Page 85 - How China Is Winning the Tech Race

Murdoch has put Deng in charge of strategy for launching the News Corpo-
ration–owned MySpace, the top U.S. networking portal, in China. This is
Deng’s first official role at the media colossus since she met Murdoch as a
junior employee, became his Chinese interpreter and guide, and then his third
wife in 1999. Deng, 39 years old, a native of the large eastern city of Xuzhou
in Jiangsu province, has made several scouting trips to Beijing since the acqui-
sition of MySpace in 2005 for a stratospheric $580 million. But critics and
bloggers have blasted a trial MySpace China site and instant messaging
service she debuted in spring 2007, claiming it’s dull-looking in comparison
to the eye-popping designs of most Chinese Web pages and lacking in features
such as audio and video chat. Expect more fireworks in 2008 when Deng and
her team of investors and managers roll out a full-scale MySpace China.
Chen and Deng are going after a potentially huge Chinese market for
social networking. Today, young Chinese are always online, downloading
music, posting videos, chatting, sending messages, blogging, and making up
virtual personas. This is amazing considering the censorship and authori-
tarian control in communist China. Online advertising on Chinese social net-
working sites, with most of those sites trailing portals and search engines in
obtaining advertising dollars, should hit $159 million by 2010, up from $23
million in 2006, forecasts the Shanghai-based iResearch Consulting Group.
This is dwarfed by the estimated $900 million spent in 2007 for ads on
MySpace, Facebook, and the like, in the United States, which is predicted to
rise to $2.2 billion by 2010, according to the research firm eMarketer.
Chen discounts MySpace China’s chances of doing it right in this hyper-
growth market. But Chen will need all his hard-earned entrepreneurial expe-
rience to do battle with Deng, not least because of her mystique as Murdoch’s
confidante on all matters Chinese. With his early-bird advantage, parade of
Chinese-language Internet brands, and millions of users, Chen essentially is
ignoring latecomers MySpace China and Deng. Chen claims that Murdoch is
“one of my role models” for building a global media empire but dismisses
Deng with a curt, “I’ve never met her.”
He’s equally scornful of their new Chinese-language site. “I didn’t even go
on their Web site. They don’t have a chance.” He says he worries far more
about fast-moving, well-entrenched local players such as Tencent Holdings’
dominant QQ instant messaging service and an array of community-building
services. “It will be impossible for newcomers to penetrate the fortress that

Oak Pacific Interactive—W eb 2.0 on Steroids 59