MySpace & The China Challenge

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Foreign firms in China can have a hard time especially, as in so much of the online world, when there are low barriers to entry, intense competition, and a need for flexible, localized services. Here is a quick look at some of the notable failures in ThisSpace so far:

    • Ebay: As Dan Harris at China Law Blog put it: “They came in woefully unprepared, spent a lot of money, and now they are essentially gone”. A joint venture with Tom Online was an expensive last-ditch effort to make good. And they still have to compete with Alibaba’s very successful Taobao.com.

    • Google: The world leader plays second fiddle to local player Baidu, and has suffered criticism at home. It has developed a compromise solution by offering a censored, local Chinese service alongside its (in China) patchy international service. In China, according to Caijing it has operated without a proper license, poached Microsoft’s top man, and “borrowed” a Chinese character input system from rival Sohu.com.

    • Yahoo!: A Toronto Star report noted: “Yahoo’s China portal will be reoriented as a business-oriented search engine…the firm had to change or fail amid intense competition from domestic rivals.” Having also suffered from unwanted political pressure and lack of success, a link with Jack Ma and his Alibaba (which owns Taobao.com ) may have been expensive, but could prove a good bet.

An article in CNet (quoting the Wall Street Journal) points out that both Yahoo! and Ebay would have been better off letting their local purchases ( 3721 and Eachnet respectively) develop their businesses with the aid of all that money, but with less interference. Instead they ran the businesses from afar, missed the opportunity to leverage local talent, and finally “surrendered control of their brands in China to Chinese partners”. It was not meant to happen like that – and did not have to. See more on these issues here: “Google Could Use Some of Ma’s Alibaba Magic”.

The trials of MySpace, a late (and recent) entrant to the market, have been the subject of much debate (see here), but now that it is finally “live” in China, will they have learnt the lessons? Will they suffer a backlash on censorship issues? What are the first impressions?

Kaiser Kuo at Ogilvy’s China Digital Watch suggests that “most people predict a swift and ignominious departure, if not death” for the Murdoch-owned networking site, which is being overseen in China by his wife, Wendi Deng, alongside China CEO Luo Chun. However Kuo points out that Luo had success at MSN where he made it “the IM of choice among white-collar office workers”. Other positive signs are said to be that MySpace in China will be “almost entirely autonomous”, meaning that it can be customised for the China market (see also “My(Very Chinese)Space“).

Doubts remain. But, win or lose, it will make for great case study material about China market entry, the use of existing or imported brands, localization of management and services, working with regulation, and a host of other issues.

One Response to “MySpace & The China Challenge”

  1. Finance information » Blog Archive » MySpace & The China Challenge Says:

    […] it has operated without a proper license, poached Microsoft’s […] Original post by Jeremy Gordon and software by Elliott

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