Tencent.com

All the kids in China really want is to play games online, an insight that Ma Huateng, founder of Tencent.com, is using to create a user base in China that’s more dominant than Google’s is in America, reports David Barboza in The New York Times (2/5/07). “They have what I call the largest virtual park in China,” says Richard Ji, a Morgan Stanley analyst. “And in China, the No. 1 priority for internet users is entertainment; in the U.S. it’s information. That’s why Google is dominant in the U.S., but Tencent rules China.” A key reason for that difference is “the youthful face of China’s online community. In the United States, roughly 70 percent of internet users are over the age of 30; in China, it’s the other way around.”

So, where “America’s internet users send e-mail messages and surf for information on their personal computes, young people in China are playing online games, downloading video and music into their cellphones and MP3 players and entering imaginary worlds where they can swap virtual goods and assume online personas … Tencent combines aspects of the social networking site MySpace, the video sharing site YouTube and the online virtual world of SecondLife,” earning “the bulk of its revenue from the entertainment services it sells through the internet and mobile phones. “

Tencent denizens use a virtual currency — called Q-coins — “which allow customers to shop online for games, music and even virtual furniture.” This has led to the development of an “underground economy in Q-coins.” Although “the coins are not redeemable for cash,” the Chinese government is “studying whether Tencent’s online tokens were a threat to China’s currency” and stands ready to ”crack down on the coins if they were used to engage in money laundering schemes.” Tencent founder Ma Huateng, 35, says the Q-coins only add "vibrancy to the economy." Launched in 1998, Tencent went public two years ago, and today has a market value of $7 billion, posting profits of $100 million over the first three quarters of 2006. Ma, himself, is said to be worth some $850 million. ~ Tim Manners, editor

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