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ChineseInternetCompaniesandTheirQuestforGlobalizationHarlanD.
Whatley11SwissManagementCenter,Zurich,SwitzerlandAbstractChineseinternetcompanieshaveseenanunprecedentedgrowthoverthepastdecade.
However,veryfewarerecognizedbrandsoutsideofChinawhilesomeseektodeveloptheirbrandsinforeignmarkets.
Thispaperanalyzesthemarketingstrategiesoftwointernetcompanies:BaiduandTencentandtheirquestforglobalization.
Keywords:Baidu,Tencent,internet,branding,marketing,globalization,China1.
IntroductionInnovationeffortsbytechnologycompaniesinChinaaredrivenbyaddingsignificantvaluetoimportedforeigntechnologiesorbydevelopingnewproductstosatisfyspecificdomesticdemands(Li,Chen&Shapiro,2010).
FirmsintheemergingmarketofChinadonotpossesstheR&DresourcesthattheirdevelopedWesterncounterpartshave.
However,thisischangingasSinointernetenterprisesextendtheirreachgloballyintoforeignmarkets.
BoisotandMeyer(2012)arguedthatitiseasierforChinesefirmstodeveloptheirbusinessinforeignmarketsasopposedtothegovernmentcontrolleddomesticmarketinmainlandChina.
MoreattentionisbeingdirectedtowardsChinesemultinationalcorporationsastheyhaverisenfromhumblebeginningstobecomingrecognizedasinternationalplayersinthetechnologymarket(Sun,2009).
ThisqualitativeresearchpaperexploresthequestforglobalizationoftwosuccessfulChineseinternetcompanies:BaiduandTencentHoldings.
Inthiscasestudy,thefocusisonthemarketingstrategiesoftheseexpandingmultinationalenterprisesandthechallengestheyfacetobecomerecognizedasglobalbrands.
AllofthefirmsinthisstudywerefoundedasprivateenterpriseswithnoownershiptiestotheChinesegovernment.
Furthermore,ananalysisofthecountriesandmarketstargetedbythefirmsisincludedinthestudy.
Inadditiontoareviewofthecurrentacademicliterature,interviewswereconductedwithmarketingandstrategyprofessionalsfromtheperspectivefirmsaswellasjournaliststhatcloselyfollowChineseinternetfirmsandthetechnologysector.
ThisstudyontheglobalizationofChineseinternetfirmswillcontributetomarketingresearchonthisregionandsector.
2.
BaiduCo-foundedin2000byRobinLi,whodroppedoutofaPhDprogramattheStateUniversityofNewYorkatBuffalo,andEricXu,aSiliconValleyventurecapitalist,BaiduisChina'smostpopularsearchengine(Rabkin,2012).
Also,itistheworld'sleadingChineselanguagesearchengineandisrankedastheworld'sfifthmostpopularwebsite(Alexa.
com,2012).
ThefirmispubliclytradedontheNASDAQstockexchangeandhasamarketcapitalizationof$41.
6billion(Jiang,2012).
Baiduisranked25thontheBrandZlistoftheTop100MostValuableGlobalBrands(MillwardBrown.
com,2012).
Thename,Baidu,translatesfromChinesetoEnglishas"hundredsoftimes"andcomesfromaSongDynastypoem(ir.
Baidu.
com,2012).
2.
1Baidu'sbusinessmodelBaidu'sprimaryrevenuestreamscomefromadvertisingviaPayperClick(PPC)andsearchengineoptimizationviaPayforPlacement(P4P).
In2009,Baidurevampeditsbusinessmodeltoprovidebettertargetingandanewpricingstructurethatcalculatedadvaluesbasedoncompetitors'blindbids(Greenberg,Jie&Hardy,2009).
Inessence,theycominglepaidsearchresultswithnaturalones.
BaiduUnion,whereBaidu'ssearchboxfieldisusedonpartneringwebsites,generatessharedrevenuewithhundredsofthousandsofsites.
Recently,BaiduplannedtogeneraterevenuethroughonlinemarketingonitspopularBaiduTiebaonlineforum,whichwillallowclientstomarketproductstotheforum'susers(Investor'sBusinessDaily,2012).
2.
2MarketingstrategiesBaidu'smarketingstrategyincludeseffectivemarketsegmentationandafocusstrategyinordertoraiseitsclickrateandincreasesitetraffic(Kotler,Keller&Lu,2009).
Jiang(2012)stressedthat"Baidubenefitedtremendouslyfromitsearly-moverstatus,acarefullycrafted'China'brandimage,anditsaggressive(andsometimesquestionable)marketingtacticsthathaveinvolvedpaidsearchranking,siteblocking,andpaidremovalofnegativeresults"(p.
16).
AccordingtoKaiserKuo,DirectorofInternationalCommunicationsatBaidu,"ourinternationalgrowthstrategyisinitsveryearlystagesofexecutionnow.
Weappreciatehowdynamicthesituationisinallemerginginternetmarkets,andwe'llhavetobeadaptable,responsive,andopportunistic"(personalcommunication,September5,2012).
2.
3PartnershipsFrank(2012)emphasizedthatpartnershipsarevaluablefortworeasons:companieswillgetmoremarketvalueandgainthetrustofitsclientsanditcanprovidebetterservicestoregularconsumers.
OneofBaidu'sstrongestpartnershipsiswiththeChinesemicrobloggingsite,SinaWeibo,whichhasover300millionusersandisChina'sanswertoTwitter.
ThepartnershipisinresponsetoBaidu'sshutteringoftheirmicrobloggingproduct,BaiduTalk,andprovidescooperationbetweenthetwofirmsintheareasofsearch,content,platform,technology,andresources(Lau,2012).
Inthefallof2011,BaidureleasedBaiduYi,itsmobileoperatingsystembuiltaroundAndroidOS.
Lee(2012)reportedthatBaidupartneredwithDellComputertoincludeBaiduYionDellhandsetsandtablets.
BaiduYihasbeenrebrandedasBaiduCloudandwasrecentlylaunchedonaTCLsmartphone(Millward,2012).
OtherpartnershipsforBaiduincludeweb-basedtravelservicescompaniesQunarandSkyscanner.
ThesepartnershipsareinlinewithGoogle'srecentacquisitionofFrommer's,aU.
S.
travelservicescompany(Olanoff,2012).
2.
4InternationaleffortsCooper(2010)observedthat"languageisanimportantelementinensuringaconsistentbrandculture"(p.
13).
BaiduannounceditsintentionstoentertheJapanesesearchmarketinDecember2006andbeganservertestinginJapaninMarch2007withanofficiallaunchinJanuaryof2008withweb,image,videoandblogsearchservices(Baidu.
com,2012).
LikeeBay'sattempttocracktheJapanesemarket,thishasbeenadifficulttaskforBaidu.
From2008to2011,Baidulost700millionRMBassearchenginetitansYahoo!
andGoogledominatetheJapanesemarket(Hopkins,2012).
InMayof2012,BaidulaunchedanofficeinAustraliaaimedathelpinglocalfirmstapintothepotentialofChina'sinternetspace.
BaiduformedajointventurewithaSydney-basedfirm,ChinaSearchInternational,andrecruitedsomeseasonedtalentfromTelstraandNineMSNtospearheadtheinitiative(Apostolou,2012).
In2012,BaiduformedBIRC,ajointresearchlabinSingaporewithI2R,tofocusonnaturallanguageprocessingtechnologies,allowingBaidutoresearchThaiandVietnameselanguagecapabilities(Wee,2012).
ThiswillgiveBaiduabetterideaoftheircustomerbaseinthesecountries,wheretheyalreadyhavelaunchedproductssuchastheHao123webdirectory,BaiduTiebaandTraDaQuan(socialnetworkingservice)(Russell,2012).
Unfortunately,Hopkins(2012)sharedthatBaiduhasencounteredsomeoperatinglicenseissueswiththeVietnamesegovernment.
Wee(2012)notedthatBaiduisdoingquitewellinIndonesiaduetothelargeChineseex-patcommunitythere.
2.
5CompetitionBaidufacesstiffcompetitionfromEnglishlanguagesearchenginesGoogleandYahoo!
buthasmanagedtoformanalliancewithMicrosoft'sBing.
WithGoogle'sexitfromChinatoHongKongin2010,thiscreatedanevenbetterstrongholdforBaidu,whichnowcontrols80%oftheChinesesearchenginemarket(Greenberg,Jie&Hardy,2009).
InChina,BaiduiscontinuallybeingchallengedbyQihoo360whotoutstheirbrowserasbeingmoreconvenientcoupledwithsuperiormalware/anti-viruscapabilities,despiteBaidu'ssuperiorcontentandresources(Zhang,2012).
3.
TencentHoldingsFoundedby"Pony"MaHuatengandfourcollegestudentsinShenzhenin1998,Tencent'sQQserviceoffersachatprogram,asearchengine,ane-commercemarketplaceandsomeofthemostpopularonlinegamesinChina(Einhorn&Stone,2011).
WuandFrantz(2012)statedthat"themissionofthecompanyistoenhancethequalityoflifethroughinternetvalueaddedservices"(p.
95).
TencentHoldingsispubliclytradedontheHongKongStockExchangeandisranked37thontheBrandZlistoftheTop100MostValuableGlobalBrands(MillwardBrown.
com,2012).
InChinese,Tencentmeans,roughly,"gallopingmessage",whichisinlinewithitscoreinstantmessagingproductknownas"QQ"(Tencent.
com,2012).
3.
1Tencent'sbusinessmodelTencentsegmentsitsbusinessintothefollowinggroups:CorporateDevelopmentGroup(CDG),InteractiveEntertainmentGroup(IEG),MobileInternetGroup(MIG),OnlineMediaGroup(OMG),SocialNetworkGroup(SNG),TechnologyandEngineeringGroup(TEG)andTencentE-CommerceHoldingCompany(ECC)(Tencent.
com,2012).
Recently,Tencentannouncedthatitwouldadoptanopenplatformbusinessmodel,amajorstrategicshiftforthecompany(Shen,2012).
TencententeredintoapartnershipwithZynga,theUSgamemakerbestknownforgameslikeFarmVille,whichitcreatedforFacebook.
ChinaEconomicReview(2012)affirmedthatthebreadthofTencent'sgamesbusinessincludesmobileapplications,socialgames,onlineshootersandmassivelymultiplayerrole-playinggames(MMORPGs).
In2011,onlinegamesaccountedfor5.
3billionRMBor55%ofTencent'srevenue(Shen,2012).
TencentfacesfiercecompetitionintheonlinegamesmarketinChinafromShanda,NeteaseandChangYou(Olsen,2011),althoughChinaEconomicReview(2012)arguedthatonlinegamesarewaninginpopularityinChina.
Theopenplatformapproachmayinpartbearesponsetoheatedcompetition,suchastheTwitter-likemicro-bloggingservice,orweibo,introducedbySina,aTencentcompetitor,in2009.
Leveragingitsenormousreach,Tencentlauncheditsownweiboin2010(Rapoza,2012).
3.
2MarketingstrategiesWuandFrantz(2012)assertedthatTencent'smarketingapproachincludesforwardorientation,independentinnovationandnationalbrandscreation.
Tencentstronglyutilizesstrategicpartnershipswithleadingdomesticandforeignbrands.
SomeofTencent'spartnershipsincludeVinagame(Vietnam),LevelUp(Singapore),EpicGames(USA),ActivationBlizzard(USA)andZynga(USA).
In2011,TencentpartneredwithSky-mobiLimited,theleadingmobileapplicationstoreinChina,topromoteTencent'sQQmobilebrowserviaSky-mobi'sMaopaoapplicationstoreproduct(WorldwideTelecom,2011).
Inadditiontoonlinegames,otherformsofmediaandentertainmentareofinteresttoTencent.
FlanneryandChen(2011)contendedthat:Internetandmobilecommunications-relatedcompaniesarelookingtoaddnewformsofonlineentertainmentcontent.
AndwithChina'sgovernmenteasingrulesonthecontentbusinessand"cultural"industryoflate,companiesthatpreviouslyhadnomajorconnectiontothemediaorcontentbusinessarelookingtogetin.
Tencentsetupa500millionRMBinvestmentfundinAprilof2011focusedononlineentertainmentcontentthatincludeda4.
4%stakeinHuayiBrothersMedia,produceranddistributorofsomeofChina'smostpopularfilmandtelevisionproductions(Coonan,2012).
GaopengisafledglingjointventurebetweenTencentandGrouponandistheeighthlargestdailydealsiteinChina(Ollier,2011).
AnotherjointventureiswithTencent,AlibabaandPingAnInsurance,whichisrisky,asthethreefirmsarelookingtoinsureonlinebuyersagainstinternetfraudinChina(Young,2012).
InMayof2011,TencentinvestedintheAsiantravelportal,eLong.
com,mimickingtheonlinetravelstrategiesofBaiduandGoogle(Tencent.
com,2012).
3.
3InternationaleffortsAspartoftheirinternationalstrategy,TencentlaunchedanEnglishlanguageversionoftheirwebsitecalledImQQ.
com.
iPhoneandAndroiduserscandownloadEnglishversionsofQQtotheirsmartphonesatnocosttotheenduser.
ThestyleofQQ'sEnglishversionisinlinewiththeaestheticofWesternersandisveryuserfriendly(Wu&Frantz,2012).
OutsideofChina,TencenthaspenetratedIndia,Singapore,ThailandandVietnam.
InIndia,TencentsignedalicensingandfranchiseagreementwithMIHin2008andownsa20%stakeinthegamingplatform,Ibibo(Wu&Frantz,2012).
LikeChina,Indiahasarapidlydevelopinginternetculturethatismigratingtosmartphoneapplications.
Tencent'snewmobilesocialnetworkingapplication,Weixin(WeChatinEnglish)isavailableviatheiOS,Android,SymbianandWindowsoperatingsystemsanddeliverstext,voiceandvideoinninelanguagesincludingArabic,English,Portuguese,ThaiandVietnamese(Hopkins,2012).
In2010,TencentinvestedinSanook,Thailand'smostpopularwebportal(Tencent,2012).
InIndonesia,Tencentreleasedalocalizedcross-platformchatapplicationcalledQute,whichhassomeFacebook-likefeaturesandhasover1milliondownloadssinceitsJune2012launch(Hopkins,2012).
S.
Millwardreportedthattherearecurrentlysome3millionQQInternationalusersinIndonesiaandthatQuteisoneofthefastestgrowingtechnologyproductssinceFacebook(personalcommunication,September11,2012).
3.
4CompetitionTheInstantMessenger(IM)marketisdominatedbyWindowsLiveMessengerwitha64%sharefollowedbyMicrosoft-ownedSkypewithan18.
6%share.
Yahoo!
Messengerhasa7.
2%shareandTencent'sQQhasa2.
9%sharewithGoogleTalktailingbehindwitha1.
9%share(OPSWAT,2012).
Forsocialnetworking,FacebookistheworldwideplayerwhileTencent'sopportunityinAmericaiswithonlinegames,wheretheyshownosignsofslowingdown.
4.
ConclusionVaughn(2012)assertedthat"Chinaisactivelyseekingtoexportmorethanjusttherestoftheworld'smanufacturedgoodsandtodevelopstrongbrandsthatcanholdtheirownbothathomeandontheworldstage"(p.
3).
ShellyLazarusofOgilvy&Matherstated:Chinesebrandsarefacingthesameissuesthatnationalbrandsfromothercountriesmustaddresswhentheygooverseas.
Liketheirinternationalcounterparts,Chinesebrandshavetoestablishandmaintainan'emotional'bondwithlocalconsumers,nomatterthemarket.
Thisisachallenginggoalforanycompanyseekingtopartakeintheglobaleconomy.
(Yong,2005).
Li,ChenandShapiro(2011)observedthat"thestrongerafirm'smarketingefforts,thestrongerthepositiveeffectofexportingactivitiesonitsproductinnovation"(p.
13).
Friedman(2012)arguedthatthekeytoChina'sglobalbusinessreachisanewgenerationofChineseinnovatorswhoarelowcost,buthighskilled.
Globalbrandsmuststriveforsuperiorityonbasicslikethebrand'sprice,performance,featuresandimageryandmustlearntomanagebrands'globalcharacteristics(Holt,Quelch&Taylor,2004,p.
73).
TheresearchinthiscasestudyshowsthatBaidu'sscaleofChineselanguagecustomershasgiventhemtheabilitytomoveintootherAsiancountries,butwithoutEnglishlanguagecapabilities,theystillhavealongwaytogoinotherregions.
Tencent,viaanaggressiveacquisitionagenda,hasmadeitspresenceknownintheonlinegamesworldand,unlikeBaidu,offersEnglishlanguageproductsandservices.
Chinesetechnologyfirmshavebuiltuplargecashreservesoverthepasttwodecades,allowingthemtoformjointventuresandacquirefirmsrelatedtotheirbusinessinforeigncountries,despitecultural,politicalandregulatorybarriers.
Intherapidlydevelopingworldoftechnology,ChineseinternetfirmshaveleveragedtheirpopularityandscaleinChinaandarepositionedtobecomeglobalmarketleaders.
5.
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