During the Great Wall Summit's Mobile Internet Forum held in Silicon Valley, UC CEO Yongfu Yu, who is also part of Lei Jun's ecosystem, made several public appearances in the US, speaking at the GMIC SV Conference, UC Berkeley, and Stanford University. This was part of UC's overseas expansion strategy: to enhance UC's visibility in the US through speeches, which would aid in talent recruitment.
In contrast, when UC entered markets like India, Indonesia, and Russia in 2010, it didn't go through such elaborate efforts. Back then, Yu adopted what he called the "Sea-Land-Air" strategy—deploying products in a market to validate success before establishing an office locally for hiring talent and fostering market partnerships. In the US, UC altered its approach by setting up an office first last year, recruiting talent before pushing products—a complete reversal that underscores the uniqueness and challenges of this market. Currently, UC holds just a 1% share in the U.S. mobile browser market, indicating a long road ahead.
Compared to the U.S., UC's expansion into developing countries can be considered relatively "easy," with some markets even entering a harvesting phase.
First Place in India, Over 10% Share in 10 Countries
This August, marking UC's ninth anniversary, Yu announced that UC Browser had captured a 30% market share in India, making it the leading browser provider in that market. Given India's peripheral position in Chinese media attention, this milestone did not attract much fanfare. However, for UC and Yu, it was certainly worth celebrating.
For UC, this marked the first breakthrough for a Chinese internet company in a large-scale market (India has a population of 1.2 billion). For Yu, his executed "Sea-Land-Air" strategy finally bore fruit, succeeding both domestically and internationally. Especially the latter, as domestic browsers were fiercely competing at the time, raising doubts about UC's decision to divert resources to overseas markets.
UC's success in India largely replicated its early achievements in the Chinese market. "The Indian market lags behind China by about three years; 2010's India was equivalent to 2007's China," said Yu, "We anticipated a transformation in India's smartphone market and invested accordingly beforehand."
In 2007, China was still dominated by Symbian systems, and UC Browser, with its main feature of saving data usage, was highly attractive, eventually becoming dominant. With lower incomes, Indians are frugal with their data expenses, making them a natural target market for UC Browser. After "air-dropping" its product into India in 2010, UC acquired 20 million users within a year, validating Indian demand. By 2011, UC established an office in India and began recruiting local talent.
"Before reaching 20 million users in India, we didn't meet any clients or discuss any collaborations. Without product influence, why would they cooperate with us?" This is precisely the "Air Force" component of Yu's "Sea-Land-Air" strategy—remotely deploying products to test demand.
In 2010, UC launched its products not only in India but also in Indonesia, Russia, Nigeria, Vietnam, and other markets, all supporting local languages. Due to UC continuously updating its data on the Indian market, people mistakenly thought it was solely focused on India. According to Yu, UC has achieved over 10% market share in 10 countries. It holds an 18% share in Vietnam as the largest third-party browser, nearly 20% in Nigeria, and over 10% in Russia's Windows Phone version.
Overseas Expansion Strategy: Achieving Scale Breakthroughs in Populous Nations
Interestingly, when Yu introduced the state of overseas markets, he counted the countries by population size: India with 1.2 billion, the U.S. with 300 million, Indonesia with over 200 million, Brazil nearing 200 million, Russia with over 100 million, Nigeria approaching 100 million... giving the impression of being a "world king" with half the world's population under his coverage.
In fact, this is precisely UC's overseas expansion strategy. "When choosing an overseas market, it's not about how easy it is to break through, but finding populous nations with regional coverage capabilities to achieve scale breakthroughs," said Yu, "Breaking through in smaller countries is meaningless—it's all small-scale operations."
However, UC's strategy is also evolving. During UC's ninth anniversary media briefing, Yu introduced UC's next strategy: focusing on localized development in China, temporarily abandoning the Japanese and Korean markets, increasing investment in India, Russia, and Middle Eastern countries, and actively exploring European and American markets. Even though UC has achieved good development in populous nations, strong local forces in Japan and Korea have kept UC out, and the U.S. market mentioned at the beginning remains a long journey ahead.
Now, with Baidu and Tencent increasing their investments in India and Southeast Asia, UC must accelerate to avoid falling into a passive position when overseas blue oceans turn into red seas. But achieving "rural encirclement and urban conquest" will require more than just saving data. The moment of truth for UC's thousands of technical developers' innovation capabilities has arrived. Yu responded: in the past seven years of leading UC, there was only one thing he never hesitated on—investing in technology and products.
"Did Pony Ma know when to harvest WeChat?"
After gaining a 30% market share, 2013 could be considered UC's harvest year in the Indian market. However, among the multiple language versions launched simultaneously in 2010, while UC now holds over 10% market share in ten countries, only India has seen significant scale breakthroughs. If India took three years, how many more years will it take for other countries to reach harvest?
Yu's answer: Can you tell me when Pony Ma knew when to harvest WeChat?
He believes that the most critical aspect for Chinese internet companies venturing abroad is having the determination to internationalize. With determination, one can then assess which international markets deserve long-term and key investments. "If you design backwards for results, many actions will become distorted—you'll calculate profit models and care too much about return on investment," said Yu, "This was the mistake made by American internet companies in China a decade ago."
Yu thinks the previous wave of American companies failing in China was because these were generally large American internet enterprises that weren't excited about developing countries, calculating early returns on investment and unwilling to invest long-term. "No internet company has succeeded using this model, even Chinese ones." Yu believes that increasingly, more American small and medium-sized internet companies are entering Asian markets, like Evernote and Jawbone Up, "They're less profit-driven and thus may succeed."
"Global internet differs from traditional businesses; competition is harsher, leaving no room for price wars," said Yu, "If you don't use free products, the core issue isn't pricing or channels, but the product." He believes competition is the same both domestically and internationally, "The market is always zero, the product is one. To make one stand firm depends on your ability to draw zeros, making the product reach ten, hundred, or a million; but if one doesn't stand firm, all zeros become zero."
Fighting overseas, Yu deeply feels that users don't have so many eyes to choose from—they look at the product. He uses UC's success in India as an example, "To Indian users, Chrome, Opera, Firefox are all foreign companies; they don't care whether it's a Chinese or American enterprise—rather, Chinese enterprises seem more distant. If your product isn't good, it won't work."
The Most Lacking Element in Chinese Enterprises Going Global: Courage
UC's internationalization strategy takes Huawei as a role model. From the results, Huawei's business expanded first in Asia, Africa, and Latin America, and UC also gained shares in developing countries, making them quite authentic "master-disciple" pairs.
Yu introduced that after completing a case study on Huawei, they concluded that Chinese tech companies going global follow two stages: first, stepping out of the country to transform Chinese enterprises into international ones; second, transforming international enterprises into global ones with a global perspective and height. "The hardest part for Chinese enterprises is to make others see them as international enterprises."
UC's specific strategy is the "Sea-Land-Air" three-stage development. "Air Force" refers to product deployment rather than personnel deployment, "Army" refers to forming teams after reaching tens of millions of users, and "Navy" refers to utilizing China's terminal manufacturing advantages for penetration. Currently, apart from India, UC is still in the early "air-drop" product stage in most markets.
Yu highly praises "Made in China." "China's global influence wasn't created by the IT industry, but by private enterprises, Zhejiang bosses, and Guangdong bosses," he gave an example: At an airport abroad, he met a few Chinese businessmen who couldn't speak a word of English, and he helped them check in. "They have such courage; without knowing English, they can do business abroad. Chinese tech enterprises going global lack not technology, but this kind of courage."
According to Yu's experience, the hardest problem for Chinese enterprises that have gone global is recruiting talent and forming teams. His advice is to keep the proportion of Chinese employees in local teams below 30%. Of course, this comes from Huawei's experience. "In 2010, my first trip to Indonesia, Huawei had 1,700 people there, only 200 of whom were Chinese, leaving a deep impression on me," recalled Yu, "This is true internationalization, not just sending Chinese people abroad and calling it internationalization."
"A Browser is a Sub-Operating System"
UC's employee count has reached 1,800 people, estimated to exceed 2,000 by the end of the year. It's hard to imagine that a browser requires so many people.
Yu considers a browser to be a sub-operating system. "No product, except an operating system, involves the breadth and complexity that exceeds a browser," said Yu, "UC becomes more professional and deeper, requiring more people to invest." He used the code development of UC's browser kernel as an example, "Our U2 kernel used 100,000 lines of code, and by 2011, our U3 kernel used millions of lines of code. Now, very few applications use more than 100,000 lines of code, let alone millions."
Yu believes that Chinese PC browsers are "application-level" browsers, using someone else's engine (IE) and wrapping it in a shell. "UC's U3 kernel can simultaneously achieve acceleration and PC display. If using IE kernel, it cannot simultaneously achieve cloud server acceleration and PC display."
Currently, UC is intensifying its surrounding ecosystem layout, such as earlier adding Alipay controls, and announcing cooperation with Amazon in plugins at the GMIC SV conference in the U.S. According to UC's official data, UC's plugin platform "UC+" has 50 million monthly active users and has cumulatively added 200 million times.
UC is promoting the "super app + light app" cooperation model. Yu believes each country and market will have a few super apps, like Google and Facebook in the U.S., Tencent and Baidu in China. The foundational services at the top are provided by super apps, while the detailed functions at the bottom develop towards web directions. Thus, each super app can connect rich WebApps (i.e., the "light apps" proposed by Baidu). Yu dislikes native apps because they have high development costs and developers lack the power to decide when to launch, "which doesn't align with the culture of rapid iteration in the internet."
He used the development of the video industry as an example. Before 2007, watching videos required client software, and watching videos on the web was slow. After 2007, YouTube and Youku emerged because the threshold for watching videos on the web decreased. Using a browser to find videos broadens the scope compared to using a client, "the browser is the most universal solution providing the most videos and formats."
However, although a browser is a sub-operating system, Yu does not want to do too much ecosystem-related work. "Among all internet products, browsers have the highest degree of openness because they help users quickly reach third parties instead of directly providing services," said Yu, "we just want to create a platform."
Creating a "Food Street" with Baidu
In August, Alibaba increased its stake in UC, and Jack Ma joined UC's board, easily leading outsiders to believe that UC had chosen to align with Alibaba. Yu responded that UC did not choose to align with Alibaba; Alibaba is merely an investor, and UC continues to maintain cooperation with Baidu and will collaborate with other e-commerce platforms (the latest example being cooperation with Amazon in the U.S. market).
Indeed, earlier this year, rumors spread wildly about Baidu acquiring UC, with intensity second only to 360 acquiring Sougou. Previously, UC had not responded to related rumors, but during his speech at UC Berkeley this week, Yu mentioned that a giant had offered a 2-billion-dollar ("two billion") acquisition price. Yu did not accept it, explaining that he didn't want to miss the opportunity to "independently pursue dreams." However, the real reason—also mentioned during his speech at UC Berkeley—should be "Baidu wanting too much control." According to Yu's speech, Baidu hoped to graft its dreams onto UC, "Baidu has too many things it wants UC to support and implement, but Baidu considers strategically prioritized matters that aren't UC's current focus."
When responding, Yu explained that UC chose independent development because it has the capability for independent development. "If you want to independently develop, you need to understand that you must have the ability to independently develop; if you don't have the ability, don't choose independent development," said Yu. After choosing independent development, does he worry about pressure from giants? Yu responded, "People shouldn't be scared to death; if people get scared to death, all internet businesses can stop."
However, since September, after proposing the concept of "light apps" and joining the WebApp war, UC has caused tangible impacts. I asked Yu how he views competition from Baidu, and he used the prosperity of a "food street" (similar to Lei Jun's "restaurant theory" six months ago) to make a vivid analogy:
You open a restaurant, and another one opens nearby. Are the two competitive? In my view, I hope to open ten restaurants, forming a food street... It doesn't分流your customers but attracts more people to the street. People say peers are enemies, but why do they all prefer to stay on a food street? The most important function of a food street is to establish customer cognition of the chain. If it's a chain, everyone's business grows incrementally. Normally, you might have 100 customers a day; but with a food street, 10,000 customers come, and if you capture 10%, that’s 1,000 customers, increasing your clientele tenfold. So we thank Baidu; they came together to smooth out the industrial chain and gave WebApps a great name.
This analogy is very clever. However, if both Baidu and UC are doing "Sichuan cuisine," their competition becomes more direct. Perhaps next, both will explore Cantonese, Shandong, or Beijing cuisines for differentiation to attract consumers (developers). Or maybe a price war?