How Hudong Thumped Wikipedia in China

What happens when you mix US$30 million in venture capital funding, community generated content and an innovative online wiki?  Meet Hudong, a for profit company trying to improve the Wiki model with their crowd sourced, Chinese language encyclopedia.  BloggerInsight recently had the opportunity to interview the Hudong’s founder and CEO Dr. Pan Haidong to learn more.

Founded in 2005 with the belief that wiki like websites would be “the next big thing”, Hudong has grown to become China’s leading online wiki encyclopedia with 3.92 million articles from 1.9 million users.  Hudong competes with another homegrown wiki encyclopedia, Baidu’s Baike which has about 2 million entries. (Source: CNN)

Wiki-what?

Wikipedia is a web staple in many countries globally, but not so in China.  Since launching their Chinese language version in 2002, the community of local volunteer writers and editors has been slow to develop.  This is primarily due to the fact that it was largely inaccessible in China until 2008 due to Wikipedia’s refusal to self-censor content.

Currently the Chinese language version of Wikipedia has about 280,000 entries and only 700,000 users, far less than the English version that boasts 3 million articles from 10 million contributors.  Hudong has a cordial relationship with Wikipedia, but they remain competitors.

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Monetizing the Chinese Wikipedia

Jimmy Wales first founded Wikipedia as a non-profit because the economic climate in 2001 was bleak, according to Dr. Pan. Hudong has been a for-profit business from the start, although like many other sites they are struggling to find a fitting monetization model.

“Nonprofit is not the only way to grow a Wikipedia: ‘Every road leads to Rome’.  With more money we can grow the business in a much faster way.  In the 4 year history we’ve seen that phenomenon,” says Dr. Pan.  They’ve raised over US$ 30 million from venture capital firms including DCM.  Currently they’re still in the red, but expect to break even in 2010 and there are already rumors of an IPO thereafter.  Here’s how they’re planning to do it:

1.  Advertising – boasting higher CPM than other Chinese Web 2.0 websites, “content is king” may also mean online encyclopedias are green.

2.  Publishing – prior to the Beijing Olympics Hudong published “Olympia”, an encyclopedic book on the Olympic Games drawn from their online content (with contributor consent).  This was just a test, but Dr. Pan indicated that there would be more to come.

3.  Mobile Value Added Services – Hudong is looking to work with service providers to leverage their extensive existing content, although no deals have been announced yet.

Local Innovation

“The Chinese Internet Users are more entertainment oriented [than their foreign peers] as more than 70% are under 30 years old, and they like to form communities so these are important traits to cater to as a wiki site.”
Dr. Pan is proud of Hudong’s innovations to better serve the local market.  They include the “Cloud of Knowledge” visual representation of topics and User Ranking, following the Chinese trend of providing open rankings to encourage users to contribute more to climb the ranking ladder.  In addition, Hudong rewards top contributors with gifts ranging from post cards to MP3 players.  Lastly, Hudong offers user profiles similar to social networking sites, to provide a more complete online destination.

The Future

Dr. Pan believes that Hudong’s greatest strength is their team and knowledge of wikis in the Chinese language market.  He believes the prospects look bright as they continue to expand their 100+ person team (more than half of which are product and software engineers).  With a new deal just inked to expand Hudong’s reach to overseas Chinese, the user and content growth looks to continue.  The only question that remains is how easy it will be to monetize.

Kai Lukoff (@klukoff) contributed to this post.