Page 84 - How China Is Winning the Tech Race

MBA from Stanford, along with his reputation as a Chinese Internet go-getter,
make for a Clintonesque rags-to-riches story. Born in the central Chinese city of
Wuhan, Chen, age 38, is chairman
and CEO of Oak Pacific Interactive,
“The biggest problem for Oak Pacific is that a Beijing-based social networking
it does not have a strong core business which company that is in the center of the
it can sustain and scale.” hottest trend going: Web 2.0, online
sites where a circle of friends chat,
Tangos Chan,
blog, share videos and music, send
publisher, China Web 2.0 Review
instant messages to one another, and
play games online. His social net-
working powerhouse is an unpar-
alleled collection of 11 sites, most of them modeled after successful Web 2.0 sites
in the United States. Chen runs the Chinese wannabes of community network
MySpace (Mop.com), video-sharing site YouTube (UUMe.com), networking
portal Facebook (Xiaonei.com), and classified listings site Craigslist
(RenRen.com). The master plan behind this grand scheme is quick gains and
three big letters: IPO (initial public offering).
The disparate assemblage Chen has built through acquisitions and
internal development in five years has served as a test for the CEO’s ability to
keep juggling without becoming overextended. Tangos Chan of China Web
2.0 Review says that Chen’s performance could be better. “The biggest
problem for Oak Pacific is that it does not have a strong core business which
it can sustain and scale,” he says.
In 2006, Chen raised $48 million primarily from Western venture firms
and was gunning for an IPO with $7 million in profits and $50 million in
revenues largely from advertisers drawn to some 200 million user clicks daily
on its Web pages. But the start-up’s small and shaky foundation, which is
heavily reliant on mobile phone services, reversed the plan. A government reg-
ulatory change in the wireless service business cut into revenues; that resulted
in financial losses and forced Chen to lay off 200 of the 800 employees. Now
Chen needs to milk alternatives such as paid subscriptions and premium
services. This is where his experience in keeping users glued to sites comes in
handy. Chen calls himself the company’s chief stickiness officer.
Chen soon will get to see how good he really is. Rupert Murdoch and his
Chinese-born wife, Wendi Deng, are going after some of Chen’s goodies.

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