The Rise of the Internet and its Impact on Censorship in China

The rapid rise of China’s mobile internet base altered the fabric of Chinese society. From civil affairs to law, politics, academia and foreign relations. Technological developments forced the Chinese government to change its tactics in controlling the Internet. Previous forms of media such as broadcast and print were strictly regulated as indispensable components of the political stability. Now, the Chinese government has implemented a plethora of strategies to censor prohibited information on the Internet. These strategies include strict regulations, employing people to monitor the web, creating organizations for internet oversight, and developing internet censorship technologies. 

Thus, the Chinese government maintains full control and ownership over the Internet, media and news. It does this by providing daily directives to media outlets on what content to cover. Moreover, the Chinese government manages its telecoms infrastructure in a way that allows for top down internet censorship to take place. As a result, China’s internet censors have blocked websites and removed certain smartphone apps. In addition, China’s internet censors are responsible for the mass deletion of microblog posts, instant messages and user accounts that touch on banned political, social, and religious topics.

Altogether, there are reportedly over 10,000 websites blocked in China. For example, major news and social media hubs like the New York Times, YouTube, Twitter and Facebook are among those blocked. Furthermore, increased internet censorship in China has recently extended to apolitical spaces such as online music stores, platforms for live streaming, dating, celebrity gossip, and blockchain technology. This has resulted in authorities suspending and tightening scrutiny over internet features that enable real-time communication. 

China’s Vision for the Internet – A New Internet Model

Access to the Internet in China is provided by eight internet service providers (ISPs), which are licensed and controlled by the Ministry of Industry and Information Technology (MIIT). These ISPs are referred to as the backbones of the mainland Chinese internet. Their role is to control access to the worldwide web and be the gateway that connects the global internet to the Chinese internet.

Chinese companies police censorship efforts

However, most internet censorship does not occur at the ISP level. It occurs on individual platforms, in which Chinese companies must police vigilantly. Thus, it is no surprise that Chinese super apps such as WeChat are built to facilitate censorship. Specifically, the multipurpose social media app WeChat increasingly employs artificial intelligence to scan and delete images deemed to include banned content. Throughout 2019, large-scale deletions of posts and accounts occurred on both WeChat and on Sina Weibo’s microblogging platform.

Therefore, it is evident that the government together with big-tech companies learned very quickly how to employ digital technologies such as data analytics and artificial intelligence to advance internet censorship in China.

China’s idea of cyberspace sovereignty

So far the Chinese government has managed to promote the Internet as a means for socioeconomic development while successfully minimizing its political impact. While many people and countries bristle at the idea of such wide-ranging internet censorship, China has sought to legitimize it in recent years by promoting the idea of “cyberspace sovereignty.” China defines this as each country having the right to “choose their own path of cyber regulation and development, and public policies for the Internet.”

These moves embody the Xi administration’s sweeping efforts to strengthen China’s system of cyber governance and internet censorship. These efforts aim to expand the legal framework for control over data, networks and information. In essence, China is pushing ahead with its own model of the Internet.

[Source: Quartz, China’s Internet Backbones and the Shape of China’s “Great Firewall,” These graphics show how China’s backbone ISPs located along the Eastern Coast control and provide access to mainland servers that route IP addresses to local IPs.]

Government’s Role in Creating a Managed Internet Ecosystem

Established in 2011, the State Internet Information Office is the responsible organ for internet censorship in China. China relies on the main telecommunication companies such as China Telecom, China Unicom and China Mobile to enforce blocks. To date, more than 60 internet regulations have been issued by the Chinese government.

The 2017 Cybersecurity Law along with other regulations have increased the pressure on private technology companies to assist the government in creating a sophisticated blueprint for internet censorship in China. The PRC Cybersecurity Law requires companies to monitor the content their customers create or share, censor content that violates laws and regulations, and report such content to the authorities. Thus, new regulations, censorship campaigns, and increasing restrictions on the use of virtual private networks (VPNs) have further heightened internet censorship in China. In 2018, regulators reportedly shut down over 6,000 websites. From January 3 to 21, 2019, the Cyberspace Administration of China (CAC) shut down 733 websites and 9,382 mobile apps, and deleted over seven million pieces of online information.

No single government department handles internet censorship in China

In sum, China’s internet censorship regime is implemented by the provincial branches of state-owned ISPs, business companies, and various other organizations. There is no single government department that handles internet censorship in China. But rather, a complex and confusing web of departments and organizations implements censorship over internet media. Below is a graphic that illustrates the interconnectedness of China’s internet censorship framework. It also includes a description of the relevant government departments and their roles in regulating China’s internet.

[Source: “The Limits of Commercialized Censorship in China” by Blake Miller. Agencies and Individuals Influencing Censorship on Sina Weibo]

Departments involved in internet censorship

• The Publicity Department of the Communist Party of China, formerly known as the Propaganda Department, takes the lead in deciding what is kosher and what is forbidden. It sets the direction for media and state messaging for the whole country. 

• The State Council Information Office (SCIO) has a parallel function to the Publicity Department, but is officially controlled by the government, not the Party.

• The Ministry of Public Security (MPS) controls technical internet censorship. Like the Ministry of State Security (MSS), it also has the power to shut down websites and printing presses.

• The Cyberspace Administration of China (CAC) is the most important regulator of internet content and has become much more powerful under the Xi Jinping administration. 

• The National Radio and Television Administration (NRTA) oversees licenses for news publishing, books and periodicals, radio, film, TV, and video game software. Before March 2018, it was known as the State Administration of Press, Publication, Film, Radio, and Television (SAPPFRT), which in turn was formed in 2013 by merging the State Administration of Radio, Film and Television (SARFT) and the General Administration of Press and Publication (GAPP).

• The Ministry of Industry and Information Technology (MIIT) shares and sometimes fights over the responsibility for regulating internet and video media. MIIT controls networks and the Internet, but more from the technical side.

• The Ministry of Culture and Tourism (MCT) oversees theater, live music, visual arts, “cultural products,” and also has oversight over video game hardware.

How does China Censor the Internet?

China censors the internet in two ways: through micro-censorship and macro-censorship.

#1 Macro-censorship

Macro-censorship uses software and hardware based interventions to prevent whole domains from being accessed. Macro-censorship is often referred to as the “Great Firewall of China.” Macro-censorship is what makes certain foreign websites inaccessible. This level of censorship starts at internet routers and applies to entire internet networks.

[Source: Global internet Freedom Consortium, China’s Great Firewall]

The Great Firewall operates under the “Golden Shield Project.” It has been in operation since 2003 and is controlled by the Ministry of Public Security. It serves as the main infrastructure that blocks access to unfavorable incoming addresses from abroad. The Great Firewall deploys several technologies to block entire websites and specific webpages from being accessed by IP addresses located in China. However, the Great Firewall of China primarily focuses on blocking external content.

Some common technical methods used by the Great Firewall are: IP blocking, DNS filtering, poisoning, and redirection, URL filtering, packet filtering, man-in-the-middle attack, TCP connection reset, deep-packed inspection and VPN blocking. Although China has never publicly revealed the technical details surrounding the Great Firewall, researchers worldwide conclude it does in fact employ these tactics such as blocking IP addresses, DNS attacks, and filtering specific URLs and keywords. However, the latter method has become more and more difficult with the increasing popularity of the encrypted HTTPS protocol. 

[Source: Global Internet Freedom Consortium, Internet Censorship Mechanisms in China]

#2 Micro-censorship

In contrast, micro-censorship targets individual expression within China’s domestic internet. Micro-censorship happens at the post, comment, and article level. It is carried out by social media companies and other internet content producers (ICPs). Micro-censorship is accomplished in several ways such as keyword filtering, manual content review, and algorithmic filtering.

However, there are a wide range of micro-censorship methods used in various ways by different companies. But in general companies utilize both human and machine-power to censor online content.

Thus, it is evident that in addition to the many efforts directly taken by the government, a key feature of China’s internet censorship on social media are the obligations placed upon individual companies. This is because they bear the ultimate responsibility for removing prohibited content from their platforms.

In China, censorship is delegated and regulated through internet content provider (ICP) licenses. ICP licenses are necessary to operate an internet business in China. These licenses can be revoked or suspended if ICPs do not comply with government censorship directives.

What role do websites play in internet censorship in China?

Chinese websites are legally required to sign the “Public Pledge on Self-Discipline for China’s Internet Industry.” This orders companies to remove offensive material and to block certain terms. As such, each platform has developed its own methods to combat “harmful” content targeted by the government. Keyword filtering is the first line of defense for many ICPs. Keywords of either single words, phrases, or co-occurring words and phrases are set up to prevent searches, posts, or comments about off-limits content. This form of review is done in two ways: through manual content review and algorithmic review.

How websites monitor content

As part of their responsibilities to enforce China’s internet censorship laws, companies are expected to have the technology to block and filter posts, and the staff teams on-site to conduct manual content review. Technology firms are not only responsible for monitoring and censoring public social media content. They are also responsible for monitoring closed chat groups and even one-on-one conversations.

Thus, Chinese tech firms often employ thousands of content moderators to remove censored material. These moderators look for code words, slang, and memes that people use in order to get around the censors. In addition, there are also censorship “factories” in China to fulfill these duties for firms. For example, one such company named Beyondsoft uses a service called Rainbow Shield. This service has compiled over 100,000 basic sensitive words and over three million derivative words. Of these words, about one-third are related to political content. Following are words related to pornography, prostitution, gambling and politics.

Most Common Internet Censorship Methods

1) Search Engine

In China, the market share of foreign-owned search engines is low, as domestic players like Baidu and Sohu dominate the market. As they are the natural starting point for Internet users, these search engines are of high interest to censors. One method search engines use to censor the Internet is to filter the search results of prohibited terms.

The search engines playing a role in the censorship of China’s internet also include the likes of international companies such as yahoo.com.cn and Google. Google for instance received widespread criticisms over its Dragonfly project and its rumored development of a Chinese censored search engine. Furthermore, Google has also removed advertisements on Chinese websites that review anti-censorship software.

[Source: Personal Graphic, List of popular search engines in China]

2) Reporting

China has recruited thousands of individuals to search the internet and report problematic content to authorities. In particular, organizations like the ‘China Internet Illegal Information Reporting Center (CIIRC).’ This organization, which is ostensibly a civil society organization encourages the reporting of “illegal and harmful information” to the Ministry of Public Security.

3) Content Manipulation

Internet-opinion companies that monitor, analyze, and Content manipulation refers to Internet-opinion companies that monitor, analyze and manipulate China’s social media interactions online. Additionally, there are specific groups and individuals that are given the task of manipulating the direction of internet discourse. For example, the “Fifty Cent Army”. The Fifty-Cent army is a group of individuals are rumored to be paid per-post. This group of individuals consists of government organized persons and netizens given the task to steer online discussion on sensitive topics.

4) Platform and URL based blocking

Platform and URL blocking restricts access to specific apps and websites like Facebook, Twitter and Youtube.

[Source: Personal Graphic, List of previous and now blocked websites and social media applications in China]

5) Keyword Censorship

The most identifiable aspect of internet censorship in China is the ever-evolving list of banned terms and phrases. Entering these identified prohibited words into a search engine will return no results. Similarly, using these filtered terms in a social media post will result in machine-automated software flagging or deleting the content.

The best analyzed list of forbidden keywords comes from Sina Weibo. The list now contains almost 3500 The best analyzed list of forbidden keywords comes from Sina Weibo. The list now contains almost 3,500 blacklisted words. However, many of the words are not ‘blocked’ forever. Instead, they are blocked temporarily during breaking news events and later made accessible once censors judge that the ‘subversive’ connotations of the words have been forgotten. Amazingly, it takes mere moments to block new terms. This allows Sina Weibo censors to respond in real-time to monitor new social media developments. This capability plays a large role in shaping the public discussion online.

However, keyword lists do not always result in automatic blocking or search restrictions. This is because there are usually different levels of keyword lists. At Sina Weibo there are three levels of keywords based on a combination of political sensitivity and the likelihood that a non-sensitive post will be flagged from the keyword.

How Sina Weibo censors content

At Sina, employees in charge of content moderation make most of the decisions about what is and what is not to be censored on their platform. First, posts are flagged and sent to content moderators through keywords. Then, management directs audits of certain posts, accounts, or user reports.

These content moderators employ a variety of methods to handle and outright delete content. Employees commonly choose to handle content in one of five ways: delete, secret, friend, restrict, and conceal. All of these ways of handling content involve hiding content from a subset of users on Sina Weibo. Though the censorship choices mentioned above are the most commonly used, they are not an exhaustive set of the ways in which Sina handles objectionable content. Below is an illustration of the internet censorship process on Sina Weibo.

[Source: Blake Miller, How Sina Censors Content and the Types of Censorship]

China’s Internet Censorship Industry Has Given Rise to New Markets

Internet censorship itself has become a lucrative business in China. For example, the online version of the Party-run newspaper People’s Daily, people.cn. In particular, they contract with companies such as news aggregator Jinri Toutiao to censor content that contravenes the government. Revenue from People.cn’s censorship services reportedly rose 166 percent in 2018.  Thus, the People’s Daily monetized its expertise in identifying ‘‘politically sensitive’’ content by marketing the services of its in-house censors and by formally training and certifying censors.

Another censorship service, Rainbow Shield, as previously mentioned, employs over 4,000 people in multiple cities to review online content. Hence, there exists a lively market for the internet censorship industry in China. Here, many for-profit organizations resort to selling various data products and services to help China monitor online content. Data in the Chinese enterprise credit system shows that more than 900 companies provide internet surveillance services or own copyrights for internet surveillance software.

China is a leader in developing and exporting internet censorship tools

According to records posted on a Chinese government procurement platform, there have been more than 400 pieces of bidding information and contract briefings that refer to the internet censorship business. Also, there are more than 2,000 companies providing various services to the Chinese government in the market.

As a result of these disclosures, China has become a leader in developing, employing, and exporting internet censorship tools and social media surveillance software. For example, the Chinese firm Semptian has touted its Aegis surveillance system as providing “a full view to the virtual world” with the capacity to “store and analyze unlimited data.” The company claims to be monitoring over 200 million individuals in China, which is a quarter of the country’s total internet users. The company even markets a “national firewall” product, which mimics the Great Firewall in controlling internet traffic in China.

Control-service providers

Hence, two types of control-service providers and agencies own the greatest market share in the industry. Technical companies and media organizations. Technical data companies rely on their data-processing technologies such as web crawling and sentiment analysis to provide their stakeholders with customer-oriented surveillance software.

Second are media organizations. China’s media players are very strong in the censorship industry because of their market oriented nature. Although official media outlets such as People’s Daily and China Youth Daily fall under the government’s purview, they still need to address market competition by exploring new profitable business models.

As a result, organizations such as Xinhua, China Daily, People’s Daily, and China Youth Daily have all started their own online-opinion-surveillance agencies that provide internet censorship services. Among them, ‘The People’s Internet Public Opinion Office’ is the most well-known. It relies on the resources of the People’s Daily and People’s Daily Online. As of 2012, this business earned a revenue of approximately $29 million dollars. This represents the second biggest source of income for the People’s Daily.

Internet censorship in China will likely get more rigorous

In sum, internet censorship in China is very widespread and its impact is felt broadly throughout society, business, and politics. As the cluster of actors operating within China’s large and interconnected digital ecosystem continue to merge business models and innovate, it is more than likely that internet censorship in China will become even more rigorous. As a result, this will have a huge impact on all businesses in China. For foreign MNCs in particular, data privacy, business control, and enterprise reputation will be the leading concerns moving forward.

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For a foreign business to deliver a message on China’s internet, it is better to take advantage of the local Chinese search engine Baidu rather than Google. Baidu is the most popular search engine in China as the market share of Baidu in China is around 80% in 2018, way outscoring its competitors.  

Baidu has always been the clear leader even if in 2013, Qihoo entered the market and took 10% of the market share. Thus, the best way of optimizing your China SEO is to optimize your website for Baidu SEO. If you do not adjust your strategy for China SEO you will lose approximately 700 million users.

How does Baidu compare to Google?

While Baidu has similar function as Google does, Baidu SEO strategy is different from Google SEO strategy. Baidu uses different algorithms compared than Google and is specifically designed for Chinese internet users. Also in a China SEO strategy, it is important not to overlook the  cultural differences between the west and China, including different language, censored internet atmosphere and different user patterns. While there is a lot of internet coverage about Google SEO, less people have a clear understanding about Baidu SEO.

Get an ICP license to improve website performance in China

China’s internet is tightly controlled by the government. Thus, getting an ICP (Internet Content Publishing License) in China could improve  Baidu SEO performance. Getting an ICP license is the only way for a legitimate Chinese hosting company to host your website on their servers. Because of the Great Firewall in China and an increasing number of blocked foreign websites, the best way to stay in the competition and stand out is to have a Website in China or at least using a test to see if your website is blocked. This will allow you to avoid some severe penalties given to foreign-hosted website because the Chinese government prefers to be able to reach any website visible in China and so does Baidu. As a consequence, if your website is not hosted in China you are penalized on the SERP and your loading time will be slow. In other words, obtaining an ICP license means much faster loading time for internet users compared to websites without an ICP license.

As a result, Internet users in China are more likely to not only find, but also return to websites with an ICP license. Having an ICP license positively affects Baidu SEO performance. However, the ICP license is only available for Chinese registered companies. While not having an ICP License is not absolutely necessary for Baidu SEO, since Baidu will not block websites for lacking an ICP license.

Using Chinese language is important

It seems to be obvious, but some people overlook it. The only official language, which is the language used and recognized by Baidu, is simplified Chinese. In addition, it is preferable to use a native speaker instead of using Google translation to create and review the content on your website for  better China SEO performance. Simply translating all the content is not enough, it has to be written by a native speaker, and the content has to be accurate and grammatically correct in order to optimize Baidu SEO.

The key role of keywords

Like other search engines, Baidu SEO cares about keywords. Contrary to Google, meta descriptions are important with title tags as well. In order to avoid  penalties from Baidu, it will be important that you check that the keywords on-page matches the keywords off-page. Also, you might want to take advantage of the keywords tags even if this is not very important for rankings. Compared to Google, Baidu prefers precise and specific keywords. You need to have specific and detailed keywords for your website to be ranked higher.

Another factor concerning the algorithm of Baidu is the click-through rate (CTR). Due to that, in your strategy you have to optimize the content to encourage more clicks from the internet users. Also, your main tool concerning keywords will be the Baidu’s keyword research tool. It will allow you to have accurate data about the search trends in Baidu from the internet users.

Focus on domains and hosting

There is often a debate in SEO about local domains and local hosting but as Baidu is a Chinese company it favors elements in Chinese for better China SEO. The .cn domain could be important for good Baidu SEO, and the page load time matters for ranking as well.

However, obtaining a .cn domain could be a real challenge in terms of the administrative process. A lot of documents are required in order to apply for one .cn domain. Generally, you will have to find a partner or a local agency to take care of this task.

Semantic search

Google has a tool named Google’s knowledge graph while Baidu also has had a tool called “box computing” since 2009. It displays the relevant information and data on the search engine result page (SERP) above the main results.

This data will not be generated from the system automatically. Instead, it has to be submitted specifically to the platform, which is Baidu’s Aladdin platform. Aladdin is a platform that accepts data in XML form for display above Baidu’s normal search results. It’s also available for mobile which represents a huge potential in China.

Be part of the Baidu galaxy

When Google has a lot of products around its search engine (maps, Gmail etc.), Baidu also have other major products in addition to its search engine. Specifically, the Chinese search engine also has its own encyclopedia (Baike), its Questions and answers website (Zhidao) and its forum platform (Tieba). The thing is that Baidu generally put its own applications on the top of the SERP (Search Engine Results Page). Thus, in order to improve Baidu SEO,  it is important to leverage Baidu’s other products. For example, if your company’s China SEO performance is not satisfying, try to establish a Baidu Baike page for your company.

Case study: Baidu vs Google

On Google and Baidu, the search results of the same question “Where to get vaccination in Shanghai” are different from platform to platform. Two differences here correspond to two points we mentioned above.

How do search results differ between Google and Baidu

For the question “where to get vaccination in Shanghai”, Google displays more general and systematic content about vaccination information in Shanghai related to clinics and hospitals. Baidu shows answers that repeat the exact wording of the question but do not necessarily answer the question. In terms of key words searching, Baidu is far behind in “Natural Language Processing”. Thus, the keywords for Baidu SEO need to be precise.

In Baidu’s search page, you can notice the content from Baidu’s other service platform has been prioritized in display. Specifically, Baidu prefers links from Baidu Zhidao, Baidu Jingyan etc. even though the content is over five years old. This shows utilizing Baidu services is important in improving China SEO performance.

Social Media Optimization

Social media plays an important role in the digital marketing nowadays. Thus, managing social media will also be an important part in improving your China SEO strategy. Famous SNS like Facebook or Twitter are censored in China, but Baidu partnered with Sina Weibo one of the most successful social networks in China. It will allow indexing Weibo posts in Baidu’s results pages. Besides that, WeChat is also a popular social media platform in China.

Thus, if you want to optimize Baidu SEO performance, playing around with different social media platforms.

Other tips to success in China SEO

Do not use Javascript or Flash. Baidu will not recognize them and thus not index your website.

SEO for Baidu: Use Baidu’s Webmaster tools and submit a site map. Make up-to-dated contents with good quality and good quantity.

Follow Baidu’s SEO rules to rank high

Previous market studies from daxue consulting reveal that there are not a lot of differences between Google and Baidu SEO. The key is to adapt your tactics and follow the specific rules for Baidu. Improving your Baidu SEO strategy could improve your business’s digital marketing campaign in this fast growing country.

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Matthieu David: Hello everybody and welcome in this new episode of China Paradigm, our China podcast where we interview entrepreneurs in China. Today I am welcoming Aurélien Rigart. It’s hard to pronounce your name in English. I don’t know how you pronounce Aurélien in English.

Aurélien Rigart: I think you’re doing pretty well, Matthieu. People definitely say Aurélien. Definitely a lot of unique things, but we’ll stick with Aurélien for today.

Matthieu David: Good. Aurélien is a co-founder and vice president of IT Consultis. IT Consultis is a web agency in China developing websites in China, apps, mini-programs, and they write actually out in a spectrum of services. You also introduced brands in China, companies on Tmall, the marketplaces. I was trying to understand your designs of the shop. That’s why I understood from your presentation online and you have a team of 70 people with offices in China, Shanghai, Ho Chi Minh, Singapore and I will be interested to know why those locations and how you manage them. It will be very interesting to understand better. So, you founded the company 2011 in March more precisely. You are a co-founder with a two to three or a total of four co-founders. I’m not totally sure the number and I will have questions on it.

You have worked on 450 products so far. They are a wide variety of clients as well from the startup to big companies, like Swatch, like Leica and many as you are going to talk about, If you are going to talk about what you did for them. Thank you very much for being here.

Aurélien:  Thank you, Matthieu. A real pleasure to be here in the morning.

Matthieu David: Yeah, we shoot early in the morning.

Aurélien: Yeah, that’s a good thing.

Matthieu David: First question. Well, it’s about the size of the company. I read online. I read your presentation, corporate presentation, 70 people more, very impressive. You’re self-funded, or you’re not self-funded? Are you self-funded, or you’re Gov. funded?

Aurélien: Yeah, we are 100% self-funded. We started the adventure seven years ago, three partners. So we’re a family company. So initially with my brother and I, together with the family and get the idea to kick-start this, this company, and then like we invited our third co-founder to come and join us. So that was seven years ago, and now we have a team of 70 people. So 100% self-funded. We’re not backed up by any banks, any fund or any other agency. We’re 100% independent.

Matthieu David: I see. Very impressive to grow from zero to 70 people. So about the size of the company, you talk about 70 people, what about revenues? What about a number of projects? 450 the number of clients.

Aurélien: So, I mean the size of our web agency in China overall, like roughly we’re growing 40 to 50% year on year and the last couple of years, we are at the $3 million-plus company. Our goal is to continue in the next year, growing 50%. As you mentioned, being self-funded and growing 50% is always a little bit a challenge and sometimes for cash flow perspective. Like all the companies here, established by foreign entrepreneurs in China, but that’s the goal. So, we have a lot of ambitions, and we have ambitions to grow in different regions, different services.

Matthieu David:  Yeah, for the listeners who are not managing business here or do not touch with the finances in China; It’s very hard to get financing for any bank. You don’t get a loan; you don’t get work to keep a loan in China. So when you start a business, you need to get clients quickly, to pay your bills and you need to be resilient. What I’m actually impressed by the size you have reached is that we see a lot of web agencies in China, many web agencies. I think I feel the market is very competitive and I like to have your opinion on it, but you have few companies, will reach the level of 40 plus.

They reach 30 but going to 40 plus; you’re becoming a very sizable web agency in China. What’s your take on it? What’s your feedback on it? How did you grow to be above average in terms of agencies in China?

Aurélien: Well, I think one of the secrets is always to remain grounded, to always keep your feet on the floor and to always build a company in order to scale it up. Always drawing for your senior management to delegate as much as possible a lot of mission in order to achieve that growth and keep this mentality. So it’s really like a matter of mentality if you on a scale company. So, of course, the IT industry in China is a field where there’s a lot of challenges, there’s a lot of competition, and I think if you want to keep growing, of course, you need to keep your best people. In order to get to keep your best people, you need their level of seniority to evolve with the company.

You need to make sure that they’re going to delegate. You need to make sure that you’re going to be able to pay them more. This is the mentality, the scaling mentality that we’ve been applying to our team. So I think that’s one of our secret to growing and as well, like as you mentioned earlier, you need to be like extremely resilient. It’s very hard work. Very hard work. Very hard work is like pushing the limits all the times, and I’m very happy as an owner of a web agency in China, is like the person, the manager I am right now. I’m a totally different animal than I was like a year ago and I’m pretty sure I’m going to be like, it’s a little different one day a year from now.

So, it’s constantly learning and surrounding yourself with other entrepreneurs in China or other business people that have been facing the same problems. This is the way I see scaling up, and this is why I’m very confident we’re going to scale up an extra 50% next year.

Matthieu David: So it’s about management for you. The scale is going from management.

Aurélien: Yeah, I mean, management mindsets and effort. You need to manage everything, and since being in China, you need to be cash flow positive. You need to make wise investments, and you need to be healthy, basically. Like if you want to grow like this, it means you’re a healthy company because there’s a lot of companies that have loans from banks here and there and you never know if they’re healthy. We need to grow. Therefore we need to be healthy.

Matthieu David:  I see. You said you are a family company. Did it rotate in France initially, or you started from China? Is it linked with your parents or grandparents or family? Because you studied with your brother.

Aurélien: It’s a family company because I studied with my brother here. He came here 10 years ago, and he started a consultancy doing sourcing and trading, and then afterward we came here, we study another product which failed, which was an e-commerce platform. After this failure, we decided to launch this IT business in China, IT Consultis, and we also own Two Thai restaurants, actually three Thai restaurants in Shanghai. So it’s always been like it’s my brother and I and now we have two other, I mean a third co-founder and another French partner.

So we have four partners, but you know, like the mentality, the way we work, the way we lead is really like a big family. That’s, I think, one of the reasons why people are staying in the long run because of us as well.

Matthieu David: Interesting. So, the family mentality is not only because you’re starting with your brother. So you started in 2011, and when I look at your background, you’re not a programmer. I look at your background on LinkedIn. I will read it for the audience. Structural engineer, social design, 45 story complex results are what was the product when you were a student, and you studied reinforced concrete structures, product management, two construction, very far away from the digital industry in China. How did you, how did you catch up to be in the IT landscape in 2011, just after graduation?

Aurélien: So that’s an interesting mindset. When you’re young, you think that you’re a little bit invincible. So my background is that I’m actually, as you mentioned, like a civil engineer. I graduated from one of the top engineering school in France. I did my first master’s degree in France, then I went to the US, and I did a second master’s degree. I was also a researcher. I did a lot of amazing things over there, and then it was the recession in the US, so it was a little bit difficult to get a visa there in 2009, 2010. So, I decided to join my brother to come to China and to become an entrepreneur, and at that time we were like, hey, let’s give it a try and there are opportunities.

So, one of the ways we’d been able to do it is like always surround ourselves with people that will have the knowledge, and I think coming back to your earlier question, why we’ve been able to scale the business this well. I’ve seen a lot of foreign companies in China that study that exactly the same time as us. The only difference is that the main person, the main driver of the company, was usually a programmer, and these people involved himself 100% into the project. So that means like creating value but within the company. What we’ve been having is like really working on in and out of the company.

So structuring the company, I’ve been working on delivering the value but also growing an ecosystem around it. So I think this has been very helpful and afterward why and why not. There’s a lot of entrepreneurs that have been starting different businesses where they have no background and no experience in that field. So, I think we’re trained as engineers or as business people doing the schools that we’re doing in France. We are raised and the education that we are structuring us to solve problems.

Like when I get into the IT industry in China and now seven, eight years ago, I saw this as like having these challenges here, and these challenges here and this is the direction we wanted to take, and how are we going to assemble and how are we going to work with everything. So if tomorrow you say, hey, Aurélien, I really need to start a company in that ecosystem. I will not be scared. I would approach it in a very specific way.

Matthieu David: But still recruiting a programmer requires tests, requires to know if you can really do it. Can

you do it well? Can you do it, averagely? Can you do it poorly? How did you assess if you could do it poorly, averagely, or in an outstanding way? What is your first experience, an e-commerce product that you learned, which gave you the directions or tools, the ideas on how to assess the ability of this?

Aurélien Rigart: So, I mean, first of all, the key for us to start the company was really recruiting our third co-founder, which was Thomas Guillemaud, who is still part of the company and he’s like one of the directors and him more than my brother, and I is geekier. He’s like even though he has graduated from a business school, he has a programmer and a geek mindset. So I’ve been on board, it was already the opportunity to ensure that this area of the business will be 100% covered. Then afterward, it’s always recruiting the right person that you can trust, and when we started at that time, we started with less than $10,000. That’s like one of the things that also you need to realize.

So we had $10,000, and we had like a couple of people to pay including me, including Thomas, including the first programmer that will be hired, including the office. So, the remaining cash flow positive has been quite a challenge, especially at the beginning. So that was the major challenge, and then you need to bet on people because at the time we couldn’t hire senior people. We definitely could not hire senior people. So he was like, for us, it’s always been betting on very smart young people that we know we can trust and that will grow step by step within the growth of the company. That will help us grow the company.

Matthieu David: When did you join? Just at the start or?

Aurélien Rigart: I joined, yeah, sort of the start. That was a funny story because we were doing this e-commerce platform, and we were at a point where it was difficult for us to maintain it and continue it. I talked to my intern at that time, and my brother and I, we shared this idea that we wanted to start a web agency in China. She came back to us and said, hey guys, you know how to do this. I have the perfect guy for you. You need to meet Thomas. I mean he’s in France right now but he’s going to graduate soon, and the next thing you know, so I got him on the phone, and I told him, hey, Thomas we want to do this. We have no money but real ambition, and we think that China is a great market.

Of course, I was a little bit more convincing, but I don’t know how, but he said, hey, yes. The next day he was like, two days later he was taking a flight ticket. So yeah, that call was pretty convincing, pretty proud of me. That was the first break. So, coming back to your question is like how do you influence people for them to in the end join your company? Like, join your path, and you have like a big hairy, ambitious goal. How can you share it with other people and how they will follow you at some points. I think this is the biggest strengths of some entrepreneurs, is the ability for them to, for people to join them on their path at some point.

Matthieu David: I see. Talking about a big ambitious goal, which is a wedding used by EOS. How EOS, I know you’ve been involved in EOS in China, Shanghai. How Eagle has influenced your way of management and change your way of management, and since when?

Aurélien Rigart: I think EOS has tremendously changed my life in many ways. First of all, from a perspective, so when joining EO about two and a half years ago, we were just reaching the million dollar revenue, annual revenue. At that time I thought that, well, we’re a pretty decent accompany. We’re doing well and getting in an organization where there were so many businesses that were like $500 million business. I was looking at it like wow, I have a long way to go. So first of all, I was thinking that wherever I was, maybe I thought that I was a decent size. I realized that I was a very small size.

So, from that moment, I decided I need to continue working very hard in order to grow to a sustainable size in and to be respected in the community, in the entrepreneur community. So that’s the first thing about Eo and then surrounding yourself with like-minded people, people that you can share your challenges, and you can brainstorm about how you can improve your methodology, the way you manage things, the way you scale your business. This has helped me in these things like a great learning tool. What I like to do is you identify, you have a couple of mentors in the organization, and you have a couple of mentees. I like both aspects of it because I have a lot of accelerators, a lot of other EO members that are coming to me and asking me questions about how do I do this?

How do I do that? I do the same thing we were out of people. So I think it’s a great learning community and of course, as you know, I put a lot of time into it. I’m part of the board of directors for two years. I was an accelerator coach as well, and I like it. Of course, this can be time-consuming and taking your time a little bit away from your business or your personal life at some point. But you know, I have to say that it’s like it’s worth doing it. So I highly recommend any entrepreneur to get into the organization.

Matthieu David: Talking about your thoughts, what was your first client? What was your first client, and how did you get it?

Aurélien Rigart: All right, so first clients was very small. I mean very small. It’s actually like that smaller of a restaurant, a French restaurant called Le Salio. I think everybody in Shanghai knows it. So the mindset that we adopted at that time was if we want to grow, we have no portfolio, we have no experience, and we have no reason for people to trust us. That’s it. We’re coming like way up to those companies that are doing like 20, 30 projects. So, the only way people are going to select this is that first of all we can … They feel that they can have the trust in us and of course, I think we’ve got to be cheaper than the competition. So getting on the market, our first project was a $500 project.

Matthieu David:    500?

Aurélien Rigart: Yeah, and at that time, we thought we were crazy rich, the beginning of us becoming super rich. At the end, that was like a 20-day project. So, I’ll let you calculate. So what was the hourly rate we get paid for that project? So it was … Yeah, we didn’t make much money on that one, but it was the idea. When we started the company, you think those young entrepreneurs; they have no experience. They don’t have a portfolio is just like, yeah, they seem to be nice and with a smile on their face and why should I choose them? So, you need to start; you need to show your motivation, you need to show your commitment and show that whatever is going to happen, you never going to quit on it. You’re going to deliver.

Whatever it takes you’re going to deliver, and you’ve got to deliver with the highest level of quality and expect at that particular time. So people decided to trust us, of course because we were in the entrepreneur community already for quite a bit of time and we were showing that we will not quit. That was the beginning. This $500 million project, what we did at that time is that even though we could have to get paid like two or $3,000 for the same job we ensured at that time that this looked like a $2,000 project, for one simple reason is that even if we know we’re going to lose money on that project, but when the company that had $20,000 would come to see us, we will look good enough to take, legitimate enough to take that $2,000 project.

Once we get that $2,000 project, we made it look like a $4,000 project. Therefore, when this $4,000 company comes then, and this has been our approach since the beginning. Of course, I cannot do this for seven years. Now we are focusing more on profitability. But this is how you scale up from doing companies like small restaurants to Fortune 500 companies. Because the SME, they were looking at us to how you can only do websites for restaurants, and then, yeah, you show that you can do it, that you’re aggressive. Then step by step you get here and then the second stage you get here, then. We didn’t start with a Fortune 500. We started really at the bottom of the line. So very little cash, very little experience on the Chinese markets, and then like step by steps, we worked very hard to get here, very hard to get here, very hard. Then this is where we’re going.

Matthieu David: The difficulty of managing an agency, and I was trying to understand also people in the agencies, say dream about having a product because of the product makes life much easier. It’s a retainer. It’s paid monthly or yearly. How have you … What has been the service that helped you to grow? How you manage the growth of your web agency in China where you need to adapt constantly to the market, to the client because there’s a new technology? How will you manage this? I feel it’s rare that you can reach a size of 70 people because of this because you taught to manage the growth of an agency.

Aurélien Rigart: So first of all, talking about employee retention, because that’s the first thing, as you say. A lot of people like to go in startups where there’s a product where they’re going work on something very specific. I have to say that a couple of years ago it was really hard because we were training really talented developers in China and they were very often attracted as well by that kind of startups that raise very fast capital and the developers in China with a really crazy amount of money. That’s something that we could not compete with.

So, I think retention was one of the key challenges, and then as a company, we tried a few times to say, hey, we’re going to develop the products instead of doing only the agency work. What we realized is that it is really not the same word. It’s really different, and we have basically like two or three opportunities.

Matthieu David: What products?

Aurélien Rigart: I think, everybody I’ve seen … Okay, so our first opportunity was as an HR system. We worked in the past for IRA, Index, Stella Luna, and a couple of like the capital as well. A specific product which was like an O2O product where you can scan it at your code, those sharp little leaflets in the shopping bag when people will leave. They’ll scan a code and then like having the opportunity to apply online directly for a job in the company. You’re just thinking about Zara, as the client can actually, one of the staff, one of the in-store staff. So at that time, companies wanted to leverage their in-store traffic to convert them into potential employees because for them, recruitment was like those companies are growing like thousands and thousands of stores every year or more.

So, they were leveraging these. So, at that time we got a lot of requests for a similar product by different brands. So we were like wow, there’s a great opportunity and the problem is that if you have an agency on one side and you’re trying to develop a product from the other side, you always are going for the thing that makes you eat. Sort of thing that was making us eat was the money that our clients were giving us. If you want to develop a product, that’s a really different structure in terms of investment because you need to be accompanied. You cannot charge a product like $10,000 to each of the clients because if it is a product they want to pay maybe a thousand dollar a month or they want to be built on a retainer.

So at that time, we didn’t have the structure or capability or maybe just the mindset to make it happen. So, that was the first product, and then really the second product is a little bit like everybody has done at some point. Some web agencies in China have pivoted to duties, which is like social CRM in China, either charge bird or social CRM. So I know one agency that is, I mean, like one social CRM that is doing extremely good. That was actually an agency in the past, and of course, we’re working with them. They have an awesome product, but at some point, we couldn’t continue doing the agency and the product. So like that to say hey, we’re only going into product direction.

There’s one agency that is doing a little bit of both still, which I think is very courageous of them. So like for us, I think that we understood that IT will be very difficult to be the best at it and that there was already two and three excellent players on the market and to catch up with them, we would have had to raise funds and would have had to really change the strategy. When you want to grow a company like what we’re doing, at 50% year on year, you need to put your full attention. This is like a 70 hours a week work, and if you want to develop a product on the side, this is probably the same mindset and same amount of work. So, we only have one life, and you need to sleep at some point. So, that’s one of the reasons why we didn’t go that way.

Matthieu David: The other thing, you said at the beginning that you had other businesses. You had Thai restaurants, and you also mentioned other businesses. So, you are actually managing different businesses, or you’re involved in different businesses.

Aurélien Rigart: So, we’re involved. At the time, a couple of years ago I was spending e maybe like 20 or 30% of my time in the restaurant business and then 70% on the agency. Now I’m doing 99% on the agency or like 120 on the agency and maybe 1% on the restaurant. My brother is taking care of the restaurant business, so he is spending like 50, 60% of his time on the agency and 40% on the restaurants. It’s like deciding on where you want to invest your time, but that’s what it is at the moment.

Matthieu David: Why did you suddenly open restaurants? Was it because you are not sure about your business and you wanted to diversify? Was it because you find opportunity? Was it because you had other partners to partner with?

Aurélien Rigart: Yeah, I mean, it was really an opportunity at that time. It was like five years ago. One of our friends was actually selling her Thai restaurants, and she wanted to do something different other than a restaurant. My brother and I in the family we’ve always dreamed about having restaurants. So, she came along with a … She was seeking for investors, buyers, and she told us, yeah, I’m willing to sell it for that price, and we were like. So we made a couple of calculation, and we said, all right, we’ll do it. That was just based on an opportunity. It could have been another business then like say, hey, let’s see this opportunity, let’s give it a try.

So then we had the first one, then we opened a second one, which is a much bigger one and now we have as well lounge, a little kind of like corner, fast food restaurant called Urban Tuk Tuk, which is something that is using more like the new retail, new technologies and a lot of delivery, shopping mall or co-working space. This is not like the big restaurant where you can sit down. This is more like a delivery corner, and this is something that is much more scalable than just a typical restaurant which requires tremendous investment if you want to start one location.

Matthieu David:  I see. What’s the name of the first restaurant?

Aurélien Rigart:  Urban Thai, so it’s Thai food. Sorry, it’s not French food

Matthieu David: Okay, going back to your web agency in China, IT Consultis. You have developed the first website was basically a website for restaurants. Now you are developing a much more sophisticated project. What is the main project that you are asked to work for in China? Is it to go to Tmall and open a Tmall shop and design the Tmall shop? Is it to have an independent website? Is it HTML five? Is it a mini-program? What’s new? What are the IT trends in China in 2018?

Aurélien Rigart:  Okay, so just to correct on this. So we don’t do Tmall. I know it’s something that is written on our website, but that’s something that we should have changed already years ago. So we don’t do the Tmall work. We have excellent partners doing this, and so we do mainly things that will require somebody working on the strategy. Then we have a UI, UX designer; then we’ll have programmers working on it. So I will say the big, so we have been working with a brand like Swatch, like Decathlon, Porsche, Budweiser.

What strikes me in 2018 is really the only channel approach is that you’re not doing websites in China just to do websites anymore. You’re doing a website to display your contents, not only on the website, but you’re creating a content management system to display the information in a mini-program on the website, in the in-store display. So now when brands are coming to see us, it’s like really the Omnichannel strategy in China where you have two targets, different users at a different time. We, of course, like a piece of content that is going to be displayed in a very specific way for them. So, right now one of the things that I’m the proudest of is the ability for the IT Consulting team to really take and that call though that program where right now we’re working with a brand from the concept to delivery.

We’re helping them with selecting their ERP partners. We’re helping them with selecting the CRM partners. We are helping them with digital touch points in the store. We are helping them to develop their mini e-commerce program, their websites in China, and linking everything with an order management system. So, that’s how deep we are able to go from doing this small website to having really like an omnichannel strategy in China where we’re going to target, of course, everything is around We Chat nowadays.

So you need to interface interacts and make sure that it’s going to be perfectly integrated within the ecosystem, the Chinese digital ecosystem, or if we’re doing a project for Singapore or at a region in Asia being integrated into those systems as well.

Matthieu David:  I see. So positioning yourself as the one-stop agency which is going to partner with an ERP, which concerns ERP, for the end client and you’re going to organize all this work because I guess you cannot take care of everything. So, what are the different aspects to look at when you talk about an omnichannel strategy in China? You’re talking about We Chat, clearly to be ready to work on We Chat, linked to QR code, a link to the ERP or the CRM or the company? What other aspects should be looked at?

Aurélien Rigart: Well, I mean, I think you’ve already listed quite a few of them. I mean, it depends afterward, if you’re talking about an international brand or if you’re talking about a brand that is localized. There’s a lot of challenges with data storing in China. Privacy is always a little bit of deregulation, so you need to pay a lot of attention to this, and afterward it’s really helping brands and customers or other entrepreneurs, to make the best-educated decisions. Our mindset is like that for the brands that we’re serving is to bring them the best return on investment.

So, it’s really helping them to make choices that are going to create like real revenue for them, and that is going to be, first of all, scalable and that they’re going to be able to keep using for the long run that is going to be easy for them to maintain, and where are they going to have most freedom to interact with their ecosystem.

Matthieu David: You’re putting Ho Chi Minh, you’re putting Singapore. I find Hi Chi Minh will be partly for development. It also falls in the market of Vietnam, and what about Singapore? How did you develop those three locations? Do you have partners over there? Did you send one of your partner over there, one of the co-founders? How did you develop this? I feel opening a new location is always a very big challenge.

Aurélien Rigart: Yeah, opening a location is always a challenge, and you always have more challenge than what you expected earlier. So right now, so two years, a little bit more than two years ago, we decided to open Ho Chi Mihn. So, the main reason for this is that we always had A pack in ambitions. So not only China ambition and at that time, it was actually super-duper hard. Two or three years ago, there was a crazy scarcity in order to find technical talents in Shanghai. At that time we were debating whether just opening like a production center in a little bit further than Shanghai.

It can be Hangzhou, it can be Suzhou, but it can be all the way up to Chong Chior to Chung Lu. We were not really sure where to go, but we also knew that we had a back ambition. So being a back ambition, like doing something in Suzhou, Hangzhou, when you want to target Indonesia, Malaysia, Thailand or Japan or Korea at some points, didn’t really make sense. So we studied a little bit, Asia Pacific. Of course, we had to look at India because India is very famous for its development. We had to look at the Philippines and we had to look at Vietnam. One of our good friends, they already had a production center over there and he was telling us only good things about it.

So, we decided just to go there for a trip and we kind of fell in love with the country and the city. We started to interview people and then after 10 days over there, we decided to open a company. So that was interesting. So my brother and I went there. Then Thomas went there, we stayed there for one week. Thomas stayed there one week and after two weeks we met with the lawyer and we started the company straight away. So, I think that was a wise choice. Afterward, as you mentioned, opening a company and having two locations is something that is, of course, very challenging. What we thought that, like we just clap and the company will open and everything will be easy. Teams will work together very easily.

No, that’s not as easy as it looks because whenever you’re working on new sites, the easy communication, that’s when you have a problem or when you have like a task to do, you just scan and go to the person and say hey, whatever I wrote on that ticket, I was expecting it to be like this and not like this. Now, you have people, of course, like it’s almost the same time so there’s only one hour time difference but that means you need to document much better what you’re doing. Then at the same time, we’re talking about a different culture, different language. So it’s like creating added barriers and anticipated ways to work. Then like India, it kind of forced us to become more and more professional.

So in a way, that was not expected but I have to say that this would add some words in terms of quality control and in terms of project management. So if before you would spend like 20% of project management of quality control on the project, then all of a sudden you’ll need to spend like five or 10% more on the same project because you need to add communication. You need to add documentation. That was one of the things. But for us, we always work. So we have the two teams and right now, most of the work that we’re doing is actually targeting China. So for most of the project, we still have like 50%, 50%. We always have the same amount of people working here in China, which had Chinese developer most of the time working on a project along with developers from Vietnam.

Matthieu David:  How big is the team in Vietnam?

Aurélien Rigart:  So right now, we have 40 people in Shanghai. We have a little bit less than 30 in Vietnam, and we have two people in Singapore.

Matthieu David: What was your first high? Do you have a manager?

Aurélien Rigart: Yeah, our first hire was a lady called Ming. She’s our HR and admin manager over there. So, that was my first hire. I spend like eight hours in the store retail, in the meeting room of store retail, one of the first, I mean, the first time I went there because we had already pre-screened a lot of CVS. I met people back to back, and after this, it was clear that we were going to hire her and then a couple of days later she was starting with us. So that was like starting and straightaway launching something. For Singapore, Singapore was a different story. So Adrian, who was our BD manager in Shanghai, his girlfriend, um, who was like a very important position within a pharmaceutical organization, was moved to Singapore as a director for APAC Region.

For Adrian, it was a little bit hard to stay here, and he told us, hey guys, I love the company, and I definitely see that they could be a potential opportunity in Singapore. So, I think that will be great if I go there and I opened the office. I think the decision was made the same thing in just a couple of hours. Say hey, let’s give it a try and see how it works, so.

Matthieu David: I see. You’re developing partly from Vietnam, only from Vietnam. We know that China is very specific in terms of development programming. There are China and the rest of the world, basically as Facebook and then Facebook and Google and then Google. How do you … What would you suggest any client do in order to localize in China, their digital presence? What are the best practices to follow? The best IT trends in China? Do you have a list in mind to look at when you look at a website in China, and you look at the situation of a company of what you will have to adapt?

Aurélien Rigart: I used to manage most of the design and the design localization when the company was a little bit smaller. I mean like not doing it. That is not massive, but interacting a lot with our design team to work on this job, but it’s been quite a long time. So, I don’t think I have the best skills up to dates, at least, when it comes to this, but overall, of course, user experience. So you have to look at different things. You need to first look at it from a programming perspective because as you know, there’s the great firewall in China. The way you’re working globally with CDN, like a specific script specific functionality, this doesn’t apply in China because we were going to come back to it.

But there’s the programming part, symptoms of localization, that’s the first thing. The second part is the user experience. So, user experience, we’re going to start by this. Of course, every single country has its own specific ways to have their own user experience, their own user interface. But I think China is at another level. Everybody knows about the Chinese great firewall and that the fact that the ecosystem is very different here. So having a different ecosystem means that Chinese users have been used to really use different apps such as We Chat, Alipay and it has changed as well the way that users are, sorry, experience creator are working within the system. So, a lot of people now will open a website or e-commerce platform.

We’ve seen We Chat so they will have to use all the social logging aspect. They will ask to move maybe coupon of We Chat, or they will need you to create a mini program instead of just doing an application. So localization on that part is very crucial. The Chinese users, they have a different mindset. They have a different way to interact with a digital screen, with the digital industry in China, and I think it’s something that needs to be taken into consideration. For example, when you’re doing shopping on Amazon, on an app or like in France or the US, the user experience is going to be very different than the user experience you’re going to have on Tmall, you’re going to have on JD.

So, when you’re building something for an e-commerce perspective, you need to think about instant how the users are going to interact with your experience. So, that’s the first thing, and there’s a good list of like five, 10, 20 things that you need to check up on. But the most important thing is like the mindset and getting the inspiration from those experiences in order to make sure that the learning curve of the users coming on the experiences that you have created is going to be the smallest possible. So, that’s the first thing, the user experiences. The second thing that you can really have is from a technology perspective.

I think that’s one of the reasons why as well, there’s not a lot of massive players coming to China and that we are competing with. Not a lot of web agencies in China will have this knowledge about how to do digital in China. So, you have the great firewall, so that means you need to host your website in China, most of the time and all the time. So you need to have your content delivery network here. You need to have everything registered here. So, that’s one of the big challenges, and you need to use all the ecosystems. So, including all the API’s of Alipay, of We Chat pay, like studying up here your media program or interconnecting with your order management system, your CRM in China.

Of course, everything needs to be storing data or anonymize if you send outside of China. So, those are the other things to consider because a company that will go to like Vietnam or Indonesia or a French company that will try to do e-commerce, in Germany things will be quite easy, maybe the only thing that you will need to change is the language, but the infrastructure is easy. Like if you have a website that is hosted in France, it’s easy to do it in Germany. In China, it’s either merge different levels. The localization is a real challenge for every brand, and then I always say one of the biggest challenges as well is that a lot of the global solution such as sales force commerce or eco-commerce are not yet authorized in China. So, that means-

Matthieu David: They’re authorized in Hong Kong, right?

Aurélien Rigart: Yes.

Matthieu David: So, there’s Salesforce in Hong Kong.

Aurélien Rigart: So there’s still a lot of companies using sales force that will probably require a lawyer to discuss more the new regulations, but if we just talk about sales force commerce, which is the e-commerce platform, then this is like a solution that does not have that eye center. So if you want to use it first in terms of legal aspects, it’s a little bit shaky. The second thing is that it’s not in China. The time that you will have in order just to do a transaction or add something to your checkout is going to take maybe like one, two, sometimes three seconds. So, therefore, it’s going to kill your user experience. So, those solutions are not in China, so there’s a lot of companies that are using those big solutions, probably when it comes to China, you can abuse it.

So they need to use another solution such as Magento or in that order, management system, or they might use Adobe content management system globally, or Side Co, and then you come to China, and they need to use something different.

Matthieu David: I see. You were talking about you actually. Do use the Scrum methodology to adapt to every iteration?

Aurélien Rigart: Yeah, I mean from a job, there’s always a little bit of a challenge too because doing scrubbing and agencies, that is always a little bit of a challenge, but-

Matthieu David: Why do you think it’s challenging?

Aurélien Rigart: Because we are … Our workloads really depend on our clients’ feedback sometimes. Like when you’re working on a product, it’s very easy to know that you’re going to do this and then you’re going to do that, and then you’re going to do that. Working with a client sometimes is you’re expecting feedback. So, let’s say you start on a design, you do your wireframe and then all of a sudden you’re stuck for one week because you’re waiting for feedback. At that time, you need to work on another project. So let’s say that you need to realign very often what the priorities are and how, of course, you need to make sure that you don’t do context changes too often.

But that’s of course, how are you going to optimize the resource management we’ve seen within the company? So if we’re using it, but we’re adopting in the best way possible.

Matthieu David: So when you work with a client, do you say, we have tools for iteration? How do you communicate on that?

Aurélien Rigart: So that’s always a challenge because a number of iteration is, it’s always great to define a framework, but what I love and why I love the mindset of our people is to be like until it’s going to be perfect, then we have to make it happen. So, of course usually what we see is that usually will take three or four iterations depending on what area you’re looking at. So for example, if you’re like talking about wireframe, if you’re doing UX part, then like two or three iterations will be necessary. But afterward, when you’re doing the homepage as well, when you’re working on the user interface of the homepage of your website in China, sometimes like two, three, even four iterations might be needed but you cannot start working on the rest of the project if a client is not happy with his homepage.

So, for us it’s you need to frame it legally, but overall, I have to say that until we find something that is perfect from our standard and that is going to appeal to the clients, we’re going to make it happen.

Matthieu David: Last question. We can continue, I guess with always other topics, interesting topics. The last question is about the future. We talk about AI, we talk about VR, we talk about AR, we talk about voice recognition. My question is two questions. First, is it happening? VR, AR, AI, voice recognition. Secondly, how do you stay up to date? How do you know it’s time to develop the competencies and talents internally in order to be able to answer to the request of the clients?

Aurélien Rigart: So we have a team of senior manager that is… What I like a lot about our team is that we are not specialized in a solution. We’re not here … Our teams are like real engineers. So if they need to be on top of the IT trend in China all the time, they will be on top of the trend. So let’s say there’s a new version of Google or a solution that comes out, we will be a very early adopter. Why? Is because the people that we have, they have the mindset to learn and learn and learn to be engineers, to be oriented. So that’s the first thing, and I think that’s important to have a team of problem solvers.

The second thing is that the way we manage the company, actually we arranged a little bit internally the processes and how the team will work together. I really think that we as the new organization that we have what we call squads now. So different leaders, different people are going to operate their own small team within the company, and this is going to enable us to, first of all, become excellent in each of those fields because we got to be a little bit more specialized. I have the feeling that if tomorrow we need to kick start other projects, like doing maybe voice us or doing maybe UX or work for cars in the future or doing a little bit of AI or doing something different. We’re going to be able to do it.

So our scope of work, as mentioned earlier, we went from doing a website for a small restaurant and to do really an omnichannel strategy in China. So, I can see that we’re going to grow, we’re going to keep growing, but within our scope, within our competencies. So right now, for instance, like we don’t do content creation. I don’t think we’re going to go there. So we do a little bit of CRM in China, social CRM, which is something which is strategy related to the things that we’re doing when we’re building an omnichannel strategy in China. But yeah, I would say that’s really a step by step and yes, we see it happening.

We see the systems that we’re building are, all of them communicating together from like a ticketing system to order management system. The fact that with new technology, everything is becoming headless. You’re going to have a user interface that is going to pull content from the e-commerce OMS platform to the logistic platform here to do content management system and then you can pull up all the information here on an app or a mini-program or an in-store digital experience. So I think this is where the technology is really moving forward, and the IT industry in China is becoming so interesting.

The future with a self-driven car is going to be like another breakthrough with, of course, voice, with all the voice appliances that we’re going to have, with Alexa and all the Chinese competition that is arriving strong on the market. But you’re going to be in a digital world where you’re going to be able to order or to interact with a screen almost anywhere. I think this is where were we going to focus our future.

Matthieu David: Thanks for your time Aurélien. How did you like this episode of our China business podcast?

Aurélien Rigart: Well, so I have to say I was the first time for me, so I get a little bit of a cold in the last weeks, and it was a little bit early in the morning, but I loved it. Thank you. I think you’re great host Matthieu. Thank you for having me in China Paradigm. I really appreciate it.

Matthieu David: Thanks all. Thanks for joining this China vlog where we interview entrepreneurs in China. It was very instructive. It will be published in a week.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

This article Podcast transcript #13: Omnichannel strategy, social CRM, what are the IT trends in China? is the first one to appear on Daxue Consulting - Market Research China.

Game of Thrones censorship in China: angry fans on social media

Game of Thrones (GoT) is known for its explicit content and violent battle scenes, which draws the ire of China’s censors. In China the HBO website is blocked, meaning that Chinese fans unwilling or unable to use a VPN must watch Game of Thrones through Tencent. Upon watching the season 8 premiere in April 2019, fans were outraged to find that the version approved for China had six minutes cut out. The Chinese Game of Thrones version came in at 48 minutes compared with the 54-minute HBO original. Chinese Game of Thrones fans took to their social networks to complain, sharing and posting rebukes like:

“It is a bit uncomfortable watching the censored version. If those scenes are not worth seeing, why would the writer write them? Why would the director shoot them? People who like Game of Thrones don’t like it for porn and violence but for the whole thing. I don’t want to miss even one second.” – Twitter, user Wang Bubble.

“Tencent is making us pay to see a castrated version of Game of Thrones. Do any sisters have Game of Throne links to share?”- Weibo

Chinese Game of Thrones fans have long protested censorship of this TV show in China , complaining that without the censored content, they missed plot points and were left confused. One Weibo user posted:

“When other people discussed the episode and said a little lord was burned to death, I really had no idea what they were talking about. I’m speechless. In order to censor blood and violence, the entire story has been affected. Censoring to the point where the plot is cut down; what’s the point? I was thinking that in the whole episode, I didn’t see a single ghost, and found it so weird. All along it was Tencent that deleted the scene, completely ruining it. So how do I watch the uncensored version?”

Censorship of Game of Thrones in China is not new, but the restriction of the HBO website is a recent development. HBO was banned in China in June 2018 after political comedian John Oliver joked about President Xi Jinping on his HBO show Last Week Tonight.

Within the first 24 hours of GoT’s season 8 premiere, the episode had already been illegally streamed 5 million times in China.

Baidu overwhelmed by searches related to GoT in China

The search index on Baidu for “权力的游戏” (Game of Thrones) has a daily average of 11,063. All peaks on the graph are days that new episodes aired. During the periods when new episodes are airing, queries spike to an index of nearly 100,000 a day. In contrast, the most popular domestic Chinese television show Ashes of Love (香蜜沉沉烬如霜) has a daily index of only 8,791.

Since the premiere of the newest season April 14^th, Baidu searches for Game of Thrones has seen a daily index of 60,914 searches.

The first peak on the graph is the day of the season 8 premiere, during which Baidu received a search index of 229,014 for Game of Thrones. All other peaks are also episode premieres.

Baidu searches for Game of Thrones are clustered in Eastern provinces.

Game of Thrones searches in China by location, from highest to lowest:

1. Guangdong
2. Beijing
3. Jiangsu
4. Shanghai
5. Zhejiang
6. Sichuan
7. Shandong
8. Hubei
9. Henan
10. Fujian

Keywords commonly searched in conjunction with GoT in China are “download,” “season 8,” and also “cut off,” which show domestic annoyance with the censorship of Game of Thrones in China.

Games of Thrones in China, a topic equally discussed on Chinese and Western social networks

Weibo discussions about Game of Thrones in China blew up prior to the show’s season 8 premiere in April, and the Game of Thrones Weibo hashtag racked up 96 million views in the day before the episode premiere.

The Game of Thrones Chinese hashtag on Weibo (#权力的游戏) has 19.12 million discussion posts and has been viewed 2.56 billion times.

Most popular are posts that include pictures, screengrabs, or videos. The top 20 most liked photos on May 9^th all heavily featured graphic elements.

Games of Thrones on WeChat: Impossible to miss

GoT in China is discussed more on WeChat than on Weibo. The average daily index number for Game of Thrones on WeChat is a whopping 1.8 million. That index number rises on days of episode premieres: when episode 1 of season 8 premiered in April, the index number for the day was 12.8 million. In contrast, the index number for Ashes of Love (香蜜沉沉烬如霜) on their series premiere was 330,000.

WeChat is a popular location for Chinese netizens to discuss GoT episodes, share theories, and bond over their love of the show. There are hundreds of official Game of Thrones WeChat accounts and dozens of articles about the show posted daily.

Game of Thrones in China is so popular that many WeChat users have created stickers from show imagery.

Chinese fans speculate about the Game of Thrones series ending

On Zhihu, which is a Chinese question-and-answer website, the Games of Thrones Season 1 discussion page has over 410,000 followers and 8,700 questions asked, while the Season 8 discussion page has 34,740 followers and 1,390 questions. Zhihu members have given the latest season a rating of 9/10. Questions related to the show are mainly clarification questions about plot points and theories or speculations about the show’s ending. 

Game of Thrones branded goods in China: The witness of a craze for TV show in China

Game of Thrones’ popularity in China has created a demand for Game of Thrones branded goods in China. Available on Taobao are GoT branded clothes, keychains, figurines, puzzles, beverages, and more. The products are mostly of international origin and have English-language packaging.

Love of the show has also inspired Chinese Game of Thrones fans to invent their own edible confections. Several posts have circulated on WeChat and Weibo with fans showing off their homemade GoT-inspired baked goods and cocktails.

Despite complaints about censorship of Game of Thrones in China, the show is a massive hit among Chinese citizens, which has manifested in Game of Thrones presence on Baidu, Weibo, WeChat, Zhihu, and Taobao. What will be the next international TV show in China?

Author: Alison Bogy

Make the new economic China Paradigm positive leverage for your business

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This article Game of Thrones in China: What do Chinese fans think about season 8? | Daxue Consulting is the first one to appear on Daxue Consulting - Market Research China.

A committed government aids security market in China

Chinese cities are intensively investing into safety equipment by acquiring the latest technologies and equipment. Those cover cyber security, system integration, video surveillance, tracking technologies, consulting and planning, security planning, public safety communication, emergency notification, physical identity and access management and information management.  This security market in China, focused on citywide protection, is dominated by foreign-based companies enjoying technological advantages. 35% of the market is owned by overseas corporations and has reached $46 billion of revenues. Sichuan province has spent $4.2 billion for its “safe cities” project with 500,000 additional surveillance cameras,  while Guangdong province plans to order twice as many security cameras as Sichuan. Beijing on its own will soon be operating more than 700,000 cameras across the city. Another 310,000 surveillance cameras will be bought by Urumqi and Guangzhou.

The massive population movements occurring in China are accompanied by colossal government budgets to relocate 250 million rural residents in modern Chinese cities. This will enable them to decrease the current income inequalities existing between the urbanised east coast and the western and central regions’ lagging development. These cities plan to welcome large numbers of immigrants, while also making sure to maintain the security of the ballooning urban population, to ensure the government mandated economic development continues uninterrupted. Tens of billions are being spend on top quality technologies by the government for cities to remain safe and sound.

Security though surveillance

The equipment range demanded from the security market by the government is particularly large and each expects strong growth in the next years. The smart video surveillance is booming in China as the government, but also corporations, aim to ensure security through surveillance. The competition for the security market in China is fierce since there are several important international competitors including Cisco, IBM, Huawei, Symantec as well as rising Chinese companies supported by the State. The profitability of the market is in no doubt as today 13 million cameras have already been installed in China. China may be the world’s largest consumer of video surveillance equipment but there is little sign of this trend slowing down.

In order to ensure maximal security, China would like to remain independent in its core chips and systems, but locally produced cameras don’t deliver sufficient image quality to recognize faces and no audio can be recorded yet. Furthermore, efficient storage and compression of the massive quantity of information isn’t available today.

Towards cybersecurity: Plan 3111

The IT security market in China is estimated at $4.9 billion and expected to double in 2 years. The International Data Corporation (IDC) believes that the compound growth rate will be 12.2% over the next 3 years. With the exception of IBM, all antivirus suppliers in China are domestic to protect personal information and spying as a scandal blow away the image of many foreign based companies. The environment is particularly dynamic as mergers and acquisitions are frequent and domestic companies are developing at a high pace. Despite the protectionism displayed by the Chinese government, top performance are desired by the Chinese meaning that piecing through the country like IBM with top-notch service and technology will enable high market share as other foreign companies aren’t present on the market.

Most companies are orienting themselves towards information technology security and their personal information products for enterprises as this market will rise up to 4.83  billion dollars this year. As China is investing heavily into control and security of the internet, objects are connecting with the web creating Internet of things (IoT). As a result, in longer term control and security will even reach people’s daily objects. Benjamin Franklin wouldn’t agree with this policy as it is believed that “Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety.”

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This article Security Market in China – Improving Security or Control? is the first one to appear on Daxue Consulting - Market Research China.

The Great Firewall started since 2002

The name ‘Great Firewall of China’ came from an article written by a man called Charles R. Smith on May 17^th 2002 about the internet censorship in China. It is another name for China’s national public network monitor system, also called GFW for short. GFW is a sub-function of China’s Golden Shield Project.

How the Great Firewall Works

The “Golden Shield Project” is a nationwide public security information project aiming at informationizing the public security work and setting up a quick responding coordination mechanism with unified command. The project mainly includes the construction of public security integrated service communication network, the general information system of public security, the public security command and dispatch system and national public network control center. The project became effective in 2003. The GFW mainly refers to the public network monitoring system, especially referring to the filtering of the sites, IP address, key words and address involving sensitive content.

The Effects of the Great Firewall

The effects of the GFW usually are that the home network users cannot access foreign websites or webpage; or the foreign network users cannot access some websites or webpage in China. There are usually two ways to do that. One is to completely block the IP address or DNS poisoning; the other is to temporarily disable access by sensitive keyword filtering (by sending TCP command). The two effects use two different ways of blocking. The former is more convenient and more widely used while the latter is only used in a minority of some designated site such as Google.

GFW—Result of National Security

National firewall is not only confined to China. Many countries such as the United States has their national network monitoring systems as well. For example, the US scans every email sending to or out of the country. Recently in an interview, when asked about the opinion towards China’s Great Firewall, the CEO of Tencent, Mr. Ma Huateng responded, ‘The internet is like a virtual world. Only with an orderly management, can the virtual world keep its sustainable development. Every country’s management of the internet is greatly of the concern of security, only defers in degrees. China is still developing, facing many new situations, so it is constantly making new rules. However, as a whole, the network management standards are the same to both domestic companies and international companies.

Stefanie for Daxue Market Research China

 Documentation:

http://blog.sina.com.cn/s/blog_4a7a70350100085w.html

This article The Great Firewall of China is the first one to appear on Daxue Consulting - Market Research China.