The comeback kid bounces all the way back to the bank

Many entrepreneurs have watched in envy as the profits of online gaming companies soared in recent years in stark contrast with the fortunes of many other industries.

However, many of those same entrepreneurs backed away from joining the bandwagon, deeming it an overcrowded and risky venture.

Not Shi Yuzhu.

The controversial and unconventional businessman, who is not known for a lack of confidence, leapt in with both feet and hasn't looked back since.

Many in the know warned him that he would need deep pockets to fund highly expensive research and development.

They also said that even if he produced a workable game it would still need to capture the hearts and minds of a notoriously fickle gaming community.

But Shi had something up his sleeve: a strategy that existing gaming companies had already spurned and one that would go on to place the 47-year-old 14th on the list of China's richest people with a fortune of $1.8 billion, according to the Hurun China IT Rich List 2008.

The secret of Shi's success was to target the nation's vast second and third tier cities and rural areas where it is more common to use Internet cafes to go online. Existing companies were targeting the biggest cities where gamers tend to play at home.

Some have likened the tactic to Mao Zedong's successful appeal to the rural heartlands when fighting the Nationalists. Indeed, Shi is a keen student of the Chairman's life.

He also made sure his product was kept in people's faces, drawing on marketing expertise garnered from a flamboyant career of ups and downs.

Shi launched his company, Giant Interactive Group, an offshoot of his original Giant Company, which he created in 1991, in 2004. He invested $3 million in research from which emerged ZT Online, a multi-player online role-playing game that quickly grew into one of the nation's most popular and profitable. At its peak there are as many as 1.5 million people playing at the same time - a number equivalent to the population of Philadelphia, the sixth most populous city in the US.

Shi's marketing team numbers 2,500. The staff make regular checks to make sure ZT Online's posters are being displayed on the walls of Internet cafes and sell pre-paid cards to players enabling them to play the game.

He also hires good-looking women to play, luring male teenagers and men into the cafes.

Gamers who spend 120 hours a month playing are rewarded with game points worth $15.

And he regularly sponsors 50,000 cafes across the country to offer only ZT Online on their terminals.

Three years after launching, Giant Interactive became the only Chinese gaming company to be listed on the New York Stock Exchange.

Shi certainly puts his money where his mouth is. Rather than be called CEO, he prefers the title CGO - chief gaming officer.

He spends 10 hours every night playing ZT Online, during which time he collects players' feedback.

Shi was born in Anhui province in 1962 and graduated from Zhejiang University with a degree in mathematics. He left his first job as a civil servant and went to the boomtown of Shenzhen in 1989, where he completed a master's degree in software. He made his first million yuan ($147,000) by selling his own software, and established the Giant Group. As his computer-related business developed he moved into real estate and the health care industry. His healthcare product, Nao Huang Jin (Brain Gold), became a best seller thanks to an aggressive nationwide marketing campaign. By 1995, his personal wealth was estimated to have reached nearly $7 billion.

One year later, things began to go sour because of over-investment in real property. Faced with debts of $37 million, Shi withdrew from public life and spent three years working on a new healthcare product, Nao Bai Jin (Brain Platinum), which was said to aid sleep. Thanks again to heavy advertising, annual sales grew to more than $160 million.

Shi sold the company and used the profits to set up the online venture that was to bring him his next fortune and the scrutiny of management observers worldwide.

To what does he owe his success? It is all because he is "a master in understanding the customers and market", according to no less an authority than Jack Ma, CEO of Alibaba, China's largest online business platform.

(China Daily 05/25/2009 page7)