From Zhangshuyue’s blog:
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.