Chinese Internet market: Baidu, Alibaba, Kaixin001 & Weibo

Western Technology companies has been able to establish themselves across the globe and been able to generate profits irrespective of the geography. But world's number 2 economy China is coming as a tough nut to crack. There are various reasons why Western IT companies are not able to replicate the same success in China which they have elsewhere across the world.

To understand the reasons we need to understand the political environment in China. China is not a democracy, it is a country controlled/governed by Communist Party of China which maintains its hold over various aspects of individual's life.

It is very successful in producing results. Since 1978 China started reforms, it started the creation of large export oriented hubs. Export from these zones zoomed exponentially, these zones have now evolved as full fledged cities. In 2001 China became the member of WTO and it again eased certain controls.

Reasons why western IT companies are finding it as very hard market
1. Internet penetration in China is rising consistently and more and more people are spending lot of time on net. It has become an important mode to express opinions. For a country with one party system this does not augurs well, so Communist party of China wants to maintain strong hold over internet to stop any anti-governmental agenda over the internet. The reasons are obvious why party does not want western companies to succeed. I am not going into the reason whether this is right or wrong, but reasons why party won't let western companies to control chinese internet market are obvious.

2. High Piracy: China is ranked very high in terms of piracy. Piracy rate in China is more than 80 percent, with Chinese economy becoming second largest potential for IT products is tremendous if piracy goes down. Till this time, China was doing little to control it now they have promised that they will take steps to curb piracy.

3. Almost all the duplicate websites of google, twitter , facebook are available in China and are very popular.

Baidu competes with Google
Twitter & Facebook are banned in China, their clones are gaining increasingly popularity. Check out the link for additional details:
http://economictimes.indiatimes.com/infotech/internet/Chinese-clones-of-Facebook-Twitter-gain-popularity-in-China/articleshow/6846909.cms

How Chinese market will evolve over time I will discuss in another post.