Internet-based strategy changes business landscape

Without making use of any physical stores, China's smart phone maker Xiaomi has gone from zero to 10 billion U.S. dollars through online sales alone in just three years. With no advertisement, traditional food seller Huangtaiji amassed over 100,000 followers on Weibo, or Chinese version of Twitter, while achieving one million yuan (162,000 U.S. dollars) of monthly sales in less than two years. Their business modes and subsequent success were unimaginable a decade ago. But since China has become the world's No. 1 in terms of its 618 million Internet users, or nearly 46 percent of total population, an increasing number of enterprises like Huangtaiji are embracing new ways of doing business. Internet-savvy He Chang, founder of Huangtaiji, turned a street-corner deli into a popular brand by employing strategies ranging from online marketing to close consumer-company interactions on social networking sites. Huangtaiji sells "jianbing", a traditional Chinese pancake made on the spot and a popular take-away. In 2012 its first small, clean and Wi-Fi-equipped store opened in east Beijing's CBD, winning popularity among young white-collar workers who like to share food photos and recommendations online. Marketing campaigns promoted He Chang, 33, as a well-educated young man with overseas education background, love for traditional food and ambition to start a new Chinese-style food brand, which is believed to have helped win more support. The company now operates four stores in Beijing and is able to rake in 1.6 million yuan (260,000 U.S.dollars) in sales per month. "The success of Huangtaiji is an example of how Internet-based business strategy works," said Zhang Xinsheng, a researcher with the China Institute of Communications. Smart phone maker Xiaomi also focuses on understanding consumers' demands in product development via online interaction, having opened an online community where Xiaomi users' recommendations can be heard by the company's research and development personnel. Internet has also pushed Chinese firms to change its sales and management structures in order to reach consumers more directly. Home appliance manufacturer Haier has discarded its pyramidal structure by dividing 80,000 staff into 2,000 independent units which directly dock with users, according to Zhao Dawei, author of "Swordsmanship of Internet Thinking." All changes in sales channels, marketing and corporate structure are meant to make the enterprises more consumer-centered, which is more possible in the Internet era, according to Zhao. Chinese consumers used to have nowhere to complain to, regardless of how dissatisfied they were with the goods the received, said Zhou Hongyi, chairman of Internet giant Qihoo360. "With the Internet, negative comments are seen publicly. This influence cannot be ignored," Zhou said. "The Internet has broken the information asymmetry to put consumers in first place," said Ye Daqing, CEO of online lending platform Rong360.com.