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Models with Chinese Characteristics
  Date:2013.09.28  Hit:536次
SAIF has made a remarkable achievement from USD 8 million to USD400 million by fifty times of ROI within ten months, which comes from that SAIF invested Beijing Perfect World Co., Ltd (hereinafter referred as “Perfect World”) and propel it to list.

On September 6, 1006, SAIF completed the investment of USD 8 million to Perfect World which is a second Chinese company of network invested by SAIF, and the partner of SAIF Fund also entered into the board of directors. On July 26, 2007, Perfect World listed in NASDAQ to raise capital of USD188 million almost and SAIF held 84 million shares of Perfect World by 35.85%before is issued. Before then, SAIF had attained from USD40 million to USD 550 million by 14 times of ROI within eighteen months, which came from that SAIF invested Shengda. Thus, the brand of SAIF also spread far and wide. However, the backgrounds of investment for the network games are not different.

Corporate Character

“The investment is very successful. We have better understanding about the filed and team. It is beyond my expectation that it takes only ten month from completion of investment to list despite more negotiations,” Yang Dong said at the exclusive interview by the observer of Zero2ipo (清科), “SAIF invested the sound-business company with a solid basis such as Perfect World etc. We may make basic decision of investment. “

Yang Dong thinks that Shengda focuses on operation and Perfect World on R&D although both are network game companies. “We invest based on the corporate character. No matter how the character is, it may be successful. Therefore, you should not change yourself deliberately. Compared with Shengda, Perfect World has its professional R&D background.”

Yang Dong thinks that Chi Yufeng, Chairman of Board of Directors in Perfect World, is a typical founder. Chi Yufeng is always engaging into the start-ups. After hot sales of Jin HongEn from Kai Tian Pi Di and Wan Shi Wu You, Chi Yufeng succeeded to launch a series of educational software about network and English with largest market share. But the piracy is a development bottleneck of Jin HongEn, which is an issue that all software companies are at fault.

It is true that most of technician in the company graduated from Tsinghua University. Especially, some technical talents learned from American Bell Laboratory. With repeated study and compared with educational software, Chi Yufeng think that the intellectual property rights of network games are easily protected. Furthermore, the network games may successfully integrate with the computer graphic, networks and antivirus. It may challenge with the barrier. Therefore, about three or four years ago, Chi Yufeng, together with other colleagues, specially visited the S. Korean game developers. Since then, they have been filled with boundless confidence to develop competitive games which are more suitable for Chinese based on their own technical advantages even they think they may be better than S. Koreans.

When Yang Dong met with Chi Yufeng, they had developed the first type of game engine with independent intellectual property rights through improved technology for more than one year. With their own engine, more and more games are developed quickly. When SAIF injected the capital, Perfect World was just beginning to popularize the first type of game. Although they can make profits, the market share is unknown. Therefore, they need support of capital.

Strong Capability of Solving Problems and Attractive Incentive System

Yong Dong think that Chi Yufeng’ team is competitive. Competed with Kingsoft for educational software, they are winner. They developed the network games relying on their strength. “We are pleased to cooperate with such competitive company with independent intellectual property rights,” Yang Dong said, “Should HongEn, Ce-star, Kingsoft solve the issues of piracy of software, their founders were tycoons in the industry seven or ten years ago.”

Yang Dong thinks that Chi Yufeng’s team can solve the problems independently. “They can solve the problems independently. They grasp our intention and select by themselves, “Yang Dong said, “For example, preparation of listing is a large systemic works. In the days before, we held a post-seminar of listing in Hong Kong with 40-50 participants, including those from service agencies such as Investment firms, lawyer firm, printing house and PR companies etc. All flows were completed by themselves independently. We only instruct the flows and concerns.”

Yang Dong thinks that Chi Yufeng is an entrepreneur. After Perfect World is listed, the company needs more talents with R&D, marketing, planning and management etc. “This is a system. Chi Yufeng can lead the team successfully by treasuring talents with attractive and incentive system.”

Chinese Model

Why did SAIF invest World Perfect? Yang Dong has considered the following items: Because most of Chinese internet fields are imitating with the foreign model. In actually, the Chinese internet behavior is greatly different with the foreign. Few Chinese companies make the basic research about the design of page layout and function of network based on the Chinese habits. They are only imitating with the others. For example, If Yahoo has got a face-lift, they will only imitate. “Relatively, the network games are better, for example, the Perfect World may represent the different habit of leisure between Chinese and the others in the world. The American players need to find their feelings from the games and frequently change options. However, more Chinese prefer to cost time for chatting. Especially, there is only one child in the Chinese family and they are seldom get-together outdoors or outing. So, it is an ideal option to develop some network games for leisure as a communication platform. Therefore, the Chinese games are more and more of leisure and communication instead of American games with tendency of war and violence, “Yang Dong said, “China needs the product and business model with Chinese Characteristics.”

With successful investment to Shengda and Perfect World, Will SAIF invest more network game enterprises? Yang Dong answers: “I’m not sure. The network game industry is an acceptable and mature business model with good prospect. But it is a dog-eat-dog industry by some competitors such as Shengda, Ninetowns, and Netease etc. Therefore, I don’t know whether SAIF will invest the other network game companies. But I can frankly tell you that we will more selective and cautious.”

Postscript: Long-term investment platform to tally with national conditions

Yang Dong’s office locates in CBD of Beijing, where characterized by rich and unique traditional Chinese cultural atmosphere such as red wooden furniture with traditional patterns, potted plant, green vine and rockworks with water stream. He is fond of books of Chinese culture and investment management. He has got the habit of exercising Taijiquan at least twenty minutes every day. The investment presents his traditional thought of Chinese culture.

Besides Perfect World, SAIF invested more projects such as Buytime Media which devotes itself to media industrial chain, Longfan Media, Sunco Property in real estate agency, MainOne which devotes itself IT service of Small-and-medium enterprises and Huayu International which engage into occupational education. All of them can have a better understanding about the Chinese conditions and hope to build investment platforms for the founders with Chinese characteristics.

Yang Dong said that more investment opportunities exist in China. For example, because Perfect World has its own technology as well as products and business model with Chinese characteristics, SAIF invested Perfect World; because SAIF grasped the investment opportunities in urbanization process of Chinese economic development, SAIF invested Sunco Property and Huayu International.

A foreign scholar once talked with Yang Dong and said he had developed a theory about an enterprise for six stages such as establishment, capital raising and growth etc. Yong Dong told him that the theory tallied with the principles of Yao and Gua in Chinese Yi Jing. However, the traditional Chinese theory is changed and extended abundantly. Incorporating with long-term profound national philosophy and theory essence, Yang Dong will pay more attention to the natural law of the development for the objective things. He will not change or disturb the development of the enterprises he invested. “SAIF is a long-term investment firm. After investment of enterprises and people, I will fully trust them and regard them as experts and let them handle affairs independently.