Since I have been in China, I have been thinking a lot about the web in China (and of course, living with a Chinese Internet connection). I know my share of web entrepreneurs, so one of the things that has been sitting in the back of my head is the question “how can foreign web companies expand into the Chinese market?” I know some excellent people thinking about doing just that.
After a few months, my honest advice to any web company thinking about China is: Don’t. It’s not worth the risk.
The unavoidable danger is being blocked by the firewall and completely losing any investment in China. The other is being cloned by a Chinese developer: shanzhai or copy-to-China. I propose to convince you here that these aren’t two independent risks, but are highly correlated.
Let’s look at the history of some prominent shanzhai sites and their foreign inspiration:
- Facebook was founded in 2004 and was big by 2006. It was accessible to Chinese users. Renren as a Facebook clone started as Xiaonei in 2005. (“Xiaonei” is literally “inside campus”: it was University-only, just like Facebook) It became Renren and grew. Facebook was blocked in China in 2008.
- Google has been the largest search engine and offering a Chinese version since 2000. Baidu was founded in 2000. Google went deep into China in 2005, ended up turning tail and running, and was first blocked in 2010. It’s not officially blocked now, but continues to be degraded: it doesn’t work occasionally from my phone, or is a little slower than other sites, or just doesn’t work for an hour here or there.
- YouTube was launched in early 2005. Chinese clone Youku was launched in late 2006. YouTube was blocked in March 2009.
- The timeline for Twitter is a little different: founded in March 2006, blocked in June 2009, and cloned as Sina Weibo in August 2009.
- Wikipedia started its Chinese language version in 2002. Baidu Baike was created in 2006 and Hudong in 2005. Wikipedia has been blocked in China in various ways off-and-on since 2004. Currently Wikipedia isn’t blocked, but like Google it is degraded. Some articles aren’t accessible, and my mobile carrier blocks all images.
The pattern is clear here: a foreign company does something innovative, a Chinese company clones them and grows to be a viable competitor in the Chinese market. The foreign site becomes immoral and is blocked.
In each of these cases, the Chinese market moved quickly to the shanzhai site. I hear a little grumbling about the degraded Google service, and see the occasional Chinese kid on Facebook, but mostly the users moved smoothly to the Chinese-owned clone.
The reasons given for Internet censorship in China are generally prohibition of illegal material and promotion of national unity. There seems to be a clear side benefit: to neutralize foreign competitors when they become inconvenient to a local company.
I don’t think there is any quid pro quo there. I don’t think the Baidu founders went to the government and asked if they wouldn’t mind eliminating his competition, but the outcome seems identical to if they did.
So my advice on China is that there is too much danger of your entire investment being lost to the throw of an administrative switch on the firewall. Too much danger of a local clone. Too much danger of them both happening simultaneously.
Edit 03-2014: There has been some quid pro quo, at least on the scale of posts.
April 30th, 2013 at 10:30 am
Quite agree!
And here’s an off-topic:
As a heavy user of Google services, I have found several ways to help speeding up Google in China. The best way is modifying the hosts file. Here’s a project called Smarthosts:
for PC: https://smarthosts.googlecode.com/svn/trunk/hosts
for Mobile: https://smarthosts.googlecode.com/svn/trunk/mobile_devices/hosts
It works in this way: if you send HTTPS request to any Google web server, Google will always give you the right page anyway(maybe by doing some reverse proxy). And Google does have servers in Beijing with un-filtered dedicated lines linked abroad. I’ve done whois check on those IPs and they do belong to Google Inc.
The Smarthosts will also help you solve DNS level block (such as Facebook, Github). But remember to force HTTPS(maybe need to manually add the prefix).
May 12th, 2013 at 11:35 am
Greg, I just came across this article in ACM Queue: “Splinternet Behind the Great Firewall of China”, http://queue.acm.org/detail.cfm?id=2405036. A good discussion of the technology and history of the firewall. Although you’ll likely have to circumvent the Great Firewall to get SFU proxy access to Queue to read the article …
The author describes how the effects of the GFW spill into Internet transactions entirely between countries other than China.
May 12th, 2013 at 11:37 am
On another topic, here’s the list of upcoming host cities for the Very Large Database Conference (VLDB):
40. VLDB 2014: Hangzhou, China
39. VLDB 2013: Trento, Italy
38. VLDB 2012: Istanbul, Turkey
37. VLDB 2011: Seattle, Washington
36. VLDB 2010: Singapore
Interesting group in which to find Hangzhou.