Tencent Technology News (Li Zhiyu) reported on August 17 that Yao Hongchao, chairman of Beijing China Steel Network Information Co., Ltd., said that websites in vertical industries need to find a very large product in the market. If they can get 1% of the market, The share is very powerful, with sales revenue of tens of billions in the steel market.
Yao Hongchao believes that there is a big difference between popular e-commerce companies and e-commerce companies in the industry. One is that the number of employees is very small. Currently, there are about 300,000 steel traders and more than 20 end users in the country. , buyers, and about 50,000 commercial customers. There are more than 500,000 companies in total, and the number of employees may only be 60 to 70 million. So the number is much smaller. Furthermore, it is a traditional industry, and many people do not know much about the Internet. This is a difference in understanding.
The 2010 Internet Conference was held in Beijing from August 17th to 19th. Tencent Technology conducted a full range of video and graphic live broadcasts at the scene. As one of the biggest highlights of this Internet Conference, Weibo interaction was introduced on a large scale throughout the conference. As the official and exclusive Weibo partner of the conference, Tencent Weibo ( http://t.QQ.com/ ) has launched the #Ask the CEO event. All netizens can ask questions in advance to the Internet industry CEOs you follow.
Yao Hongchao, Chairman of China Steel Network Information Co., Ltd. (photo by Tencent Technology)
The following is an interview with Yao Hongchao:
Host: Dear netizens, good morning! I am very glad that you are here at Tencent’s 2010 China Internet Reporting Conference. The guest we are inviting now is Mr. Yao Hongchao, Chairman of Beijing China Steel Network Information Co., Ltd. First of all, I would like to invite Mr. Yao Always say hello to all netizens.
Yao Hongchao: Dear netizens, hello everyone!
Host: Mr. Yao still speaks standard Henan dialect. I think everyone can understand it. (Laughs) First of all, Mr. Yao, please introduce to us what are the main businesses of China Steel Network? What services does it provide?
Yao Hongchao: China Steel Network Information Co., Ltd., this is the name of our company. The name of our website is China Steel Network. Our website is a portal in the industry, and it should be said that it is currently the best among the portals in the industry.
Host: Provide steel consultation?
Yao Hongchao: Yes, consultation, market conditions, including the latest news events in the industry. This is the best our site currently offers. The second is search, including checking some resources.
Moderator: Search within the site?
Yao Hongchao: Yes, it is a search within our industry, such as finding some goods and resources.
Moderator: Trading, buying and selling steel.
Yao Hongchao: Understand the market prices across the country, know how much the prices are in Beijing and Shanghai, or what kind of resources Beijing has, what kind of resources Shanghai has, and what kind of resources Nanjing has. This is for search. The third is e-commerce, which is now mainly spot trading, which is a trading method that is different from futures and electronic trading. The trading of futures and electronic trading are basically similar, but the products are different.
The positioning of our website is to move the traditional steel market to the Internet. Generally speaking, everyone knows that Dangdang puts traditional books on the Internet. Because in reality, there is no steel market that can sell tens of millions of tons of steel on one platform at once. Even if it could, it would require at least several thousand acres of land, and the cost would be very high. And the Internet can do this very easily. And currently we are also the largest online steel market in the country.
Host: When did our company establish this website?
Yao Hongchao: Our company was founded on April 15, 2006, and we started recruiting employees. We officially launched on May 8, 2006.
Host: If we think about it in terms of revenue, how big is our company?
Yao Hongchao: Because of this website, we moved to Beijing in August last year and had been in Zhengzhou before. We now have a headquarters in Beijing and an operations center in Zhengzhou. Now the annual income is not much, with an operating income of more than 20 million yuan a year.
Host: But your profits are relatively high?
Yao Hongchao: Yes, the cost is relatively low. At present, the operation of the enterprise is relatively normal.
Host: How is the growth potential?
Yao Hongchao: Basically, the growth rate is more than 200% every year.
Moderator: What do you think of the application of e-commerce, including the Internet, in vertical fields? For example, your application in the field of steel? If you were asked to give advice to other entrepreneurs who want to build e-commerce or vertical portals, what would you give? What kind of advice?
Yao Hongchao: There is a big difference between popular e-commerce companies and e-commerce companies in our industry. One is that the number of employees is very small. Currently, there are about 300,000 steel traders and more than 20 end users in the country. , buyers, and about 50,000 commercial customers. There are more than 500,000 companies in total, and the number of employees may only be 60 to 70 million. So the number is much smaller. Furthermore, it is a traditional industry, and many people do not know much about the Internet. This is a difference in understanding.
But take our steel industry as an example. The annual steel transaction volume is about 4 trillion, which is very large. Because steel is a relatively large pillar industry of the country.
Moderator: So your speech revealed a message that when we want to build a vertical industry website, we need to find a very large product in the market.
Yao Hongchao: Yes, because it needs a certain market capacity to make profits from it. Just like in our industry, if we get 1% of the market share, it will be very powerful, which will be tens of billions of sales revenue. The customer base of this industry itself is relatively high-end. For example, a simple steel trader has a strong spending power. He has at least millions of assets, and many more have assets of tens or hundreds of millions. Therefore, customers’ spending power is also very high.
Moderator: Mr. Yao, because our company is China Steel Network, there are currently two hot topics in the financial field. The first is iron ore negotiation. We have been anxious about the iron ore negotiation, but there is no particularly clear result. , or the results of the negotiations were not satisfactory. What do you think of how Chinese steel companies can better seize the initiative in iron ore negotiations?
Yao Hongchao: From a macro perspective, we still don’t have a good way to solve this problem in iron ore negotiations. It is not only difficult for us to solve it, but also difficult for the country to solve it, because the current society is a resource-based society. Once you have the resources, you have the initiative. You can stop buying for three or six months, but you can't stop buying for a year. That's unrealistic. Resources are increasingly important to our society.
I think the first step to solve this problem in the short term is for everyone to unite and make centralized purchases. For example, if one order is to purchase 50,000 tons a year, then the centralized purchase may be 500 million tons, which can last three months or six months. Month, the pressure on mines is also very high. The second is that our country must first develop many domestic mining resources, and we must vigorously develop domestic mining resources. In addition, we need to look for more and better resources around the world. For example, Wuhan Iron and Steel acquired a mine in Australia. This is a very wise move. I think these two points can basically solve the problem, but I cannot say that it will definitely solve the problem because resources are non-renewable.
Moderator: Last question, I would like to ask, in the end, our steel prices have been rising because steel is a necessary product or raw material for economic construction, infrastructure construction, or manufacturing. Is this because of our macroeconomic situation? Will the economy improve further or will prices rise due to the relatively small supply in our market?
Yao Hongchao: After three consecutive months of decline, steel prices have risen for four consecutive weeks. Since July 20, steel prices have continued to rise, with an increase of about 8%-10%. This range should be said to be relatively large. But from the perspective of our researchers...
Host: Is the stock out of stock, or something else?
Yao Hongchao: From the perspective of our researchers, we mainly look at comprehensive factors, mainly people’s mentality. Basically, the price of steel now still depends on futures and electronic trading. The state is still suppressing the steel market in terms of macroeconomic policies, so there are no major changes in macroeconomic policies, and there is no major improvement in market demand, which has led to an increase in steel prices. There is not much to explain, and it has basically increased by about 10%. , because the three major steel mills including Wugang and Baosteel will raise prices intensively in September, by about 5%-10%. If this happens, China's steel prices will continue to rise. Of course, from our perspective, the risks behind the rise are huge.
Moderator: There may be other crises or problems.
Yao Hongchao: Yes, but judging from the rise in national steel prices and the economic environment, the overall situation is relatively good, and the growth is still very good.
Host: Due to time constraints, our brief chat with Mr. Yao ends here. Thank you again for being a guest in our studio, and thank you all netizens for your participation. This concludes our interview. Thank you all.
Yao Hongchao: Thank you.