Chinese Buyers Should Do Research before Domain Investment

Dot Club Domains designs a lovely monkey mascot to represent their company. [File Photo: Courtesy of Allegravita]

Anchor: As many ordinary Chinese citizens have lost so much money in the stock market, some of them give fanatic enthusiasm about investing in short domain names, otherwise known as web addresses.

And an upcoming auction launched by Dot Club on the very short portal "4.cn" in late March may again stir up their excitement.

But is it a wise choice for Chinese citizens to continue their craze in domain names" investment?

Xu Fei talks to Dot CLUB CEO, Colin Campbell and an experienced domain name Chinese investor Deng Yusheng to find out more.

Statistics from "West.cn", one of the world biggest new domain name registry providers, shows the registry of dot club domain extensions have recently grown to 700 thousand globally from 580 thousand in early Feburary.

Dot CLUB CEO, Colin Campbell is now in Beijing, promoting their next round of auction of two domain names "8.club" and "99.club" in China from March 21 to 24.

"Dot club, as we know, in the last few months, becomes a pretty popular name and very strong in the market place. Investors have been investing in these names and they"ve been going up. Dot club is probably a more sustainable investment than some of the other domain extensions that may not have the kind of usage we have. Plus you have global demands. So if you have a brand-able name, you can sell it to the west, and that can be very good as well."

These two domain names auction are planned to take place on "4.cn", arguably the most influential premium domain platform in China.

In fact, according to the latest 2015 Year-to-Date Top 100 Sales Chart provided by DNJournal, a domain industry news magazine, Chinese buyers accounted for nearly 75% of all global short domain name purchases in 2015.

However the domain name investment like many other means of investment may have ups and downs, which would lead to a potential risk in the relevant investment activities. Michele Van Tilborg is the COO of dot Club Domains:

"The dangers would be is that you didn"t do your research and you overpaid, or there"s no market for it. That"s why I think it"s important to do your research and put your money into domains that have long-term demand around the world. So you diversify your risk."

What happened to money earned domains?

The underlying premise of making money off domains is simple – you buy a domain that generates click revenue while you wait for someone who is willing to pay you a premium to turn the domain into a website.

With a belief that domain name trade will get a boost in the Internet plus era, thousands of domestic investors are rushing to snap up "short" domain names, ones with five or less letters or numbers, and pushing up the value of domain names around the world in the process.

From an insider"s perspective, Colin Campbell thinks Chinese investor"s preference for short, numeric names is very reasonable.

"I have seen in China a number of the short-character letters "nn" or "LLL"; they"ve been trading very well in the marketplace. In fact they are almost liquid to the point where you can put them for an auction: One day, you buy for 100 dollars, a three-character letter, and then another day, sell it for 300 dollars. You know there"s a lot of liquidity for those certain types of names. I think when you get into longer words, there"s slightly less liquidity for those particular names. But over time I think that will improve."

Deng Yvsheng is a famous "Dalao" in domain investing industry and Dalao, in Chinese, indicates an influential figure.

Deng started working in IT industry in 2004. Years of work experiences has provided him with a good understanding about the investment value of domain names.

Now he owns over 10,000 dot club domain extensions which costs him nearly one million yuan of RMB.

When being asked why he has specific appetites for dot club domains, he explains:

"Dot club is very suitable for building up a new website. Beginning with the character "C", it is almost as short as dot Com. According to my observation, the registry of Dot club is increasingly popular since the word "club" means a group dedicated to a particular interest. This is a good option when it comes to a domain name used to launch a social media platform, a website or even a platform of communication just within the members of an enterprise."

Domain investing may create miracles in which someone could make millions overnight. But there are also warning signs that Chinese investors" jumping into domain names may cause another bubble.

For ordinary citizens, investing could earn you more but also may cause you to lose money. Thus keeping a cautious mind is always important and a priority for investors.

For Studio Plus, I"m Xu Fei.