MySpace is negotiating its entry into China with a venture capital group and a former China Netcom Group exec, according to the WSJ (sub required), a sign that it is relying on local help to avoid the expensive mistakes made by other U.S. companies in China.
The report said the Rupert Murdoch, chairman of MySpace owner News Corp., is sending his wife Wendi Deng (pictured above) to plan MySpace’s entry into the world’s most populous nation, and that she’s in talks with IDG Ventures in China, and Edward Tian, the former China Netcom Group chief executive to help with the move.
MySpace’s move is significant because eBay and Yahoo, two other large U.S. Web companies that made earlier moves to China, have struggled against local competitors there. Yahoo, an early player in search, has invested $1 billion there, but has little to show for it. It has seen competitors spring up all around it. The controversy around Qihoo has been particularly bedeviling for Yahoo. Notable is that Qihoo’s investors include IDG, which is MySpace’s supposed ally. IDG also invested in Baidu, which has eaten Google’s lunch in China so far.
MySpace will compete against several other local Chinese social networking players, including 51.com. That company recently received $12 million (scroll down) from Sequoia Capital. Sequoia is also investor in Qihoo, and thus the Web of intrigue is spun.
Murdoch has made all the right moves. He has said MySpace’s local operations need to be very Chinese.
The WSJ reports:
IDG’s Chinese investment arm already has a joint venture with News Corp. operating a Chinese portal called Chinabytes.com. A person close to IDG’s Chinese venture confirmed it had held talks with MySpace. A Chinese news outlet reported earlier this week that Luo Chuan, the former general manager of MSN China, would become president of MySpace China on Dec. 8. Luo Chuan couldn’t be reached for comment.
8 Comments
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David said:
“Murdoch has made all the right moves. He has said MySpace’s local operations need to be very Chinese.” - and then he brings in Wendi?? Getting someone who has no experience of China to setup an operation there is not good, but its almost as bad to assume that because somebody was born in China and speaks Chinese then they “know” China.
I think Wendi will be more of a liability than an asset to MySpace in China. I doubt she has had much hands-on experience in China since her Star TV days and her track record is not that impressive anyway.
Unless they are successful at poaching a lot of talent I would have thought they would be better off investing into or acquiring an existing player. My prediction is they will make a big bang when they launch (backed up by lots of $$) and then fade over time.
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Ya said:
Few expects Wendy’s role to be beyond talent search and early relationship building.
The challenge to myspace china may lies in the nations’ different social environment, values, and relationships. Building a giant user base and most importantly binding it with a solid and sustainable revenue model in a fircely competitive industry calls for vision, innovation, and strong execution.
With 10+ years local and global experiences at Microsoft, and especially the product knowledge and operating experiences from MSN space, the rumored candidate LUO Chuan of MSN China may be the best person Wendy and Edward can find for Murdoch.
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Chris said:
Wendi could be an asset although she wasn’t impresive on her work at Star TV, but since she wasn’t among the executives then, you can hardly blame her being non-impressive.
You need someone from the top, at Murdoch’s level, to know China to all its subtleties. A good example is Skype, they formed an alliance with local portal, they “officially” offered pc to pc calling, and “unofficially” offer the pc to phone service which is banned in China for now. Skype can still “go around” the policy unpunnished. Other VoIP Provider like Vbuzzer are located outside China but they just seem to have a way to get their calling credits bought/sold in the Chinese Ebay or Taobao site.
The partner Murdoch/Wendi chose for their China operation, Mr. Tian, is a high profile guy who connects to almost the top level in China. Once the way is paved (I believe it will be paved with the help of Tian), they just need to hire a management team from local elite to run a successful business.
I think MySpace’s methodology is correct this time.
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Matt Marshall said:
I can’t comment on Wendi, because i don’t know much about her. My point is more about their initial strategy. Thanks for insights.
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Chris said:
Matt, it’s a good report to me and you are right in the general picture. When it comes to how to succeed in China, it’s usually not how they entered China, it’s how they fight battles in China. In my observation 2 things are far more important then the initial strategy, one is the give enough consideration in the cultural barriers, you can’t duplicate what work in USA and hope it will work in China. (you can replace China with almost any other countries like Japan, remember Ebay is kicked out of Japan already). After all, social networking is more about a culture than a technology. So you need to hire a local operator. The second? you have to give enough trust and authorization to the guy you found/hired. Yahoo wasn’t successful in China at all, because it failed in all 2 fronts.
Hopefully MySpace learned something and don’t make the same mistake.
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Tangos said:
51.com in your post was linked to 51job.com.
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Matt Marshall said:
Thanks Tangos. Fixed.
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SelltoEurope.com Blog » MySpace prepares ground campaign for China, carefully said:
[...] Venturebeat (former Siliconbeat) reported that MySpace is negotiating its entry into China with a venture capital group and a former China Netcom Group exec, according to the WSJ (sub required), a sign that it is relying on local help to avoid the expensive mistakes made by other U.S. companies in China. [...]