It’s mid-October and a strategy conference for UCWEB, a company that provides mobile phone web browsers, is being held at a high-end hotel on Beijing’s Financial Street. Emerging from the audience is a slim young man who steps onto the stage. He is the new chairman of UCWEB, Lei Jun.
Last December, just two months after getting the venerable Kingsoft listed on the stock market, Lei announced that he was stepping down after ten years as CEO of the company. But now, in lesser than a year, he is about to make a comeback.
“The web browser business is not easy, because it is a game played by giants,” explains Lei. “I like playing with them, however, and I want to turn UCWEB into a world-class technology company.” Lei failed to fulfil this goal in Kingsoft, but he is hoping things will turn out better with UCWEB.
Continuing the Fight with the Spoils of War
Lei first made his mark while studying computer science at Wuhan University in 1989. He made RMB50 (US$7.3) by developing his first encryption program, Bitlock. Lei joined Kingsoft in 1992, a few months after graduating. He would stay with the company for the next 16 years.
Kingsoft was started in 1988 and had a rocky path from the beginning. Among all the domestic IT companies that sprung to life at the time, Lenovo has already made it onto the Fortune 500 list. Ufida Software and Neusoft are also favoured by investors. But under Lei’s leadership, Kingsoft has always seemed to struggle outside the arena. The company has never been able to obtain venture capital, nor has it been able to beat two vicious adversaries: Microsoft and piracy.
Lei fought hard. By 1995, Kingsoft had gathered almost all its resources and developed its own office suite, Pango Office, to compete against the dominant Microsoft Office. In the end, however, it lost the battle and nearly all its assets.
Lei and his team were forced to withdraw. They rented half of the fourth floor of an old four-storey block in Beijing. For several years they endured the low-rent facility in an innocuous little lane. It was not until 1999 did they move to the Jade Palace Hotel. It faced the Beijing Sigma Centre where Microsoft is located.
At that time, Kingsoft had to produce anything it could to survive: from the PC game ‘Zhongguancun Apocalypse’ and the audio and video player software KingPlayer, to Kingsoft PowerWord and KingTrans. Lei also learnt from the Selected Works of Mao Zedong. “We can only continue to fight with the resources obtained from the war and expand our business with products Microsoft doesn’t have,” he reasoned. While Lei still clings to his revolutionary instincts, Kingsoft keeps upgrading WPS, although it is no longer a threat to Microsoft Office.
All this time, Kingsoft has never been able to build a stable base. During the first few years of marketing Kingsoft PowerWord and Kingsoft Antivirus, budget was always tight. At the end of each Chinese lunar year, Kingsoft usually sold the software to distributors first in order to be able to pay out bonuses to its employees. If distributors were unable to sell the software, they would return the products after the Chinese New Year. If that happened, Kingsoft took a serious financial hit. As the yearend approached, the company would offer cut-rate deals and launch newly upgraded versions in a scheme to reverse the negative cash flow.
Kingsoft took its guerrilla tactics to the Internet in 2000 and set up Joyo.com, one of the earliest e-business websites in China. For a while, Joyo.com was the largest online bookstore in China, but it was later overtaken by Dangdang.com because of a lack of funding. Joyo.com was eventually sold to Amazon.com in 2004, but the deal also required Kingsoft to give up its e-business.
A year earlier, though, Lei had discovered lucrative online gaming. He ordered five of his eight technology directors to begin developing games. Kingsoft eventually launched its first online game, ‘JX Online’, which turned out to be a huge success. Kingsoft was now able to move out of its cramped quarters at the Jade Palace Hotel and into the bright and spacious Boyan Building on North Fourth Ring Road. Lei no longer felt the need for his guerrilla tactics.
