Others News
- US icons struggle to find local Web model
Date: 25-Jan-2007 Sources: (People's Daily)
As eBay becomes the second American Internet giant to hand over its Chinese operation to a local partner, following a similar move by Yahoo!, China looks more and more like a curse for US companies than a creative expansion into the world's largest potential market.
The soaring success of American Internet icons in other international markets has simply not translated to China, and once-invincible firms find themselves in the unfamiliar role of reeling from battles with local rivals.
Their troubles, say industry experts, can be traced to poor understanding of Chinese users' habits, slow progress in using local managers and a US-centric business model.
Xie Wen, former CEO of Yahoo! China, agreed that common failures of US Internet giants in China include a lack of understanding of Chinese users' habits and slow progress in tailoring overall operations to fit the culture.
'Apparently, eBay and other US Internet companies did not do enough to localize their companies' culture, management teams and operations,' he said. 'If they don't change themselves in China, they will never win in this large market.'
Qu Xiaodong, general manager of CCW research, a domestic consulting firm, said it was a failure of catering to the majority of Chinese Internet users that led to the underperformance of most US Internet companies in the country.
'For an Internet company, actual user tastes become much more important,' he said. 'We could easily identify a superior computer by technological stadards such as a fast CPU and larger hard disk, but we can only say that a website is better because it is more 'interesting' or 'attractive'.'
Qu noted that because the definition of interesting or attractive varies from culture to culture, US Internet companies have to play like real Chinese if they want to be attractive in China.
They may not have developed a model to fit China, but American Internet giants did try to play like Chinese. EBay, for example, acquired the most popular Chinese auction website when it entered the Chinese market in 2002. It also spent a huge amount on television advertising during the Spring Festival and even offered gifts to new users. But it all collapsed in the face of local competitor Taobao's 'zero-charge' policy, and eBay had to hand over its Chinese business to Tom Online last December.
'I think the top managers of US Internet giants are willing to make more localized efforts,' said Cao Junbo, a senior analyst at iResearch, a Chinese consulting firm.
'But under the current management system, these managers could not always make their own decisions and that's why they always show a slower response to the Chinese market than their local rivals who apparently have more controlling power over their companies in China.'
Google, for example, announced the resignation last December of Johnny Chou, co-president of Google Greater China. Wang Huainan, Google's Asia-Pacific chief marketing officer and the father of Google's Chinese name Gu Ge (song of grain), also confirmed his departure last November. Microsoft's MSN, after the resignation of Luo Chuan, its former Online Services Department Greater China general manager, reported that its managing director for Windows Live China Gong Li is leaving in the next two weeks.
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