Do US Internet companies fail in China market?

Internet bar in Chinese, a place that people can pay by hours to use computer and Internet. It's very common in China. Photo by Ms Jackson on Flicker

While I was doing research for my homework, I found an article called Internet companies’ top 10 mistakes in China. It’s written by a Chinese from Yeeyan, and translated by a blogger ThinkChina, who grew up in Hong Kong. Concerning U.S. businesses in China, I always regard myself as a Chinese customer and question why U.S. businesses are so successful in China compared with Chinese companies in the U.S. This article, however, let me upside down. It gives me some new thoughts as I have never thought about U.S. Internet businesses failing in China, even though it seems to be true.

To be honest, I agree that U.S. Internet companies are not as successful as U.S. tech and sportswear companies in China. First, I think technology (hardware and software) and sportswear are more like products that sell to Chinese customers. But Internet and websites are more like services that Chinese people use them as a communication tool in a native Chinese milieu. Otherwise, for U.S. Internet companies, expanding Internet services and websites in China is a big challenge to understand the way of communication between Chinese people. Localization is tricky for international companies. Second, Internet policy of Chinese government is not completely developed. In other words, China market is a delicious cake that any Internet company want to share, but it largely depends on changing Internet policy.

The first mistake the article listed:

1. Ignoring the needs of the masses.  US companies tend to focus on elite white-collar workers – they ignore the needs of Internet cafe users and users in smaller cities (which is now >50% of population).  In other words, they target a small segment of elite users as opposed to targeting the masses.

China does have a huge number of people using Internet daily called “wangmin (Internet citizen).” But most of them are not white-collar who received higher education and entered international companies. Besides white-collars, I didn’t hear many wangmin use Twitter, Facebook, Google and eBay. On the other hand, Chinese Twitter (Sina weibo Tencent weibo ), Chinese Facebook (renren), Chinese google (baidu) and Chinese eBay (taobao) develop speedily. Regardless of judgement of Internet policy made by Chinese government, these Chinese Internet companies play “the game” with its rules.

5. Telling users what to do rather than having them tell us what they want. Relates to #1 – not understanding the needs of the masses and tend to over-design for the elite group.

Interestingly, my perspective is that Chinese customers are used to let others tell them what to buy or what to use. They like to hear others opinions (opinion leaders) including advertisement. It might be a part of Chinese culture, conformity. Understanding mainstream Internet culture in China, which is much different from America’s, is a key for U.S. Internet companies.

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