Failure to cater to local tastes and habits in using online interfaces are most certainly two of the stumbling blocks which have felled foreign internet sites in China. Akin to walking through the hectic neon-lit downtown of a Chinese metropolis, with glittering, strobing flash and masses of buzzing, burring text to take in and decipher; it seems that popular Chinese sites provide comfort to their users through sheer volume of visual information. When quizzed about why such a chaotic user interface would be appealing rather than just a source of internet rage or – more benignly – merely headache-inducing, many web users say that they prefer the Chinese style because a site like Sina.com allows them to see everything that’s going on in all spheres of public life just at the glance of a single page. 

Web firms that consider themselves aesthetically slick and design savvy might find the mismatching chaos of the tight grids of text featured in most Chinese designed websites as being tacky. But the truth is: sometimes less is not more, particularly in the eyes of Chinese consumers.

One company that approached the Chinese market with intentions of bringing a Western style ‘quality’ site to China but switched tact was current web giant Groupon. Named Gaopeng.com.cn, in response to the domain name being pinched by a wholly Chinese competitor, Groupon’s original intention was to have one group buy item featured on its pages according to cities. With beveled edges and pleasing colour coding Gaopeng.com was no doubt a treat for Western eyes. However, the paired down minimalism and allusions to ‘quality not quantity’ did not translate so well when filtered through Chinese eyes. In fact, it read as: business not so booming. 

Ideology

Ideology is one of the main reasons why successful foreign internet businesses have not done so well in China. The story of Google is a commonly known one. With a fairly sizeable market share of 25%, taking into account the fact that China has the world’s greatest number of people online, Google pulled out of the China market in 2010, the official reason being that it refused to censor search content in accordance with government guidelines. There has been a great deal of speculation about the nature of this retreat and the reasons behind it.

Ideological reasons for Google’s lesser performance and final complete departure from China were not limited to the purely political. Indeed, one of the features which gave Google’s main search engine competitor, Baidu, the edge was the fact that it made copyright infringing links to shared media such as mp3s and movies readily available as a search option. Provision of such services clearly would not have sat well with Google outside of China, although, it finally succumbed to market demands, supplying a media search service in China. A reluctance to provide competitive services no doubt had a detrimental effect on Google’s growth within China.   

The glaring bottom line for big foreign e-commerce businesses in China is that of ideology. China’s leading internet businesses are embedded within China’s ideological systems: they are intertwined with state owned businesses, academic networks and they have close relations with the country’s leaders. This has made China tough terrain for foreign internet companies

E-commerce and social networking are much more complex spheres than straightforward retail, in which Western companies have excelled at in China – take Nike, Starbucks and KFC as a few examples. A lack of state backing is likely one of the greatest confounding factors along with limitations arising from rules imposed by their own ideological stances – Google’s reluctance to encourage sharing of media for free, for example.  

Finger on the Pulse

Media mogul Rupert Murdoch’s social networking site Myspace had such confidence; many commenters saying that Myspace.com would manage to dodge and not be felled by the troubles which led to its peers’ final retreat or failure to even break the ice of the China market (Twitter, Facebook).            

In reality, Myspace has flailed in the dirt because of failure to observe a business 101 – the need to identify a target market. Whereas RenRen.com targets students and Douban.com targets trendy urban music and cinema lovers, Myspace had no specific demographic to latch on to. This is undoubtedly a result of not having a finger on China’s pulse.

It seems that gargantuan e-businesses have been caught unawares in China. Many appear to have blithely assumed that the slick tried and tested methods would facilitate a corporate bulldozing of the China market, leaving mega profits in their glacial, inscrutable wake as they have so effortlessly done in other countries.

What they failed to take into account is China’s uniqueness in terms of both customer needs and corporate structure. In blogs there is much anecdotal evidence that disparities in working methods have been a great obstacle for productivity for foreign e-commerce businesses in China. International businesses with more ethically, process-oriented means of operating are basically left standing in the dust and encumbered by ineffective – often English based communication systems – whilst  Chinese companies have their eye on the prize. This flexibility and ruthlessness in Chinese companies, in combination with the other factors mentioned in this article, such as ideology and aesthetics, are most likely the reasons why many Western internet sites have failed in China.

What the future holds

At the time of writing, it seems unlikely that a large foreign internet business will achieve great success in China. It seems that right now Groupon.com is most likely to take up this mantle, as it is based more in retail than an online intangible product such as social networking. Its very own group-buy model has been adopted and mimicked by China’s own companies. Whether a foreign company can actually maintain its identity, management and business codes whilst achieving great success in China remains a source of great debate.
 

Related links
How Hard is it to Run a Business Legally in China?
Seizing the Moment: Entrepreneurs in China
The Best China Business Blogs

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Keywords: foreign web firms China foreign internet sites in China failure of foreign sites in China