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| +Shaun Rein |
When Google decided to withdraw its search engine from China, it was not just a corporate decision, but had large repercussions inside the country's government too, explains business analyst Shaun Rein in the Pandodaily.“I don’t see how Facebook could succeed in a meaningful way in China,” [Shaun Rein] says. One of the major reasons is that China’s more reform-minded government officials felt like they got their legs cut off at the knees by Google. Rein is angry at Google because of that.
“When Google came into the country, they made a deal with the government, saying ‘We’ll follow your rules, and you’ll allow us to operate,’” Rein says. “And I think there was a lot of push-back within the government, saying ‘We don’t trust Google.’ But a lot of the fore-minded officials said, ‘We vouch for them, we’ll do it.’”
When in 2010 Google very publicly pulled its search operations out of China in response to “sophisticated cyber attacks,” including the infiltration of Gmail accounts of China-connected human rights activists, those officials who greenlighted Google got in trouble. In China’s government, discipline is taken very seriously, and in Chinese society, loss of “face” – which can be roughly understood as a blow to one’s reputation – is just as damaging. The consequences of the Google drama are thus hurting Facebook today.
“Nobody in the Internet field is willing to stick [out] their head and go to bat for an American Internet player again,” says Rein. “Because it’s not worth it for them. They don’t want to see their career stunted, like those guys who approved Google originally.”...
Ultimately, Internet media companies such as Facebook, Google, and Yahoo were always going to have a tough time in China anyway, because of the nature of their businesses.
“A lot of people have been saying that China’s government is becoming more protectionist,” says Rein. “That’s not true. China has always been protectionist. There’s always certain sectors, as long as I’ve been here since the mid-90s, that foreign firms cannot operate in easily. And one of them would be, say, media. Another would be electricity, finance, and the Internet. The Internet is actually the worst, because it’s a mix of media, it’s a mix of entertainment, it’s a mix of culture and everything.”More in the Pandodaily.
". More about Shaun and his book in Storify.
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| Helen Wang |
People who speculate that Ma’s aim is to acquire Yahoo! may have missed the point. Jack Ma is unlikely to be a qualified suitor. He hasn’t proved that he can turn Yahoo! around in China. There is no reason to believe that he can turn Yahoo! around in the U. S.
Ma’s real intention may very well be to expand his Alibaba Group to the U. S. market. “I want to learn one thing here,” he said, “how we can help U.S. SMEs (small and medium enterprises). What value we can create between us, Amazon and eBay.”
That has always been Jack Ma’s ambition. Today, Alibaba already has 15 million users from outside China. Taobao has grown to over 300 million registered users and commands a 90 percent market share. Ma believes that Taobao will grow even faster in the future.
As Jack Ma knows very well, it won’t be easy to succeed in the U. S. market. “The best way to succeed in business is to learn from others’ mistakes,” Ma said. “Many people have written books about Alibaba’s success. But I really don’t think we are so smart. We have made many mistakes. One book I want to write someday is ‘Alibaba’s 1001 Mistakes.’”More in Forbes
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| Jack Ma of Alibaba |
In 2004, I visited Alibaba at its headquarters in Hangzhou. It is located on a campus of three ten-story buildings in the northeastern part of Hangzhou, about a ten-minute taxi drive from West Lake. In the lobby, a flat panel TV was streaming video clips of Jack Ma speaking at various public events where his admirers, most of them in their twenties, were cheering him like a rock star. While visiting Alibaba’s headquarters in Hangzhou, I felt the same “insanely great” energy of entrepreneurship as I felt in Silicon Valley. When I asked a senior manager at Alibaba whether the company was worried that it would be bought by eBay, I was blown away by the answer: “We will buy eBay!”As we know now, Ebay failed that epic struggle, that is still going on. Helen Wang:
First, eBay failed to recognize that the Chinese market and the business environment are very different from that of the West. EBay sent a German manager to lead the China operation and brought in a chief technology officer from the United States. Neither one spoke Chinese or understood the local market. It was eBay’s biggest mistake. Second, because the top management team didn’t understand the local market, they spent a lot of money doing the wrong things, such as advertising on the Internet in a country where small businesses didn’t use the Internet. The fact that eBay had a strong brand in the United States didn’t mean it would be a strong brand in China. Third, rather than adapt products and services to local customers, eBay stuck to its “global platform,” which again did not fit local customers’ tastes and preferences.Commercial
 Image by Fantake via Flickr |
| Helen Wang |
Paul Denlinger by Fantake via FlickrThings were fine as long as the two companies didn't enter each other's territory: For Alibaba, this was the China market and for Yahoo , this was everywhere else. (Yahoo has a significant presence in Hong Kong, and commands more than 95% of all traffic in Taiwan through Yahoo 's acquisition of Kimo in 2000, and Yahoo founder Jerry Yang's Taiwan roots.)Alibaba is entering the global market, taking on Yahoo outside China. So, Yahoo entering China, led by its current headquarters in Singapore, is unavoidable, writes Paul Denlinger.
That's a mighty big hole. With China's economic dynamo, it's impossible to sell a real ad package if China is not included. This is why Yahoo needs to move into ad sales in China.
But the problem, from the Chinese government's perspective, is that the ad sales center is based in Singapore, which is not a part of China. When Google skedaddled out of Beijing to Hong Kong in March, it could at least claim that Hong Kong was a part of China, and that it had not in fact left China, even though Hong Kong is not covered by the Great Firewall of China which censors content in the PRC.
But that is not the case with Singapore, which China recognizes as a sovereign nation, even though more than 70% of its population are ethnic Chinese. And diplomatically, China and Singapore, along with the other countries of Southeast Asia, have been going through some rough patches lately.In short:: Yahoo is not only taking on Alibaba, but also the Chinese government, warns Paul Denlinger.
What we can expect from this merge? At least, the merge shows that Myspace China is almost entirely autonomous from Myspace to make its own strategy, which is a good start to compete in Chinese market.
"Yahoo is dismayed that citizens in China have been imprisoned for expressing their political views on the Internet," the company said in the statement faxed to The Associated Press, which asked Yahoo to comment on Shi's lawsuit.Well, we were dismayed already quite some time before Yahoo was asked to defend itself in a US court. It just does not fit. I'm again dismayed and wonder how sincere Yahoo is now.
