Never, ever, under-estimate Rupert Murdoch. He is a class act. Yes, he sometimes gets it wrong. His comments some years ago on China backfired into his face. Some of his newspapers have been less than stellar. But mostly he gets it right.
Now his News Corp. has signed a deal to bring its popular online social networking site, MySpace.com, to China. News Corp. and two venture capital firms agreed earlier this month to hire a former Microsoft executive to license the MySpace brand and technology in China in the hope of capturing market share in the world’s fastest-growing internet market.
This is a diabolically risky business. Outside of China MySpace.com is one of the world’s most popular Web sites. But there it was starting in green fields. In China it is starting in an area where social networking and online gaming and entertainment sites are already wildly popular.
Murdoch, who is News Corp., is not stupid, knows the risks, so by licensing the brand and allowing local entrepreneurs who understand the local market to build a wholly indigenous business he hopes to succeed where ventures like, say, Yahoo dropped the ball.
William Bao Bean, a partner at Softbank China & India, a venture capital firm, said, ‘They want to avoid some of the mistakes made by the first and second waves of international Internet companies that came to China.
‘By putting a local manager in, they give the company a fighting chance. This is a very crowded area with at least 100 companies competing in the same space that MySpace has entered.’
Murdoch is up against Baidu, Tencent and Sina.com which is a bit like one David against three extremely agile Goliaths — Robin Li of Baidu, Ma Huateng of Tencent and Jack Ma of Alibaba.com — who are all supplied with slingshots and ammunition and know how to use them.
The China operations of Amazon, Ebay, Yahoo and even Google have all either lost ground or ceded the leading market position in spite of spending hundreds of millions of dollars to acquire established Chinese competitors.
Rupert Murdoch, which is News Corp., now plans to build a very local Internet company in China. It has teamed up with IDG VC, a unit of the Boston-based International Data Group, and China Broadband Capital Partners, to, in effect, finance a Chinese start-up rather than importing its own MySpace.com unit.
They will be rattling the tin to the tune of as much as $100 million. Which sounds a lot of money until you look at the opposition. Be afraid, be very afraid.
Source: International Herald Tribune