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Looking ahead to big $$$
Dot-coms’ survival tactics

By Eva Ling,  Arith Leung & James Chen

Dot-coms soared. Dot-coms crashed. Dot-coms have come and gone. People label dot-coms as “money-burning” businesses.

However, not all Internet companies are suffering losses.

Hongkong.com is one of the few that manage to make money out of this business.

Hongkong.com doubled its net income to $4.5 million in the third quarter of 2000.

Based on audit guidelines endorsed by PricewaterhouseCoopers, an international consultancy firm, Hongkong.com was getting 5.6 million daily pageviews by September 2000.

It also had 1.35 million registered subscribers at that time.

Mr. Rudy Chan is the chief executive officer of Hongkong.com Corp.

According to Mr. Chan, the goal of the company is to satisfy users’ needs and to build loyalty among users.

Hongkong.com was rated as the most “attached” site in Nielsen/Net Ratings’ inaugural poll conducted in November 2000.

E-match is a feature of Hongkong.com. It is a highly interactive online love-matching platform.

“We also help different companies and businesses to find their dream matches or partners by using the e-match platform,” Mr. Chan said.

“They just need to state their criteria and preferences for their partners in the business.”

Creative advertising and promotional strategies are keys to Hongkong.com’s success.

However, successful examples like Hongkong.com are still rare.

In fact, many well-known dot-coms in Hong Kong, like Sina.com and Hkcyber.com, are still running at a loss.

Miss Cindy Lee is the public relations manager of Sina.com.

“As of now, our company has about US$12.6 million in hand globally,” Miss Lee said.

“We are still running at a loss despite a 296 percent increase in our net revenue last year.”

According to Sina.com’s financial advisers, their capital can subsist for about 4 years.

Miss Lee thinks there are several reasons that dot-coms lose money.

First, some dot.coms hire too many editorial staffers to provide contents.

Professional editorial teams are costly and thus a heavy burden.

Second, some dot-coms spend too much money on promotional campaigns, money that cannot be recovered in a short time. This is a fatal blow.

Third, some Internet companies take over weaker firms and made bad investment decisions.

Miss Lee admitted that Sina.com has encountered the above difficulties.

Nonetheless, they managed to solve them.

To solve the problem of a costly editorial team, Sina.com bought contents from sites like Cashonline.com, thus greatly reducing costs.

To promote its site, Sina.com has created “Sinaman”, a cartoon character, instead of hiring celebrities, thus reducing promotional costs.

At the beginning, Sina.com bartered with some media companies like Metro Broadcast to promote its web site.

Such cooperation in the form of barters, instead of paying advertising fees, again saved them money.

Hkcyber.com was founded by media critic Mr. Wong Yuk Man.

It had suffered a $16 million loss by the third quarter of 2000, although it carried out numerous remedial plans.

Nevertheless, Mr. Wong is confident and optimistic about his business.

Said he: “We could probably break even by the end of 2001.”

Hkcyber.com had approximately 300,000 users at the end of 2000.

But to him, the pageviews of Hkcyber.com are no longer his target.

“Our web site has already gained popularity in Hong Kong,” he said. “Now, we are concerned about users’ actions.

“Internet companies should have a global perspective. Hong Kong itself is  only a small market.”

Hkcyber.com plans to cooperate with Internet service providers in Canada to meet the needs of ethnic Chinese people in North America.

But the first thing they need to do is to set up servers in Canada in order to ensure that the web site can be viewed with good quality from abroad.

Unlike Internet companies that acquire and combine with traditional media, Mr. Wong said Hkcyber.com would not go back to the old economy.

Instead, Hkcyber.com will become an interactive and three-dimensional medium.

Although some dot-coms have closed down recently, Miss Lee of Sina.com is still optimistic because the Internet will continue to be trendy in the future.

Sina.com’s target is to break even by the years of 2002-2003.

“For advertising, we are now turning our eyes to the mainland market,” said Miss Lee.

Some big companies on the mainland like Kodak have become Sina.com’s advertisers.

To generate revenue, Sina.com is planning to charge customers a small fee to keep them away from advertisements.

Said Miss Lee: “It may sound strange that users need to pay for not receiving any advertisements.

“However, many people think the advertisements are too annoying. They are willing to pay for deleting them.”

She pointed out that by doing so, users on the one hand would not be bothered by the advertisements. On the other hand, advertisers would reduce wastage in their advertising strategies.

Apart from these, Sina.com is planning to charge users a small fee for cleaning  up computer viruses for them.

It plans to provide free virus checking service for members. If their customers’ computers are attacked by viruses, the company will provide anti-virus software and charge them accordingly.

Said Miss Lee: “Since Sina.com is a global company, we hire workers in different countries according to their wage rates.

“We hired some frontline workers in China where the labour cost is low.”

Apart from breaking even in 2002, Sina.com also aims at being the No. 1 Chinese Internet content provider.

Some dot-coms charge for information in order to earn more.

Mr. Chan of Hongkong.com does not think it is the right time for initiating this practice.

He said: “Every piece of information, product or service has its market price. In a free market like Hong Kong’s, the market price is zero.”

He said that billing for information has not gained market acceptance yet, but he is open to the idea.

Unless the information provided is very unique, the public will not pay for it.

He said, “If we are confident that the information bears a high market price and market acceptance of billing information is likely to develop, we may take this lead.”

Many dot-coms are struggling just to break even. Which ones will survive is anybody’s guess.

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