Page 86 - How China Is Winning the Tech Race

smaller emerging players in China have built,” he says, adding that home-
grown companies have the advantage in China. The fast-moving, incredibly
competitive Chinese Internet market requires quick decision making, on-the-
ground insights, and flexibility to react to sudden changes in regulations or
market shifts, he points out. “There are tremendous barriers of entry to the
Chinese Net space,” he says. “MySpace will be under pressure to do some-
thing revolutionary, something extraordinary.”
In laying the foundation for MySpace China, Deng has picked up some
lessons from eBay and Yahoo!. Unlike those multinational companies, which
vainly struggled to customize services to suit Chinese users and ultimately
turned operations over to domestic partners, she went local from the start.
She’s set up MySpace China as a Chinese company, separate from Murdoch’s
empire, with News Corporation owning a minority stake. Also, she’s lined up
high-powered managers and investors for the locally run Chinese site, which,
like all sites operating in the People’s Republic of China, is government-
censored. To run the 36-employees-and-growing start-up, Deng’s handpicked
Luo Chuan, who ran Microsoft’s MSN service for 12 years in China as CEO.
As investors and majority owners, she’s brought onboard IDGVC China, the
well-regarded Chinese venture arm of the Boston-based International Data
Group, and China Broadband Capital Partners, run by AsiaInfo founder
Edward Tian. Deng is on the board, as are Luo, Tian, and MySpace co-
founders in the United States, Chris DeWolfe and Tom Anderson.
Even with those big names behind it, industry observers agree with Chen
that MySpace doesn’t have a high likelihood for success. “Everyone thinks it’s
a total joke,” says technology media publisher Jeremy Goldkorn. “It doesn’t
have a chance. The market is already really crowded, and they don’t offer
anything unique. The only thing MySpace China has going for it is News Cor-
poration’s deep pockets,” he says, finishing with the punch line, “Deng has no
experience in this field.”
Chen doesn’t have the best reputation either. Industry observers have
accused him of inflating his numbers for lead site Mop.com, losing key
managers because he’s difficult to work for, and trying to manage too many
Web sites at the same time. Moreover, Goldkorn says that Oak Pacific is
skewed to a teen audience and pales next to sites with the older and richer
demographic profiles advertisers prefer.

60 SILICON DRAGON