x Abu Dhabi, UAEFriday 28 July 2017

Web giants must take blame for failure in China says ex-Google chief

Impatience, bad management, misreading local needs and cultural differences to blame, not favouritism by Chinese government.

The Chinese flag is seen near the Google sign at the Google china headquarters in Beijing, China.
The Chinese flag is seen near the Google sign at the Google china headquarters in Beijing, China.

Internet companies in the US have themselves to blame for failing to succeed in the Chinese market, says the former chief of Google in China. Lee Kai-fu was poached by Google from Microsoft in 2005 to help establish its Chinese operations, and left the search company last September to establish Innovation Works, a US$115 million (Dh422.4m) venture capital fund aimed at the world's largest internet market.

Mr Lee, a co-chair at the Abu Dhabi Media Summit this week, said foreign web companies that were losing market share to their Chinese competitors were victims of their own bad management, not government manipulation or protectionism. "I think they don't manage their business right and I think that in a couple of ways," Mr Lee said. "For an American company to succeed in China, it needs to do the following things: first, you have to have an empowered local team; second, you need to humbly listen to the local user; third, you need to move fast to give users what they want; and fourth, you need to have a longer-term outlook and not be too greedy in wanting to make money on day one.

"If you do all four things then it is fair competition; if you don't do one of the four, then you are the one who is causing your difficulties, not some other entity out there." Google made waves internationally this year when it said it had detected a sophisticated corporate espionage operation originating from China aimed at it and other western technology companies. The company said it was considering leaving the country.

The US government is considering filing a complaint against China's internet censorship and protectionism with the World Trade Organisation (WTO), a top American trade official said yesterday. The government is "trying to make our own determination whether we believe this is not WTO compliant and if the best resolution is to - file an appeal", said Ron Kirk, the US trade representative. Mr Lee declined to answer questions on Google's China business.

A number of US internet companies have tried and failed to extend their dominance of online markets into China, including Facebook, Google, eBay and Yahoo. None has managed to come out on top of local competitors, and industry onlookers have accused Chinese authorities of favouring local businesses. But the notion of an unfair playing field is "a misconception", Mr Lee said. "If you look at how fast and scrappy and smart and knowledgeable these Chinese companies are, you would start to appreciate what it would take to react to that," he said.

"When you have a large corporate in the US that has to review all the decisions, where the servers have to be held in the US and the decisions are made over there and you have to beg in line for the engineer in the US to change your code, then it is no wonder those companies lost." Innovation Works is aiming to recruit the smartest Web professionals in China to help build and invest in new internet businesses for the country. It has received more than 100,000 resumes since launching last September.

"Our access to this talent pool is amazing," Mr Lee said. "What makes China great is that there is a very strong desire to succeed. Having come out 30 years ago from incredible poverty but now with all these opportunities, entrepreneurship and starting companies is the dream of many young people." @Email:tgara@thenational.ae