Selling Domains Part 2 - What to do with ChiPs

With the incursion of the Chinese domain buyer ChiP (Chinese Premium) domains have become all the rage and are typically hot items. ChiP domains are domains typically 4 letter domains without vowels or the letter v. The definition of ChiP domains has broadened to include 4 number domains without a 0 or 4. The one thing that both the letter and number variations have in common is they are all .coms.

In my recent trip around the world attending the Dubai Domainers Meeting etc. I began to dig into what was fuelling the interest in ChiPs. I spoke with one prominent domain owner and he indicated that a lot of the money being invested in ChiPs actual come from margin loans underpinned by stocks on the Shanghai stock market.

What Chinese investors are doing is taking RMB (Renminbi – Chinese currency) and buying ChiPs on websites like 4.cn. They are then either flipping the domains to other Chinese investors or planning on selling them for $US at a later date. In many cases, as ChiP domains are quite liquid they have become an effective medium for converting RMB to $US.

It just so happens that there are some well cashed up Chinese investors (ie. not margin loan backed) that are buying the domains in $US because they can resell them for more in the Chinese market or believe that their value will increase over time.

It's also an effective method for hedging themselves against a likely RMB devaluation as the Chinese economy slows down. It’s a long-term play in a very volatile market that if you have the cash you can ride out the ups and the downs. In the event of a Chinese economic collapse these investors have a very transportable assets (ie. domains) they can quicly sell for $US. It's an interesting play and just shows the incredible flexibility of viewing domains as an investment asset class.

For your interest, my company ParkLogic has now established a number of relationships with ChiP domain buyers that are paying reasonable rates for the domains. We’ve been moving a LOT of domains for western investors wishing to quickly cash-out now so they can diversify into other assets. Let me know if you have any ChiP domains you are wanting to sell and I can put you in contact with our team leader.

Where this is all heading is anyone’s guess but there’s one thing for sure that if you ignore the Chinese market you’ll miss out on a huge opportunity. As a person that never regrets having cash in their bank account I would suggest that the door on the ChiP opportunity is quickly closing. Possibly due the Chinese stock market taking a beating there is a declining demand for the domains and this is impacting prices.

I have written in a previous article that I’ve sold all of my own ChiP domains and would recommend other investors carefully consider doing the same.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.