Important Disclosures regarding Price Target Risks, Valuation Methodology, Regulation Analyst Certification, Investment
Banking, Ratings Definitions, and potential conflicts of interest begin on Page I of the Appendix Section.
June 8, 2009
CHINA INTERNET AND MEDIA
CHINA INTERNET AND MEDIA: RECENT INDUSTRY
• GM positive on China amid bankruptcy filing. According to local newspapers, GM stated that auto sales in May
increased 75% yoy, thanks to a recovering economy and strong car-related stimulus programs. The US auto giant also
assured the press that its China operations (two JVs with local car makers) are not included in its petition for court
protection from creditors. GM maintains its two-year goal of selling 2M units and rollout 30 new models. In a
separate announcement, Volkswagen also posted strong sales number in China in May, up 57% yoy. Keep in mind
that Auto is a very important part of online marketing, representing nearly 20% of the market. This is positive for
online advertising, especially in 2H09, as we believe that strong sales data provide an incentive for advertisers to
speed up the budget planning cycle and allocate more spending.
• China power generation down. Any worry? According to government statistics, the power generation was down
3.5% in May. We believe power output is more correlated to the export industry than domestic consumptions. In
addition, the decline in power usage has been stabilized since last November, when production was down nearly 10%.
• Chinese rely more on trusted brand names. A recent Boston Consulting survey indicated that Chinese consumers
plan to spend more (compared to last year) and worry less about the economy than their US and European
counterparts. This study also indicates that establishing a trusted brand is important in China because consumers (1)
believe in the brand more than consumers in other countries; (2) will pay for high-quality brands, especially for food,