Before the presentation, I would like ask a quick question for you.

How many of you use Amazon? eBay? And Google?

Ok, 100% of you are familiar at least one of these three internet business. However,

Do you know who the counterpart of Google in China is? The counterpart of Amazon in China? The Counterpart of eBay in China?

Today I will introduce three factors of internet business in China and answer these questions.

The first point I will talk about is the market size of internet business in China. 6 years ago, I worked for an American B2B company. When I visited United States the first time, I told my colleague that China’s internet user will be more than that in U.S. in 5 years. He said, no, no way! That time, there are 150 MM internet users in United States! I said, well, United states has to keep having children, and without dying, then after 50 years, you have chance to achieve 400MM internet user. China totally has 1.3 billion populations, and it is a piece of cake! In fact, after 3 years, the number of Chinese internet users exceeded that of United States, and now there is more than 500 MM internet user in China. Someone will say, well the number of internet user is impressive, but the purchasing power is low. Yes, it is the case now. People may spend only $20 on line annually today. But giving another 5 years, people may spend $200 on line! It is just a time issue. So when you plan to do online business in China, look forward!

The second point I want to talk about is business environment. At thunderbird, many professors and students can speak one Chinese word, “Guanxi”, the relationship or network. They usually think that relationship with government is very important to make success in China. Here I will tell a fact that, the most successful three internet companies in China, Baidu, the counterpart of Google in China, Dangdang, the counterpart of Amazon in China, and Taobao, the counterpart of eBay in China, all of them or their founders has no direct relationship with central or local governments. The biggest “Guanxi” you have to keep in China is the same as that in other part of the world: the relationship with your customers. All local government need job positions and taxes. So once you make your customers happy, you make government happy and earn respect from governments automatically. To the “Guanxi” with government, I will say it is important and you can fall in love with her, but never marry her.

The third point I want to say is, if you want to make money from China, stay there. No market in the world are welcome gambler, except Las Vegas, but you usually loss money there, right? So if you want to grab and go away, please keep away from China. Here are some very successful examples, such as Microsoft, Oracle and IBM, all of them have localized strategy, localized products and local employees. Their attitudes and behaviors show their responsibilities to local community and local market, and help them earn trust as well as money from China.

In conclusion, China has a big internet market, and is becoming huger and huger. To do business successfully there, you should go there, stay there, and build good “Guanxi” with your customer there. Thank you all for your listening. 

 

Wei Li

MBA Candidate,  Global Business Development

Thunderbird School of Global Management

Phoenix, Arizona, USA

[email protected]