This post is about internet, business, and China. Not how to do internet business here, but rather discussing how to ready yourself if you happen to own an internet business, and may someday want to try your luck in the Orient.
It’s going to be lengthy, and mostly I will spin the whole thing around the case of Foursquare, the rapidly emerging location-based social network, or I’d rather call it a social game. In case you feel bored in the reading process (I’m quite positive you will), I guess it’s better to put my conclusion before the actual body, to save you some time, or maybe create a little suspension. I believe that:
China is not a piece of virgin land with infinite opportunity. Actually it’s sort of a closed parallel universe. Everything has a counterpart here, or will soon have a couple of them if there isn’t one already. Residents seldom get out, but whoever ventures inside the border must fight its shadow self before anything. Shadow self here means those who clones foreign services atom-to-atom, in order to duplicate their international success.
Now let’s cut into the boring part.
On the morning of April 16th (Beijing time), 163 Tech, one of the major tech portal sites in China, posted a story about Foursquare. Link here.
It’s not even worth translating. The whole article is about Foursquare releasing a new version of client pack and gave a thorough instruction on what Foursquare is. To my knowledge, this is so far the first time Chinese web media covers Foursquare. 1:54pm the same day, QQ tech, another major tech portal here picked up a similar story from Forbes. This time it’s not on the front page though. But given the copy/paste spreading nature of Chinese portals, with some luck, there will be a chain-reaction soon. And unlike the western world, portals are what’s big here. SNS and micro-blogging fall into the secondary team.
Media coverage is good, however, not always so. Current stories about Foursquare on our portals emphasize that Foursquare is “fresh start, fun, growing at stunning speed”, and most importantly, “been shown a lot of love by venture investors”. According to 163 Tech story, it has already got 1 million US dollars from VC. Typical Chinese chemistry of business works like this: you get a glass of pure business, put in 1 pinch of venture investor love, 1 teaspoon of rapid growth, 0.5 gram of fresh start, and finally add 0.1 gram media coverage. Boom! You get an assembly of nice carbon-clones. Foursquare has already got everything. Give a little more here and there, a swarm of clone legion will shut it out of China for good, in case it may want to join the “let’s conquer China singlehandedly” team somewhere in the future.
The thing is, overgrown population leads to heat competition (for everything), which in turn leads to the high demand on response speed, ready-for-use business model and cash support for mere survival. Thus Chinese start-up businessmen are always keen on internet sector (fast to deploy and profit), on venture capital (to make start-up business boom a.s.a.p.), and successful templates from the western (saves a ton of feasibility research, also works as material for lobbying more and more careful venture investors).
The now-massive Instant Messaging giant QQ started off as an ICQ clone. World-dominating Alibaba (Taobao) was an eBay clone (good job though, it got much better than eBay in the long run), Dangdang was an Amazon duplicate, and the earliest 3 portals (Sohu, Sina, 163) were all “inspired” by Yahoo. That’s only the early days of Chinese internet sector. Facebook was cloned as Kaixin001.com, which was later further cloned by a couple of other companies into Xiaonei.com, 51.com, etc. Now Facebook the GFWed is said to be plotting a China entry, guess who’s daddy when it lands here? Twitter was cloned as Sina Weibo even before it got GFWed. Not to mention the micro-blogging frenzy rallied by 163, Tencent, and Sohu. Craigslist inspired a swarm of classified information sites a couple of years ago which unfortunately all died out. With everyone getting into the clone-VC-marketing-dominate model, newbie starters are more than ever paying attention to foreign examples of success. Chatroulette was discovered by majority of Chinese netizens about a month ago, and its stories spread rather wide. Now there is at least one Chatroulette clone working full force to duplicate its success and attract VC here in China already.
Now Foursquare has been proven to have remarkable growth, and VC-charm. I’m quite positive Foursquare clones will begin to show up in about 3 months (it’s technically harder to clone than Chatroulette). My suggestion is, if Foursquare would ever possibly consider gaining a share of Chinese market in the short or long future, it should get into action now, to defend its not-really-presence here. Chinese internet users have some unique natures: A) as a group, they tend to pick up new stuff much slower than westerners B) once they do, it will be harder than moving mountains to make them switch to any other equivalent, except if God wills so. It would be a good idea to start the defense battle right now, gain some distance before the Attack of the Clones could ever hit the big screen. I’m not talking about all those trouble incorporating here. It could be achieved easily: make a Chinese UI for Foursquare client.
English-only is a hell of a deal breaker here. Why so little Chinese (consider the population) use Twitter even before it’s GFWed? Why, despite the fatal lack of utilities on that platform, are Chinese Android users refusing to install Advanced Task Manager? More on Android’s case, why users here tend to avoid the stock app market at all? It’s all about language barrier. Chinese are mandated to learn English from junior high, and we can’t get a bachelor diploma without passing CET level 4 English test. Getting master degree requires even higher marks. The majority of Chinese are *forced* to swallow it, and they resent this language once they no longer need it, which in most people’s case means right after graduation. And you know people lose language skill faster than a free falling hippo when they don’t use it, or even hate it, right? With years spent on game/software localization and movie subtitle making, I’m rather confident to say that a general Chinese will automatically reject any software with more than 5 English words, or 1 full English sentence on its UI.
If that is done, they could do some extra work to sweeten the situation up: the phone client. Right now Foursquare has a client for iPhone, BlackBerry, Android, webOS, and Windows Mobile (this buggy WinMoSquare thing doesn’t seem to be official release though). Of all the major smartphone platforms the only one missing is Symbian S60. I know Americans in general and geeks everywhere laughs at Nokia. Me, too, thinks S60 is a pathetic piece of cultural relic. However, not even 65,536 gigawatts of distain can warp the reality. Outside the United States, Nokia and its S60 legion rules, reigns, and kills, particularly in China. I’ve been doing a hobby project #PhoneWatch on twitter (@chassit). Put it simply, I identify every single smartphone or other smart-looking gadget bumps into my sight on my evening subway trip back home (Beijing, Sanlitun – Dawanglu, Line 10 then Line 1 through the busiest CBD area), and count them as groups. Not a long trip, but quite good timing IMO. Actually I’ve been doing this for kind of an occupational disease for a couple of years, only not keeping clear record. To my knowledge, Nokia S60 is always the winner. Now I’m 2 days into data-keeping, each day ending up with S60 topping the list, with a number as good as all other groups combined (groups are: S60, WinMo, Android, BlackBerry, Palm OS/webOS, iPhone, Moto Linux, shanzhai phones, Kindle, Sony PSP, Nintendo DS/DSi/DSL/DSi XL, tablets). As to why S60 beats iPhone by so far, I think I’ve got some reasonable theory, but that’s story for maybe another day. Anyway, not supporting S60 in China is quite far from a wise move.
What’s done is done. Under the current situation, which is not bad actually, if Foursquare will someday be interested in a China-entry, my suggest plan is (as in phases):
Phase 1 – right now: Grant the software a Chinese UI, also give a Chinese facelift to the website if possible. Stop here, wait for to-be cloner’s move. Do this as early as possible. Save energy, stay alert. Develop a S60 client pack if time allows.
Phase 2 – marked by the 1st sign of cloners: Post the install package (BlackBerry, iPhone, Android) on pirate app sharing hubs. BlackBerry users are the minority. iPhone users (those who actually use them as a smartphone) all rely on jailbreaking. Android users, as mentioned before, resent the stock market as a whole. Pirate app sites (mostly BBS) are the major resource of phone applications here. Foursquare doesn’t count on sales of app for revenue anyway, so no hard feelings.
Phase 3 – marked by any cloner getting the 1st batch of venture capital: Dig further into Chinese smartphone user communities. Influence them in QQ chat groups in addition to piracy share BBS. Offer prize to most active Chinese users. Incorporate in China if necessary, as required to start further cooperation with venue owners.
Phase 4 – marked by Tencent joining the war: Unlikely, but highly dangerous if it happens. All-out war is required. More viral marketing. Spread advertisements if things are not going well. Tencent is the most horrible enemy out there. Their QQ IM service has hundreds of millions of users, and they are surprisingly faithful. Spiraling from IM service, Tecent has attached online games, SNS, blogging, search engine, C2C sales platform, email, file sharing, news portal, and various “big things” at different times to the QQ client. Stimulate QQ IM users -> rally them to the new (closely bound) service -> instant boom -> kill competitor in mere months. This is the normal routine for it. Up to date, their clone products have claimed kings of hills, with only less than a handful of unbeaten opponents namely Google, Baidu, and Taobao. Foursquare could stand on an even ground with those three giants? I doubt so. QQ mobile client is a must-have for Chinese smartphone users, and Foursquare sound like a rather nice and easy-to-implement add-on to its current clients. They don’t even have to do any marketing, just send a system notification “have you updated your QQ to the latest version?” Without the human power and user base of Tencent, response speed is the only weapon if Foursquare ever gets in a toe-to-toe deathmatch with it.
Well, that’s it. If Foursquare marks China-entry as a mere possibility, they should start making small things happen right now. Here the key rule is: the 1st to capture the flag always have a better chance of succeeding. The same also applies to other rapidly emerging service providers. If you have a plan of getting a Chinese branch down your schedule, start planning *right now*. Do not treat China as just another country. It’s more like a parallel universe where things tend to be self-dependent and seldom go out. Always be prepared for your shadow self.
Article by Kane Gao, Allegravita’s Head of Research