Some things in the wide world of Chinese copyright infringement present a bit of a challenge in deciphering what is truly the real deal. Is the “Passta” VW a friend spotted recently in Beijing really a knock-off Passat, or just the product of lazy workmanship at the factory? Is the “Disney Cuties” store in the People’s Square Mall of Shanghai authorized, or just another rip-off?

In the online world, however, some things are just easier to compare for legitimacy’s sake. The ‘Facebook of China,’ for instance, makes no effort at concealing its similarities. A quick look at Xiaonei.com (literally: in school), and one gets the feeling the site is the product of a sneaky kid in the back of the class cheating off Facebook’s answer sheet.

So when Xiaonei recently raised somewhere between US$96 and US$435 million, much ado was made about the future of the company, the rise of social networking in China and concomitant business opportunities.

According to Allfacebook.com, a popular, albeit unofficial blog about Facebook, a Chinese version of the genuine site will be released soon, which I thought may spell doom for Xiaonei and its deep-pocket investors.

When the Spanish version of Facebook was released a few months ago, I quickly stopped receiving pesky invitations from the Hi5.com social network popular with my former Chilean classmates.

Instead, I watched as one-by-one every person I knew there quickly became hooked on the features of Facebook and ‘friended’ every person they had ever met, including many foreigners.

I assumed the same would hold true for Xiaonei once Chinese Facebook users were given a tool in their own language, but a Chinese friend, Jessie Lu, I contacted (via Facebook chat) spelled quite a different story.

Jessie has accounts with both social networks, but maintains that Facebook is really only popular in China with people who have studied abroad, “speak ok English,” or have many foreign friends. That’s a limited market in the grand scheme of China.

She believes that there won’t be a mass exodus to Facebook once a localized site is available partly because Xiaonei does such a good job keeping up with all the features its rival offers. A ‘chat now’ feature has been offered since the beginning of Xiaonei, a feature just rolled out in the past month on Facebook, for example.

The Xiaonei CEO recently gave a speech to students at East China Normal University in Shanghai, and when students queried him about the clear copyright infringements against Facebook, Jessie says he replied along the lines of, “I just bought the site recently, I don’t know. I didn’t design it.”

Apparently “Don’t ask, don’t tell” is alive and well in China.

Further, in a mini-conference on digital media in China last year hosted by AmCham-China, experts suggested social networking innovation has been hampered for two big reasons:

• Some sites might look Web 2.0, but you won’t find much to dig deeper, said Andrew Lih, a former new media academic at Columbia University and Hong Kong University, now authoring a book about online collaboration. Licensing issues limit content. Mapping data in China is fairly limited too, and some of those who have tried have been fined severely. The bottom line: “If an entrepreneur has a really good idea in Chinese, his first response is often, let’s get the hell out of China where what we develop is going to be protected,” Mr. Lih said.
• Innovation is severely hampered. “With the ever present hand and eye of Net Nanny, the implication is that if we don’t censor ourselves, we will be censored,” said David Wolf, CEO of Wolf Group Asia. “Google wasn’t born here,” he said. “It was born in the U.S. and faithfully copied by Baidu.”

However, as social networking sites get better at figuring out how to make money from their users, and the battle really heats up for the international markets, Facebook’s ultimate success could be in jeopardy in China just like Google’s has been thanks to search engine rival Baidu.

With an increasingly savvy online market in China, a local, bona fide Facebook site should have been launched long ago in order to catch some early advantages. Now with proper funding, Xiaonei poses a great threat to Facebook and its ability to crack the Chinese market.

Looks like those Xiaonei investors did their homework after all. It just remains to be seen whether they can pass the test and provide a truly superior, original product with all that capital.

    Channel: Movers & Shakers     |