February 15, 2006

China defends Internet controls & AOL launches new Chinese site

Filed under: Regulatory — Administrator @ 9:06 pm

New York Times reporter Joseph Khan reports on comments made by Liu Zhengrong, Head of Internet affairs for the information office of the Chinese State Council, regarding China’s control over the Internet:

“If you study the main international practices in this regard you will find that China is basically in compliance with the international norm,” he said. “The main purposes and methods of implementing our laws are basically the same.”

“Major U.S. companies do this and it is regarded as normal,” Mr. Liu said. “So why should China not be entitled to do so?”

AOL launched its new Chinese portal over Chinese New Year targeting Chinese living in the US – we tried the search feature from Beijing and there doesn’t appear to be any blockage of information.

The timing of the launch is interesting – perhaps a marketing ploy set at distinguishing themselves from Google, Yahoo! and MS – the difference being, AOL servers seem to be hosted State side. No street cred there, AOL.

Most of the commentary we’ve read applauds AOL’s open search, proclaiming “…companies have choices…despite what they may claim…” but this is just ignorant and misses the bigger picture – AOL can’t make it in China and they realize this (otherwise, why they are targeting US based Chinese when ever other US portal/search is in China?)

First rule of doing business in any foreign country (for example, China) is localizing, working within the system, sticking out performance wise, yet remaining under the regulatory radar (as much as possible). AOL recognizes that if they rolled out a meaty China operation (not as Time-Warner, but as AOL the Internet play), such as Yahoo!, Google, and MS have, odds are extremely good that their search parameters and content would echo that of the big three.

(on the soap box)

We aren’t here to defend China, but rather to provide some perspective – which, by being on the ground for over a decade, is somewhat clearer than pundits across the pound. China is an amazing, frustrating, backwards, confusing, quagmire of conflicts, resolutions and more questions but at the end of the day what truly separates the success stories from the failures is sustainability and adaptability (i.e. frequent trial and error) to China’s evolving landscape and power plays. That is why a quality/gritty/grounded management team is more important than the size of the market or uniqueness of IP – other investors feel differently, but we don’t.

(off the soap box)

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