Some hypothesize that the main reason for the lack of Facebook’s dominance in China is due to government protectionism to help out local firms. Given Facebook’s success in the US and many western markets, I can certainly understand why they might have such a belief. However, when we look at the issues in more depth, it’s clear that the root issues lie much more with the realities of the competitive environment that already existed in China, operational issues with foreign online companies in general and Facebook’s lack of local presence/focus.
Below is a Top-10 list of the key reasons why Facebook would have failed in China even if the Chinese government had never implemented blocking on the great firewall of China in July 2009.
10. Facebook had no brand awareness in China and no marketing budget to promote themselves in market
9. Facebook developers didn’t create Chinese games/apps, so had no eco-system or benefits to attract users. And even if they did, the apps/games would not be targeted to Chinese culture/interests
8. Facebook had no operational team in China and thus just can’t compete locally…and didn’t have the local understanding to operate efficiently by Chinese rules. China was not a priority for HQ and never would be.
7. Even if Facebook had a team in China, they would not have the nimbleness to react to local competition or autonomy to operate by local rules. We’ve seen this with all foreign online companies operating in China. (Yahoo, eBay, Google, MSN, etc.)
6. Facebook is a global company with one-size fits all mentality, and China is a place where localization and local culture/norms matter a lot. There is just no way for them to operate a global platform to target local user needs and compete effectively with home grown providers. Facebook servers are centrally located in the US… even basic things like latency and download speeds just can’t match local competitors.
5. Facebook never reached critical mass in China. A social network without critical mass is not attractive. And since most Chinese users only care about other Chinese users, the global network provided very limited value to them.
4. No foreign online companies have ever been able to sustain a market leadership position in China
3. LinkedIn has never been blocked in China and still only exists as a niche product catering to expats in China
2. Even when Facebook wasn’t blocked for several years, from 2005 -July 7th 2009, they only had few hundred thousand users in China.
1. Tencent had a huge social network with over 400 million loyal users in China well before Facebook even entered the market…they were just TOO late and Tencent too strong. Even against local players, Tencent is able to destroy their competition seemingly overnight when they move their attention to specific markets. Facebook would have been no different.
Alvin Graylin is a seasoned technology entrepreneur and business leader with over 18 years of leadership experience, ten of which are in Greater China. Currently, he is the founder and CEO of the leading mobile search provider in China, mInfo Inc.