Big data firms must focus on creating value

Size not the only thing that matters in emerging industry

Disparagement of China's big data industry is growing almost as quickly as the number of companies entering this exciting new field, where the aim is to collect and analyze large data sets for a variety of end-users. "China's big data industry is still in its initial stages, a mere concept perhaps" - such criticisms can be seen everywhere in the press.

The truth is, big data has become so hot that even the tech industry's biggest giants cannot help but dive in. Last year, e-commerce giant Alibaba signed a framework agreement on big data services with Guizhou Province, where authorities hope to start operating big data application services this year.

China's big data start-ups are also gaining increased attention - just a few days ago, corporate big data provider Jusfoun Big Data announced its receipt of 200 million yuan ($32 million) in its second round of financing from local venture capital investors. According to statements from Jusfoun CEO Wang Sanshou, the company intends to go public before the end of the year.

Founded four years ago, Jusfoun collects and analyzes data from 9 million companies, 40,000 market segments, 500 cities, 5,600 districts and counties, 2,500 high-tech parks, 300,000 streets and 120,000 office buildings. Such a large data base enables Jusfoun to operate a comprehensive date solution platform for clients including commercial banks, Internet financing companies, peer-to-peer businesses and securities firms.

Although many big data companies in China are still struggling to find a profitable business model, Jusfoun has been making money since 2014. Jusfoun has several channels to generate earnings, including selling financial terminals to banks and building data platforms for local governments.

However, the key to Jusfoun's success isn't just its possession of a large data base - this is just part of the story. Many other big data companies have access to similarly sized pools of data, yet have failed to attract investors or generate a profit. Investors, for their part, have also become savvier when it comes to backing emerging tech firms, such as those in the big data industry. Famed investor and iStart founder Cha Li is among those now saying that data have to be not only big, but meaningful. "What's important is not the quantity of the data … but the data's value to consumers," he told the Global Times recently.

In 2013, Cha invested in hunteron.com, a website that gathers information from more than 1,000 staff recruitment agencies into a single talent-search data base. Compared with Jusfoun, hunteron.com's data pool is relatively small and of use primarily to human resource professionals. This, however, did not prevent the company from garnering notice - not to mention some $20 million worth of funding from Sequoia Capital and other investors last year.

Another example of a Chinese company applying big data to a specific market segment is ctcnn.com, a website that provides analytic information relating to China's tourism industry. Each day, the site's operators monitor data such as the share prices of listed travel-sector companies, Alexa rankings of nearly 100 different travel websites as well as admission prices at close to 300 tourist attractions in China. Such information is an invaluable resource to industry research fellows and executives.

It's hard to say whether it's a better idea for tech companies to focus on the "big" aspect of big data or to carve out a niche in a specialized market. If we look at successful examples abroad, many companies choose a narrow focus at first before going on to provide a wider array of services.

In China, the industry's prospects hinge on the ability of companies to analyze and interpret data, not just gather and store it. Climbing up the value chain with meaningful, valuable conclusions will be a new test for an industry where size often takes a backseat to interpretative skill.