social-networking.jpgChina has emerged as the new battleground for social networking sites. First it was Rupert Murdoch who said last week that his Chinese-born wife, Wendi Deng, has been sounding out Chinese officials about launching a Chinese version of MySpace, the astonishingly popular site owned by Murdoch’s News Corp.

Now Facebook, which catering mainly for US college students, has also discovered China.

Or rather, it has discovered that there is a similar-sounding Chinese-language site called Faceben.com and it has told it to find a less problematic name, according to an unconfirmed report picked up by Pacific Epoch.

The Chinese site duly complied and visitors to Faceben.com are now redirected to Faceren.com — not be confused with Chinaren.com, a site  for Chinese alumni owned by China’s Sohu.com, or with Renren.com, a similar site.

Now these two stories have uncanny parallels with the tales of rampant ambition and bandwagon jumping that characterised the first internet boom.

For those who missed the story, News Corp paid an astonishing $580m for MySpace
last year. With hindsight, analysts say Murdoch may have got a bargain given the phenomenal growth of MySpace — it currently has over 100m users worldwide and is adding around 1.5m new ones each week.

Facebook started later and is more select: it has over 9m users. Chinaren claims to be the largest online alumni club in China with over 60m registered users as of June 2005.

Earlier this year, France’s online dating firm Meetic paid almost €17m for eFriendsNet, a Chinese dating site.

Despite the huge buzz surrounding this whole area of social networking, I think western firms operating in this space will have enormous difficulties trying to “monetise” China.

Neither MySpace or Facebook currently operates in the PRC and they face a host of hurdles should
they try to do so. For example, there are the cultural differences. In other Asian countries, consumers have shown themselves to prefer home-grown social networking sites to these western imports.

Murdoch’s proposed solution is to recruit local partners, who would own around 50% of MySpace’s Chinese operation. That would ensure the content is more suitable for a Chinese audience, and the local partners could also deal with complaints.

In the US, MySpace is frequently acused by parents, teachers and religious leaders as being a potentially dangerous place for teens to hang out. Wired has a good story on the moral backlash against MySpace.

Presumably, Ms Deng was in China to try to present the acceptable face of MySpace while avoiding the dreaded “C” word — censorship.

Another problem is that China’s internet advertising market is immature. According to BusinessWeek, online ad rates are 90% lower than their equivalent in the west.

So, while they attract growing numbers of users in the west, the jury is out on whether MySpace and Facebook can also build sustainable business models. In China, that discussion has not even started.

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