Has Facebook Netted the Chinese Golden Carp?

April 11, 2011

I was in Hong Kong 10 or 11 days ago. I had a number of informal conversations with individuals who were wild and crazy and who were straight and narrow. Baidu is definitely a factor in the China market, but if the folks with whom I spoke know their dry fried Szechuan crispy beef, the Chinese government is generally keen on having a purpose-built, slices-dices-chops search engine. Oh, it will curate too. Like the word “curate”. It means filter I believe.

When I read “Facebook May Strike China Deal With Baidu,” I wondered if the deal would have legs. I don’t doubt that there will be some type of “play” for Facebook. In fact, I agreed with this statement:

These sources said the new venture wouldn’t involve Facebook.com, which is blocked inside China like many more social networking sites, but a jointly owned, new social networking website. It’s unclear when the site could launch: joint ventures need to be approved by the Chinese government and that can take a while, and they have to staff it up with experienced executives that both sides can agree on.

Three observations.

First, the social function of next generation communications is pretty darned impressive. In a nation state which is into black and white rules, the likelihood of unfettered social media is probably not a popular idea among the government’s senior officials. I am not sure it is all that popular in other countries, but China is the new superpower so what it does is quite influential.

Second, if China whips up a “good enough” search engine, life for the non governmental entities can be okay but probably not great. The unfettered approach to business that is popular in the US is not likely to flourish quite as business would in the US ecosystem. Stated another way, don’t get a Baidu tattoo just yet.

Third, in the business and political climate of China and its client states, I am not sure that “social” is going to work exactly as it has in Egypt. Social conditions are different and there is a some evidence that cleverness is a key part of survival in China.

When I was in Xian, a city alleged to be one of the termination points for the “Silk Road” trade route. According to information provided to me by my “personal guide”, merchants would be admitted to a special area connected to the main city. Upon entering the area, the merchant would see a big space. When the gate shut, the merchant would see he was in a walled area. Egress required opening a gate. Merchants, according to my “personal guide” did not get keys. The big gun would negotiate with the merchant. If  the merchant was recalcitrant, the big gun had the merchant in a good looking, secure holding pen.

I figured out that if the big gun made an offer, it was probably a good idea to accept that offer. After all, I understand the notion of “shooting fish in a barrel.”

Whether this anecdote is correct is irrelevant. The fact that I heard it from a “personal guide” provided sufficient insight to how at least one Chinese professionals perceived the best practice for negotiating with merchants from outside of the Middle Kingdom. I recall reading this bit of advice:

All warfare is based on deception.

Net net: The search and social story is still unfolding for a darned big market that Google has managed to blow off and Facebook is angling to net like a big golden carp. My, my. Interesting.

Stephen E Arnold, April 11, 2011



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