Mobile browser provider UCWeb dreams of 1B users
SHUHEI YAMADA, Nikkei staff writer
BEIJING -- In early June, the Chinese e-commerce giant Alibaba Group Holding acquired full control of UCWeb, a browser provider for mobiles. Yu Yongfu, chairman and CEO of UCWeb, made it clear that his company aims over the next five years to double its global user base for browsers and other products to 1 billion. He also said he would like to help Alibaba expand its e-commerce business in India and in Southeast Asia, where it has already proven popular.
UCWeb is one of China's largest mobile browser companies. In a recent interview with The Nikkei and other media, Yu talked about his management approach and the future direction of the company.
"It was a very difficult decision to make, but I eventually came to the conclusion after getting back to the basics of entrepreneurship that it would be better for us to grow business under the umbrella of Alibaba," Yu said. "UCWeb, an English company name derived from 'You Can Web,' represents our aim to give users fast and easy access to the Internet. I thought that (the merger) could bring our company closer to our dream of providing Internet services for half of the world's population.
"Our company wants to have 1 billion users for our browsers, mobile search engines and gaming platforms over the next three to five years," Yu said, adding that although U.S. giants Google and Facebook are the only two Internet companies ever to have such numbers, UCWeb has a chance to reach that level as well.
Yu will assume responsibility for Alibaba Group's mobile Internet business as head of the newly established UC mobile business group.
"The two sides quickly came to an agreement over the acquisition as our talks progressed smoothly in the past two months," he said. "I will take part in Alibaba Group's strategy committee and soon become a member of its (27-person) partnership," who have more power than ordinary shareholders and are responsible for appointing the board of directors.
"The acquisition deal will mainly be settled through stock swap transactions using Alibaba's shares," Yu said. Alibaba is scheduled to be listed in the U.S. later this year. "Since Alibaba hasn't been listed yet, there are no specific numbers for calculating the price of the purchase. But we talked with Alibaba and agreed that the value of the deal should be more than twice that of (Chinese search engine operator) Baidu's $1.9 billion acquisition of (China's mobile app store) 91 Wireless."
UCWeb's browser is available in 11 languages, including Chinese, Indonesian and Vietnamese. The company's mobile browser is used by about 500 million smartphone owners worldwide. It is India's most popular mobile browser.
"Executives from Alibaba and UCWeb will be brought together soon to discuss anew how to expand internationally," Yu said. "The important thing is to consider how to combine UCWeb's global success (in India and Southeast Asia) and that of Alibaba."
Regarding promising areas of cooperation, Yu said: "Our subsidiary Shenma is China's second-largest mobile search engine in terms of market share. I and Alibaba Chairman Jack Ma share the view that a mobile search service could bring great opportunities for innovation. As a first step, we want to enhance synergies between Alibaba's strength in e-commerce and our expertise in mobile searches.
"Over the next decade, Internet technologies will likely evolve from existing IT to data technology," he added, referring to the use of big data to analyze customer information and other metrics. "So we would like to enable deeper synergies in the big data cloud computing business."
Big helping small
Yu, who used to be a dealer at an investment company, joined UCWeb in 2006 and successfully led the company. He first came to know Jack Ma Yun in late 2008.
"Our company planned to increase capital at that time," Yu said. "When negotiations with potential buyers to raise capital were expected to wrap up in just a week, Ma said to me: 'Yongfu, please give me a chance! I want to see you soon.' I immediately flew to Hangzhou to visit Alibaba's head office as a token of respect for Internet business tycoon Jack Ma.
"After we talked about the Internet for two hours, he finally offered to buy new shares of UCWeb at prices higher than other potential investors. Thus he snatched up the deal from likely buyers in a last-ditch attempt," Yu added.
"Because I was once an investor, I have my own investment policy -- that is to say, good investment decisions should not be expensive forever, while bad decisions should be expensive forever," Yu said. "Jack Ma is an honest man and one of the best strategic thinkers in the Chinese Internet industry."
China's three biggest Internet companies, Alibaba, Baidu and Tencent, are buying out smaller companies.
"I previously thought that if a company becomes larger, their growth could slow down," Yu said. "Currently, however, it's not true. Large businesses grow even bigger and more powerful as they seem to have accumulated sufficient resources to fight back. I also felt enormous pressure from large competitors up until yesterday because my company used to operate independently.
"Large acquisition deals driven by big players could also mean that a larger number of people will become willing to start their own businesses. An accumulation of capital is a prerequisite for launching a business, as has been the case for firms in Silicon Valley. I expect the entrepreneurial boom to arrive again in a year or two. But don't get me wrong. I have no intention to start a new business," he added.
Founded in 2004, UCWeb is one of China's largest mobile browser companies. The Beijing-based company has nearly 3,000 employees. In 2013, it generated 75% of revenues from in-browser advertising and earned 25% from paid apps, mostly for online gaming. Although its financial results are not available because UCWeb is not listed, the company expects its sales of mobile game software to surpass $100 million. Alibaba initially acquired a certain amount of stake in UCWeb before the merger in 2009.