Dotcom Venturer

Fritz Demopoulos has proven an American can have
dotcom success in China once. Can he do it again?

By YU SHUJUN

REBEL WITH A CAUSE: Years ago, Fritz Demopoulos eschewed his cushy job with News Corp. to do his own thing much more successfully

Every foreigner in Beijing either knows what qu na’r means or must think it strange that only taxi drivers seem to substitute this greeting for ni hao. But to Fritz Demopoulos, its literal meaning, “Where are you going?” had far greater significance than a simple taxi driver’s information solicitation.

Now founder of Qunar.com, an aptly-named Beijing-based travel search engine, the 37-year-old American has gone a long way in the Chinese media, Internet and wireless industries since he first arrived in China in 1997.

Ironically at that time, the eventual founder of Qunar didn’t know where the heck he was going.

“My [old] company sent me to China,” Demopoulos said. “They gave me the chance to come out to Asia. But at that time, I didn’t know about China. I was lucky, super lucky!”

Arriving in China only by chance, Demopoulos quickly recognized there was a lot more where that came from.

“Opportunities are everywhere,” Demopoulos said. “I remember that the former Minister of Information Industry of China Wu Jichuan said, in some way, China is the most open market in the world.”

And it’s true, he said.

Demopoulos’ career path proves that.

What’s more, Demopoulos proves that a foreigner doesn’t need billion dollar company perks or a slick embassy aura to live out the American Dream in China. Actually, he shows one can be more successful without them-and maybe just by “showing up.”

Showing up

YES MEN: Going to work every day for someone else’s corporation may look impressive, but it only takes you so far, as Fritz Demopoulos proves

When Demopoulos talks, he exudes a bit of California cool, putting our Beijing Review staff at ease right away.

He’s the kind of guy who ends most sentences with “right?” and just makes you want to respond, “Right on, man!”

Indeed, Demopoulos was born in Los Angeles and went to college there.

But his father was from Greece and mother from Austria, immigrating to the United States in the 1960s.

That, in addition to his parents’ business success, gave Demopoulos a bit of a bug to do something other than surf.

“Back in the 1960s when my parents immigrated to the States, what was the American Dream?” Demopoulos asked rhetorically. “You had three kids, a couple cars, a house and a business. That’s what my parents did [even] as immigrants, right?”

Right Fritz, but what about your own dream, our staff wondered. And why do you stay in China?

“My dad’s an entrepreneur,” Demopou-los said. “That’s why I wanted to become an entrepreneur too, eventually.”

As for China, Demopoulos had a strange yet poignant answer.

“Sometimes here, you can do well just by showing up,” he said. Showing up, we wondered, without language skills? Without knowing the culture?

“In China, a lot of people don’t have all the experiences and reference points that I have,” Demopoulos said. “In the States my experiences and reference points are the same as everywhere else. In China there are these natural advantages. Part of the trick is we have to understand what we think we can do well and understand the limitations.”

Rejecting corporate office space

While Demopoulos doesn’t understand Chinese culture as well as locals, his resume boasts a stellar corporate pedigree, which enabled him to come here.

Demopoulos began his career in China in 1997 as business development manager for News Corp., having been involved in a range of initiatives with various News Corp.-affiliated companies including ChinaByte.com, STAR TV, NDS and Twentieth Century Fox.

But when you first meet Demopoulos, you know he’s not a company man.

Young and laid back, he speaks in quick purposeful bursts that likely incubate better in the clutter of a start-up rather than a company boardroom.

Demopoulos left News Corp. to co-found Chinese-language sports Internet portal Shawei.com in 1999, although he spoke almost no Chinese at that time.

“I just said this is the time to do it,” Demopoulos said. “I remember a friend said, ‘Get a desk, a phone and an office and just go for it.’ So I did that. I remember the first day we were sitting there-that’s when the clock is ticking because you’re burning your own money. It’s really a lot of pressure.”

Fortunately for Demopoulos, the pressure didn’t cause any key business ingredients to explode other than popularity.

“We thought we would have a newsletter and as we got more people we would have a proper website,” Demopoulos said. “We just grew that business.”

Shawei soon grew to become one of China’s largest sports websites. In 2000, before the Internet bubble burst, Demopoulos sold Shawei to Hong Kong-based Tom Group for $15 million.

But for Demopoulos, being anti-establishment didn’t mean cutting himself off from media networking in China.

Before starting Qunar.com, Demopoulos served as advisor to an array of well-known Chinese and international media companies including Titan Sports, Hai Run Media Group and InterActive Corp., as well as interim head of business development for Netease.com.

Last year, he co-founded Qunar.com with his former Shawei.com partner Douglas Khoo, a Malaysian, and former Shawei Chief Technology Officer C.C. Zhuang, a Peking University graduate. In June 2005, Qunar finished its beta test of a Chinese-language version and it was formally launched, thus becoming one of the first travel search engines in China.

SideStep look alike?

Demopoulos acknowledges Qunar.com is similar to SideStep.com, a well-known travel search engine in the United States.

But Qunar clearly has a better grasp of the region here, with far more listed searchable regional flights, and in the host country’s language of choice.

In developing his business scheme, Demopoulos and his partners examined Google. He found that Google worldwide gets about 23 percent of its revenue from travel-related advertising, and Google China gets about 18 percent.

Hence, Demopoulos realized there was an enormous travel advertising market waiting to be snatched. However, the Chinese online travel market had been dominated by two Nasdaq-listed companies: Ctrip.com and Elong.com.

How could Qunar carve a niche?

In fact, Ctrip and Elong are actually online agents of hotel accommodation and airfare groups.

But Qunar is just a search engine.

“Our business model is a little bit different,” Demopoulos said. “We fight with Baidu and Google for revenue and fight with Ctrip and Elong for customers.”

Currently, Qunar.com searches over 300 Chinese-language travel websites. These search results provide consumers with real-time pricing information and other descriptive details from more than 20 airlines and 10,000 hotels serving the Chinese mainland. Through Qunar.com, consumers can quickly, easily and in real-time compare virtually all available prices for air tickets, hotels, car rentals and tour packages online. Qunar aims to allow consumers the best choices and value in travel.

However, one big obstacle for Qunar is that many Chinese still are accustomed to the traditional way of booking air tickets and other services-in person with a known agent. Even Beijing Review’s foreign staffers, who in their own countries are more accustomed to ordering air tickets online, often find cheaper prices going to the travel agent down the street.

Certainly, the online travel market in China is tiny.

According to statistics from the China National Tourism Administration (CNTA), as of September 2005, online travel transaction volume was about 4-5 billion yuan, accounting for only 1 percent of the whole market. In the United States, revenue of the online travel market reached $54 billion in 2004, grasping 20 percent of the whole market.

According to a Deutsche Bank report, U.S. travel consumers drove the share of total bookings from around 1 percent in 1998 to about 19 percent in 2003. The report also pointed out that China consolidators will likely develop more slowly than the U.S. online, but the opportunities and profitability are likely to be greater in China.

The Chinese travel market itself is enormous.

CNTA statistics also show that in 2005 the number of Chinese travelers traveling within China was 1.212 billion (note the entire population is 1.3 billion), and those traveling overseas numbered 31.2 million, up 10 percent and 7.5 percent respectively over 2004.

Meanwhile, as of the end of the first half of this year, the number of netizens in China had reached 123 million, according to the China Internet Network Information Center.

These figures may give confidence to Demopoulos.

“We certainly feel we can change the travel landscape,” said Demopoulos, although he declined to discuss revenues or earnings, which would give some indication of his company’s growth.

If language is any indication of growth, however, Qunar is poised for the big time.

Besides its present simple Chinese and English versions, Qunar is slated to launch Japanese and Korean versions, as well as traditional Chinese.

In the final analysis, Fritz’ American Dream is a work in progress, but no doubt it’s happening. So if you happen to be a taxi driver, the next time you ask Fritz Demopoulos, qu na’r, listen carefully. He might tell you an inspirational story that could change your life to something a little more-say-American.