- Impact
- 168
Why is everyone so sold on chips? Do they really mean that much to end users in China? Or is it just a fad group mentality bubble waiting to pop?
Let’s have a look at the top websites in China:
They all have vowels aeiou… in China it’s more important what the pinyin translates to in Chinese which is more than just putting your chips in google translate:
Baidu.com (百度: bǎi dù) Sina.com (新浪网: xīn làng wǎng), 163.com (网易: wǎng yì), Sohu.com (搜狐: sōu hú)
Truth is aeiou are highly sought after and are already used by almost all the biggest websites in China.
So why the sudden gold rush with chips and not brandables? I lived in China for 5 years and believe there’s 3 main reasons:
1 – internet is huge and new websites/businesses are popping up online at an astounding rate. Living in cramped apartments with smog outside means everyone’s on the internet – it’s huge! But everyone thinks that Chinese can only type in chip domains and nothing else = false as shown by all the top websites in China not being chips…
2 – Chinese herd mentality with investing – it started with real estate & Chinese stock market where everyone got in, market crashed & now they’re looking for new investments. Big guys get into domains – everyone blindly follows then lose their shirts when the big boys get out… rinse & repeat - question is how long this domain frenzy will continue for?
3 – which brings us to foreign capital outflows in china (reason why lots of big investments into domains recently). Many Chinese view domains as something they can use to transfer money out of the country since the government is clamping down on all foreign outflows of capital. People keep finding new ways to get their money out of the country/security and the government keeps plugging the holes – rinse and repeat with new ideas/investments to get money out of the country/get investments that can’t be taken away by the government. Domains are no different. If the domain investments work to hide people’s money and transfer it overseas there’s a good chance the government will stop this from happening (as they’ve done with all previous methods). What could the government do? Maybe force Chinese websites to only use .cn would be doubtful but I wouldn’t put it past them. Make it harder to transfer domains out of the country = likely…remember we're talking about trillions of dollars seeking a safe haven overseas.
Either way if domains prove to not be a good place to hide money then the big Chinese money investers/domain buyers will move out to the next investment niche which will leave the ‘herd’ of small time Chinese domainers screwed and taking a loss. Investment cycles in China do not go up forever as is shown by their stock market and overall economy which is in big trouble.
Have you noticed the big investments by Chinese companies over the last year or the purchases of houses in Vancouver, SF, Sydney, etc? It’s because everyone knows it’s now the time to buy overseas before the Chinese currency gets depreciated. China spent something like 500 billion last year just propping up their currency – this can’t happen forever so Chinese are buying anything and everything overseas right now while the currency/economy is strong.
Nobody is safe in China, corruption is huge and anyone can be thrown in jail and their money confiscated at any time. There’s big demand to get money out of China and into secure investments (some see domains as one venue to secure their money). But most rich Chinese have already got their money out of the country. So what happens when the currency devalues = Chinese not spending abroad on things such as domains which I think will happen in the next year = big downturn in China & China has already bought enough domains to sell internally without purchasing overseas.
So where does that leave western domainers wondering about the Chinese market for domains?
1- Within a year +/- Chinese investments abroad will scream to a halt when the currency devalues which will definitely affect the number of domains being sold to the Chinese on platforms such as Namejet, gd, sedo, etc. This will likely leave western domainers holding bags full of chips with few people to buy them. China has already purchased enough domains to flip with each other and satisfy demand for a long time.
2- Chinese economy is in a very rocky transition – the golden years of 10%+ growth a year is a thing of the past. Now is the time to sell to China before things deteriorate too much over there. Remember what happened to Japan after the boom years and them buying up the world?
3- branding in China is more important than chips – all the largest websites in China are not chips – they are brands so start thinking outside the box. There’s lots of companies in China that want to be global and there’s lots of Chinese that think western brands are better = short pronounceable domains that can translate into something meaningful in pinyin will be a solid long term bet. Also brandable domains with aeiouv have end users wordwide. Besides numerics which there will always be demand for - If you have any 4l or 5l brandable/pronounceable .com domains that will likely be the next gold rush.
What do you guys think about chips?
Let’s have a look at the top websites in China:
- baidu.com
- qq.com
- taobao.com
- weibo.com
- 360.cn
- 163.com
- sina.com.cn
- sohu.com
- renmin.net
- xinhua.net
- jd.com
- tmall.com
- youku.com
- etc...
They all have vowels aeiou… in China it’s more important what the pinyin translates to in Chinese which is more than just putting your chips in google translate:
Baidu.com (百度: bǎi dù) Sina.com (新浪网: xīn làng wǎng), 163.com (网易: wǎng yì), Sohu.com (搜狐: sōu hú)
Truth is aeiou are highly sought after and are already used by almost all the biggest websites in China.
So why the sudden gold rush with chips and not brandables? I lived in China for 5 years and believe there’s 3 main reasons:
1 – internet is huge and new websites/businesses are popping up online at an astounding rate. Living in cramped apartments with smog outside means everyone’s on the internet – it’s huge! But everyone thinks that Chinese can only type in chip domains and nothing else = false as shown by all the top websites in China not being chips…
2 – Chinese herd mentality with investing – it started with real estate & Chinese stock market where everyone got in, market crashed & now they’re looking for new investments. Big guys get into domains – everyone blindly follows then lose their shirts when the big boys get out… rinse & repeat - question is how long this domain frenzy will continue for?
3 – which brings us to foreign capital outflows in china (reason why lots of big investments into domains recently). Many Chinese view domains as something they can use to transfer money out of the country since the government is clamping down on all foreign outflows of capital. People keep finding new ways to get their money out of the country/security and the government keeps plugging the holes – rinse and repeat with new ideas/investments to get money out of the country/get investments that can’t be taken away by the government. Domains are no different. If the domain investments work to hide people’s money and transfer it overseas there’s a good chance the government will stop this from happening (as they’ve done with all previous methods). What could the government do? Maybe force Chinese websites to only use .cn would be doubtful but I wouldn’t put it past them. Make it harder to transfer domains out of the country = likely…remember we're talking about trillions of dollars seeking a safe haven overseas.
Either way if domains prove to not be a good place to hide money then the big Chinese money investers/domain buyers will move out to the next investment niche which will leave the ‘herd’ of small time Chinese domainers screwed and taking a loss. Investment cycles in China do not go up forever as is shown by their stock market and overall economy which is in big trouble.
Have you noticed the big investments by Chinese companies over the last year or the purchases of houses in Vancouver, SF, Sydney, etc? It’s because everyone knows it’s now the time to buy overseas before the Chinese currency gets depreciated. China spent something like 500 billion last year just propping up their currency – this can’t happen forever so Chinese are buying anything and everything overseas right now while the currency/economy is strong.
Nobody is safe in China, corruption is huge and anyone can be thrown in jail and their money confiscated at any time. There’s big demand to get money out of China and into secure investments (some see domains as one venue to secure their money). But most rich Chinese have already got their money out of the country. So what happens when the currency devalues = Chinese not spending abroad on things such as domains which I think will happen in the next year = big downturn in China & China has already bought enough domains to sell internally without purchasing overseas.
So where does that leave western domainers wondering about the Chinese market for domains?
1- Within a year +/- Chinese investments abroad will scream to a halt when the currency devalues which will definitely affect the number of domains being sold to the Chinese on platforms such as Namejet, gd, sedo, etc. This will likely leave western domainers holding bags full of chips with few people to buy them. China has already purchased enough domains to flip with each other and satisfy demand for a long time.
2- Chinese economy is in a very rocky transition – the golden years of 10%+ growth a year is a thing of the past. Now is the time to sell to China before things deteriorate too much over there. Remember what happened to Japan after the boom years and them buying up the world?
3- branding in China is more important than chips – all the largest websites in China are not chips – they are brands so start thinking outside the box. There’s lots of companies in China that want to be global and there’s lots of Chinese that think western brands are better = short pronounceable domains that can translate into something meaningful in pinyin will be a solid long term bet. Also brandable domains with aeiouv have end users wordwide. Besides numerics which there will always be demand for - If you have any 4l or 5l brandable/pronounceable .com domains that will likely be the next gold rush.
What do you guys think about chips?
