Major web companies have had hardships entering the Chinese market, due to structural and cultural barriers of entry:
- A social barrier: Most Chinese internet users tend to prefer home-grown websites since they are better localized for their needs.
- A technical barrier: Local websites are faster as they can be hosted in China.
- A legal barrier: Local laws are complex to comply with (i.e. censorship) and they make China an unattractive place for many foreign companies.
Ironically, major Chinese social networks and search engines are almost copies of their western counterparts. Such similarities finally reinforce western sites’ prominence…
Here are some Chinese major sites’ statistics:
|Renren (~Facebook)||Youku (~Youtube)||Todou (~Youtube)||Baidu (~Google)|
|Registered users||119 million||50 million||71.7 million||100 million (2009)|
|Monthly users/visitors||31 million||281 million||95 million||145 million (2009)|
|2010 Revenue||$76 million||$59.6 million||$43.3 million||$1.199 billion|
RenRen = Facebook Chinese version
RenRen’s colors, features and site architecture are very similar to Facebook. It has been growing rapidly and it is particularly popular with Chinese college students. However, the Facebook of China is geographically limited. It goes without saying that the population is large enough to remain a very attractive market for the social network but from a user’s perspective, I would not register on RenRen unless I could contact my friends from the US, France or Canada. Facebook has succeeded in being consequential everywhere (else) in the world, partly by geo-targeting the interface with more than 70 languages.
YouKu &Tudou = Youtube Chinese versions
Youku and Tudou are the largest Chinese video-sharing websites. Together, they hold near 65% share of video-sharing market in China. However, user-generated video content has become popular in the last few years, and most contents are not homemade. According to Victor Koo, CEO of Youku.com, professional contents such as TV shows and movies represent over 70% of the video views. Movies are broadcast in cooperation with various local television stations and production houses. Even if designs are very similar to YouTube’s, business models are quite different: YouTube’s revenues mostly come from Google AdWords extensive advertising network, whereas YouKu and Tudou rely mainly on some major brands to display image and video ads.
Baidu = Google Chinese version
Even if Baidu looks like a Google’s copy, its performances are pretty much opposite: Baidu’s market share in China has reached 75.9%, whereas Google China only represents 18.9%. Historical events in the past few years explains why the U.S.-headquartered leader has not succeeded in competing with Baidu. In 2006, Google launched the China-based google.cn search page but results were subject to Chinese government’s censorship policies. Google’s shares kept decreasing in favor of its local rival, Baidu. In 2010, Google declared they were no longer willing to censor search results in China and redirected all search queries to Google.com.hk, since Hong Kong is not subject to most Chinese laws, which has raised frustrations in the Chinese government…
Chinese versions have certainly been inspired by Facebook, Google and YouTube, but they have built a localized business model that U.S. leaders could hardly reproduce. Design and web functionality aside, main differences are based on legal and social external factors. Finally, Chinese websites take advantage of a profitable, huge and protected market but they will have to be very creative if they wants to compete globally!