Question-and-Answer Session
Operator
Your first question comes from Dick Wei - JP Morgan.
Dick Wei - JP Morgan
With the higher salary expenses and potentially sales and marketing expenses for the third quarter and the beyond, what kind of longer term margin trend does the company see?
My second question is on the overall game development in China, any new trends that you see in the market, particularly for example if the real-time strategy games have gotten more popular and your view on Company of Heroes, for example. Thank you.
Grace Wu
Allow me to answer your first question regarding long-term margin trends. We usually have a salary and benefit increase every year, it usually takes effect in the third quarter and also we did that in 2008 as well. This definitely has an impact on margins; approximately 1%.
However, it is always our commitment to try to offset these type of expenses with our scale efficiency so hopefully we can manage the long-term margin in a similar range, but of course, given the short period of time it might fluctuate a little bit. Longer term we still hope to keep the operating margin in a stable range.
Maggie Yun Zhou
Dick, can you please repeat your second question again?
Dick Wei - JP Morgan
I was curious on the company’s thoughts of on new game development in China. Any new trends in China in terms of a game type that is more popular or any interesting development? For example, are real-time strategy type of games getting more popular or not? Thanks.
Tianqiao Chen
(Translation)
Thank you, Dick for your question. I will interpret Mr. Chen’s answer. The China online game market is developing. We will see that; there will be more and more different types of games coming out.
For example, at the current stage, we work with the traditional game developers to develop the online version of single-PC games such as Dead or Alive Online and Company of Heroes Online. We’re very positive on the future of the different types of games.
In addition, we believe that based on our portfolio strategy we are able to provide users a very diversified experience and are very optimistic about that.
Operator
Your next question comes from Alicia Yap – Citigroup.
Alicia Yap - Citigroup
Regarding your 3Q guidance, how much have you factored in from the contribution of Changchun and other new games? How much will the guidance actually continue to come from the growth of existing games?
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