Friday, October 22, 2010

China cutting off the competition

China's continued censorship and blocking of websites is a frustration to many Internet users, but it is also stifling business and creating unfair competition. As censors block everything from Twitter to Facebook, YouTube and Blogger, the Chinese equivalents are flourishing. Of course, these services follow the party line and self-censor online content. Reasons for the censorship of China's Internet is rarely stated but the timing of blocks is a clear indication of what rattles the Chinese Communist Party. YouTube was blocked soon after widely publicised pictures of a Tibetan monk being beaten by Chinese police surfaced on the video-sharing website. The blocking of Facebook is likely because banned groups such as the Falun Gong use the social networking site. Twitter was blocked shortly before the 60th anniversary of the founding of the People's Republic of China and when the first pictures of an explosion at a Uighur restaurant in Beijing surfaced on Twitpic that too was blocked.

China insists that any website operating in China, does so "according to the law", a veiled insistence that content deemed offence or subversive be expunged. For sites such as Twitter and Facebook this is virtually impossible. Eradicating contentious content only within China would be cost prohibitive and would not necessarily appease authorities and allow access to the Chinese market. All this means that Facebook are unable to make any money from China's growing Internet generation. But it is not just Facebook, which is perhaps the biggest example of a successful start-up.

Geo-location applications such as Google's Latitude, Gowalla and Foursquare have grown dramatically in the last year. The sites allow users to tell their friends and others their location via a check-in at bar, restaurants and other venues. The applications have also spawned promotional offers. It is known as Location Based Marketing or LBS and has allowed venues to draw in extra custom by offering users that 'check-in' on such services to cheaper meals or samples. In the United States, Starbucks and Domino's have rewarded the "mayor" of their stores free coffee and pizzas. In Britain too some outlets have offered incentives. Weatherspoons for example has offered a 20% discount to the "mayor". But China blocked Gowalla and Foursquare earlier this year thus affecting any chances of businesses there capitalising on the services [Mashable].

But while western apps are unable to exploit the Chinese market other domestic services have sprung up in their place. Jiepang, play4f, and Kaikai are just three of a growing number of such services. But is is difficult to see LBM working in China where the Internet is so heavily controlled. The first major barrier of growth in China includes smartphone penetration. Applications for Foursquare and Gowalla, amongst others, are readily available for the iPhone and Android devices. However in China these will, of course not work. In addition the official Android Market has been subject to blocks in itself. 

Jiepang is the only such service to provide such an app, though reports suggest penetration is low. Those attempting to 'check-in' via the website on a regular Internet capable phone can be disappointing and often results in a failure. Jiepang is said to be doing a good job at using cool promotions in conjunction with retailers and venues to drive user adoption. They have about 60,000 registered users in China and growing rapidly. It is ironic too, that in a country known for consistent surveillance of its citizens, that such a service is rising in popularity. Jiepang and play4f are, according to some sources, increasing their user base by 30% each week. It it difficult to know if such things are sustainable and even profitable for retailers and outlets.

Foursquare, Gowalla may have failed in China before they even began, but even in countries where they are accessible, take-up has been relatively slow. For users there needs to be a clear incentive. In addition there is the issue over whether interest can be maintained. Whether geo-location apps take off and LBM becomes better established will depend too on certain privacy concerns, much raised by campaigners. So-called Facebook murders, stalkers and other scandals have raised the stakes in the use of social media. There have yet to be similar reports concerning Foursquare and other such sites. It is early days but there has already been a check-in from space [CNET / CNN
tvnewswatch, London, UK

Further reading: Techcrunch / enovatechina / Guardian / WSJ / Mashable
Pictured: A sign advertising Foursquare at a London pub. Foursquare is blocked in China

1 comment:

Mr Lonely said...

nice info you got there..