Why Is China So Hard For American Companies?

Why can’t U.S. Web companies make it in China on their own?

Rob Hoff asks a good question ... Here is my thesis and it lies in the tone in this email. The tone is not unique to the writer, it is actually a pervasive part the modern Chinese culture.

This “jingoism” is very much a part of any emerging country and the driver of transformative growth of a nation’s cultural and economic self-confidence ... today it is very much evident in China and Korea ... in the past it had replayed it self in many other countries ... think of the self absorbance of the United States during “Manifest Destiny” and post WWII, Western Europe during the Renaisance & the times of the colonies, Rome at the time of Julia Ceasar... so is this the case in China ... (and to say its ethnically or racially driven would be to look at the symptons than the motivations ... and to ignore the way Americans are viewed by the rest of the world - the worst offenders of the said blind nationalism)

To claim that American companies do not undertand the Chinese and thus fail is quite a superficial examination of the issues at hand. It is part of the problem, but does not address where the rubber meets the road ... the mind and choice of the consumer.

In China, consumers/users are EXTREMELY aware of the national origin of the product or service they are consuming. For vanity/luxury goods ... car, handbags, even meals ... having an American or Western brand is definitely an asset for targeting the growing vanity of the Chinese middle class (its an Asian thing, LV sell more bags in Japan than anywhere else) ... . BUT for services that offers an utility rather than a “lifestyle,” its a severe handicap.

Consumers are constantly choosing between the CHINESE search engine (baidu) vs. the AMERICAN search engine (google)... . the utility comes second, the nationality comes first. The origins of these two companies very much factors into their choice ... “do I support the service of my countrymen or a foreigner?” ...

Jack Ma understands this ... at every press conference he cant help but play to the us (we chinese) versus them (American) angle ... And rarely does he ever offer up the fact that Alibaba is actually owned (a major portion atleast) by the Japanese (Softbank).

The Chinese internet industry is a point of national pride, if we want a part of the gold rush, we have to pay homage to the people, culture, and the business ecosystem which we are extrating from ... too few American companies realized this ...