Home / Blogs

Forget it, Jake. It's China.

John Yunker

A timely article in The Wall Street Journal (that I only recently got around to reading): "The future's not here." American business people once saw China as dynamic, exciting and wide open. Not anymore.

To which I ask: When was China ever "wide open?"

An excerpt:

For years, American entrepreneurs saw a place in which they would start tech businesses, build restaurant chains and manage factories, making potentially vast sums in an exciting, newly dynamic economy. Many mastered Mandarin, hired and trained thousands in China, bought houses, met their spouses and raised bilingual children.

Now disillusion has set in, fed by soaring costs, creeping taxation, tightening political control and capricious regulation that makes it ever tougher to maneuver the market and fend off new domestic competitors. All these signal to expat business owners their best days were in the past.

Let's not blame the recent trade and tariff issues. China is a ruthlessly competitive market that, like so many countries, tilts the playing field in favor of its home-grown companies. And intellectual property is (to put it mildly) not well protected. I remember when Bill Gates traveled to China years ago to complain about the epic levels of piracy of the Windows OS (at the time, Windows was the leading operating system in China and yet Microsoft saw little in the way of revenues).

Other companies that have struggled in China include Cisco, Amazon and WalMart. And let's not overlook the fact that Google and Facebook are still desperately trying to squeeze their way in without selling their souls (and are close to doing just that).

One thing I have been telling companies in the early stages of going global for more than a decade now — if China is your first overseas market, perhaps you should select another. Going global is difficult, no matter what country or culture you target. But add in one of the most heavily and capriciously regulated intranets (China's Internet is in truth an intranet) and you face a very steep hill to climb. That's not to say you shouldn't target China, but go into it with eyes open and a long-term game plan.

And, frankly, that's true for any market. Every new market is a new frontier — with new rules, cultures, competitors. The experience of going global can be equal parts exhilarating and terrifying. But it is most definitely not boring!

By John Yunker, Author and founder of Byte Level Research
Follow CircleID on
Related topics: Multilinguism, Web
SHARE THIS POST

If you are pressed for time ...

... this is for you. More and more professionals are choosing to publish critical posts on CircleID from all corners of the Internet industry. If you find it hard to keep up daily, consider subscribing to our weekly digest. We will provide you a convenient summary report once a week sent directly to your inbox. It's a quick and easy read.

I make a point of reading CircleID. There is no getting around the utility of knowing what thoughtful people are thinking and saying about our industry.

Vinton Cerf, Co-designer of the TCP/IP Protocols & the Architecture of the Internet

Share your comments

I'm shocked to find out gambling is going on here... Christopher Parente  –  Jan 24, 2019 7:27 AM PST

Good piece, but doesn't go far enough. For a while now seems clear that China has been changing the equation, and Western companies need to reevaluate the pros and cons of the market. Initially welcomed, then IP gets absorbed, rules tighten, China eventually jettisons and proceeds without you. Is access to the market worth it? Many companies probably too far in already, and maybe you simply can't ignore the world'd largest retail economy (as of this year).

But more should ask the question. And if they decide not to enter/divest, make an argument to their stockholders as to why they aren't going for short term revenue that could hurt the company long term. 

To which the Chinese would probably say - why should China continue to simply be a cheap labor market and a market for Western goods, in which the majority of the value goes to foreigners? Either way, as you say it's amazing anyone is surprised.

Great title BTW - one of the best movies ever. I've tried to respond in kind.

To post comments, please login or create an account.

Related

Topics

Domain Names

Sponsored byVerisign

Cybersecurity

Sponsored byVerisign

DNS Security

Sponsored byAfilias

IP Addressing

Sponsored byAvenue4 LLC

New TLDs

Sponsored byAfilias