Why are foreign brands blocked in the Internet field?

Absrtact: Although Groupon, the founder of Groupon, has developed in the US, its joint venture in China has suffered a lot of setbacks. Not only is the GAO Peng Net, the local Consumer-to-consumer electricity merchant website Taobao 2003 founded, in less than two years time obtains 5

Although Groupon, the founder of Groupon, has grown in the US, its joint venture in China has suffered setbacks. Not only is Gao Peng Net, the local Consumer-to-consumer electricity merchant website Taobao was founded in 2003, gained 59% market share in less than two years, forcing ebay to withdraw from the Chinese market in 2006. Microsoft's Windows Messenger did not take any advantage of the local software QQ in the process, which developed a variety of content and a multi-level membership fee model, which accounted for more than 70% of the market share. AOL also tried two times to enter China, but was forced to withdraw two times.

Why in the automobile, the fast elimination and so on many traditional fields, the foreign brand has played the superiority in China, but in the Internet domain has been hindered everywhere?

The core advantage of failure

"The traditional field of foreign companies to gain advantage is often in the capital, core technology, talent management team, such as core competitiveness," Xu Jin Consulting director of the Internet, the advantages of this is often not obvious.

Capital, there are many VC, PE in promoting the development of local Internet enterprises and even "burning money" to seize market share, and often foreign internet companies began to enter China will not invest too much money; technology, foreign-owned internet companies tend to be in the business model after the development of relatively mature to consider external expansion, But at this time there is already a similar business model of Chinese companies copy, and localization of the adjustment to occupy the main market share, and the business model itself does not have intellectual property rights, Web technology itself is not a high barrier; Local Internet companies ' listing prospects and equity incentives tend to attract innovative talents more than foreign-funded enterprises.

Strategically, many Chinese Internet companies have adopted aggressive growth strategies as venture capital-backed start-ups, while large foreign companies have been overly cautious in their investments. In Jingdong Mall, for example, the company stands out because of its early investments in state-of-the-art information systems and massive logistics infrastructure.

Another difference from a traditional foreign company, Analysys International analyst Shou sent to the "first financial daily" that the development of Internet companies faster and shorter product life cycle, and product substitution is strong, which requires enterprises to grasp the needs of local consumers to develop products, but multinational internet companies are often global decision-making, High cost of communication.

"The more critical reason lies in the positioning of the Chinese market," said Jiangong, a researcher at the China Internet Information Research Center, "to position the Chinese market as a separate market or as a regional market?" In his view, the Chinese netizens have more than five billion, accounting for One-fourth of the world's netizens, has hatched Tencent, Baidu, Alibaba, such as world-class internet companies. Foreign companies may want to position China as an independent market, "and I think we should learn about KFC-' Our Future in China '."

Break the spell of failure

How to break the curse of the Chinese market is a problem that many foreign internet companies are considering. Acquisitions and partnerships are a common way for companies to get into unfamiliar new markets, but Amazon has bought the second-largest electronics retailer in 2004, but failed to play a dominant role in other countries and is still fighting against its domestic rivals.

Another example is Expedia's acquisition of the online travel agency Art Dragon in 2004, but its desire to appoint foreign executives to align its domestic management with international business has been difficult. Until Cui (Weibo) as chief executive at the end of 2007, the performance of the Dragon has just begun to improve, but in the face of nearly 40% of the market share of Ctrip, its less than 7% of the market share is still difficult to shake the latter's dominance.

A key reason for the poor results of several acquisitions is the loss of creative local talent behind the scenes. Xu Jin said: "The latest trend for overseas companies to participate in the Chinese Internet market is cooperation, not simple acquisitions." "In 2010, Hong Kong Internet company tom.com and China Post established a joint venture in the mainland to set up an online shopping company called" Mail Music ", hoping to combine Tom's technical expertise and existing online customer base with the obvious advantages of China post in warehousing, distribution and payment.

To crack the development of foreign-owned Internet enterprises in China, Xu Jin: "It is important to adopt different strategies at different time nodes." "For example, in the early days, through the way of Angel investment, in the medium term through equity and technology transfer, later when the development of relatively stable enterprises through the acquisition of the way, or through other low-cost means of intervention to understand the Chinese market familiar with and accumulate Chinese users. "Of course, if you want to achieve sustainable success in the Chinese market, you may sometimes need to walk more than one leg." "And Jiangong also thinks that foreign-funded enterprises in China's Internet market, may not treat themselves as an operator, but as an investor."