a business initiative: education portal in china v. 2.1 1 a business initiative for launching an...

A Business Initiative: Education Portal in China

v. 2.11

A Business Initiative for LaunchA Business Initiative for Launchinging

An Education PortalAn Education Portalin Chinain China

Presented byPresented by

Zenocom Ltd.Zenocom Ltd.

Aplus Business Consulting Ltd.Aplus Business Consulting Ltd.

Newton Press Ltd.Newton Press Ltd.

September 15, 2000September 15, 2000


v. 2.12

Why China? Cultural BackgroundsWhy China? Cultural Backgrounds

Population: 1.26 billion Urban: 29% ( = 370 millions) Ethnic groups: Han Chinese, 92% Education: Compulsory, 7 - 17

Literacy (1996): 82%Age Distribution (%)

40-5922%

60 +10%

20-2918%

< 1932%

30-3918%


v. 2.13

The Han Chinese culture has been dominated the Chinese history of more than 5,000 years

Though different pronunciations have resulted in hundreds of dialects, the written Chinese language is one and the same

The unified written Chinese language has been the major driving force in shaping the Chinese national identity and cultural characters



v. 2.14

In China, the ability to read and write is the highly respected prestige for people

Teaching children to recite and learn to appreciate ancient poems and articles constitutes the most important part of pre-school education

Ancient Chinese texts of 2000 years ago are far more closer to modern Chinese people than the ancient Greek texts to modern Western people



v. 2.15

The one and the same Chinese language has been the most cherished fortune for Chinese people through the history to date.

Based on its unified cultural heritage, today’s China could constitute the largest single media market in the world



v. 2.16

GDP Growth Rate

0%

2%

4%

6%

8%

10%

12%

'81-90

avg.

'95 '97 '98 '99 '00estm. Source: IMF

Per Capita Annual Income

US$0

US$500

US$1,000

US$1,500

US$2,000

US$2,500

US$3,000

'97 '99

Rural Ten Big Cities

Even amid the financial crisis sweeping the whole Asia, Chinese economy growth kept at very high rates.

Why China? Economic IndicatorsWhy China? Economic Indicators


v. 2.17

Household Ownerships

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Color TV

Phone

Pager

Portable Stereo

VCD

CD Player

Mobile Phone

Rural Ten Big Cities Source: Gallup 1999

So, what is next for people to own? Computer and Internet access!

Why China? Economic IndicatorsWhy China? Economic Indicators


v. 2.18

Like everywhere else in the world, TV is the single most powerful medium in China

At least 55% of the total population is covered by various TV programs, i.e., total TV audience is more than 700 millions.

Penetration of TV0% 20% 40% 60% 80% 100%

Rural Urban

TV Audience0 100 200 300 400 500 600 700 800

Rural Urban Total

Millions

Why China? Media BusinessWhy China? Media Business


v. 2.19

While TV is the strongest medium, Chinese people keep very strong reading propensity

According to the SRG research, over 80% of residents in the big three cities regularly read at least one newspaper

Penetration ofnewspapers

0% 20% 40% 60% 80% 100%

Beijing

Shanghai

Guangzhou

Why China? Media BusinessWhy China? Media Business


v. 2.110

Forecast

In the past years, number of Internet users has been doubled every half year. Internet is forming the fastest growing business in China.

China will constitute the largest Internet market of the whole Asia-Pacific region in a few years

Source: CNNIC, August 2000

(Millions)

Why Internet in China?Why Internet in China?

Number of Internet users in China

0.1 0.2 0.5 0.9 2.0 4.68.9

16.928.0

60.0

0

10

20

30

40

50

60

70

Dec '96 Jun '97 Dec '97 Jun '98 Dec '98 Jun '99 Dec '99 Jun '00 Dec '00 Dec '02


v. 2.111

Since 1998, when the number of Chinese Internet users attained 2 millions, Chinese Internet startups have generated great buzz in the whole society Successful listings of several leading Chinese Internet portals on Nasdaq have resulted in greater enthusiasm of international venture capitals and str

ategic investors



v. 2.112

Despite the overall setbacks of Nasdaq listing companies, the 4 China-based Internet companies are still favored by international investors


Note: Figures are based on the closing price on Sep 17, 2000

0

10

20

30

China.com Sina.com Sohu.com Netease.com

Sto

ck P

rice

(US

$)

0

500

1,000

1,500

Mkt

Cap

(US

$ M

illio

ns)

Stock Price Mkt Cap


v. 2.113

Internet has brought to Chinese people totally new experience: A new world of information A new world of communications A new world of business

The advent of Internet is pointing to the most progressive, well-educated and affluent generation of Chinese people



v. 2.114

Internet users tend to be: Young and energetic Well educated Eager to try new things

Age breakdown of Chinese Internetusers

Above 406%

36~406%

31~3510%

25~3034%

Below 2444%

88% of users are aged below 35 84% have taken at least 3-year college education

Education breakdown of ChineseInternet users

University orabove52%

3-Yr College32%

High Schoolor below

16%

Source: CNNIC, Jan 2000



v. 2.115

While sina.com is dominating the Internet buzz in China, other e-business-oriented web sites are growing faster than the general interest sites.

8848.net, a Chinese B2C e-shopping portal, is going to be listed on Nasdaq very soon



v. 2.116

Though the fastest growing business segment, Internet in China has great room for new developments Current problems are consisting in the following:

Lack of infrastructures: Payment, credit system, bandwidth Speculation / gamble motives Lack of clear business model and profit zones Lack of long-term objectives Lack of experience Lack of capital market Inefficient distribution system

All these problems suggest that we could carry on more sophisticated thinking on the e-Business developments



v. 2.117

The current dominant portals are all news-oriented and difficult to present visible profit zones The current e-commerce portals are difficult to present their business models because of the yet-to-complete infrastructures In contrast, the demand for on-line education is outstanding and will constitute a profit generator in the very near future.

Education: A New DimensionEducation: A New Dimension


v. 2.118

Compared with other products, knowledge might be the most sustainable and competitive product in the e-Business era Knowledge products are more relevant for people to improve their life quality Knowledge products are easier to sell through the Net Knowledge products don’t require a complicated system of distribution. Fufilments are much cheaper An on-line / off-line mix approach could be easily applied to the knowledge products. Distribution of off-line materials could greatly help sell the programs

Why Education?Why Education?


v. 2.119

The Purpose for Saving0% 10% 20% 30% 40% 50% 60% 70%

For sickness orinjury

To financeeducation

For old age

For child'smarriage

To finance ownbiz

To buy homeappliance

To remodel thehome

Household Spending Distribution(%)

Clothing7%

Home9%

Dailygoods ex.

food8%

Education7%

T&E7%

Insurance4%

Medical3%

Food39%

Saving16%

Source: Gallup 1999

To finance education is among the top priorities for Chinese people

Why Education?Why Education?


v. 2.120

To whom the education portal we can address? For getting better career opportunities, large quantity of Chinese business people who are eager to learn business management knowledge and to obtain diplomas from world-known education institutions Tremendous young people who are eager to improve their professional skills: computing / networking, finance / accounting, sales / marketing / communications, Western languages Corporate clients who want to improve their employees’ business qualifications Western business people who are eager to learn Chinese business systems and environment.

Why Education? DemandWhy Education? Demand


v. 2.121

Under the researches led by a group of leading European, Asian and African researchers, a theory of reciprocal knowledge is been developed, which could constitute a set of methodologies for people to communicate between different traditions and cultures

Instead the traditional “imperialist” communication theories, methodologies based on reciprocal knowledge could constitute a totally new foundation for different people to learn each other Internet, based on its own interactive and decentralized characteristics, could be the best platform for utilizing the reciprocal knowledge

Why Education? Towards Why Education? Towards Reciprocal KnowledgeReciprocal Knowledge


v. 2.122

To create a web site that is centered with education- and knowledge-related contents and therefore to create a very large web-based community for learning

Provide aggregated entry into online education business, one of the key components of the larger knowledge-related e-commerce in China

Establishing and deepening Chinese educated net citizenship to create new base of customers for cross-selling products and services

Create new, enhanced operating platform for expanding other online knowledge shopping capabilities

On-line education offeringsOn-line education offerings


v. 2.123

I. Vast education- and knowledge-related contents: Create a very large data warehouse of various academic

resources based on multiple partners Daily campus news of both domestic and international education

institutions Info of education opportunities within and outside China On-line editions of both Chinese and European academic

journals and other academic resources Who-is-Who directories of outstanding Chinese and European

professors and researchers On-line directories of library resources E-zines of various disciplines and interests

On-line education OfferingsOn-line education Offerings


v. 2.124

II. Free education programs: Selected programs in arts and humanities On-line seminars on selected advanced

disciplines like bio-science, hosted by the world leading scientists

Fine Arts Music


Note: Lots of opportunities of sponsorship could be found for funding these non-profit programs


v. 2.125

III. Paid educational contents Business management courses (MBA) for Chinese students Advanced bio-science education would be the next big thing on the Net Other single-course programs for young professionals: computing / netw

orking, finance / accounting, sales / marketing / communications, Western languages, designing

Corp-sponsored certified training programs in computer sciences. (IBM, Oracle, Microsoft, Cisco, Intel …… would be most interested in such on-line programs.)

Corporate training programs provided by state-of-the-art consulting firms Introduction of Chinese business to European businessmen



v. 2.126


IV. Derived e-Commerce activities Based on the very large communities generated by

the integrated resources and various programs, on-line sales and cross-sales would be a natural result


v. 2.127

On-line education Offerings: On-line education Offerings: SummarySummary

Un-paid edu programs

E-commence

Paid edu programs&

Corp training programs

CommunitiesDirectories

AC resourcesAC-related newsGeneral-interest

newsBiz newsE-zines


v. 2.128

Business Model: Towards the Business Model: Towards the Profitable Growth in ChinaProfitable Growth in China

(1) Create enough knowledge- and education-related information resources ……

(1) Create enough knowledge- and education-related information resources ……

(2) …… so that to create very large communities for on-line learning ……

(2) …… so that to create very large communities for on-line learning ……

(3) …… so that to offer various paid education and training programs and conduct e-Commerce activities

(3) …… so that to offer various paid education and training programs and conduct e-Commerce activities


v. 2.129

The education portal will adopt an external vendor strategy for customer service

Business Model – Customer ServiceBusiness Model – Customer Service

Considerations: Rapid time to market Avoidance of heavy fixed investment Ability to leverage vendor experience in online

services


v. 2.130

The education portal will develop the programs with the following considerations:


Customer-centric and service-oriented Integrated Interactive Localized Personalized Easy to navigate Applications that require little-to-zero training


v. 2.131



Vendor Selected: Those who have significant resources in education and are able to provide the world class programs Europe:

University of Cergy University of Paris I University of Paris VII University of Paris VIII ENST University Without Walls Transcultural Network, etc.


v. 2.132



Vendor Selected: Those who have significant resources in education and are able to provide the world class programs China:

Chinese Academy of Sciences (CAS) Chinese Academy and Social Sciences Leading Chinese universities


v. 2.133



Vendor Selected: Those who have significant resources in education and are able to provide the world class programs International corporations who can provide certified professional

training programs IBM Cisco Oracle Microsoft, etc.

Professional consultants who can provide corporate training programs Earnest & Young Aplus Business Consulting Ltd., etc.


v. 2.134

Approach: On-line / Off-line Mix


Because of the inadequacy of the bandwidth, we would like to try a mixed approach for the proposed programs Students / trainees study at home or at work based on the

interactive CDRoms and textbooks step-by-step On-line Q&As and discussions between students / trainees and

tutors Vis-a-vis instructions several times in a year. (In any case,

physical contacts are necessary for all education programs.) [In the places where broadbands are available and affordable, we

could try a pure on-line model.]


v. 2.135

Low risk cost structure Limited up-front investments Strong push for variable cost structure Low break-even point

Aggressive outsourcing Rapid time to market Ability to flexibly test and analyze multiple offers Soft / gradual launch

Business Development StrategyBusiness Development Strategy


v. 2.136

Phase One (Oct 2000 ~ Mar 2001) Overall designing of the architectures, especially the

database structure Setup of the operation entity and the work team Integration of major academic resources: at least

200,000 contents pages Setup of partnerships Key government relations and approvals

Timing & ScheduleTiming & Schedule


v. 2.137

Phase Two (Feb ~ Jun 2001) Definite designing of the paid education contents Construction of paid contents Launch of the free contents Construction of physical education institution Integration of related parties in Europe and China Integration of the work flow Test of the learning programs



v. 2.138

Phase Three (Jul ~ Sep 2001) Completion of the paid contents construction and final

test of the learning programs Pre-launch marketing Launch of the Europe MBA and the corporate training

programs Student enrollment: Europe MBA and corporate training

programs



v. 2.139

Cost & revenue constituentsCost & revenue constituents

Revenues Membership fee Tuition fee: Regular students & trainees Tuition fee: Corporate clients Advertising & sponsorships E-commerce


v. 2.140

Cost & revenue constituentsCost & revenue constituents

Costs Pre-launch cost: site construction and

research Variable cost: ongoing site expansion and

mantainence Research, public relation & promotion Overheads


v. 2.141

Financial forecast:Financial forecast:Revenue & costRevenue & cost

0

2000

4000

6000

8000

10000

12000

14000

16000

18000Y

r 0

0

Yr

01

Yr

02

Yr

03

E-commerceAdverisingTuition fee: Corporate clientsTuition fee: StudentsMembership fee

US$,000)

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

Yr

00

Yr

01

Yr

02

Yr

03

Overheads & G&AResearch & promotionVariable cost


v. 2.142

Financial forecast: P&LFinancial forecast: P&L

P&L Yr '00 ~ 03

-10,000

-5,000

0

5,000

10,000

15,000

20,000

Yr

00

Yr

01

Yr

02

Yr

03

Revenue Cost Net Income

(US$,000)

Cum P&L Yr '00 ~ 03

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

Yr 0

0

Yr 0

1

Yr 0

2

Yr 0

3

Cum Revenue Cum Cost

Cum Net Income

(US$,000)


v. 2.143

Leading entities Aplus Business Consulting Ltd.: The leading Chinese consulting firm

specializing in marketing communications and customer publishing for international IT clients. In the past years, IBM, Cisco and Compaq are among its client list.

Newton Press Ltd.: An affiliate to Aplus, specializing in print media business and consulting for international publishing companies. It has formed close partnership with several European publishers.

Zenocom Ltd.: Also an affiliate to Aplus, specializing in development of Web business. In addition to its “Science on Line” (SOL) Web site, it is providing Web content service to IBM, Cisco, Compaq and iTeleWeb Inc.

Participants in ChinaParticipants in China


v. 2.144

These three entities, all under the leadership of Mr. Lu Xiang, will join hands together to form partnership with European institutions. Their resources relating to Web content creation will be integrated into one force.

Under Zenocom’s name, negotiations for an acquisition of the Information Center of the Chinese Academy of Sciences is ongoing



v. 2.145

Supporting entities Chinese Academy of Sciences.: The leading and the

largest scientific research organization in China. Chinese Academy of Social Sciences.: The leading and

the largest research organization specializing in humanities and social sciences.

Fudan University, Nanjing University & Zhejiang University: Major leading universities in the most affluent region of China

China National Library.: The largest library in Asia.



v. 2.146

Mr Lu Xiang

3/F, Building C, A3 Baijiazhuang Road, Beijing 100020

*

Tel

(86-10)65923373, 65867609

*

Fax

(86-10)65859114

*

Email

[email protected]

[email protected]

ContactContact

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