After receiving quite a number of lectures on why US Internet companies have failed in China, here are my thoughts currently. I’m sure it will change as I gain more perspective and experience…
1. Use success in the US as proof-of-concept. This leads to over-confidence. The fact that Google/eBay dominates in the US means little to Chinese consumers.
2. Failing to adapt website to local users. Partly a legacy problem, and partly the inability/relunctance to adapt to needs of users.
3. Heightened competition. When a large US player enters, it attracts attention. Everyone knows what you’re going to do given your existing buisiness – competition is tougher than for a player laying low.
4. Corporate governance/control. Being public companies, there are rules to abide by which cost both time and money (sarbanes, for once). A US company has more to lose in regards to negative press or any form of legitation.
5. Nature of a startup. Entering a new country is similar to starting up from scratch, in the consumer Internet space. There’s really little to leverage other than technology (which gets cheaper every day). Reality is that most startups fail.
6. Retention/Hiring issues. For emerging market like China, talents are hard to come by. Entreprenuers prefer to work at pure startups where their upside is much larger.
7. Difference in business culture. Leads to misunderstanding and frustrations from both sides. Also, leads to distrust and miscommunications.
8. Taking things for granted. This applies to a lot of things, including the rule of law. Lack of “survival instinct”.