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Franck Nazikian

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Competition with Chinese Characteristics

Posted: 05/15/2012 3:55 pm

There is a land of conflict and fierce competition in the Internet technology industry, and I am not referring to the United States or even Europe. With an online population of over 500 million and a consistent double digit growth rate, the region with the biggest stakes and the most significant prospects is none other than China. But with great opportunities comes great competition, and China is no stranger to intense rivalries and contests for market share. With a decade worth of domestic skirmishes and experience, many Chinese Internet companies have amassed a significant amount of resources and knowledge in this area. Now, battle tested and armed with confidence, many Chinese Internet firms are eager to go international and bring their products and services to the global market.

Thanks to the existence of the Golden Shield project (commonly referred to as the Great Firewall), many popular international social networks remain inaccessible within China. As a result, many domestic firms have eagerly sought to claim the users and opportunities within this sector. Companies such as Tencent and Sohu already have versions of their products such as WeChat and Weibo in various languages -- including English -- and are rapidly seeking to attract an international user base. But with internal competition looming from Alibaba and Sina, many of these companies will continue to wage a two-front war; simultaneously seeking to maintain domestic control while expanding influence outward. But if their experiences within China are any indication, these mature companies are ready for the challenge.

As if the conflict were not already great enough in the social networking space, the competition within the online video sector is even more tumultuous. Leading players Youku and Tudou had intense, public battles for content and users. The two players ended up with a proposal to merge operations, for an effective savings of $60 million a year in operating costs. With the merger set to clear regulatory hurdles by the end of the year, the dust appeared to finally settle on this area. However, a new alliance formed between Sohu, Tencent and Baidu has recently emerged, and these players appear committed to concentrating the necessary resources to capture this space. But with rumors aloft insinuating discontent among these Internet powers, it remains to be seen if this unstable partnership will be strong enough to defeat the existing market leaders Youku and Tudou.

These are just a couple among hundreds, if not thousands, of fascinating narratives and compelling case studies within the Internet Technology industry in China. With so much activity and momentum, coinciding with the inevitable increase by Western companies to penetrate this attractive market, it's imperative that the world begins to understand this environment and we continue to establish the bridge to connect these two separate worlds. This is why technology and entrepreneurship conferences are so critical in the world today. With greater connection and relations between the world and China, a better understanding between all parties will develop -- concluding with an inevitable increase in innovation and cooperation.

 

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