from thousands of blog entries and news items.

Below are the domestic revenue numbers and estimates for the top search engines in each of four markets - the US, Japan, South Korea and China. These numbers are just pulled from quick searches and are not deep analysis. Though they should demonstrate something about the so-called second largest internet market.

USA: Google

, Google reported total revenues of $6.139 billion, an increase of 92.5% over revenues of $3.189 billion in 2004. Revenue growth was attributable to both Google sites and Google network sites…

International Revenues - Revenues from outside of the United States contributed 39% to total revenues for the year compared to 34% in 2004.

Revenues from US were $3.75 billion

JAPAN: Yahoo Japan Corp

For the full-year to March, the company expects to post net profit of 46.40-47.95 bln yen on revenue of 175.24-178.44 bln yen.

(fiscal year ends 31 March)

About $1.48 billion at low end of guidance.


Sure, NHN is still a midget compared with Google. Its revenues leapt 53% last year, to $351 million, while earnings should come in at $86 million, Daewoo Securities estimates (for 2005).

Estimated revenues $351 million

CHINA: Baidu.com

Total Q1 revenue $5.2 million.

Q2 at Rmb65.2 million (Rmb8.3/$1) $7.8 million

Q3 2005 was Rmb83.2 million (Rmb8.1/$1) $10.3 million

Baidu.com, Inc. announced that it expects to generate total revenues in an amount ranging from RMB102 million ($12.6 million) to RMB106 million ($13.1 million) for the fourth quarter of 2005.

That would be a ballpark total of $35.9 million (not adjusting Q1 for revaluation and going with low end of guidance)

There are many differences that could be noted about the above companies - Google is very big in advertising while Yahoo Japan is big at auctions - but these are not the biggest reason for the discrepancies. These are the top brands in their respective markets and the revenues they generate should be a more important indicator about the size of the market than the raw number of users.  Baidu is expecting revenues of about one-tenth of Naver, and a just fraction of those of Yahoo Japan or Google.

AsiaPundit is not downplaying the fact that there is significant growth opportunities for Chinese internet businesses, the quarter-on-quarter rise in Baidu revenues clearly indicate that there are.

However, the amount of cash that can be gained through direct investment here is still small. Picking a few local Chinese stocks - or playing the venture capital angle - is a far more reasonable way to make money through internet investment in China.

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by @ 12:24 pm. Filed under Japan, South Korea, China, Asia, East Asia, Northeast Asia, Web/Tech

One Response to “china’s internet hype”

  1. Dong Zhou Says:

    1. You are only comparing search engine markets, not the entire Internet sector.
    2. Other Chinese Internet companies has much bigger revenue than Baidu (e.g., Netease had $200M revenue in latest quarter)
    3. Japanese Internet market is clearly bigger than Chinese market. Korean market is probably smaller though.

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