For a while now there has been little to write about – however – with the release of Zhang Yimou’s film “Curse of the Golden Flower” – which posted RMB270 million in PRC box office sales as of Jan ’07 (less than 20 days since released) – we think Chinese consumers have turned the corner – it is time to invest in digital theaters!

Umm, yeah, IP issues remain…but you must start somewhere and we think the time is now!

One of the nice bits about traveling in China is that the airlines actually cut the price of their tickets closer to the date of departure – rather than the other way around, as it is just about everywhere else in the world.

For example, a one-way economy ticket from Shanghai to Beijing might cost RMB1,110 a week prior to take-off, yet drop to RMB580 the day before departure.

This pricing policy, according to a good friend who is CEO of a major Hong Kong airline, is one reason, the core reason, discount airlines will never make it in China.

Er, that was then (two weeks ago) and this is now. We were shocked, just flat out shocked, to learn yesterday that both e-long and ctrip no longer discount tickets closer to the departure date. In fact, according to our favorite e-long agent, at least in Shanghai, the maximum discount the agent can offer four days prior to the departure date is 20%, not the 40 – 60% we’re accustom to.

Everyday, we see little signs that China’s business environment is evolving, maturing, and this is great to see, even it if it means we need to consider taking the overnight train more often to Beijing than we would like.

USAToday ran a short note on a recent Time magazine e-commerce poll, it reads:

An overwhelming majority, 95%, of affluent Americans have made an online purchase in the past year, according to the latest Time online poll, featured…the most popular items bought online were clothing, accessories and books; 68% of respondents made such purchases in the past year.

This is interesting from the perspective that in China (we imagine this trend holds true for other Asian countries) e-commerce is not only powered by the 18 – 25 year old segment, but also over 80% of these kids are actively engaged in some form of e-commerce.

And thus, compared to the USA (and Europe?), e-ecommerce demographics are completely different here in China as these 18 – 25 year old guys/gals are not all that affluent – basically, spending their time gaming online rather than purchasing electronics online. If we use USA/Time e-commerce poll as a proxy for China’s e-commerce timeline, well, I guess we better dig-in as it is going to be a long wait.

One thing is for sure, we are glad we are not heavily invested in the e-payment space…

What kills me about China’s Internet companies, even listed, well capitalized companies, is their lack of attention to details. For example, today I called Beijing based travel agent e-long to book a ticket from Shanghai to Hong Kong using the company’s “In Mainland China Number: 400-810-1119”

Here is my conversation with e-Long’s travel agent:

Ymer: “Hi, I would like to buy a ticket from Shanghai to Hong Kong”

e-Long: “Are you calling from Beijing?”

Ymer: “No. I’m in Shanghai…”

e-Long: “I’m sorry, you can’t use this number to book a ticket from Shanghai, you can only use it in Beijing…”

Ymer: “So, why, on your website does it inform customers in mainland China to use 400-810-1119”?

e-Long: “I don’t know…”

Ymer: “Don’t you think that is a little strange? I can’t be the first person to bring this up…have you ever asked your manager why this is the case or made a suggestion that customer service should try and clarify this?”

e-Long: “…(silence for 30 seconds and then there was laughter and a gulp)…do you want the mobile number of my boss to ask him yourself?”

I get it that people in Shanghai like to talk to other Shanghainese (strange phenomenon in China), but this is easily solved by using a web based PBX software – there really isn’t any excuse for this sort of service.

At the very least there should be a feedback loop from the front line agent to her immediate boss whereby suggestions are made and executed upon. Japanese automotive manufacturer, Toyota, did this famously, whereby they called it Jidoka:

…It refers to the ability to stop production lines, by man or machine, in the event of problems such as equipment malfunction, quality issues, or late work. Jidoka helps prevent the passing of defects, helps identify and correct problem areas using localization and isolation, and makes it possible to “build” quality at the production process.

Maybe we need to come up with a similar process – we can call it “Zhong-doka 2.0” and start evangelizing it to China’s web-based community?

USAToday reports that Toshiba, a Japanese electronics company, has developed mobile-phone technology that searches for product reviews on up to 100 Web journals, or blogs, in 10 seconds.

Although, there might be issues of trust (commentary) and accuracy (data), we like this concept very much and will be following its development closely.

In the same breath, there is a small Shanghai based venture called Kaible.com that is backed by Dragon Venture that does something similar, however its offering focuses on price comparison.

We are not a big fan of Kaible’s model as it’s less dynamic (real time pricing) and completely dependent on the participation of merchants providing reliable, truthful data. Furthermore, we don’t see the value in it for the retailers — why would they want to reveal pricing to their competition. And finally, anyone who has shopped in China knows plenty well that haggling (over the price) between customer and clerk is more the norm than the exception – how does Kaible account for this?

(One approach might be to encourage consumers to SMS/Email Kaible with price information in return for loyalty points, or a chance to with gift certificates – however the most powerful driver would be community.)

First, the creator of the MillionDollarHomepage went to ebay to auction off the last 1,000 pixels which sold for US$40,000

And, now it is RocketBoom’s turn…

Last week, news hit that Shanda is partnering with Hong Kong listed electronics retailer Yolo to distribute Shanda’s EZ series of home entertainment products got me scratching my head (again) about the present and future of e-commerce in China, specifically, where is it going?

Consider the Shanda and Yolo relationship:

(1) Shanda is one of the largest web based companies in China with a hyper active — first adopters of e-commerce — and loyal customer base, and yet they’ve been unable to successfully sell their EZ home entertainment products via Shanda’s platform

(2) Shanda has structured a deal whereby Yolo will not only subsidize EZ Pod purchases (RMB200 below sticker price), but also share revenues from EZ Pod (i.e. fees generated from paid subscriptions)

So the question is, why is Shanda moving offline (and asking Yolo to subsidize EZ Pod) when they have a captivate audience, solid branding, traffic, and a solid payment platform in place (could you ask for a more fertile e-commerce environment)? And, what does this say about the future of e-commerce in China (ex-out gaming and mature content)?

I have some ideas, but I’ll leave it up you, the reader, to fill in the blanks…