10 Reasons for American Internet Companies’ Failure in China

While we regard eBay, Amazon, Yahoo!, Google and other American websites as successful case studies internationally, what we have seen in China is just the opposite. American websites in China are basically the model of failure. It can be said that their Chinese rivals’ success are built on abandoning the American experiences and practices. In my opinion, American websites’ failure in China is due to their operating concepts. They have good strategies, the most intelligent people, the most money, the best technologies, but that does not change the way of doing things.

1. Preferring white-collar bourgeoisie VS Welcoming the mass population

This is the fatal weakness of American website companies in China, but so far few of them have realised this point. Among those people who operate American websites, senior executives are from HK and Taiwan, while employees are white-collar workers in Shanghai high-rises. All they know about China is the CBD of Shanghai, therefore all practices include product design, website style and target audience are for white-collar workers in Shanghai and Fortune 500 companies. They will never consider demand from general public and small to medium companies.

Their upbringing, interest and vision make them exclude the public at heart. American website employees are deeply disdainful of those guys in Internet cafes, those thousands of Internet users in small cities and towns all over China (note that these 2 groups account for more than half of the Chinese internet population). Superior American website white collars not only dislike them, but also really hate them.

They only know Gmail, not 163(Netease) mailbox; only MSN, never use QQ(Tencent), in order to show their superiority. At heart, they feel that they would rather let the websites close, than building a website that meets the public demand with no “taste”.

If you want to be a mainstream Chinese website, not meeting the public demand is doomed to fail.

2. To be forgotten VS To be hated

The former is the philosophy of American websites, the latter is the philosophy of Chinese internet entrepreneurs.

While American websites fear a single piece of negative news, Chinese websites fear there is no negative news. Being hated by thousands of people is the highest realm of Internet promotion.

American website staff has 10 times more salary than their Chinese website counterparts, hence being afraid of losing their jobs. They would rather deliver no performance, than taking 集運推薦 risks and making mistakes. They are low-key, conservative and cautious, everyone is polite and educated, but with no competitive mentality. As a result, they are beaten to the ground by their sharp and fresh Chinese rivals.

Look at the offensive stance of Ma Yun (founder of China’s biggest B2B website, Alibaba.com) over eBay. While Ma’s Taobao.com was still far behind eBay in China, he had declared Taobao the biggest in China. The PR executive from eBay China could only responded like “we only focus on user experience”. Ma even said that “I couldn’t see a competitor even using a binocular”. eBay staff were afraid of making mistakes and saying the wrong thing, thus using excuses like “US listed companies cannot make discretionary comments”.

3. Long lasting war VS Quickfire actions

American websites always have long-term planning and spend loads of money on useless marketing research. They plan strategies and budgets for the next few years, and they are too rigid to adjust easily. They can have a lot of money and talent at the beginning, and slowly plan and develop things. Unfortunately, websites are not like other industries, where many multinationals adopt a strategy of making losses for 10 years and then turning a profit. This is not working in the Internet industry, in less than 10 years Yahoo! and eBay had already failed in China. So instead of doing it slowly, it would be better to fire up at the first beginning.