This week, I had the pleasure of interviewing John Xu, the owner of the popular Chinese marketplace 4.cn. In addition to 4.cn, John owns and operates the escrow service DN.com. He also has a very sizable portfolio of domain names himself.
You may have read the breaking news on NamePros about John's recent sale of Daikuan.com for an "eight figure RMB fee," which equates to at least $1.5 million.
John is a very influential and prominent figure in Chinese domain investing, so we took the chance to ask him as many questions as possible on a range of topics relating to Chinese domain name investing. Thanks to @Eric Lyon and @Edward Zeiden for their contributions to this article.
NP: What changed in recent years that made domain names a desirable investment asset?
John: As we all know, e-commerce is becoming more and more popular. It is still Internet Era. Start-ups are realizing the importance of domain names. Investors have seen the potential of domain investing. Plus the fluctuation of the stock market kept lots of funds idle. The prosperity of the P2P business opened up people’s mind to discover news channels in which to invest their funds. It is because of the varieties and prosperity of the investing market that more and more funds are rushing into the domaining industry.
NP: What are the biggest factors driving growth in the domain market for Chinese investors?
John: Firstly, high-end domain name sales drew lots of public attention to the domaining industry. But I think the most important reason is that more investing approaches are occurring, together with bank interest rate reductions and the stock market suffered great strike. At the moment, it seems that there are no better investments. Plus the younger generation has become the new middle class and they’d prefer to invest in the future instead of the history, i.e. antiques or jewels.
NP: Do Chinese investors invest with the expectations of eventually selling the assets to end users or are they planning to sell them to other investors as the market continues to rise?
John: I think most investors are planning to sell them to other investors. Some investors bought or registered so many that in no way end users can buy even part of them, only a few.
NP: What makes a domain name valuable to a Chinese investor?
John: Because of the culture difference, a domain name's value can be quite different to Chinese domainers and Western domainers. Investing in short number and letter domain names can be no wrong. In a word, length is always valuable to domainers, while pattern can top it up sometimes.
NP: Does the stock market play a roll in the rise of domain values and increased interest in domains? If so, in what way?
John: Yes. Investors suffering losses in the stock market may want to find another investment. Premium domain names are good choices. For them, they may choose to not put all the eggs in one basket. Domain investing is a nice try.
NP: What's the 5 year plan of a Chinese domain investor? How about the 10 year plan?
John: I think more and more Chinese domain investors have seen the potential of the Western domain market. They will continue getting more domain names that are meaningful in Chinese while meaningless in English from Western markets. From a longer perspective, Chinese domain investors want to make Chinese domain market a much more ruled, orderly and scientific market.
NP: How trusted is ChaoMi in the Chinese domain market? Does the website have much influence on prices investors will pay?
John: I think it operates its role to some extent, though I don’t think it has the authority of influencing the prices too much. Regarding it as a statistical platform is better.
NP: Are there any other sites that Chinese investors use to determine the value of domains?
John: I don’t think there are big convincing websites exclusively to be used to determine a domain’s value. If there is enough interest in statistics from 4.cn and DN.com, we might consider revealing them.
NP: Are there major Chinese holidays or seasons where you see regular sales lull at 4.cn?
John: Yes, of course, holidays do the same to all industries. Though domaining is an online business, but it is conducted by human beings. I think it’s more healthy to cut a few major breaks for investors and brokers. As you know, in the domaining business, people work day and night.
NP: In terms of quantity of transactions this year vs. last year, do you predict similar growth for 2016?
John: I think there will be a greater growth rate according to recent market.
NP: Do you consider the current buying trend to be a bubble?
John: A boom indeed. But I think it has not reached to a bubble yet.
NP: Is cold emailing frowned upon and are there any other different procedures people usually follow to be respectful of their culture when contacting domain owners out of the blue to purchase their domains?
John: I think emailing is still the major way and more trusted.
NP: What's the best time of year for you for sales? Do numerics sell for more if a certain holiday is happening or right after certain holidays?
John: It’s hard to say. Yes. There are several new developed holidays and they relate to certain numbers. We can see some difference of the sales when these days come. The major change of sales happen when major domainers meet up at conferences; that has been proven to be true after several meet-ups. I believe that communication promotes the industry.
NP: Are Chinese domainers usually investing as a hobby, part-time job, full-time job, diversification of their investment portfolio, or something else?
John: There aren't many full-time domainers. Most domainers are also running a company or doing jobs. So a big part for them is diversification of their investment portfolio as they are doing domaining as part-time job.
NP: In a recent report, you recommended caution and rationale in registering domain names. Can you elaborate on those comments?
John: When a boom comes, some new investors who don't fully understand the market trend may get lost and join the boom without consideration. This is dangerous. You should still have your own judgments and think twice when making decisions. The new-in domainers need to be guided instead of being misguided. The power of the crowd is unpredictable. Before anything severe happens, I felt the obligation to do something right. I personally was under attack after I spoke up. My statement hurt some people’s benefits, but I believe it was the right thing to do, for the sake of the industry.
NP: We’ve seen a large amount of growth in the 4-letter .COM market, which has leveled out recently. Do you think prices will increase again?
John: I think it won’t increase too rapidly. And I believe the price would stay in a reasonable range at last.
NP: Which domain names are 4.cn users currently most interested in buying?
John: Numeric domain names and short letter domain names took the majority part.
--
Thanks to John and the team at 4.CN for taking the time to produce these excellent answers. I know John worked on these responses over the course of a couple of days.
There are some very interesting facts that John revealed during that interview. I personally learned a lot from his answers, and I hope you did too.
This interview has been edited for length and clarity.
You may have read the breaking news on NamePros about John's recent sale of Daikuan.com for an "eight figure RMB fee," which equates to at least $1.5 million.
John is a very influential and prominent figure in Chinese domain investing, so we took the chance to ask him as many questions as possible on a range of topics relating to Chinese domain name investing. Thanks to @Eric Lyon and @Edward Zeiden for their contributions to this article.
NP: What changed in recent years that made domain names a desirable investment asset?
John: As we all know, e-commerce is becoming more and more popular. It is still Internet Era. Start-ups are realizing the importance of domain names. Investors have seen the potential of domain investing. Plus the fluctuation of the stock market kept lots of funds idle. The prosperity of the P2P business opened up people’s mind to discover news channels in which to invest their funds. It is because of the varieties and prosperity of the investing market that more and more funds are rushing into the domaining industry.
NP: What are the biggest factors driving growth in the domain market for Chinese investors?
John: Firstly, high-end domain name sales drew lots of public attention to the domaining industry. But I think the most important reason is that more investing approaches are occurring, together with bank interest rate reductions and the stock market suffered great strike. At the moment, it seems that there are no better investments. Plus the younger generation has become the new middle class and they’d prefer to invest in the future instead of the history, i.e. antiques or jewels.
NP: Do Chinese investors invest with the expectations of eventually selling the assets to end users or are they planning to sell them to other investors as the market continues to rise?
John: I think most investors are planning to sell them to other investors. Some investors bought or registered so many that in no way end users can buy even part of them, only a few.
NP: What makes a domain name valuable to a Chinese investor?
John: Because of the culture difference, a domain name's value can be quite different to Chinese domainers and Western domainers. Investing in short number and letter domain names can be no wrong. In a word, length is always valuable to domainers, while pattern can top it up sometimes.
NP: Does the stock market play a roll in the rise of domain values and increased interest in domains? If so, in what way?
John: Yes. Investors suffering losses in the stock market may want to find another investment. Premium domain names are good choices. For them, they may choose to not put all the eggs in one basket. Domain investing is a nice try.
NP: What's the 5 year plan of a Chinese domain investor? How about the 10 year plan?
John: I think more and more Chinese domain investors have seen the potential of the Western domain market. They will continue getting more domain names that are meaningful in Chinese while meaningless in English from Western markets. From a longer perspective, Chinese domain investors want to make Chinese domain market a much more ruled, orderly and scientific market.
NP: How trusted is ChaoMi in the Chinese domain market? Does the website have much influence on prices investors will pay?
John: I think it operates its role to some extent, though I don’t think it has the authority of influencing the prices too much. Regarding it as a statistical platform is better.
NP: Are there any other sites that Chinese investors use to determine the value of domains?
John: I don’t think there are big convincing websites exclusively to be used to determine a domain’s value. If there is enough interest in statistics from 4.cn and DN.com, we might consider revealing them.
NP: Are there major Chinese holidays or seasons where you see regular sales lull at 4.cn?
John: Yes, of course, holidays do the same to all industries. Though domaining is an online business, but it is conducted by human beings. I think it’s more healthy to cut a few major breaks for investors and brokers. As you know, in the domaining business, people work day and night.
NP: In terms of quantity of transactions this year vs. last year, do you predict similar growth for 2016?
John: I think there will be a greater growth rate according to recent market.
NP: Do you consider the current buying trend to be a bubble?
John: A boom indeed. But I think it has not reached to a bubble yet.
NP: Is cold emailing frowned upon and are there any other different procedures people usually follow to be respectful of their culture when contacting domain owners out of the blue to purchase their domains?
John: I think emailing is still the major way and more trusted.
NP: What's the best time of year for you for sales? Do numerics sell for more if a certain holiday is happening or right after certain holidays?
John: It’s hard to say. Yes. There are several new developed holidays and they relate to certain numbers. We can see some difference of the sales when these days come. The major change of sales happen when major domainers meet up at conferences; that has been proven to be true after several meet-ups. I believe that communication promotes the industry.
NP: Are Chinese domainers usually investing as a hobby, part-time job, full-time job, diversification of their investment portfolio, or something else?
John: There aren't many full-time domainers. Most domainers are also running a company or doing jobs. So a big part for them is diversification of their investment portfolio as they are doing domaining as part-time job.
NP: In a recent report, you recommended caution and rationale in registering domain names. Can you elaborate on those comments?
John: When a boom comes, some new investors who don't fully understand the market trend may get lost and join the boom without consideration. This is dangerous. You should still have your own judgments and think twice when making decisions. The new-in domainers need to be guided instead of being misguided. The power of the crowd is unpredictable. Before anything severe happens, I felt the obligation to do something right. I personally was under attack after I spoke up. My statement hurt some people’s benefits, but I believe it was the right thing to do, for the sake of the industry.
NP: We’ve seen a large amount of growth in the 4-letter .COM market, which has leveled out recently. Do you think prices will increase again?
John: I think it won’t increase too rapidly. And I believe the price would stay in a reasonable range at last.
NP: Which domain names are 4.cn users currently most interested in buying?
John: Numeric domain names and short letter domain names took the majority part.
--
Thanks to John and the team at 4.CN for taking the time to produce these excellent answers. I know John worked on these responses over the course of a couple of days.
There are some very interesting facts that John revealed during that interview. I personally learned a lot from his answers, and I hope you did too.
This interview has been edited for length and clarity.
. Plaudits should also be given to 
