It is hard for us to imagine life without "Google," because Google has become such a necessary internet tool in America. but even before Google threatened to close its search service in China, it was already not functioning well in that country. Google and other large American internet giants, like Yahoo and Ebay, were not really capturing the Chinese market. In addition Facebook and You tube were blocked by the Chinese government, so the internet companiies we are most familiar with are not the ones that are successful in China. The most successful internet companies in China are Baidu, Tencent, and Alibaba, local companies that are making enormous profits. The Chinese internet business after Google's departure, can be compared to a "profitable walled-off bazaar." However, these local companies will probably have trouble becoming global brands.
The Chinese government favors domestic companies, which can make these local companies extremely profitable. Baidu, the chinese equivalent of Google, was much more profitable than Google within China. The profits of Tencent, and Taobao.com, which is an e-commerce site increased their profits over 70% last year in spite of Google.s presence. The reason these local companies are so successful is because young people in China do not search the web for information. They are interested in downloading music, playing online games, and social networking. In China, 60% of internet users are under 30 years old and are interested primarily in entertainment. In the United States, it is the opposite; the number one priority is information. Experts say that American companies failed in China because they are slow to adapt and do not know how to deal properly with the Chinese government. Internet companies in China have to work closely with the government and they make the government's politics the company's business agenda.
One advantage local companies have is government protection because the Communist party wants to control communication and the media. Therefore, foreign internet companies are treated with suspicion. Youtube has been blocked inside China for over a year, ever since a user showed a video with human rights violations in Tibet. Without competition from facebook, which has no site in China, a local social networking site called Kaixin001.com has enlisted over 70 million users. Chinese online video companies, like Youku.com and Tudou.com have few big competitors, which helps them become hugely successful.
Google is a multilingual search engine. But Baidu only searches in Chinese. Google was troubled by censors, but Baidu isn't bothered by censorship because it does not really bother them. Chinese internet companies know the real money is in online fun and games; so sometimes Baidu's search engine is filled with propaganda from the Communist party. Obviously that is not okay for Google and other American companies. This article suggests that when Chinese companies try to expand their business outside of China they will have a lot of trouble, because they will not understand their competitors. However, Chinese companies may very well be happy staying at home and concentrating on the Chinese market. China has over 400 million internet users and the market is increasing rapidly, making the Chinese market alone a hugely profitable business.
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