Tech in China: Worth the Risk?
Some of tech’s largest companies like Microsoft (MSFT), Google (GOOG), and Yahoo (YHOO) have expanded into China with hopes of tapping into the world’s fastest growing economy.
Gaining ground in China could mean exposure to the country’s half a billion Internet users, which represents a massive opportunity for companies looking to grow outside the saturated U.S. market.
China’s economy is expected to grow 9.5% in 2011, at a time when the U.S. is eyeing growth between 3.1% and 3.3%.
But while the market opportunity in China is enormous, success has been mixed, especially even for some of the most savvy U.S. tech companies that have tried to go it alone.
Google has struggled to wrestle search market share from Chinese market leader Baidu (BIDU) and has battled authorities there over censorship issues. Google’s presence in the Chinese search market may dwindle further, after popular Chinese web portal Sina (SINA) announced in February that it was dropping Google’s search service from its site in favor of its own technology.
Fearing similar troubles, Yahoo turned over its Chinese business to Alibaba in 2006 in exchange for a 39% stake in the company.
While eBay (EBAY) initially gained ground in China after entering in 2003 through the acquisition of EachNet, the company eventually lost share to local auction site Taobao.
Top private Internet companies like Facebook and Groupon, who announced earlier this year that they are breaking into China, hope to sidestep some of the problems mentioned above by partnering with local Chinese firms. Facebook has struck an agreement with Baidu to launch a new social networking site, according to reports. And in March, coupon king Groupon launched a new Chinese deals Web site called Gaopeng.com, which was done in collaboration with Chinese Internet company Tencent.
However, challenges still remain, namely China’s strict governmental regulations and favoritism for local firms.
What do you think?
http://www.minyanville.com/businessmarkets/articles/thestreet-china-chinese-tech-stocks-chinese/5/3/2011/id/34304 
Categories: Asia, Food for Thought, North America, The Big Picture