It’s been 16 years since China allowed its first Internet connection. And it’s been 16 years since everybody outside began speculating about exactly what that meant for the Communist country.
Western governments hailed the move as a step away from censorship and authoritarian control, while individual companies practically drooled over the massive, untouched consumer base and all of the opportunities it held.
Of the more noteworthy corporations to take advantage of the perceived new era, Google (GOOG, Financial) stepped out especially confident, certain that it could take over China the same way it was eating up the U.S. But in doing so, the tech giant blatantly and foolishly ignored one of the most important rules of any business: Know your market.
In essence, Google tried to impose its western vision of the web onto the Asian nation, which ended up creating a mess for itself and easy profits for local competition.
Google Fails in China
With 384 million Internet users, China accounts for over one-fifth of the 1.73 billion people around the world that take to the web. So few can blame Google for having nothing less than global domination on its mind when it entered the Chinese market all those years ago.
What investors and businesspeople everywhere can fault the tech giant for, is the fact that it arrogantly took years to find out even the most basic facts about its local competition, such as Baidu ADR (BIDU, Financial) andTencent Holdings ADR (TCEHY, Financial). And it largely ignored free music downloads – an element that just happens to make Baidu extremely popular – until last year.
For that matter, it didn’t bother changing much of anything, expecting China to adapt to it instead of it to China. If you go onto Google’s China page, you’ll find an almost identical search box to the one you’d find on Google’s U.S. page, which poses a big problem considering that it doesn’t fit Chinese characters very well.
Was the giant tech corporation really arrogant enough to assume that its newest market might not search in their own language? Maybe and maybe not, but outsiders can easily see the damage regardless… since Baidu claims more than 60% of the domestic, online search market in China today.
Google also didn’t bother learning that typical Chinese Internet users spend most of their online time on entertainment as compared to Europeans and Americans, who use it more for work-related purposes.
According to China Internet Network Information Center – a business that actually did its research – 61.5% of users are 28 years-old or younger, 12.1% have a university degree and 42.5% have a monthly income of $146 or less.
In addition, they don’t like to type, probably at least in part because of the very nature of their language, which contains thousands of different characters. They navigate instead by using their mice, hence the reason why most Chinese portals consist of hundreds of colorful links competing for attention.
McKinsey reports that in China, consumers rely on blogs and other user-generated consumer reporting when deciding what to buy, mainly because they trust word of mouth much more than any blatant advertising campaign. So it should come as no surprise that they’re also very active participants, leaving more than twice the amount of comments their peers elsewhere post.
Online Freedoms for Chinese Society
While the West cries “Foul!” over the Chinese government infringing on its people’s online liberties, what they have to simultaneously realize is that the Internet is still the most free space in Chinese society.
Raised on a diet of propaganda in real life, many citizens there view the web as a place of authenticity and empowerment, with its genuine, user-generated content. And as such, it has a greater importance for them than it does elsewhere.
We see it as just one more form of communication. They see it as a crucial source of information they can’t get elsewhere.
Even if Google actually did take the time to study up on the market it wanted so badly, the American corporation wouldn’t be able to understand its audience in the same way Chinese firms like Baidu do. In the battle for global domination of the Internet, Google will just have to settle for everything else… because it can’t win this war.
Good investing,
Tony Daltorio
http://www.investmentu.com/
Western governments hailed the move as a step away from censorship and authoritarian control, while individual companies practically drooled over the massive, untouched consumer base and all of the opportunities it held.
Of the more noteworthy corporations to take advantage of the perceived new era, Google (GOOG, Financial) stepped out especially confident, certain that it could take over China the same way it was eating up the U.S. But in doing so, the tech giant blatantly and foolishly ignored one of the most important rules of any business: Know your market.
In essence, Google tried to impose its western vision of the web onto the Asian nation, which ended up creating a mess for itself and easy profits for local competition.
Google Fails in China
With 384 million Internet users, China accounts for over one-fifth of the 1.73 billion people around the world that take to the web. So few can blame Google for having nothing less than global domination on its mind when it entered the Chinese market all those years ago.
What investors and businesspeople everywhere can fault the tech giant for, is the fact that it arrogantly took years to find out even the most basic facts about its local competition, such as Baidu ADR (BIDU, Financial) andTencent Holdings ADR (TCEHY, Financial). And it largely ignored free music downloads – an element that just happens to make Baidu extremely popular – until last year.
For that matter, it didn’t bother changing much of anything, expecting China to adapt to it instead of it to China. If you go onto Google’s China page, you’ll find an almost identical search box to the one you’d find on Google’s U.S. page, which poses a big problem considering that it doesn’t fit Chinese characters very well.
Was the giant tech corporation really arrogant enough to assume that its newest market might not search in their own language? Maybe and maybe not, but outsiders can easily see the damage regardless… since Baidu claims more than 60% of the domestic, online search market in China today.
Google also didn’t bother learning that typical Chinese Internet users spend most of their online time on entertainment as compared to Europeans and Americans, who use it more for work-related purposes.
According to China Internet Network Information Center – a business that actually did its research – 61.5% of users are 28 years-old or younger, 12.1% have a university degree and 42.5% have a monthly income of $146 or less.
In addition, they don’t like to type, probably at least in part because of the very nature of their language, which contains thousands of different characters. They navigate instead by using their mice, hence the reason why most Chinese portals consist of hundreds of colorful links competing for attention.
McKinsey reports that in China, consumers rely on blogs and other user-generated consumer reporting when deciding what to buy, mainly because they trust word of mouth much more than any blatant advertising campaign. So it should come as no surprise that they’re also very active participants, leaving more than twice the amount of comments their peers elsewhere post.
Online Freedoms for Chinese Society
While the West cries “Foul!” over the Chinese government infringing on its people’s online liberties, what they have to simultaneously realize is that the Internet is still the most free space in Chinese society.
Raised on a diet of propaganda in real life, many citizens there view the web as a place of authenticity and empowerment, with its genuine, user-generated content. And as such, it has a greater importance for them than it does elsewhere.
We see it as just one more form of communication. They see it as a crucial source of information they can’t get elsewhere.
Even if Google actually did take the time to study up on the market it wanted so badly, the American corporation wouldn’t be able to understand its audience in the same way Chinese firms like Baidu do. In the battle for global domination of the Internet, Google will just have to settle for everything else… because it can’t win this war.
Good investing,
Tony Daltorio
http://www.investmentu.com/
