Facebook, “Must Die” (in China)

| June 10th, 2010

From Zhangshuyue’s blog:

 20100609-fb-01

The inside information of Facebook to enter China came in mid-April 2010, said that the earliest will be within three months. Then followed by a Chinese headhunter company said that Facebook already commissioned them to recruit the relevant General Manager in China, mainly in charge of the gaming business. On the surface, according to various sources Facebook is really going to enter China. These speculations on the king of the SNS industry created heated discussions all over the world. Netizens are especially curious about which Chinese name Facebook will use. Should it be “Lianpu” (脸谱) (types of facial makeup in Chinese operas), or slightly pictophoneic characters “Mianshu” (面熟) (first character means face, second character is a homophonic pun of the Chinese character “book” and it means familiar, together familiar face), or should it just follow what Google did phonetically translate the name to “Feisibuke” (“非死不可”) a very inauspicious term which means “must die”? But more importantly, now this temporary name seems to suggest the bleak future of Facebook entering China.

Difficult for traditional SNS to walk on the road of China

On the surface, Facebook entering China is a logical thing. Figures showed that Facebook’s page views for the first time surpassed Yahoo in February this year and has become the most popular network platform. However in China, as of early December 2009, the number of registered users of Kaixin001 (www.kaixin001.com) was close to 70 million, with over 2 billion page views and more than 20 million users logging in each day.

SNS’s future looked bright but this is only because of being popular. Although many companies put up advertisements, it seems that the investment is not as effective as imagined. Just as Facebook found helplessly that although it has reached 193 billion page views (December 2009 data), the click rate of the ads on the pages was very low. In December 2009, users’ time spent on the site for Facebook already surpassed Yahoo, reached 116 million minutes, users spent average of 247 minutes on the site monthly. However, these amazing numbers which attracted advertisers just cannot bring immediate value for the investments.

There has long been Shanzhai version of Faceook in China. Renren and Kaixin001 etc Chinese SNS were the earliest pioneers; actually both are imitating the Facebook model. In China, SNS also cannot solve the profit problem. Especially Kaixin001, in the beginning was almost like Facebook’s twin also inherited the difficult situation, and even more serious. So called white-collar platform network, Kaixin001 accumulated user base with MSN users in the beginning, going in the right direction but was not popular enough, only relying on web game plug-ins was difficult to trap the already busy white-collar group. And after Tencent SNS platform used similar plug-ins and successfully opened up grass-root market, Kaixin001 had a transformation, but because still unclear about the users’ faces, the problem of profiting still could not be resolved. After all, Tencent’s success is because the users’ consumption habits, while Kaixin001 has not trained their users with the habits, profiting by adding advertisements also could not be accepted by the users.

Model is unchanged, while the user group is completely different from Facebook in the U.S. if it continues to follow the traditional SNS model, then it’s just like recreating the problematic Kaixin001 in 2008.

Difficult to break the localization bottleneck, difficult to see the light

Facebook had developed the Simplified Chinese version as early as 2008, but because of these managers in Europe and America have no clear understanding of the pattern of the Chinese market and the lack of communication between headquarters led to the operations in China being very mild and ineffective. Google sadly left China, in fact the real underlying cause was also not able to be truly localized.  It could not open the heart of the Chinese users. Will Facebook take the same path to disaster?

In terms of localization, it is easy said than done. After all, Facebook does not understand Chinese culture. Even though not yet entered China, it has already showed signs of being unaccustomed. March this year, Facebook users across Asian increased by 6 million, monthly active users was over 850 million with average growth rate of 7.5%. However the growth rate in Hong Kong and Taiwan were only 4.5% and 2.5%, far lower than the average. It is easy to see that Facebook already encountered localization issues when just testing the waters around China.

Meanwhile the majority of the Chinese Internet users have never heard of Facebook. In China, because ordinary netizens can not directly access Facebook homepage, people know very little about it. The user base is relatively weak.

One of the key reasons Facebook is popular in foreign countries is because the instant messaging feature. But this will not dominant in China. Tencent Board Chairman Mr. Ma said “Facebook is a tool of communication, but in China instant messaging (QQ) has replaced it to some extent.” Facing the “penguin” (QQ) with hundred millions of users, Facebook has no advantage there, must find another way.

Facing strong local rivals, early opportunity is lost

As for the news of Facebook soon entering China, iResearch Consulting analyst Zhao Xufeng and Cao Di said, the local SNS competition is fierce, similar foreign Social Networking Site MySpace already entered China but performed very average, the prospects are not optimistic for Facebook going into China.

Under the current circumstances, Facebook’s decision was too late. Analysys International analyst Yu Yi pointed out that the competition landscape of Chinese SNS is already established, if Facebook enters China as the traditional social networking site, it will not have much space to develop.

Also, Facebook now enters China will be difficult to pleasantly surprise the Chinese netizens, because after all most of its features and plug-ins were already exposed to the Chinese Internet users via the Shanzhai version of Facebook, they will no longer feel new and fresh. When Sina Micro-blog and Kaixin found out the news about Facebook entering China, they immediately imitated Facebook and Twitter’s micro-synchronization feature, once again. Tencent also recently launched beta version of its micro-blogging site, without a doubt, in the future it is to be seamlessly integrated with the Tencent space and platform. Homogenization of competition, without any resources in China, Facebook has no chance of winning. It is thus clear that China’s SNS at the moment is being looked at like the prey eyed by the tigers, local competitors try to keep the enemy outside of China.

Early opportunities lost, Facebook is also very clear about the current situation. Some information said Facebook entering China this time is not to be a social networking service provider, rather as social games developer.

Game may be their only way out, market research firm Pearl Research said, China’s online game market grew 35% in 2009, reaching 3.9 billion U. S. Dollars, and China’s online game market is expected to breakthrough 6 billion U. S. dollars in 2012. The 2009 growth is precisely benefit from Tecent space, Renren and Kaixin001 etc social networking games. Facebook to be in the pie is much easier than homogeneously competing in SNS. More importantly, Facebook’s total income of 700 million U. S. dollars in 2009, only 10 million of which was from virtual goods. Facebook has very low income in virtual goods comparing  to the SNS in China. The model of free online gaming with paid virtual props has become the market mainstream. This gives Facebook a huge untapped blue ocean. They can also use the experience in China on U. S. and other western markets.

Facebook to enter China, is it “must die”, or does it become a flexible and enterprising Lianpu (脸谱)? We shall wait and see.

35 Comments | Leave a comment | Comment feed

  1. Eason says:

    I think the only reason the communist Chinese really blocked facebook, to give xiao nei/renren a home market advantage

    • Uber says:

      facebook – Xiaonei/kaixin
      youtube – youku
      google – baidu

      None of the western counter parts have been pushed in China. When it comes to telecommunication you need government help here and the western companies don’t seem to play ball as well as the Chinese ones do.

  2. Sneakay says:

    >One of the key reasons Facebook is popular in foreign countries is because the instant messaging feature. But this will not dominant in China. Tencent Board Chairman Mr. Ma said “Facebook is a tool of communication, but in China instant messaging (QQ) has replaced it to some extent.” Facing the “penguin” (QQ) with hundred millions of users, Facebook has no advantage there, must find another way.

    This is just pure bullshit. The IM feature was added onto Facebook AFTER FB became popular. Also, the previous statement implies there was no IM services before FB, which is ludicrous since people in the US were ICQing before most of China knew what a computer was. FB is in no way replacing QQ, or competing with QQ, anymore than it is competing with AIM or MSN.

    Facebook’s features were ripped off by Chinese shanzhai sites, so they’re right that netizens won’t be that impressed by it, but what FB has is blatantly obvious and I’m not sure how anyone missed this. Facebook is used by the majority of those living in the west. Any Chinese student studying abroad gets a facebook account immediately because, well, EVERYONE has one. Therefore, any foreign-minded Chinese would instantly prefer to join the facebook network. If, then, the foreign-minded Chinese migrate, if there is a full Chinese version of the site then their non-foreign-minded friends will join them, since the foreign-minded will not want to go through the trouble of having two different accounts on two different sites.

    The point of facebook is not the IM client, but the picture and content sharing. For foreign abroad students it is a perfect way to stay in touch. This is why Facebook stands a chance in China. If it didn’t stand a chance why would the Chinese government be blocking it? They’re afraid of a foreign dominance of their social networks.

    • nicodemus says:

      “If it didn’t stand a chance why would the Chinese government be blocking it? ”

      The explanation I heard was that the “terrorists” in Urimqi used it to “plan terrorist attacks”, and that the “leaders” felt they had to shut it down to ensure “domestic harmoniousness”. That could genuinely be the case. Facebook offers a line of communication that could be difficult for the government to watch, if the servers are all located overseas.

      Moreover, there is a wealth of information and differing opinion on Facebook, (and a wealth of douchebags, like any well-stocked internet site) and the leaders might think China isn’t ready for that kind of influence yet.

      (If 1 million people join the group, my wife will let me name our first born 蜘蛛侠)

      Why they would think this, one can only speculate, but perhaps it has something to do with finding “George Bush is the Antichrist” Facebook groups. People look down on insulting the leaders in China, especially the leaders.

      (At least, they’re always surprised when I tell them the President is the least respected man in the US.)

      But I don’t think Facebook must necessarily be a success in China. I’m not sure yet, but I think you have to become Chinese to be a success in China. (Although I’m not sure how Chinese.) Dashan did it, but a lot of people haven’t. Facebook doesn’t have to succeed now simply because it’s succeeded before.

  3. Chris says:

    Agree with Sneakay, and also people underestimate the fact that Facebook is simply superior to Kaixin and Renren in terms of quality, innovation, and culture. People flocked to Facebook from MySpace for the same reasons.

    The bigger concern for Facebook, is to not repeat the same mistake as Google and muck up relations with the government. Play by the house rules, censor content as they ask, obey, and you have a real shot at competing with the local SNS.

    • Uber says:

      Not to mention Chinese can’t seem to make anything without 50 million advertisements everywhere. Right now if you click on the regular “Home” button on renren it takes you to some world cup advertising crap. Just what I wanted when I click home…

  4. Eric Havaby says:

    How can you write this article without mentioning that the Chinese government have blocked Facebook for almost a year?

  5. Eason says:

    It’s a Chinese blog, I don’t think they’re allowed to admit that the Chinese internet is anything but “free and open”.

  6. Kai says:

    About the only thing the author gets right is that Facebook has no chance in China. But it’s due to government control and favoritism; localization is a potential lesser issue. The major Chinese networks have literal armies of censors who monitor all the user-generate content. The outrage over Facebook hiring a horde of censors would be tremendous and vitriolic.

    It’s a complete rumor that Facebook will enter China. The same unsubstantiated Sina story (citing anonymous sources) has ridiculously been recycled over and over again. http://news.xinhuanet.com/english2010/business/2010-04/09/c_13243582.htm
    Facebook itself meanwhile says it has no specific plans. http://www.marketwatch.com/story/facebook-reportedly-may-enter-chinese-market-2010-04-07

    The bit about slow growth in HK and Taiwan is also complete BS. Growth is “slow” precisely bc Facebook is already dominant in those two areas–a remarkable localization success story.
    http://www.facebakers.com/countries-with-facebook/TW/
    http://www.facebakers.com/countries-with-facebook/HK/

    I earlier wrote an overview of Chinese social networks here:
    http://social.venturebeat.com/2010/04/07/china%E2%80%99s-top-4-social-networks-renren-kaixin001-qzone-and-51-com/

  7. ConfuSius says:

    please let it be 非死不可! that’s one hilariously unique name that will differentiate fb from other sites for sure! besides, didn’t china come up with all those games first? i remember seeing the farming game on qq before it spread on fb.

    • Granted, definitely it was on QQ first. On the other hand, the concept was pretty much copied from that Japanese game, Harvest Moon, wasn’t it? I’m definitely not wasting my time on either one, no matter who did which first.

  8. Laoshi says:

    Moronic Chinese with a moronic government.

    • nicodemus says:

      Try for a complete thought next time?

      (If you don’t approve of insulting people on the internet, I retract that statement with my apologies)

  9. Chris says:

    @Kai nice post on Venturebeat.

  10. sunbin says:

    the real obstacle is censorship.

    apps platform is the real innovation and differentiation that made facebook stand out from myspace/etc. in china, facebook needs to solve the issue of censoring the 3rd party apps in china, even if it is willing to censor its own content.

  11. Jane says:

    When there’s free speech, free publishing, free protesting in China, there’s Facebook in China. (Also Free Tibet and Free Xinjiang!)

  12. Andy says:

    Facebook is very popular in Hong Kong and is a dominant player. The only reason why FB will have problem is that FB is now blocked in China. Many ppl in China with foreign friends in other countries already had facebook accounts to stay in touch. Now that FB is blocked, locals have given up on it and no knew members can discover it.

    Does the government not understand most ppl just get on FB to post pictures, play stupid games, gossip, and waste time instead of plotting govn’t overthrow.

    • John says:

      Well, Facebook is a foreign company they will gather information on the Chinese market and sell it back to China, which will cost the Chinese people.

      It is pretty smart to be protectionist when you have a big market.

  13. Andy says:

    Facebook is very popular in Hong Kong and is a dominant player. The only reason why FB will have problem is that FB is now blocked in China. Many ppl in China with foreign friends in other countries already had facebook accounts to stay in touch. Now that FB is blocked, locals have given up on it and no knew members can discover it.

    Does the government not understand most ppl just get on FB to post pictures, play stupid games, gossip, and waste time instead of plotting govn’t overthrow. a

    • Tom says:

      I agree with you. Most of the people are not into plotting to take over the govt or into politics. They just want to socialize and play some games, and what better way to do so than on a social network like FB.

  14. bert says:

    “After all, Facebook does not understand Chinese culture.”

    This is so true! Does’t anyone at FB realize Chinese use chopsticks when typing?

    • C. Custer says:

      lol…but seriously, this analysis makes pretty much no sense. As someone already pointed out, the IM thing is not at all connected to FB’s popularity abroad. And FB “not understanding Chinese culture” doesn’t make a lot of sense. It’s a social networking site; they don’t need to develop an appreciation for Beijing Opera, they just need to be able to translate things decently, which I’m sure they’ve already done. Their site doesn’t produce content, so why would they care about culture?

      That said, here’s hoping it’s 非死不可. With Facebook’s horrible privacy issues and history of violations, I can only imagine how many people would be getting surprise tea invitations if they were cooperating with the Chinese gov’t (which they would have to do to enter China officially…)

  15. Kedafu says:

    WOW this article is 100% 牛B

    you know, the CCP has a fan group

    join it,

    加油 Baby

    song of the article “Cowgirl” by Underworld

    五毛党 万岁!

    • b-real says:

      SHut the fuck up you douche!!! What are you 10 or something? Come back when you have some hair on your nuts you fuckin troll.

      • bai ren says:

        Get-real
        this article is totally 牛B. there is a lot of reality in representation and with the recent step out of google, the few year block of facebook (in 2008 it wasnt blocked), and the formal re-entry of facebook to the chinese netisphere, info like this is… dare I say, dope.
        Further more that the ccp has a fan site on facebook is of complete relevance and adds depth to the discussion of facebooks current black and reentry, are ccp cadres scaling the wall theirselves?

        next with your trash talk you are the troll. whats your whimpering about? grow a pair and present something credible than words that fall in their hollowness.

        Join the facebook 无毛党 fan page!!!!!

  16. 刘俊逸 says:

    Why xiaonei site can exist in china ? Im chinese Netizen , I know the story behind story.
    Chinese government loves to do this , they just keep shutting down or deleting sensitive contents. There are some guys on internet we called them “Cyber watcher” , I guess I don’t need to introduce how “CW” works uh ? Xiaonei site also doesn’t allow these sensitive contens , but it doesn’t delete all these infos. This is the main reason it can attract manyyyyy chinese netizens.

    So if “must die” comes to china , unless it allows all the sensitive contents , or it must die. We all know except this ,”must die” has no different with xiaonei / kaixin001 such sites. It’s obvious allowing all sensitive contents in china makes it truly “must die”. They are just wasting time in china ~!

  17. masterfu (赵赋尧) says:

    use hotspot shield or any proxy

    chinese CCP censorship is garbage compared to my high school in the US, at least my high school block proxies

  18. John says:

    I have to say Chinese government is smart. The value of China is the human resource and people. Chinese government is protect it most valuable asset.

    If I was running a country with so much human potential, I would block Facebook too.

    • Vince says:

      there is vast difference between ‘protecting’ and controlling the populace. I’d say the government is more adept with the latter.

  19. Eric says:

    I hope facebook really does come to China someday. It will help establish the precedent of communication not only within China but also friending people outside of China. It will open the eyes of many Chinese that the rest of the world isn´t like the propaganda.

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