Is There Any Space for MySpace in China?

Related entries: Business Issues, Consumer Market, Corporate News, General, Investment, Strategy

I wrote the other day about China market entry for brands – bring in or buy locally , and before that about the value of local leadership (as opposed to far-off control) in companies such as Alibaba – so I was interested to see a piece by Jeremy Goldkorn at Danwei (h/t China Herald) about Rupert Murdoch and speculation about the China plans for his recent purchase, MySpace. Should he take MySpace into China’s internet space?

    “Danwei has one word of advice for our mentor Mr Murdoch about bringing MySpace to China: Dont!

    The Chinese Internet is a shark tank, and MySpace would be eaten alive by everyone from Sina and Mop to Wangyou and Tudou to Tianya, Douban, Xici Hutong and Bokee.

    Build or buy something locally: there are plenty of promising startups, and a few mature web businesses that News Corp could partner with.”

Other commentators agree.

    China Solved (in a comment on the Danwei post): “I agree with Danwei. Myspace would get slaughtered in China. There is no technology or content that is challenging to copy, and it’s usership is very culturally-shaded. Buy something local and develop it. Murdoch is a little far removed from both the technology and the cultureS (China, youth, internet, etc) that will drive this. His instincts about the potential of social networking in China is right — his approach is disastrous.”

    China Herald: “I agree with Jeremy here. There might have been opportunities for US internet applications in China in the past, but in less than a year the competitive situation has changed so dramatically, China’s internet companies might even become a danger in the US, let alone leave space in China.”

China is a competitive place with plenty of cultural quirks, and the online space comes with few barriers to entry, and a rapid pace of change – even in the context of China. Big companies, and their big brands, should not assume they will be able to leverage their overseas market leadership or competitive advantages. They should instead take a long hard look at the market (on the ground), learn from the mistakes others have made (plenty of those have been reported), and make an objective (not emotional) judgment about the best way forward.

On first sight, other news suggests that Murdoch’s empire has learnt something about the way things work in China since his infamous outburst about satellite TV and democracy. ARS Technical reports that another of his companies, Twentieth Century Fox, will follow Time Warner in selling low-cost DVDs in an attempt to combat piracy by curbing demand. However, the report also notes that:

    “Fox’s strategy mirrors Time Warner’s, but they plan to offer DVDs at a slightly higher price of 20 to 25 yuan (about $3 per disc). This is, of course, about twice as much as the average street price of a pirated DVD in China, but Fox hopes that the premium isn’t so much that it deters customers from buying their discs. Fox’s international home-entertainment manager Keith Feldman told the Wall Street Journal that ‘it comes down to our ability as marketers to convince the Chinese consumer it’s worth spending the money.'”

Hmm…as I have said before, “people in China use time to save money, while people in the West use money to save time”. Even a lot of (reasonably) well-to-do expats I know in China would most likely still go for the pirated versions (which will probably be offering table service in the bar before the official version hits the shops in any case!).

Premium products and services certainly have a market in China, but where there is no kudos in having the real thing (as in the case of a real Rolex or Louis Vuitton), and where the product is basically the same, people will go for the cheaper and more convenient version every time.

So, good luck trying “to convince the Chinese consumer it’s worth spending the money”. If it works I hope they will tell us all how!

See news source:

5 Responses to “Is There Any Space for MySpace in China?”

  1. Is There Any Space for MySpace in China? of Myspace Html Codes Blog Says:

    […] t slaughtered in China. There is no technology or content that is … Original post by Jeremy Gordon for Myspace News Is There Any Space for MySpace in China? My […]

  2. htsetti Says:

    Could you elaborate on what you mean by, “people in China use time to save money, while people in the West use money to save time”.

    thanks

  3. Jeremy Gordon Says:

    Thanks for the question. I was referring to my previous post on negotiating in China (http://www.chinabusinessservices.com/blog/?p=334). Basically there is a tendency in the West (and in some of the more wealthy areas of China) to pay a premium for anything that will save time and increase convenience – in the UK, where people are increasingly “money rich; time poor”, this is typified by the move away from home DIY (Do It Yourself) to BSI (Bring Someone In). The example I used here (from the This Is China weblog) was that of office staff using excessive time and resources searching for a marginally cheaper supply of paper. For a minimal financial saving, they spent a huge amount in terms of time or opportunity cost. They were approaching the problem from a different perspective, that was developed from local historical and cultural inputs. Of course, these are general comments, and do not mean that people in China, or anywhere else, all look at things the same way…

  4. Archive » My(VeryChinese)Space | China Business Blog Says:

    […] Investment, Business Issues, Corporate News I recently asked the question “is there any space for MySpace in China?”. Well, at least two people seem to think there is ( […]

  5. Archive » 132 Million Chinese Online. With Money. | China Business Blog Says:

    […] ompetition for all these online users is brutal, and I have already written about MySpace (here and here). I will be adding a note on the trials and tribulations of eBay soon. In the me […]

Leave a Reply

You must be logged in to post a comment.