G-Net Bets Big on China’s “Web Meeting” Market

By helping companies communicate real-time with colleagues and clients worldwide while keeping travel costs down, four-year-old G-Net now reigns as China's largest “web meeting” service provider. Founder Chen Xuejun (EMBA 2004) shares his big plans for the company's growth.

By Audrey Wu

Last March, when Cisco, the world’s leading supplier of networking equipment and network management for the internet, purchased WebEx, the world’s largest “web meeting” solution provider, the move made waves across China’s IT industry. Domestic techies know that WebEx - which establishes a channel for remote video-conferencing via the internet - was established in 1996 by Chinese-American entrepreneur Zhu Min. China’s domestic IT wizards took note, especially when Zhu’s 11-year old Silicon Valley-based company fetched US$3.2 billion from Cisco.

One of those carefully watching the WebEx sale was Chen Xuejun (EMBA 2004), the founder of G-Net. Today, G-Net is the largest professional service provider in this sector in China. True, the total China market remains quite small - about 1/200 of the US market - but Chen believes the potential for expansion is great.

Chen’s theory is that his service of internet-based “web meetings” is just too attractive for China-based companies ignore. The service works on a simple principle: users in different locations around the world can log on to a virtual space provided by G-Net. Using the company’s technological platform, clients can see, hear, and respond to each other instantaneously, and for a very small fee. Thus, web meetings are a cost-effective alternative to traveling for conferences, strategy sessions, training courses, and other business scenarios.

The service, used by multinational companies to communicate internally or externally, eliminates the need to travel to meeting sites, and rent or maintain facilities. Even teleconferencing is expensive by comparison, he says, estimating that traditional teleconferencing equipment for a single business runs at least RMB300,000.
Because costs are low, Chen says employees tend to schedule web meetings more often than they would tele-conferences or face-to-face meetings. This increases the company’s understanding of its clients, cooperators, and other stakeholders, Chen says. The result is improved innovation, flexibility, and market savvy.

"Using G-Net, a meeting with a dozen people costs only several hundred yuan, while a meeting with 100 people costs several thousand yuan,” says Chen. “This is equal to the expense of one domestic airplane ticket for one participant.”

Many of G-Net’s customers know these benefits well and are frequent users of the service. GE, one of G-Net’s largest customers, sometimes holds as many as 400 virtual meetings around the globe in a single day. For such a client, web meetings often offer the most economical, convenient and effective choice. GE is one of more than 1,000 MNCs and 100 Global Fortune 500 firms using G-Net’s services in China. Domestic companies are less familiar with the web meeting concept, but G-Net has successfully attracted dozens of big-name domestic companies including Bank of Communications and New Hope Group. To date, G-Net has signed on more than 2000 enterprises as customers. In addition, its revenue has been increased by more than 100 percent annually in recent years.

"Huge potential"

The U.S. market for the remote conferencing industry has switched nearly entirely to internet-based connections; only 2 to 4 percent of the market uses traditional non-web-based methods. Chen believes China will follow a similar path once executives grow comfortable with the technology. “In China, the web meeting market is currently only 1/200 the size of the U.S. market,” says Chen. “It is small now, but the potential is huge. This will be a trend.”

The growth of G-Net to date has certainly given Chen reason for optimism. The company happened to launch in 2003, just as China was suffering from the SARS epidemic. Ironically, the headline-grabbing disease created a new demand for virtual meetings, since large-scale meetings were generally discouraged. Even more impressively, the company has continued to double its growth yearly during the past four years. 

Chen and his partners are now also branching into additional services including tools allowing companies to communicate with their investors, and web-based remote training. This strategy differs from that of the much admired WebEx, which is entirely based on web software service. In contrast, G-Net provides both software and telecom integrated services. In addition to sharing data and videos through the Internet, G-Net also links its services to traditional telecommunication networks (such as telephone landlines) to ensure better audio quality.

One satisfied customer is Chengdu-based real estate and agricultural product manufacturing conglomerate New Hope Group. New Hope IT Director Li Tao says the G-Net virtual meeting room has helped the company stay informed. “Staff at different places only need to open the Internet Explorer browser to get together,” he says.
Li is particularly impressed with G-Net’s high-quality of audio transmission. “We have very high demands for audio quality because we often need to have discussions at meetings,” says Li. In a recent test, the company used G-Net for a web meeting of 10 people at different places, worldwide. “The audio quality was like we were sitting together in one room,” says Li. 

Each month, New Hope Group’s president meets with more than 100 department heads from company’s 37 subsidiaries across China to discuss the company’s development. In the past, participating in this four-hour meeting required many department heads to spend two days traveling in order to attend. Thanks to G-Net, the meeting no longer requires travel.

There are also other advantages to G-Net’s services, Chen stresses. A face-to-face meeting with several hundred participants all trying to make a point can result in disaster, but such concerns are unnecessary with web meetings. With the support of G-Net software, he says the meeting MC is authorized with special rights, and can easily control the pace and order of the discussion.

Remote meeting solutions is not the only product on offer for G-Net. The company’s second-largest money-maker is its remote classroom product, which accommodates 100 users at a cost of RMB10,000 per month and is accessible for users 24 hours per day. “Companies like to use it to conduct training programs. It can save time for the participants and teachers ? no traffic time anymore,” Chen explains. He adds that the virtual classroom is also a useful tool for addressing a shortage of faculty. “In a real classroom, the teacher may feel tired after interacting with just 30 students. Using the web, an unlimited number of student users can sit in the virtual “front row,” everyone can see the professor’s presentation, and all students can submit questions - and receive answers - online.”

Other G-Net services allow companies to promote their products online by inviting customers to take a virtual “test run” of new item. This service is especially valuable to IT companies that depend on getting new products to customers quickly.

Becoming China’s next WebEx is not G-Net’s dream - the company wants to be even bigger that WebEx, says Chen. This is a lofty target as WebEx now draws revenues of US$400 million annually through serving 20,000 customers. But it is because the web meeting business is booming overseas that Chen expects the domestic Chinese market to boom. In particular, G-Net has stepped up its efforts at developing mid- and small-sized Chinese companies. “The China market will be one of the biggest markets in this field. Five billion yuan a year? No problem!” says Chen.

Diversification is also part of Chen’s growth strategy. The company has shifted from receiving 100 percent of its income from web meetings in the beginning, to 70 percent today. Eventually, the ratio will shrink to 50 percent, Chen says, and future growth will come from value-added services such as web-inars, remote selling, remote IT support, and web interviews. These products and others - such as a new FaxMe product that would allow users to send faxes to email inboxes - are now being tested by G-Net’s R&D department.

Chen says one of the advantages of G-Net is his own lack of technological savvy - which requires that products are easy to use. “I am the general manager, but to tell the truth, I don’t know technology,” Chen laughs, “That’s why I can think from the angle of the users, better meet their needs and make our service more user-friendly.”