{"id":1493,"date":"2013-04-30T09:19:26","date_gmt":"2013-04-30T16:19:26","guid":{"rendered":"http:\/\/gregbaker.ca\/blog\/?p=1493"},"modified":"2014-03-30T09:15:29","modified_gmt":"2014-03-30T16:15:29","slug":"the-chinese-web-market","status":"publish","type":"post","link":"http:\/\/gregbaker.ca\/blog\/2013\/04\/30\/the-chinese-web-market\/","title":{"rendered":"The Chinese Web Market"},"content":{"rendered":"<p>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 &#8220;how can foreign web companies expand into the Chinese market?&#8221; I know some <a href=\"http:\/\/www.igorfaletski.com\/want-to-take-your-saas-business-to-china-heres-what-you-need-to-know\">excellent people<\/a> thinking about doing just that.<\/p>\n<p>After a few months, my honest advice to any web company thinking about China is: Don&#8217;t. It&#8217;s not worth the risk.<\/p>\n<p>The unavoidable danger is <a href=\"http:\/\/en.wikipedia.org\/wiki\/List_of_websites_blocked_in_the_People%27s_Republic_of_China\">being blocked by the firewall<\/a> and completely losing any investment in China. The other is being cloned by a Chinese developer: <a href=\"http:\/\/en.wikipedia.org\/wiki\/Shanzhai\">shanzhai<\/a> or <a href=\"http:\/\/en.wikipedia.org\/wiki\/Copy_to_China\">copy-to-China<\/a>. I propose to convince you here that these aren&#8217;t two independent risks, but are highly correlated.<\/p>\n<p>Let&#8217;s look at the history of some prominent shanzhai sites and their foreign inspiration:<\/p>\n<ul>\n<li>Facebook was <a href=\"http:\/\/en.wikipedia.org\/wiki\/History_of_Facebook\">founded in 2004<\/a> and was big by 2006. It was accessible to Chinese users. Renren as a Facebook clone <a href=\"http:\/\/en.wikipedia.org\/wiki\/Renren\">started as Xiaonei<\/a> in 2005. (&#8220;Xiaonei&#8221; is literally &#8220;inside campus&#8221;: it was University-only, just like Facebook) It became Renren and grew. Facebook was blocked in China in 2008.<\/li>\n<li><a href=\"http:\/\/www.google.ca\/about\/company\/history\/#2000\">Google has been<\/a> the largest search engine and offering a Chinese version since 2000. Baidu was <a href=\"http:\/\/ir.baidu.com\/phoenix.zhtml?c=188488&#038;p=irol-homeprofile\">founded in 2000<\/a>. Google went deep <a href=\"http:\/\/en.wikipedia.org\/wiki\/Google_China\">into China in 2005<\/a>, ended up turning tail and running, and was <a href=\"http:\/\/en.wikipedia.org\/wiki\/Google_China\">first blocked in 2010<\/a>. It&#8217;s not officially blocked now, but continues to be degraded: it doesn&#8217;t work occasionally from my phone, or is a little slower than other sites, or just doesn&#8217;t work for an hour here or there. <\/li>\n<li>YouTube was <a href=\"http:\/\/en.wikipedia.org\/wiki\/History_of_YouTube\">launched in early 2005<\/a>. Chinese clone <a href=\"http:\/\/en.wikipedia.org\/wiki\/Youku\">Youku was launched<\/a> in late 2006. YouTube was <a href=\"http:\/\/en.wikipedia.org\/wiki\/Google_China\">blocked in March 2009<\/a>.<\/li>\n<li>The timeline for Twitter is a little different: <a href=\"http:\/\/en.wikipedia.org\/wiki\/Twitter\">founded in March 2006<\/a>, blocked in June 2009, and <a href=\"http:\/\/en.wikipedia.org\/wiki\/Sina_Weibo\">cloned as Sina Weibo<\/a> in August 2009.<\/li>\n<li>Wikipedia started its <a href=\"http:\/\/en.wikipedia.org\/wiki\/Chinese_Wikipedia\">Chinese language version<\/a> in 2002. <a href=\"http:\/\/en.wikipedia.org\/wiki\/Baidu_Baike\">Baidu Baike<\/a> was created in 2006 and <a href=\"http:\/\/en.wikipedia.org\/wiki\/Hudong\">Hudong<\/a> in 2005. <a href=\"http:\/\/en.wikipedia.org\/wiki\/Censorship_of_Wikipedia#China\">Wikipedia has been blocked<\/a> in China in various ways off-and-on since 2004. Currently Wikipedia isn&#8217;t blocked, but like Google it is degraded. Some articles aren&#8217;t accessible, and my mobile carrier blocks all images.<\/li>\n<\/ul>\n<p>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.<\/p>\n<p>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.<\/p>\n<p>The <a href=\"http:\/\/en.wikipedia.org\/wiki\/Internet_censorship_in_the_People%27s_Republic_of_China#Legislative_basis\">reasons given for Internet censorship in China<\/a> 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.<\/p>\n<p>I don&#8217;t think there is any <em lang=\"la\">quid pro quo<\/em> there. I don&#8217;t think the Baidu founders went to the government and asked if they wouldn&#8217;t mind eliminating his competition, but the outcome seems identical to if they did.<\/p>\n<p>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.<\/p>\n<p><strong>Edit 03-2014<\/strong>: There has been some <em lang=\"la\">quid pro quo<\/em>, at least <a href=\"http:\/\/online.thatsmags.com\/post\/baidu-employees-and-web-censor-profited-from-deleting-unfavorable-online-posts\">on the scale of posts<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>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 &#8220;how can foreign web [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19,10],"tags":[],"class_list":["post-1493","post","type-post","status-publish","format-standard","hentry","category-china","category-tech"],"_links":{"self":[{"href":"http:\/\/gregbaker.ca\/blog\/wp-json\/wp\/v2\/posts\/1493","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/gregbaker.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/gregbaker.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/gregbaker.ca\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/gregbaker.ca\/blog\/wp-json\/wp\/v2\/comments?post=1493"}],"version-history":[{"count":16,"href":"http:\/\/gregbaker.ca\/blog\/wp-json\/wp\/v2\/posts\/1493\/revisions"}],"predecessor-version":[{"id":1631,"href":"http:\/\/gregbaker.ca\/blog\/wp-json\/wp\/v2\/posts\/1493\/revisions\/1631"}],"wp:attachment":[{"href":"http:\/\/gregbaker.ca\/blog\/wp-json\/wp\/v2\/media?parent=1493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/gregbaker.ca\/blog\/wp-json\/wp\/v2\/categories?post=1493"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/gregbaker.ca\/blog\/wp-json\/wp\/v2\/tags?post=1493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}