Chinese Internet Co extremely popular "burning", has reached an alarming degree. Many companies are accustomed to pay high subsidies to users to attract users to use their services, expect them to spend money before the competitors will go bankrupt.
start-up a cat car network (Emao.com) hopes to build an online platform for car dealers, the entire marketing strategy is built around the loss. "Burn the money of the investor, the heart of the person that buy a car" — the company recently makes this kind of advertisement word.
excellent step (Uber) CEO Travis Karan Nick (TravisKalanick) earlier this year by the application of this boasting, China branch lost more than $1 billion a year, part of the reason is the payment of subsidies to seize market share. Local car application drops fast (DidiKuaidi) is a number of cities and excellent step big price war.
‘s rivals say they don’t fall behind in spending money. President Liu Qing drops fast (JeanLiu) in September last year, said: "don’t burn we come to today this step." Cheng Wei, chairman of the company, said last year, spending $4 billion fast to market cultivation".
another application called car is easy to car (YidaoYongche) executives said last month that they were involved in the whirlpool burn "". The company’s chief executive, Zhou hang, said recently: "we prepared for this year at least 3 billion to 5 billion yuan of ammunition."
"burn" may sound like a viable business model, but these companies founded soon after the claim, in order to establish a brand, to obtain the scale to compete with others, paying users to use their services is essential. Especially in Chinese, China is from investment driven economy to a consumption driven economy — the government insists that the ongoing transition in the "buy" China consumers — to hope that one day they will buy your product is very attractive.
at least some people think so. Some people think that the Internet industry, Chinese atmosphere keen burn indicates that the Internet bubble swells up and coming to an end. During the dotcom bubble of the 90s of last century, Silicon Valley companies convinced investors that profits are no longer important, and now China’s Internet Co are also losing money.
"run out of money, many companies will be forgotten," Rui consulting (Datareal) founder Ma Jihua said.
he estimated that in order to attract Chinese consumers through the use of smart phones, massage, car washing and other services, Internet Co subsidies on the annual funding of up to 50 billion yuan.
but he admits there is no choice. "In this market, if you do not burn, you will not be able to gain market share, which means that you do not attract investment, you burn" is the result