U.S. web companies have a pretty poor record of penetrating the Chinese consumer market. Sample problem: Instead of customizing features to match Chinese users’ tastes, they stick to their generic plans — and lose out to domestic competitors.

The latest news to highlight this issue: MySpace China chief executive Luo Chuan has quit. The reason, earlier reported as a rumor by China blog Mobinode and confirmed by a friend of mine in China, is that Chuan and MySpace headquarters disagreed on how to reach the China market. Mobinode wrote:

We might be wrong, but our understanding on this is that Luo wants to run the Myspace on his own way (on Myspace.cn), but his boss believe Myspace China should be a Chinese version of Myspace.com and follow its global strategy. So, if the rumor is confirmed, it means Myspace China’s Independence fails.

Past examples of U.S. web failure in China include Google’s long-standing insistence on its “clean” search homepage. Domestic rival Sohu’s homepage, for example, is “crowded” with links and graphics — a style that many Chinese users prefer.

Back to social networks: MySpace, Facebook, Friendster (the largest international social network in Asia ) and the rest are trailing domestic rivals like Xiaonei, 51.com and others.

MySpace’s strategy has been a little different, though. It has done its own translations of its English-based site into other languages and it has built out teams to focus on promoting and selling ads in specific countries and regions. This “localization” apparently didn’t go so far as to let regional managers make significant changes to the translated versions.

MySpace’s strategy generally doesn’t seem to have been a huge success — so far, anywhere. Most of MySpace’s users are still in the U.S. (where it maintains a sizable lead), and the site isn’t growing fast worldwide.

Facebook and hi5 have chosen a different tack in order to reach users in other countries. They let users recommend their own translations, which helps ensure that things like popular colloquialisms make it in. They also polish those version with the help of professional translators. Both sites have been growing fast around the world this past year. Of course, neither network has created significantly different local versions anywhere. (However, I’ve heard that Facebook has looked at creating a separate China version — but that’s in order to comply with the country’s censorship rules.)

Friendster has focused on translating the site into Asian languages, to help it solidify its market share in the region (most recently, it introduced a mobile version of traditional Chinese). It boasts millions of ethnic Chinese users in other parts of Asia, but it’s not clear if that’s translated to more users in China.

In sum, given MySpace’s existing localization strategy and the trouble it and other U.S. companies have in reaching Chinese users, it seems to me that MySpace could have done well to accomodate Chuan’s strategy. Instead, according to Mobinode, he left to join a China-based video startup.

[Update: MySpace grew from 53 million unique visitors in June to 55 million in July, according to web traffic measurement firm comScore, with the largest regional user group being 30 million in Europe. This is slower than rivals, but it is some growth nonetheless. For a longer-term perspective from comScore, MySpace previously grew three percent from June 2007 to June 2008. Facebook, meanwhile, passed MySpace last year and hit 144 million unique visitors in July, according to comScore. More here.]

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