Social network in Russia eyes China

Social network in Russia eyes China
A file picture taken in Russia's second city of St. Petersburg shows a view of a building where the social network VKontakte rents an office space.

Russian President Vladimir Putin's visit to China this month has ignited interest among Russian tech companies to invest in the world's second-largest economy.

The most-used social networking website in Russian-speaking countries - VKontakte - announced on Tuesday it is entering China by opening a marketing branch in Beijing.

Russia's answer to Facebook has its eye on bringing Chinese advertisers to its platform instead of attracting individual users.

Top executives at VK, which means "get in touch", said that the growing ambitions of Chinese enterprises to go global have provided a golden advertising opportunity for emerging social network platforms.

VK, based in St Petersburg, has about 250 million accounts and 4 billion daily page views. Nearly 70 per cent of the users are in Russia, with the rest from other countries such as Ukraine where Russian is spoken.

The company has about 150 employees and outsources most of the nonessential operations.

According to Marx Zhang, who is in charge of VK's overseas business, the daily net profit of the company is about US$1.8 million (S$2.3 million).

"Closer ties between China and Russia are paving the way for bigger China-to-Russia investment," Zhang said.

He did not rule out the possibility that VK may launch a cross-border online shopping service in coming years, helping Chinese retailers to explore the Russian market.

Pavel Safroshkin, sales director of VK, said the buying power of Russia's Internet market was greatly underestimated. "Russians spend more time online than the world average and are easily attracted to online advertisements. It means profit for Chinese companies," he said.

Peter Zou, chief executive of Chinese online marking service provider YeahMobi, said the biggest Internet opportunities in Russia are mobile gaming and e-commerce segments.

"For Chinese companies, VK is one of the potential advertising platforms they will have to look at," Zou said.

Haier Group, Huawei Technologies and Alibaba Group have already made advertising deals with VK to reach Russian shoppers.

VK was the second notable Russian company this month to announce major investment plans in China.

Days after Putin presented a Russian-designed smartphone to President Xi Jinping during the APEC Economic Leaders' Meeting, Yota Devices, maker of the handset, said it will enter the Chinese market by 2015.

Although Yota is set to face unprecedented pressure from Chinese players, CEO Vladislav Martynov said Yota will change the landscape of the Chinese smartphone market.

"We do have plans to attract more individual users in China, but we have to think of a good angle to pitch to the Chinese Internet regulators," Safroshkin said.

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