An Internet Business with Chinese Characteristics

American companies have long complained about Chinese copycats, but Chinese firms have created some powerful new business models that their American counterparts might want to mimic themselves.

A service called YY has enabled rural Chinese karaoke singers to make a living singing online. Qihoo 360 has shown how a security product can be a springboard for the creation of a market-leading app store. Alibaba, China’s largest e-commerce site, doesn’t own logistics infrastructure or sell its own consumer goods.

As a managing partner at GGV Capital, a venture capital firm that operates in the U.S. and China, Jenny Lee has enjoyed a close-up look at many of China’s most innovative Internet companies. She sits on the board of YY and 21Vianet, a data center services provider. The firm also has close ties to the Chinese mobile phone-maker Xiaomi.

YY, a video site with close to 100 million monthly active users, is a phenomenon unlike anything in the U.S. The site features live karaoke singers and video game commentators, with viewers paying for digital flowers and other items that they give to the video stars. Customers can chat with the performers and pay extra to sit close to them at online concerts, with YY taking 70% of all revenues. Ms. Lee spoke to The Information about YY, how the site’s popularity is a product of China’s communist history and why it likely won't be using Bitcoin.