June 21, 2004 Cover. No one I know in the US has seen this cover from Newsweek Asia

At the Consumer Electronic Show in Las Vegas, Microsoft has unveiled more of its digital plans to connect everyone and everything via the digital hub of your living room and you together. Since three of the things that I have worked on while working in Beijing is aimed at the digital consumer, i have a particular vested interested in how they serve the Chinese consumer market. Although much of the focus during the show has been on the US market, many of those same products will eventually in some form or another find their way to China in the future. However, knowing the differences between North American and Chinese user preferences becomes critical if you are planning a whole ecosystem based on some assumptions.

One of the most significant differences between how folks in the US and people in China entertain involves physical space. In the US, consumer electronic companies strive to win the living room in the modern home. Aside from watching television in the living room, families in North America can invite their friends to play video games, listen to music, eat or watch a movie together in the living room. House parties where you invite people to your home is not only common but expected. Since the digital living room assumes a living room as your digital hub, some insight into how this may change for the China market becomes imperative.

In China, the middle class living room can also acts as a center for family life and watching television as well. However, the thought of bringing friends or business associates to the home, particularly a small or very old home can bring a tinge of discomfort for both the inviter and invitee. Instead, we bring our entertainment and socializing needs to restaurants and KTV boxes. In essence, we have outsourced the living room to commercial venues that can impress and serve our guest in a manner appropriate for the occassion. We can maintain some bit of privacy in our lives and not have to worry about the messy clean up as well. Of course, people in China still invite friends and neighbors for dinners to their home but for many of us with busy lives and small apartments, restaurants and bars play that role better. As my friend Linda, a local journalist for an international media company, once told me, "our concept of a party is to eat and drink sitting around circular tables." Having local knowledge of the social and ethnographic patterns of your customers becomes important when they have very different behaviors and lifestyles than the people who develop products for them. It seems pretty obvious but all companies, even us sometimes, mistakenly assume that everyone thinks and works like we do.

For the Chinese digital consumer, the home may still act as the base and hub for digital media but the spokes of that hub, in the form of mobile devices and alternate PCs at work and at school implies more of a decentralized role for digital electronics. Aside from wanting more compact devices that can hold their many digital assets from MP3's, PDFs. Avi.s and photographs, Chinese consumers today seemed baffled by the debate on DRM that divides technology proponents in the US. P2P (Person to Person) networks either in the form of physical sharing or online sharing is so pervasive that one can descibe China as a huge torrent of digital media being exchanged locally on a daily basis. P2P has become so common that even the sellers of pirated DVDs and MP3s have begun to feel the pinch as well from customers who don't want to pay USD .80 for a blockbuster DVD, they want it free.

Going beyond the ethical and legal issues, the question for many Chinese consumers is not how do I acquire digital assets but rather how do I find, organize, verify and share them?  For Chinese middle class and technologically savvy users, the need for a digital hub will be the same or perhaps greater than those in North America - it may just not be in their livingrooms - maybe it won't even be on their PCs.

-Frank Yu