Monday, June 30, 2008

LinkedIn to Chinese market, oppotunity and challenge

My friend Jia Jiang, currently working for LinkedIn on its China marketing strategy, visited me recently. In his visit, we shared how LinkedIn might enter China---the largest growing market in the world. Linked into China, how many opportunities and challenges the company will face?

Social Network, the difference between Chinese and western culture

In western culture, social is part of the life. In Chinese culture, however, social is the life.

I have been at United States for more than 10 years. Before it, I was in China. For years I have observed the cultural difference between the two countries. Certainly in both countries social networking is a very important part of normal person's regular life. There is, however, some subtle but critical difference. United States encourages individual heroism. Social networking is thus auxiliary to this general goal. China, on the other hand, encourages collaboration but discourages individual heroism in general. In China social networking is thus the goal. When facing a problem, a typical American thought is to solve it by oneself or otherwise engage his social network under his direction to solve it. By contrast, a typical Chinese thought is to engage one's social network to solve it and make himself be a member of the collaborative team.

Philosophically, Chinese style social networking is based on the Doctrine of the Mean (Chinese: 中庸; pinyin: Zhōngyōng). Chinese people believe in that if one tree is higher above all the others, wind will destroy it first (Chinese: 木秀于林,风必摧之; pinyin: mù xiù yú lín,fēng bì cuī zhī). Hence the principle of surviving but also living well is to follow Doctrine of the Mean---be neither too outstanding nor too insignificant. This philosophy is the basis of Chinese social networking.

Such a subtle difference actually indicates some fundamental difference between Chinese social networking and western social networking. If a western social networking company wants to enter and make itself succeed in the Chinese market, it must not only understand the difference but also know how to adjust their particular marketing strategy and even technological user interface design respectively.

LinkedIn, strengths and weaknesses with respect to Chinese market

LinkedIn, as well as all the other western social networking companies, advocates individual-centric social networks. In particular, LinkedIn makes much effort on composing individual's professional profiles in order to strengthen formal business connections among its users.

The strengths of LinkedIn with respect to Chinese market are obvious. In general, western software companies have advanced technologies better than their Chinese competitors. As one of the early adopters of Web 2.0, LinkedIn has strong technology team as well as excellent management team who really understand Web 2.0 in principles and technical details. LinkedIn has successfully branded itself to be the leader of professional social networks. In its particular domain, LinkedIn profile is more effective than either Facebook profile or MySpace profile.

Lack of the elements of Chinese culture is an immediate weaknesses for not only LinkedIn but also all the other western social networking sites which plans to enter Chinese market. No western companies can succeed in China by simply translating their sites into Chinese, especially if they are the social networking sites. (Hence I don't expect the recently reported Facebook's initial plan of entering Chinese market would be a success.) My friend Gang Lu recently wrote at Read/WriteWeb a post about the Facebook clones in China. One reason that many of these Chinese clones of Facebook are expected to grow better than Facebook China is that every one of them has customized their sites with certain unique Chinese cultural elements that the official Facebook China does not have. If LinkedIn expects to enter China, the culture customization is the first crucial barrier it has to overcome.

Another specific problem of LinkedIn entering China is its requirements of filling in detailed career information in profiles. Certainly this requirement represents the value of LinkedIn services. Such a request, however, could be seen as a serious thread by the Chinese government. Many foreign observers are surprised that there are much fewer LinkedIn copycats than the Facebook copycats in China. Indeed, it is not surprising at all from a native Chinese's eye. The Chinese government would simply not tolerate any private company to collect sensitive employment records of all Chinese people, let it alone a foreign company. In tradition, (due to the so-call "national security") only the government or certain authorized public organizations may have the privilege of owning personal profiles with detailed career information (Chinese: 个人档案). This is why even Chinese people feel difficult to copy the business model of LinkedIn in China. This issue might be a killer for the future of LinkedIn in China.

Can LinkedIn succeed in China?

Despite of all the problems, LinkedIn still has its chance to succeed in Chinese market. The key of success is, however, a point I mentioned at the beginning---Doctrine of the Mean (中庸)! The following are several particular suggestions for LinkedIn to enter China.

1) Never ever claim itself to be the leader of professional social networks in Chinese market.

2) Narrow down its domains of professional social networks to only the insensitive realms. Explicitly prohibit the adding of career information from such as army, nuclear plants, police department, and various other sensitive, national security related government departments. Narrow the use of LinkedIn China to pure business, especially on the realms such as the Sino-American exporting business.

3) Change the individual-centric LinkedIn profiles to group-centric LinkedIn profiles. Intentionally decrease the significance of individuals in the LinkedIn network of China. By contrast, significantly increase the weight of groups in the LinkedIn network of China. Such a change may require a major re-design of LinkeIn China user interface.

4) Add the unique Chinese cultural elements to the LinkedIn China site.

I must say that some of my suggestions are indeed controversial. But they are critical for western companies to succeed in China, not only just about LinkedIn.

First of all, any attempt of monopolizing Chinese market on information management may not survive long, even if it would succeed once. Chinese government had tolerated foreign companies to monopolize the TV set market in China for many years, and it is now even tolerating the foreign monopoly of gold mines in China. But it would never tolerate foreign monopoly of information access or information management in China. Neither TV set nor gold mine is directly about people. But information management is directly about people. Loss of a few money would not be pleasant but it is tolerable. Loss of the control of people, however, would be a disaster in the present China, and thus it is absolutely intolerable. LinkedIn must abandon the unrealistic dream of being the leader of professional social networks in Chinese market.

By not being the general leader does not mean it would not be profitable. Due to the large population in China, LinkedIn China in vertical could be a great success. By narrowing its realm to several most profitable realms, LinkedIn may have more focused design of its Chinese user interface with unique cultural elements and improved the quality of its services that are then more focused.

Furthermore, by emphasizing the group-centric in contrast to individual-centric LinkedIn may help its Chinese subscribers release the pressure of disclosing information for a foreign company. Actually, it has been a general law of 中庸 in China since ancient time. Let LinkedIn China be in a chinese-style infrastructure of group guiding individuals in contrast to in the western-style infrastructure of individual composing groups. I guess the same philosophy may even be helpful for re-modeling many of the current Chinese social network sites too, if they want to get a break out of the highly competitive SNS market in China.

The last question: what is group-centric with respect to individual-centric in social networking? I may write another post dedicating to this topic later.

9 comments:

bloodcarter said...

Hi Yihong,

great post! Sure, write another post about groups-centric vs individual-centric! That would be interesting.

I just thought...Why Chinese government is against collecting this info by foreign companies? Are they afraid of this companies or they just don't want this info to be exposed outside China?

Because, in the latter case this problem can be solved by making MUCH more strong privacy settings inside social network (This is exactly what I mean in my post about problems of SN).

Vlad.

Yihong Ding said...

Vlad,

It is actually a complicated issue. Formal personal career profiles are confidential information. Unlike in western countries and possibly also including Russia after 1990, in China there are still all kinds of secrets that are not allowed to be exposed in various reasons. Allowing to expose formal career profiles in general may, however, lead to the exposition of all of these hidden things, which would cause the unhappiness of the government. This is why Chinese government prohibits the control of formal personal career profiles on the hand of any private institute. It explains why the number of copycats of LinkedIn is fewer than the number of copycats of Facebook in China.

Yihong

SteveGu said...

Yihong,

I agree the subtle culture difference can play a major role in deciding a Western company's success in China market. In LinkedIn case, however, I think it may not be that critical.
1. LinkedIn is a social network for professionals who want to connect with others in their business interest area or look for career/business opportunities. The same principle applies to Chinese users. Though Chinese tend to the doctrine of Mean in the traditional cultural environment, it's less that critical in the online world. If LinkedIn does it properly, its network effect can expand the way in China as in US.

2. Government concern. For search engines or content portals, the government censorship is very strict. Although the same rule applies to all foreign companies who want to do business in China, for non-media content related businesses, this may not be that strict. For Chinese people who work for government or stated-owned organizations, it may be still very important to keep the personal profiles in the formal archive and not to exposure to public. In private sector, people may not take it as serious as before. Since it's up to the LinkedIn members to decide what to upload and what not, I don't think it'll be big concern for both LinkedIn and the government.
3. The traditional western multinationals used to view China as a huge market with 1.3 billion potential customers. it turned out it's not that easy to cater to Chinese customers. Many companies failed in the market for years and some finally turned to profitable only after they were really localized and identified who are their real customers. I'm a Web analytics guy and learned how important segmentation is to deliver meaningful data analysis. Even in U.S., LinkedIn is not for all, unlike Myspace/Facebook/Yourtube. To succeed, the company has to identify who are the real users/customers. a certain vertical areas may be a good start point, like recruiters and people who work in foreign companies or have the opportunities to work with foreign companies.
4. Another explanation why there are very few LinkedIn copycats in China is that this is a serious guy, not that fun and entertaining. The social networks that are just for fun can easily reach a massive user base and steal attentions from media and investors quickly. LinkedIn is not that kind of guy. So no too many people notice it. And people may realize that they cannot make a buck quickly from the professional type. It may takes years to reach critical mass. I registered LinkedIn in 2003, but didn't take it seriously until recently I found it's very good place to look for job opportunities.
5. Group-centric approach is very good suggestion for LinkedIn. The company can actively create/moderate some such groups for Chinese users. To engage a small percent active users/networkers at first is the best way to reach massive user base. Let the 1-3% active networkers to spread the word and the network effect will expand to the other 90% itself.
6. I have a suggestion regarding the strategy approaching China market. Leverage the small percentage of current LinkedIn members who have Chinese background or are interested in Chinese culture and China market. Create a Chinese version profile for these people and encourage them to invite their Chinese friends to join the Chinese version network. Though it starts small, this is a organic growth way to expand the English LinkedIn network to Chinese people. It's much easier to expand the current network than to create a separate one from the scratch, even if you have the technology and money. Image a united network with many branched integrated together. That's the strength LinkedIn has and other type of social networks doesn't have. And it's a advantage for LinkedIn to compete against the copycats in China.

It's up to LinkedIn to take whatever approach they think is appropriate. If they choose wisely and operate properly, they have the chance to be the leader of professional social network in China, though they don't have to claim it by themselves.

Steve

Yihong Ding said...

Steve,

Thank you for such a long and thoughtful feedback of the post. I believe that you have mentioned several important points that I have missed in my post. It is quite a good complement to my writing.

The philosophy of Doctrine of the Mean is an interesting thing. Although I agree with you that the online world is different from the real world, such a difference matter primarily only in the region where we do not take online activities as serious as in real life. Once an activity enters the sector of serious business (as LinkedIn is targeting), we have to be back to the true selves. This is how LinkedIn is different from Facebook and MySpace as social network sites.

For the government censorship, it remains a main barrier for western companies entering into China. For big countries like China, the knowledge of formal career profiles of its people is not only a great deal of wealth but also a severe security issue. What I want to emphasize is that LinkedIn may need to proactively convince Chinese government that the company has no interest in collecting sensitive personal profiles in China.

At last, I agree to you that something in China is that you can do but don't say it. LinkedIn China may certainly be the leader of professional social network in China. But to advocate it in the way as they advertise in US would be not wise at all in China.

Yihong

Kai said...

Hi Yihong, thanks for leaving a comment over at CNReviews. I don't want to make any suggestions for what Linked In should do with regards to their foray into the Chinese market but my initial impression of your post is that while I agree that all companies should be sensitive to the cultural differences of their target market, you've made some very strong recommendations that I do not think are that critical to Linked In's chances of success. To put another way, I think you're over-emphasizing the "differences of cultures" angle. One reason may be that I'm not really sure I agree with your seeming conclusion that Linked In over-emphasizes the "individual" over the "group" in such a way that is unpalatable to Chinese audiences. At the same time, I admit that I do not really use Linked In so I may not know what you're referring to that gives you that impression.

I also think your suggestion #4 is extraneous without any specifics. We all know any market would appreciate certain cultural elements relevant to them, but unless you offer some examples, that boils down to an obvious but empty suggestion.

I think there are a lot more social obstacles facing Linked In's adoption in the China market than there are "cultural" obstacles. For example, Linked In's target market are usually white-collar professionals. While that demographic certainly exists in China, we need to look more into their proclivities to state where they have worked, for who, with who, doing what, for how long, etc. LinkedIn requires disclosure (and promotion) of that information to link everyone together. We have to ask whether the bulk of the target users in China have reached a level where they are comfortable and proud enough to define (and disclose) themselves by that data.

I've said about as much as I'm comfortable saying about this. Thanks for the comment on CNR, again. Cheers.

Elliott Ng said...

Yihong, interesting post. Added an excerpt to the CNReviews post about David Brooks

Kai Mai said...

Chinese value face-to-face meeting much more, and you can get more business done around dinner tables and in clubs than in a official business place.

so a good feature is to help people meet offline when they travel.

It still requires insider connections with people from government to be successful in China. But those are hidden connections that will never be published online publicly.

Chris said...

Given your analysis as well as your suggestions to LinkedIn, how do you feel about the existing local initiatives to create communities like LinkedIn, e.g. Tianji (www.tianji.com) and Wealink (www.wealink.com)? They do not seem to be faring particularly well, why is that in your opinion?

Yihong Ding said...

thank you, Chris, I need to look at the sites you said to answer your questions.