We bumped into our neighbor David while doing our morning walk today. He just returned from China with great sales results. David is the exclusive agent for the Chinese market of an European diaper manufacturer. Why on earth would the manufacturer go through David when in this internet age anyone can connect with anyone and sell to anyone directly? His answer has a profound meaning: it's the personal touch he gives through regular visits to China, which cannot be afforded by the manufacturer. So, connection does not equal relationship, and business is about relationship. Here's the post.
November 9, 2016 (Wed)
Few things I've learned from the Vivo news
When I read news about domain names, I like to dig around so that I can learn something about the domain market. This is a fun exercise because you never know what you'll find. The news reported in the last few days about Chinese smartphone maker Vivo acquiring Vivo.com for $2.1m is a good example. (Actually, this is not really news because the acquisition was reported as early as September 1 by eName but without indicating the price.)
Vivo is a formidable brand in China. In recent years, it has risen rapidly to overtake both Xiaomi and Apple in the Chinese smartphone market, taking up the third position just after Huawei and Oppo. Vivo phones are sold globally as well. (The word "vivo" has its origin in Italy, meaning "lively".)
Currently, Vivo uses a two-pronged domain strategy: Vivo.com.cn for the domestic market and VivoGlobal.com for the global market. The startup also owns Vivo.cn which redirects to their official website. After the domain acquisition, now Vivo.com redirects to VivoGlobal.com.
In the future, I see Vivo.com.cn, Vivo.cn, and VivoGlobal.com being consolidated under Vivo.com. In other words, Vivo.com will become the only corporate website both inside and outside China. The hint comes from another smartphone maker Nubia which bought Nubia.com for US$2m last year. Now, whether you enter "nubia" into Google or Baidu, Nubia.com comes up first.
These two domain upgrade examples also give us confidence that if you want to invest in domain names for the Chinese market, then .com is your best choice. Also, English named .com domain names are fine in China as long as they are short and easy to pronounce.
According to Wayback Machine, Vivo.com was owned by RealNetworks as recent as June this year and operated as a music service site. This shows Chinese companies are not afraid to acquire domain names of operating websites, and they are prepared to pay high prices to compensate for the pain of moving an existing business to another domain name. This pattern will repeat many times in the future, pushing up prices of domain names in the corporate world. Like commercial real estate, prices of .com domain names will continue to rise.
Vivo is the subsidiary of phone maker BBK Electronics. Interestingly, the parent company understood the strategic value of short .com domain names years ago. In 2011, it acquired BBK.com for mid- to high-six figures.
BBK has another high achiever subsidiary in the smartphone market: OnePlus. The startup is a hardware success, which managed to build a passionate online following with well priced phones. Sales of OnePlus reached $300 million in 2014 and OnePlus phones are sold globally included the US.
OnePlus is using OnePlus.net as its corporate site. Following the pattern of BBK and Vivo, it's not difficult to predict OnePlus wanting to acquire OnePlus.com. Fortunately, OnePlus.com is owned by OnePlus Corp, a Illinois-based sensor maker. Currently, OnePlus.com redirects to Oneplussystems.com and the company appears to have no regional or international presence. So, it's probably just a matter of price for OnePlus to acquire the .com domain name.
All in all, I see in the long run all major Chinese brands owning short .com domain names and using them as their corporate websites. So, the best asset class in domain investment will continue to be short .com.