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Giant Spins Off Marketing Division

Tencent Tech, 11/29/10

Chinese online game developer and operator Giant Interactive (NYSE: GA) confirmed today that as the latest move in its internal asset restructuring plans, it has spun off its marketing department as an independent subsidiary, "Juxin Networks." In the future, Giant's local promotions teams will be free to promote other games in addition to Giant's own.

The internal asset restructuring plan circulated last may reportedly centered upon supporting the spinning-off of new projects into independent subsidiaries in which the staff of the subsidiary would hold a 49% stake and Giant would hold a 51% stake. Afterward, five Giant games were spun off into independent subsidiaries. Giant CEO Shi Yuzhu said at the time that the subsidiary structure had helped alleviate the "big-company disease" that had plagued the company.

Giant's marketing department began drafting a restructuring plan at roughly the same time last year, and finally began moves to put the plan into effect this July and August after lengthy preparations.

There are reportedly two main advantages to the restructuring: both that it imparts greater agency and authority to local promotional teams to take on additional work when Giant has no promotional campaigns going on, thus avoiding the problem of a labor surplus, and that it allows smaller companies without the resources to build their own promotional teams to instead use Giant's promotional teams.

The new adjustments to Giant's marketing division draw upon the company's earlier restructuring experience, allowing all employees at the managerial level and higher to purchase stock in Juxin Networks. Giant is also implementing a new assessment system that draws on traditional sales performance assessment systems to eliminate those employees who cannot achieve their objectives and reward those employees who meet or exceed objectives. A spokesperson for Juxin Networks said that employees' salaries under the new system would be comprised of basic pay plus performance-based pay, adding that under the new system, outstanding employees could see their monthly salaries grow to RMB 8,000 to 10,000.

Juxin Networks is currently responsible for promotions for a number of in-house and outside games - including XT Online, King of Kings III, and Dragon Soul, all operated by Giant, the browser game DDTank, operated by KuGou, and Xenjo Journeys, operated by Shanghai-based Yoyo Software. Juxin will begin promotional efforts for Giant's most important game, ZT Online II, before Chinese New Year in early February.

Keywords: corporate restructuring Giant Interactive Shi Yuzhu Internet GA HR online gaming Juxin Networks marketing

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