Kai-Fu Lee: Why American Internet companies are stuck in China

American internet companies have almost every exception in China. Mainland China has three big winners: Alibaba, Baidu and Tencent. The three companies ' combined market capitalisation is about $150 billion trillion.

American internet companies have almost every exception in China. Many have blamed government regulation or favouritism for American companies ' woes in China. While these factors do have a role to play, more is due to the problems of these companies themselves:

1. Too short-sighted

Chinese market is very big, very test patience. U.S. companies set priorities globally, usually on a profit-generating basis, and are scaled back in the recession. But the result of these actions is usually "save money and eat big losses". While saving money in the short term, it has ceded market share to rivals.

Example: AOL in the Chinese market two retreat, each exit is due to its own poor financial situation, but the Chinese market is still booming.

2, local team lack of power

The Chinese market is very big and the competition is fierce. To seize the opportunity in China, U.S. companies must fully empower local teams to be flexible, fully self-made, and integrate locally and meet challenges. However, because of some sensational news or overly banal concerns, U.S. corporate headquarters have not only refused to allow local teams to make themselves, but even imposed additional censorship.

Example: Google needs to get approval from Headquarters on issues such as policies, products, data center layouts, user interfaces and even home graffiti, not to mention specific personnel recruitment issues.

3. The process of globalization is slow

The Chinese market is so unique that it needs special treatment, but American companies value a single global platform. These decisions can maintain the unity of the global platform, but may lose local market share.

Example: ebay once bought the market leader ebay, but then closed the platform, and instead focused on the development of servers located in the U.S. ebay platform, which eventually turned into a disaster. Another example is that ebay relies heavily on sellers ' creditworthiness, but not in the Chinese market. Thus, Alipay won the market through intermediary payment services.

4. Cultural conflict

American companies tend to recruit an Ivy League MBA or Stanford PhD with years of work experience, and to communicate in authentic English and American body language. But these turtles may not be able to play their full role in the Chinese internet market.

Example: Yahoo China has a general manager is not considered suitable to stay in Yahoo, but he left after only 6 years to start a company with a market value of more than 3 billion dollars.

So, do American companies have a chance? It's not easy, but it's possible. First, all companies should look at the above example as a textbook in order to grasp the opportunity. Second, while Chinese companies excel in Consumer/mobile software, I believe American companies still have an advantage in big data, cloud computing and enterprise software markets ... So far.