Why haven't Facebook, eBay, Twitter, and Google been successful in China?

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    It seems that Google, eBay, Twitter and Facebook haven't seen the same success in China that they have in the U.S. and Europe. How's that possible? Is there a common reason?

    Answer: There isn't a single common thread; the companies you name need to be looked at one at a time. Because I work for Baidu, I'll recuse myself from speaking to Google's relative lack of success, but with the caveat that I would hardly call a company that has such substantial revenue share in this market, and $300-$400 million revenues, a failure. True, they have a relatively small market share by search queries, and obviously their market share isn't anything close to what it enjoys in many other markets, but it's a whole lot better than it is in South Korea!

    Let's do the rest in this order: eBay, Twitter, and Facebook.


    eBay simply lost out to a scrappier competitor. Taobao, living as it was under the cash-rich wing of Alibaba, pursued a strategy that defied eBay Eachnet's Shao Yibo's famous dictum, "Free is not a business model." (Eachnet was the Shanghai-based C2C company that eBay acquired in its bid to enter China). In this case, it seems really to have been a business model. The notion that a C2C/B2C e-commerce site would do most of its revenues on advertising might have seemed preposterous five years ago, but there you are. To hear Jack Ma, founder and CEO of Alibaba, tell it, the day that eBay Eachnet decided to connect to the eBay platform was the day they sealed their fate: Ma says they popped champagne in Hangzhou that day. TJ Murphy points this out. There was a huge drop-off on eBay Eachnet after that, and they never recovered. Their aggressive roll-out of Alipay was also absolutely critical to their success. An escrow system was a smart move given the atmosphere of low-trust in online transactions. They passed eBay Eachnet in intercity transaction volume handily quite early on; eBay Eachnet was confounded by its lack of a good payment system, and most transactions were still taking place intra-city at the critical inflection point, around the summer of 2005, when Meg Whitman sensed that things were going badly wrong and spent several weeks in China trying to turn things around. I wrote about this back then when I was working for the Red Herring:

    An excerpt from that piece:

    "Mr. Ma, 40, can’t resist the war metaphors when speaking of the struggle for China’s online auction market. He draws on the Vietnam War in particular: eBay “carpet bombs” Chinese cities with advertising, while his Taobao team “hides out in our caves” in its headquarters in Hangzhou, he says. He likens eBay’s implementation of its global technology platform in China to “trying to land advanced jets in muddy rice paddies.” And while eBay’s generals are “very good at commanding regular troops, they don’t know how to fight a guerrilla war,” says Mr. Ma. He believes the online auction giant should have taken an important page from American military history: never fight a land war in Asia."


    Twitter never really tried. They never offered a Chinese interface, and never did any marketing at all in China. Then of course they were blocked in the spring of 2009, shortly before a certain sensitive anniversary date. After the Urumqi riots that broke out on July 5 of that year, many API clients that had been usable from within China were blocked as well. Even before they were blocked, though, usage of Twitter was quite low, and clones like Fanfou,, and Zuosa had already popped up and were claiming fairly hefty user numbers. Just to give you a sense for how little Twitter's founders seemed to have cared about the China market, Jack Dorsey -- appearing in March via live feed at an Asia Society event in New York, where he talked to ReadWriteWeb's Richard McManus and the artist-cum-dissident activist Ai Weiwei (probably China's most-followed Twitter user), he admitted that until just weeks before the event he hadn't even known that the site had been blocked at all.

    Twitter's prospects in China are almost nil, barring a radical change to Beijing's policies. Censorship in China used to target primarily traditional Web 1.0 media sites -- CNN, BBC, New York Times -- plus the "usual suspects" of human rights or "separatist" groups' sites that had an agenda Beijing believed to be overtly hostile. But in the last two years, the focus has shifted to Web 2.0 sites, which offer the possibility of rapid dissemination of information in many-to-many networks and of course the threat of spontaneous organization. Beijing has recently made plain its fear of social media, and watches the most popular Twitter-inspired site, Sina's Weibo, very carefully. And a recent report from the Chinese Academy of Social Sciences singles out the final company on our list, Facebook.


    Facebook's situation is much like Twitter's: It hasn't really tried. I'm aware that there have been explorations over the China market, but nothing too serious yet. When they crowdsourced the translation of the user interface and launched a simplified Chinese version, it was only three days before Chinese ISPs (perhaps, but not with certainty, at the behest of Beijing) began blocking or partially blocking Facebook. I believe it was entirely blocked in March of 2008, around the time of the Tibetan riots in western China.

    Facebook is caught very much between a rock and a hard place when it comes to China. As a highly visible company (900+ million users globally), they can't make a move without bringing down a torrent of unsolicited opinion. Facebook is a lightning rod. There are many people simply waiting for the company to fall on its face -- the same people who love to disparage any slight tweak to its design, let alone its bigger blunders like the early, premature release of Beacon.

    Let's just imagine they were unblocked tomorrow. If they were to enter China and willingly submit to censorship -- say, forbidding any Chinese-interface user or IP address in China from joining a pro-Tibetan independence group (of which there are tens of thousands on Facebook) -- rights groups would rake them over the coals, and Mark Zuckerberg would find himself called on the carpet before an angry U.S. Congress. But if they didn't agree to censor, they'd be blocked instantly, and their offices in China (assuming they had any) immediately shuttered.

    The above answer is of course specific to companies. But even among Internet companies where censorship isn't an issue, we haven't seen any conspicuous successes, either. A dear friend of mine was once asked why it is that so many of the big-name American Internet companies hadn't really enjoyed success in China, and I think he had the right general answers. Sure, part of it is about failure to empower a local staff, or failing to localize the product adequately to suit local user tastes and habits. That's obvious. What he added, though, was really a few key points about the local competition. Local competitors are not much younger (i.e., the American companies don't exactly have decades of experience to draw on!), they're as well-funded (VC money sloshes around the China tech scene like BP oil on the Gulf Coast), and they're used to squeezing money out of relatively poor and notoriously parsimonious consumers. They're lean, scrappy, and hungry.

    Sorry I went on so long. Big question, and one that deserves a thoughtful and thorough answer.


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