How Baidu Won China
businessweek.com
businessweek.com
It was more about how Baidu beat other Chinese-companies than how it beat Google. The other Chinese companies were (a) playing ball on censorship and (b) homegrown, too.
when i was in china i found that all google services where extremely flaky: dropped packets, super long roundtrips, meager throughput and often unreachable for a few minutes. in my opinion they where almost unusable for 'business'.
at the same time websites like slashdot or our beloveth hn were just doing fine. while baidu.com, qq.com, taobao.com (all super popular sites in china) were all blazing fast.
i know i am suggesting something without providing proper proof. but for me it is quite clear what drives the success behind baidu -- its the lousy access the chinese have to the world's leading alternative to it.
just my 2 rupees.
amazing to see how internet --the one network for us all-- can end up meaning something entirely different within the borders of some countries.
The main reason why every American company will fail in China is because of cultural differences. American companies lack the ability to understand the Chinese mindset and often that leads to misunderstandings that wont be easily forgiven.
American companies that truly want to succeed in China need to readjust their business model. You cant bring an American company to China, you need to invest and develop organically a Chinese company that is substantially owned by an American company so that the citizenry and the state will allow and appreciate its existence.
As for competition among the Chinese companies, it is often the case that developing a relationship with the government is vital. But, developing a relationship or "guanxi" is a very different concept in Asian culture compared to American culture. Giving a "red envelope" is considered a necessary sign of respect and acknowledgment of their status, but in the US its a straight out bribe.
To curry favor with the people is simple, just give lots and lots of free data, products or whatever the people want. Whether that data is copyrighted, patented or otherwise. That's how baidu did it, thats how youku did it and thats how the next big thing is going to do it.
China's next big wave is going to be to develop its own silicon valley of sorts because its very popular to copy American startups and put an Asian spin on the idea to create a NEW multi-billion dollar company.
So Honeywell changed tactics and set up R&D centres in China to deeply understand why Chinese companies were buying imitation products instead of Honeywell products, and then create products that were better suited for the Chinese market. They got a lot more intimate knowledge of the market and for the first time were making major global product design decisions outside of the USA. Then with their new R&D centres, they were able to make better products at an acceptable price point to the Chinese. They dominated. Today, only a few of those copycat competitors remain and are considered a real threat by Honeywell, whereas in the past, there were almost a hundred of them.
The approach was so successful, it became Honeywell's blueprint for how they want to enter all emerging markets from now on. His main point is that you can't expect an emerging market to lap up western products just because they're western. You need a hardcore local presence doing hardcore local product development, because the market needs will often be unique. Fascinating story. He's writing a book about everything he learned, and I'm definitely buying it when it gets released. I'd put the guy's name down, but I can't remember his name off-hand; have it at home in an APCAC 2010 program somewhere.
No doubt local presence helps with guanxi and all that, but I do bet you that as the Chinese economy and market gets more and more sophisticated, guanxi will matter less and less compared to product and service quality.
It is surprising to me that these companies which get traded with SEC requirements, yet they are allowed to do whatever it is considered illegal here and still get away with it. It pisses me off that there are no regulations/jurisdiction about such shortcuts companies take. There is gotta be a solution.
Go to http://video.baidu.com/ and search for a TV show you want to watch, you will find the whole episode. With Google video you will get 3 minute clips. Baidu also has an excellent mp3 search. Looking for a movie to watch?
Google has made plenty of mistakes in China. For starters most of Googles documentation is blocked in China thanks to the way China and Google have set the network.