Ex Google China bigwig taps into Chinese mobile market

Google’s ex head of China Operations has said he’s funding a dozen start ups with his new company, Innovation Works, in a bid to tap into China’s “booming internet market.”

The nation’s mobile market is“beginning to really take off,” Kai-Fu Lee said according to CIO. “Everyone is starting out, figuring out how things will go. That’s exactly the right time when we want to get engaged.”

Lee believes that mobile internet users may more than double within five years as smartphones that can browse the web and download music become more affordable. Bloomberg also quoted Lee as claiming that the number of people accessing the Internet on their mobile devices in China may grow to 800 million within three to five years, from about 300 million now.

He added that within the next few years, entertainment applications such as media players, e-book readers, and games, will dominate the Chinese mobile market as the price of Android phones drops. To attract Chinese users, many of these products will use the “freemium” business model, offering basic services for free and charging for advanced features.

The 12 companies Innovation Works is currently funding largely centre on developing mobile products. The nation’s mobile market is “beginning to really take off,” Lee told Bloomberg.

His company is currently backing a new Android-based mobile operating system called Tapas, which is set to launch in China later this year. Tapas is based on Android and replaces apps with local alternatives. Such tweaks include allowing users to download photos of their contacts via Chinese social networking sites, or display lyrics synchronised with songs. Innovation Works expects Tapas to ship on more than 1 million smartphones by next year.

It’s also backing an iTunes-like program – WonderPod – for smartphones and a mobile app to edit photos. PhotoWonder is a bizarre editing tool designed for young Chinese girls who wish they didn’t look how they did, letting them easily modify their personal photos, such as by lightening their skin or enlarging their eyes.

“We are clearly after the Chinese internet opportunity,” Lee said during a news conference earlier today.

Innovation Works, which was funded with $115 million from investors including Foxconn, WI Harper and Steven Chen, a co-founder of YouTube, has hired 150 engineers, and spoken with 500 different start-ups, during the year that it has been in operation.

As 83 percent of mobile Internet users in China are aged about 29 years or younger, they don’t have a lot of money and are very sensitive to handset prices, Lee said. Smartphones must be priced lower to be affordable.