Items Tagged With Doing Business In China

I'm definitely not an authority on new media or tech but I have a personal interest obsession with following developments in the sector to stay up to date with what's around the corner and whether it's applicable to my business model or not.

So I woke up this morning to find everyone buzzing and debating on Twitter about Robert Scoble and how his account was deleted by Facebook in what has turned out to be a pretty big deal. I'm in no position to try and regurgitate the details but you can read Scoble's blog about it and Techmeme's got all the juicy details of what went down so far between Scoble, Facebook and Plaxo.

It didn't take long for David Feng (President of the Beijing Macintosh Union, former editor at blognation China, and founder of Beijingology) to chime in with a Chinese viewpoint that I found really interesting! As David says:

A Chinese Scoble might have initiated a PR war. He might have his guanxi or contacts breathe heavy down upon Facebook. He may already have solid contacts at Facebook, so that Facebook won’t have the guts to dezui (put more blunty, to “P-off”) Scoble. He might get downright “niu”, or strong and powerful (sometimes with a negative connotation).

I'll go off on a slightly related tangent and say that if this had all gone down in a China context:

• The folks at Plaxo wouldn't have even asked their most trusted blogger friends to try out a controversial new app behind Facebook's back. Especially if they knew it had the potential of resulting in account deletion by Facebook as mentioned by Michael Arrington in his TechCrunch blog about it.
• Scoble would have been too worried about permanently damaging what little guanxi he did have with Facebook and would have declined to move forward with risking his reputation and his Facebook account (and all the 5,000+ friends he built up on there) by being Plaxo's guinea pig for their new app.
• Even if Plaxo and Scoble still went forward with testing this unauthorized app out on Facebook, if this had gone down in China...Facebook would NEVER had immediately deleted Scoble's account BECAUSE they know that Scoble is an influencer in the very industry they are all in together. If there's one thing I'm learning from following developments of the tech sector, it's a very big industry but very small world in much the same way China business circles are. The reality is, in China who you are DOES factor into every action that is taken against you. Just look at the crazy viral controversy it's ignited so far. Again, if this was China, Facebook's CEO would've actually gotten fired whoever at the lower ranks of his company took it upon themselves to delete the account of such a high profile blogger as Scoble without consulting the PR Director or himself for that matter. Dirty laundry is never aired in public in China. Just as David Feng so correctly mentioned, that's the whole point of the Art of War.
• Lastly, even after getting his account deleted...the Chinese version of Scoble would have apologized to Facebook on the surface and explained to his readers on his blog that he didn't mean to cause such a public disruption over something that was meant to help Plaxo and Facebook work together on giving more power to the people. (So Communist sounding isn't it?) This would win Scoble big time public opinion points as a hero of the common man and save his face and likely result in his account being reinstated by Facebook who also wants to save their face in the eyes of the Chinese public.

LOL...ok, so that's my cultural lesson for today as it would apply in a China business situation. Relax, it's all HYPOTHETICAL people. The reality is, all the players here are American and this issue has nothing to do with China but there's a Chinese business lesson to be learned in these types of situations. The fact is, Facebook is looking to enter the China market soon and hopefully it won't export the American business culture it has into the China market...if so, they could very well find themselves in a situation where they deleted the account of some famous Chinese blogger with a lot of influence...and the WOM chatter against Facebook in China would never let up if that was the case.

Hmm...in that case, maybe Rupert Murdoch was smart in putting his wife Wendy as head of MySpace China after all. A Chinese Plaxo would think twice about making a famous Chinese blogger test out a controversial and unauthorized app on MySpace China because the head of MySpace China is married to a guy with a lot of guanxi in international and Chinese business circles everywhere. I'm just saying, it'll be interesting to see if Facebook CEO Mark Zuckerberg and his 23 years of zero China experience translates to a very smart decision on his part in letting his local management team in China call the shots there.

All this hypothetical food for thought is making me hungry to have another listen at some good points Eric Rosenblum made during an interview I did with him on Why American Tech Companies Fail In China. Have a listen here.

Update: Scoble's Facebook account has been reinstated. No doubt an exception based on factoring who he is in the industry as an average no-name joe hacker would stay booted off and wouldn't get to jump the queue as i'm sure there are plenty of people with deleted Facebook accounts who are waiting for their turn to get heard.

Also check out Jeremiah Owyang's blog for Plaxo's side of the story.

So I came across the following post the other day from Wired that paints a different picture of who's really playing hardball between China Mobile and Apple regarding their iPhone negotiations. The way you read it from Wired, it sounds like Apple is the one playing hardball and walking away from the deal. Hmmm...so what's the deal?

According to Rick Martin of CNET Asia's Little Red Blog:

I don't see Apple playing anything other than hardball with China Mobile. I think they're currently in a position where they don't need to beg from anyone.

Considering that they may be receiving as many as $18 per iPhone per month from AT&T, I can see how playing hardball could pay off for Apple in the long run.

Let me talk out loud for a second in an attempt to understand it...so Apple is willing to play hardball in order to maintain their rev share even if it means going with China Unicom instead? I just have a hard time understanding why Apple wouldn't want to give a little in exchange for having access to 363 million customers. Granted, only a fraction will actually be able to afford an iPhone and many who can probably have a cracked one from Hong Kong already. LOL.

My guess is, it would only have helped make Steve Jobs look like a rock star if he could have announced at Macworld that they were in partnership with China Mobile. It would have sure helped with their latest dissappointing forecast - especially with the slowdown in the U.S. economy translating to an almost certain slowdown in high end consumer spending.

Besides, there are a lot of really cool mobile phones (many that I never see here in the U.S.) from other companies. Does Apple really honestly believe the iPhone is the end all, be all of mobile phones worldwide and China Mobile should concede to their demands to be allowed to sell them to their customers? Just sounds unlikely to me.

Or maybe Apple doesn't really care about whether they partner with the largest carrier in China because they think their iPhone will sell well in the market regardless of if China Mobile or China Unicom sells it. Just talking out loud here because I admit, I jumped to AT&T from TMobile for the iPhone when it came out last summer. Even though AT&T service isn't the first choice of many here. Hmmm.... would be interested in getting some other thoughts on this.

I've got another interview with Jim Rogers today. He was one of the first guests on my show when I first started out back in April 2007.

Ok, honestly...coming from a zero finance background, I just hope I don't sound like an idiot. Luckily I've got help with questions this time around from my friends over at the Youth Venture Capital Club headed by Sam Su who's a VC in China along with some more finance savvy friends on Facebook.

Now let's hope my recording equipment doesn't quit on me.

Here's a recent article in Fortune on him. Really great stuff. Very obvious the guy knows China.

Joe Constanty, Co-Founder of NextStep Shanghai and Tangential Consulting offers his advice on doing business in China for those who are at the start of their China learning curve.