“How Foreign Tech Companies Can Succeed in China” is a curious topic because no one seems to have a clue as to the answer. There is not a single case of a foreign internet company that is leading a big consumer market here. But that was the discussion topic to kick off this year’s Global Mobile Internet Conference.

Dominic Penaloza, founder of the business social network Ushi.cn, said that maybe it’s time to lower the bar for success for foreign firms. There are a number of good, quiet business in the ’2nd tier’ in China, including Amazon China (Zhuoyue), Expedia (Daodao), Microsoft MSN, and Google China.

For foreign companies, the BIG China success stories are in hardware, fast-moving consumer goods (FMCG), food-and-beverage (F&B), and automobiles. Panelists believed that the patient approach of companies in these sectors was a big factor in their success, beyond just operating in a less sensitive regulatory environment than the Internet.

These firms are willing to spend many years to develop the distribution and insights into the preferences of Chinese consumers. Internet companies, by contrast, often rush the approach: they tend to burn an enormous amount in a few years and if they can’t make it in that span, they’re out. Chinese consumers also harbor an engrained faith in the quality of Western physical goods that does not carry over to the digital world, suggested Alvin Graylin, CEO of mobile information service mInfo.

There’s also a big difference between investing in Chinese internet companies, starting a company in China, and bringing a foreign company to China. As investors, there is foreign success: Softbank, Yahoo China, and Naspers. There are a few foreign founders behind successes like Qunar, Tudou, and CIC Data. But success stories for foreign companies are exceedingly rare.

This leads to a rather depressing slogan for foreign internet firms: “Come to China. If you play it well, maybe you can become 2nd tier.”

Kaiser Kuo, Director of International PR for Baidu, put it this way for foreign firms: ”If you’re not scared, you’re an idiot.” The reality is that the question is still, can foreign tech companies succeed in China?

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  • None

    By glass ceiling, you are assuming these companies had made decent attempts to GAIN MARKET SHARE in China. You have to produce proof they had tried harder than their Chinese competitors before your argument could be valid, otherwise this is just directed propaganda in progress.

  • http://www.bennychow.com Benny

    Foreign Internet companies can never be as successful as domestic Internet companies. If there is a good idea outside of China, by the time it becomes successful outside of China, someone has already copied it within China and has had a much further head start in market share, marketing, users, government relations, etc. The other reason why foreign Internet companies will never have majority market share is that as soon they start doing well in China, the Chinese government turns on the Great Firewall of China and blocks their site.

  • http://twitter.com/21tigermike Michael A. Robson

    Of course, they only want foreign technology so they can learn from it. Once they have the tech, the 关系(no laowai allowed) takes over. Good system eh?

  • Anton

    China is as big as several USA markets and as several tens of European. Number 5 here is better than #1 in Germany.

  • Anton

    Success is hard everywhere. There is no money falling from the sky even in SV of SF.