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China: No Time To Play Games


Lots of Chinese entrepreneurs like to boast about how hard they work. Few, however, can match Chen Tianqiao, the co-founder, chairman, and CEO of Shanghai's Shanda Interactive Entertainment Ltd. (SNDA) Chen, 32, runs China's most successful Internet gaming company, an operator that raised $150 million in an initial public offering last year and then became the best-performing stock on the NASDAQ. Chen helped launch Shanda in 1999, the same year he got married. But he sacrificed the big party that is de rigueur in China because of his workload at Shanda. "I didn't have time," he says.

Perhaps not the best way to start a marriage. But Chen (whose wife last year gave birth to a baby girl) has seen his dedication pay off. With the Chinese Internet market booming and with the number of Net surfers in China second only to the U.S., Shanda stands at the forefront of an e-commerce revolution. His management skill and ability to spot trends earn him a prominent place in this year's Stars of Asia.

Millions of Chinese spend hours and hours playing the games Chen supplies. One of Shanda's top games, a fantasy adventure called The World of Legend, boasts as many as half a million users playing simultaneously. Shanda earned $74 million last year on sales of $157 million, and analysts expect profits to top $100 million this year. At $2.6 billion, Shanda's market capitalization is the biggest of any Chinese Internet company. And early this year, Chen jolted the industry with the news that Shanda had acquired a 19% stake in Beijing-based Sina, a portal that competes with Shanda by offering its own games.

Today, Chen is one of China's richest men. He owns nearly 60% of Shanda, which makes him worth about $1.6 billion. Chen's success is especially impressive given his scant background in technology. Raised in Shanghai, he studied economics at Fudan University there. After graduating in 1994, he went to work for a real estate developer. Even today, after six years at Shanda, he admits he's not much of a techie. "I don't understand the technology," he says. "I just have a sense of technology trends."

When he started Shanda, Chen quickly realized he had to overcome daunting obstacles. For instance, many Chinese Net surfers depend on dial-up connections. To keep response time from slowing down, Chen saw that he couldn't centralize his servers the way other operators did. So he established a grid of servers nationwide. Today, Shanda operates a network of 15,000 servers in 65 Chinese cities.

Chen has also made it easier for Chinese gamers to buy access to Shanda's games by selling prepaid cards online, through Internet caf?s, and at convenience stores. Shanda now has 317,000 distribution points around China. In 77 cities, the company promises to deliver new cards within three hours to dealers that have sold out their supply. At Shanda's service center in Shanghai, telephone operators answer an average of 8,000 calls and respond to 10,000 e-mail messages a day from players seeking help with games. Chen's business philosophy? "I can summarize it in one word -- service."

Chen is now plotting his next move for Shanda. He plans to offer games on TVs later this year and is looking for new ways to expand the business. Chen says he especially admires Microsoft Corp.'s (MSFT) William H. Gates III and Softbank Corp.'s Masayoshi Son (an investor in Shanda) for their focus on their core business, something Chen says he wants to emulate. In the meantime, he says he's trying not to let his billionaire status change his life too much. He regularly works until 10 p.m., taking dinner at the Shanda cafeteria and queuing up for his food alongside other employees. While he sets aside Sundays for his family, there's still not much downtime. He often finds his way to the office even on national holidays such as Chinese New Year. Who needs parties, anyway?

By Bruce Einhorn


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