Doing Internet business in China and Asia

TechCrunch reported today that ebay is bailing out of China. This is after Yahoo sold Yahoo China to Alibaba. ebay’s Whitmen set herself up for failure when she said “Whoever wins China, will win the world.”

I had always maintained that it is very difficult for US based Internet companies to succeed in China, and many other Asian countries.  People are speculating political and many other reasons, but I contend that this is mainly a culture issue and it is not just China.  An example is Yahoo sold majority of its Yahoo Japan to Softbank long time ago.

I believe that most if not all western Internet businesses will have a lot of difficulty to gain or maintain market share in Asian countries, unless the country’s cluture is totally westernized. Internet portals are not like cars and Gucci bags. Mercedes and Gucci are things, they are not part of your inner cultrue. Internet portals are words, images, and interact with the core of your senses and inner culture. A western company may hire local managers, but these local managers are bound by western corporate culture and are often too westernized. They just won’t totally “get it.” I believe that it is because these reasons that it is extremely difficult, if not impposible, for western companies whose businesses deeply involve with culture to be successful in China and in other Asian countries that have a long history and strong culture identity. This applies to Google (Google losing market share in China) and many others, and it is not something one can fix by throwing hundreds of millions at it.

An analogy is that Shakira, Beyonce, or whoever the current pop stars are will never be as popular as the Chinese pop stars, the Korean pop stars or the Japanese pop stars in their own country. Another is none of the NYT best sellers (of course translated into the local language) will ever outsell the popular books in these Asian countries. These inner culture values are subtle, difficult to describe, and deeply engrained with thousands of years of history and hundreds of thounsands of years of evolution.

Then how do you succeed in China in the Internet market? My advice is to make people think you are a Chinese company; align with the interest of the local stakeholders; be more like a shareholder in the background rather than in the forefront; let its local management give it its own corporate culture and really run the show.

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