Introduction
Though it was in 1993 that China entered the Internet for the first time, the real rise of the Chinese Internet was in 1998. In this year, the former of Sina-Rich Win Co. Ltd, claimed that it merged the biggest Chinese Web site, Huayuan Information, and set up the largest Chinese Web site, Sina. This event aroused the attention of people both home and abroad. Just in this year, Ericsson put out a Chinese search engine—Sohu, which developed into a comprehensive portal on this basis. In the same year, NetEase bought back the www.netease.com domain name, succeeded in putting out the NetEase comprehensive Web site. Generally speaking, 1998 is not only the year that the Internet rose up in China but also the year that portals began to play an important role in China. In fact, the three portals have always received much concern since their establishment. From the marching into NASDAQ in 2000 to the “Wang Zhidong” incident and NetEase stopping brand incident in 2001, the first severe winter of Internet industry comes followed by the transition of portal in 2002, Wireless World War in 2003. We can find out that the development of the portal has vividly reflected the development of Chinese Internet enterprise since 1998.
There are some researches about Chinese portals, but most of the papers are about the development of portals, discussing the development environment and strategy of portals from the macroscopic aspect. This article intends to find out the similarities and differences between Sina and Sohu, two main portals of China, by comparing the development strategies of them. Finally, several suggestions of promoting the development of Chinese portals have been proposed.
background
Internet portals often act as gatekeepers to the Internet. Users may begin their sessions on the Internet by visiting a portal, and obtain information like news, weather, or stock quotes. They may move on to browse products, gather information, or even make purchases only after the Web sites of interest have been located through the search process. Portals also provide many personal communication services in the form of e-mails, message boards, and so forth. Moreover, most of these services are offered to users free-of-cost. It is no surprise then that portals are some of the most visited sites on the Internet. There are already many researches about portals. Internet portal representatives attention economy, its business model has become one of the core competitiveness of enterprises.[4][6] Some researches classify the portals according to its general properties and by analyzing the characteristic of information resources on portals, claim for standardization, sorting and organization of the Internet information resources [5] [7]. There are also paper studies about the business model of how to profit for the first portal Web sites [8]. Clarke and Flaherty (2003) studied the Web-based B2B portals and pointed out a process for effective B2B portal development was introduced with the five key stages of define, design, develop, deliver, and defend the portal [1]. Telang and Mukhopadhyay (2005) pointed out that that it is a common goal for Web portals to develop a loyal user base that visits the site frequently and spends sufficient time per visit. Driving traffic to their sites and making users stay for longer periods are important for portal firms because Internet-based advertising is their main source of revenue [3]. Gallagher and Downing (2000) made an empirical study of competition the Web portal industry [2].
brief introduction of sina
SINA Corporation (NASDAQ: SINA)[9] is a leading online media company and value-added information service (VAS) provider for China and Chinese communities worldwide. With a branded network of localized Web sites targeting Greater China and overseas Chinese, SINA provides services through five major business lines including SINA. com (online news and content), SINA mobile (mobile value-added services), SINA online (community-based services and games), SINA.net (search and enterprise services), and SINA e-commerce (online shopping and auctions) offering Internet users and government and business clients an array of services including online media and entertainment, online fee-based VAS/wireless VAS, and e-commerce and enterprise e-solutions. With 180 million registered users worldwide, 450 million daily page views, and over 42 million active users for a variety of fee-based services, SINA is the most recognized Internet brand name in China and among Chinese communities globally. In various surveys and polls, SINA has been recognized as the most valuable brand and the most popular Web site in China. For 2003 and 2005, SINA was ranked the “most preferred Web site” in China according to the Chinese Academy of Social Sciences and considered “the most respected Chinese company” for two consecutive years in 2003 and 2004 by the Economic Observer and the Management Case Study Center of Beijing University. At the same time, South China Weekend honored SINA with the prestigious award of the “Chinese Language Medium of the Year” in both 2003 and 2004.
Sina locates itself on the online media business and value-added information service provider. Its business strategy includes two operation centers, three major business lines, and four strategic matrixes. Sina gradually runs toward multiple business channels revenues model. Unceasingly Sina develops the business scope and the strategic partner, and with the aid of the fund, the brand, and the platform superiority, it seeks the new business development opportunity.
BRIEF INTRODUCTION OF SOHU
Sohu.com Inc. (NASDAQ: SOHU)[10] is China’s premier online brand and is indispensable to the daily life of millions of Chinese who use the portal network for their news, search, e-mail, wireless messaging, instant messaging, browsing, games, and shopping. Sohu has built one of the most comprehensive matrices of Chinese language Web properties and proprietary search engines consisting of:www.sohu.com, the mass portal and leading online media destination; www.sogou.com, an interactive search engine with over one billion Chinese language indexed Web pages; www. go2map.com, a leading online mapping service provider; www.chinaren.com, the online alumni club; www.17173. com, the games information portal; www.focus.cn, a top real estate Web site; and www.goodfeel.com.cn, a wireless value-added services provider.
This network of Web properties offers the vast Sohu user community a broad range of choices regarding information, entertainment, communication, and commerce. Sohu.com offers both corporate services and consumer services. Sohu’s corporate services consist of online advertising on its matrices of Web sites as well as paid listings and bidding listings on its in-house developed search directory and engine. Sohu’s consumer services consist of three types of services: Wireless value-added services such as news, information, ring tone, and picture content sent over mobile phones, online games: Sohu operates two massively multi-player online role-playing games and a casual game platform, and e-commerce: Sohu also manages an e-commerce platform.
At the very beginning, Sohu did a good job and we can analyze its successful strategies as follows.
Successful Financing Strategy
Sohu is the first firm to introduce venture capital, and is one of the firms that successfully introduced venture capital in china. Venture capital does give a strong support to the growth of Sohu. The CEO of Sohu, Mr. Zhang, made a good use of venture capital to start the company. In late 1996, Mr. Zhang persuaded Edward Robert and Nigeluopangdi to invest seed capital of about 225 thousand dollars. In the April 1998, Mr. Zhang got the second venture capital of about 2.15 million dollars from Intel, Dow, Hong Kong Hang Lung Group, IDG International Data Group, andAmerica Harrison Corporation. The third venture capital was achieved in April 1998.
Successful Production Strategy
Sohu makes search engines its main products, which is a very wise decision. There is so much information on the Internet that people can not find what they like in a short time. On the other hand, many Web sites can not find netizens. Search engines can help netizens find what they need and can also lead netizens to Web sites by hyper linkers. Search engines connect Web sites and netizens, which meet the need of the market in time. Mr. Zhang put forward “content is the king” and put much importance on the content building, which causes mutual enhancement between search engines and content.
Successful Public relations campaigns Strategy
The CEO of Sohu, Zhang Chaoyang’s most famous contribution to the world is “attention economy,” which is considered as the basic theory of the “money burning” campaign. It is believed that if the Web sites attract people’s attention, the hit rate is sure to rise. This theory is accepted by most Chinese, which made 1999 the “money burning” year. Most Web sites burned millions without any fear.
Successful Marketing Strategy
Sohu applies almost the same marketing strategy as Yahoo-make full use of the advantages of portals. It uses free services to attract netizens to seize its competitive position by the large number of enrolled netizens. In the era of Sohu, most Chinese Web sites are lacking in content, and what attracts netizens is e-mail, charting, news, surfing, and making friends. Besides, the narrow bandwidth and large number of netizens usually make the Internet crowded and the cost of surfing on the Internet is high, and if Web sites a charge service fee, there will be fewer people visiting the Web sites. Sohu uses the free service strategy and has attracted many netizens. There are also many Web sites that follow Sohu’s free strategy and contribute to the development of the Chinese network.
THE DEVELOPMENT STRATEGY BETWEEN SINA AND SOHU
Similarity on the Development Strategy
Manage in Pluralism
Although the Cyber-economy depression and lasting drop of NASDAQ Index are the important reasons obstructed in the development of both domestic and international portals in 2000, the inside factor remains the main reason that portals got into hot water. Ninety percent of the income of portals came from online advertisement, and 40% of the ad income came from Network Company, which made was in a very single income mode for a long time. In this situation, most portals began to carry out new strategies and use pluralistic management including income pluralism and customer pluralism in order to reduce the reliance on the advertising income and to seek lasting profit growth.
As for the income pluralism, Sina has formed five major frameworks of business development including SINA.com (online news and content), SINA mobile (mobile value-added services), SINA online (community-based services and games), SINA.net (search and enterprise services), and SINA e-commerce (online shopping and auctions). Sohu has also formed several major frameworks including sohu. com, the mass portal and leading online media destination; sogou.com, an interactive search engine with over one billion Chinese language indexed Web pages; go2map.com, a leading online mapping service provider; chinaren.com, the #1 online alumni club; 17173.com, the games information portal; focus.cn, a top real estate Web site; and goodfeel. com.cn, a wireless value-added services provider.
The customer pluralism refers to the advertiser’s pluralism and goal market users’ pluralism. Both Sina and Sohu built .net Web site and specially offer the comprehensive service to enterprise users. Compared with other companies, the advantage of the portal lies on the media and technological development.
Network Service Commercializing
Both Sina and Sohu imitated the mode of American Yahoo more or less, especially Sohu by providing overall free products and services to users on the Internet including free information service, free postbox, free community service, free software download, free game, etc. However, with the present problems, many portals began to do network service commercializing besides pluralistic management. Since 2001, Sina has successively introduced chargeable service such as the WAP Web site, Sina Store, chargeable mailbox, enterprises service platform, etc. Although Sohu formally put out its free mail system of a new generation, “Sohu’s lightning mail,” on August 17, 2001, it put out chargeable service by introducing it in other products and services such as message service and online, Sohu online introduction, etc., store of Sohu, and enterprise of Sohu.
Cooperation with Traditional Industry
In 2000, the biggest ISP company, America Online, joined with Time Warner, which let Internet enterprise see another kind of mode—network enterprise begins to involve the traditional industry and realize the integration with traditional industry. Both Sina and Sohu tried it this way. For example, Sina and Sunshine Satellite TV carried out stock right purchase and business combination. On January 6, 2003, Sina merges the news dragon of Guangzhou and remedied the deficiency in wireless business of Sina. On February 27, 2004, Sina claimed to purchase the value added service provider Crillion. On October 30, Sohu merged the 17173.com and moved toward the matrix of portals from the single portal.
difference on the development Strategy
Sina Pays Attention to Globalization, and What Sohu Emphasized is Localization Sina has four wholly owned subsidiaries: Hong Kong-Stone Group Corporation, Sina Hong Kong Ltd, Sina online registered in California, including two Web sites (North America and Taiwan), and the British Virgin Islands registered company Sina. Stone was one of the most popular Web sites in China and Huayuan Information Network has been the largest and most influential Chinese Web site in the North American region, with two sites in North America and Taiwan before they were merged by Sina. Sina integrated all of these advantages, which promote the development of Sina. Sina aims at the global Chinese community and provide high-quality personal and corporate users of value-added information services through multi-platform.
While Sohu is born on the Chinese mainland market and has very strong cultural uniqueness, its classification retrieval system channels and columns are arranged according to the thinking habits of Chinese people. In 1998 and 1999, Sohu set up its branches in Shanghai and Guangzhou, East China and South China. In 2000, Sohu put forward the localization strategic plan, targeting all unique human vivid geographical backgrounds and the traditional customs of local people. Various cities, Sohu edition, have been created.
The News of Sina and the Search Engine of Sohu
Sina has many media partners in China such as Xinhua News Agency, Renmin Ribao, CCTV, China news agency, and the China international broadcasters. They provide Sina with substantial information. Sina has a group of news editors; they classify millions of select feature news articles suitable for Sina and then put them into different columns. Sina has become an important news window of the world, which reports both domestic and international events. The news of Sina has become one of the core competitions.
Sohu makes search engines its main product, which is a very wise decision. There is so much information on the Internet that people can not find what they like in a short time. On the other hand, many Web sites can not find netizens. Search engines can help netizens find what they need and can also lead netizens to Web sites by hyper linkers. Search engines connect Web sites and netizens, which meet the need of the market in time. The CEO of Sohu, Mr. Zhang put forward “content is the king” and put much importance on the content building, which causes mutual enhance between search engines and content.
Sina and Sohu have Different Merging Impetus
Both Sina and Sohu have their integration strategies, however, their strategies are different. In September 2001, Sina and the Sun Media finished the equity acquisitions and operational integration. On January 6, 2003, Sina M & A is the leading mobile value-added service provider in Guangzhou—Dragon. On December 9, 2003, Sina announced the acquisition of online travel service companies in Shanghai’s wealth trip hotel booking network. February 27, 2004, Sina also announced the acquisition of mobile value-added service provider Crillion.
Sina will aim at M & A in traditional industries. Compared to Sina, Sohu’s three major M & A such as ChinaRen. com, 17173.com, and the real focus of a network are three information portals. Sohu’s merge aims at the sub-sector and the establishment of his son portals.
CONCLUSION
Generally speaking, the development strategy of Sina can be summarized as follows: Utilize its media advantage of the regional and news, set up the brand awareness of Sina, and drive the development of other business. At the same time, Sina should merge companies, which can make up the mm weak tendency of the new developing business. Sohu set up D with the search engine and it should set up its localization advantage, promote its Web sites, establish the brand images of new master, and explore diversified business modes to achieve the constant development.
1. From the previous comparison, we can find that portals should make full use of their advantages and make development plans according to their own attributes.
2. Portals must find out the differences between it and other portals so as to stand out in numerous portal competitors.
3. Internet is our second world that is changing constantly and developing fast, which requires enterprises of the Internet to have high flexibility so that they can make the corresponding response to change.
4. There is something in common in the development of both Sina and Sohu, which is a development trend of Chinese portals.
5. We can find from the development trend of portals, merging, especially the one can achieve complementary development, is a kind of unavoidable behavior in evolution of portal.
KEY TERMS
Attention Economy: If the Web sites attract people’s attention, the hit rate is sure to rise.
Content King: Put forward by Zhang Chaoyang, CEO of Sohu. Content is most important.
Huang Zhidong Event: Refer to the Wang Zhidong once the CEO of Sina abdicates his CEO from Sina in2001 for some personal affairs. This event has a large effect on Sina.
Money Burning Campaign: A lot of money has been spent on the Web site to make it more attractive so that more netizens will visit it.
Sohu Lightning Mail: Issued by Sohu on August 17, 2001, it put out chargeable service by introducing in other products and service such as message service and online, Sohu online introduction, etc., store of Sohu and enterprise of Sohu.
Value-Added Service: Service that will bring new revenue to portals.
WAP Web Site: In terms of this category refers to Web site that can be viewed using WAP technology on a mobile phone.
