Note from Anastasia: This is the second guest post from Alexis Madrigal.

You've heard all about the American efforts at retail/online mashups -- Webkinz, Bratz, and Barbie. Now, Red Mushroom, a Chinese game developer is attempting to launch a Webkinz/Neopets inspired kids brand, BaoBao BengBeng, that will integrate a virtual world with a plush doll sold in retail stores. In an Asian business model twist on the theme, the world will be free to play, but users will have the opportunity to acquire virtual goods and services via "point cards" purchased in the real world.

Internet penetration in China has seen incredible growth. From a mere 23 million Internet users in 2000, a June report from the Chinese Internet research agency (CNNIC) projected that the country has over 162 million Internet users. Though they haven't released an age breakout for the most recent numbers, over the past few years, the under-18 population has run about 16-18%. We can estimate that there are about 28 million Internet-connected Chinese children.

Unsurprisingly, some real problems and a healthy dose of fear have accompanied this massive change in youth behavior. Game/Internet addiction and its rehabilitation have sparked many a journalist's imagination in both China and the West. China's government has actually instituted a unique fatigue system, which aims to reduce the legendary stickiness of online games by reducing the amount of credit young gamers receive after three hours of play. It has also provided a branding opportunity for companies like Red Mushroom who can market their products as parent-friendly by declaring them "Fatigue System Compliant!"

Red Mushroom plans a "city by city" rollout of the dolls starting in Beijing and pushing out to other first-tier cities like Shanghai and Shenzhen. They are partnering with an education company and will be targeting all the online and mom-and-pop toy retailers they can find. Of course, the hope with these offline/online hybrids is to create a self-reinforcing system where real world retail sales drive the online world as the online world drives retail sales.

If BaoBao BengBeng succeeds, it obviously wouldn't be the first time that a Western media meme took off in China. Chinese media blog Danwei had great coverage on the Super Voice Girls "frenzy" of 2006 when the so-called American Idol for China swept the country.

Posted by alexis