Sina's Growth Strategies in China

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Case Details:

Case Code : BSTR183
Case Length : 12 Pages
Period : 2001-2005
Organization : Sina Corporation
Pub Date : 2005
Teaching Note :Not Available
Countries : China
Themes: Business Models | Growth Factors and Challenges
Industry : Media, Entertainment, and Gaming

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"Sina's story combines the unpredictability of China's economy with the roller-coaster history of dotcom companies founded in the 1990s to seize opportunities created by the global rise of the Internet."1

- Donald N. Sull, Associate Professor, London Business School in 2005.


In August 2005, Sina Corporation (Sina), the Internet and mobile content provider in China, announced that the company's profits for the second quarter ending June 2005 stood at $10 million, down from $18 million that the company had reported in the corresponding quarter in 2004. The decline was attributed to the drop in revenues from mobile content services, which constituted 62% of its total 2004 revenues of $199.98 million (See Exhibit I for Sina's consolidated statement of income for the fiscal years 2000 to 2004). Sina's mobile content services, called Mobile Value Added Services (MVAS), generated revenues of $25.8 million in the quarter ending June 2005, which was 23% lower as compared to the revenues from MVAS in the corresponding quarter in 2004.

Established in 1998, Sina was a result of the merger between The Stone Rich Sight Information Technology Company (SRS) and who shared a common goal of catering to the huge market for online Chinese language content. The number of Chinese online users was growing rapidly in the late 1990s and so was the demand for online content relating to news, sports, finance and services such as e-mail, search, chat, and dating. Through a network of four websites, Sina offered its services to Chinese speaking audiences spanning four countries. Sina's coverage of news and sport events along with its comprehensive portfolio of services enabled it to attract online users and become the top Chinese internet portal in 2001.

Online advertising became a major source of revenue for Sina and accounted for 88% of its revenues in that year. In 2001, there was a risk that there might be a drop in online advertisement spending in mainland China which could significantly affect Sina's revenues.

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1] From the book, Made in China by Donald N. Sull, Harvard Business School Press, Pg. 26, Published in 2005.


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