4 ms·

"The Chinese government also makes it difficult ..." The biggest internet companies like Alibaba, Tencent, Baidu are mostly foreign owned and initially funded

by fspeech 12y ago

"The Chinese government also makes it difficult ..." The biggest internet companies like Alibaba, Tencent, Baidu are mostly foreign owned and initially funded by foreign venture capital. The real difference is that they are operated by Chinese nationals who don't have a Western headquarter to report to. McDonalds, KFC, Starbucks etc., on the other hand, succeeded probably because they didn't have to face a fast evolving market and could adapt their business models to China at their own pace.

onewaystreet 12y ago
Alibaba, Tencent, Baidu were all founded by Chinese and are based in China. The Chinese government welcomes foreign investment as long as ownership remains Chinese. KFC, McDonalds and Starbucks have succeeded because the majority of their managers, owners and workers are Chinese.
- fspeech 12y ago
  Alibaba was at one time 40% owned by Yahoo and close to 40% by Softbank, with significant stakes by investors like Silver Lake and Digital Sky. Tencent was 46% owned by South African Naspers, which still owns 34%. Baidu was funded by Silicon Valley venture capital. Google actually contributed $5 million to Baidu's third round and offered to buy the whole for $1.6B (and allegedly could have cinched the deal if they had offered $2B). Google China was led by a Chinese American academic from Taiwan (though well liked by the Chinese) and staffed with managers recruited from Google's Chinese American employees, who had cushy US jobs to go back to and did not want to lose career opportunities in the US. The managers of their local competitors didn't have such luxuries.
  - cromwellian 12y ago
    Come now, Google China had onerous censorship provisions placed on it that it did not want to adhere to, and Google simply can't be a den of piracy like Baidu was.
    - fspeech 12y ago
      Yes Google is a rather special case. It clearly has technological advantages and may have succeeded despite its clumsiness if Chinese regulations were different. However that does not explain how others failed, like EBay or Yahoo. I showed clearly ownership restriction wasn't the reason. Local operational control was, in my opinion. I don't even see how this could be controversial. Jack Ma is one of China's richest man. So are the other Ma (of Tencent) and Li (of Baidu). Does anyone think hypothetical resounding successes of EBay/Google/Amazon etc could have similarly minted local billionaires? Why would the same incentives work in the US to create successful entrepreneurs but not in China? Tactically it may be true that stricter ethics rules make things harder. But that didn't stop businesses like Starbucks from succeeding eventually, because their business model can be transplanted. Alibaba didn't have success handed to it. Its initial B2B model was ho hum. It had to or did recreate itself, multiple times. Its Taobao was initially a loss leader with free listings. TMall was also not given a high chance of success. It had ferocious competitors. It created its own business models and executed well to ensure their success.
      - seanmcdirmid 12y ago
        Out of all the companies you listed, NONE have American born founders: Ebay (Iranian), Yahoo (Taiwan), Google (Russia, ok Page is born in Michigan). How many people who aren't born in China have been minted as billionaires at Chinese companies? Starbucks had plenty of problems with their Chinese partners; they worked hard to get to the point where they were actually allowed to run stores by themselves without a parasitic local partners, and I think this is only true in second tier cities right now.
        fspeech 12y ago
        US is a country of (relatively recent) immigrants and China isn't. How does this relate to the topic at hand? Many successful fast food companies use a franchise model. Starbucks is rather unique that it doesn't. I don't know enough to say whether their local partners are parasitic.
        fspeech 12y ago
  - xux 12y ago
    Funny you brought the 40% up. The Chinese government doesn't like foreign investors controlling financial companies in China. So Alibaba spun off its Alipay service into a separate company, without the approval of investors. Yahoo wasn't pleased and sole about 15% of their shares.
  - fspeech 12y ago
    "Funny you brought the 40% up. The Chinese government doesn't like foreign investors controlling financial companies in China." In the US the threshold to become a "bank holding company" is 10% equity ownership. Becoming a BHC subjects you to the regulation by the FRB or state banking boards.

by fspeech 12y ago

onewaystreet 12y ago

Alibaba, Tencent, Baidu were all founded by Chinese and are based in China. The Chinese government welcomes foreign investment as long as ownership remains Chinese. KFC, McDonalds and Starbucks have succeeded because the majority of their managers, owners and workers are Chinese.

fspeech 12y ago
Alibaba was at one time 40% owned by Yahoo and close to 40% by Softbank, with significant stakes by investors like Silver Lake and Digital Sky. Tencent was 46% owned by South African Naspers, which still owns 34%. Baidu was funded by Silicon Valley venture capital. Google actually contributed $5 million to Baidu's third round and offered to buy the whole for $1.6B (and allegedly could have cinched the deal if they had offered $2B). Google China was led by a Chinese American academic from Taiwan (though well liked by the Chinese) and staffed with managers recruited from Google's Chinese American employees, who had cushy US jobs to go back to and did not want to lose career opportunities in the US. The managers of their local competitors didn't have such luxuries.
- cromwellian 12y ago
  Come now, Google China had onerous censorship provisions placed on it that it did not want to adhere to, and Google simply can't be a den of piracy like Baidu was.
  - fspeech 12y ago
    Yes Google is a rather special case. It clearly has technological advantages and may have succeeded despite its clumsiness if Chinese regulations were different. However that does not explain how others failed, like EBay or Yahoo. I showed clearly ownership restriction wasn't the reason. Local operational control was, in my opinion. I don't even see how this could be controversial. Jack Ma is one of China's richest man. So are the other Ma (of Tencent) and Li (of Baidu). Does anyone think hypothetical resounding successes of EBay/Google/Amazon etc could have similarly minted local billionaires? Why would the same incentives work in the US to create successful entrepreneurs but not in China? Tactically it may be true that stricter ethics rules make things harder. But that didn't stop businesses like Starbucks from succeeding eventually, because their business model can be transplanted. Alibaba didn't have success handed to it. Its initial B2B model was ho hum. It had to or did recreate itself, multiple times. Its Taobao was initially a loss leader with free listings. TMall was also not given a high chance of success. It had ferocious competitors. It created its own business models and executed well to ensure their success.
    - seanmcdirmid 12y ago
      Out of all the companies you listed, NONE have American born founders: Ebay (Iranian), Yahoo (Taiwan), Google (Russia, ok Page is born in Michigan). How many people who aren't born in China have been minted as billionaires at Chinese companies? Starbucks had plenty of problems with their Chinese partners; they worked hard to get to the point where they were actually allowed to run stores by themselves without a parasitic local partners, and I think this is only true in second tier cities right now.
      - fspeech 12y ago
        US is a country of (relatively recent) immigrants and China isn't. How does this relate to the topic at hand? Many successful fast food companies use a franchise model. Starbucks is rather unique that it doesn't. I don't know enough to say whether their local partners are parasitic.
      - fspeech 12y ago
- xux 12y ago
  Funny you brought the 40% up. The Chinese government doesn't like foreign investors controlling financial companies in China. So Alibaba spun off its Alipay service into a separate company, without the approval of investors. Yahoo wasn't pleased and sole about 15% of their shares.
- fspeech 12y ago
  "Funny you brought the 40% up. The Chinese government doesn't like foreign investors controlling financial companies in China." In the US the threshold to become a "bank holding company" is 10% equity ownership. Becoming a BHC subjects you to the regulation by the FRB or state banking boards.