For Chinese tech companies venturing overseas, China is a toxic brand

China’s tech giants need to explore new frontiers. While there’s still more growth to be found within China – online spending will expand from an estimated US$275 billion this year to US$430 billion in 2016 – it’s inevitable that the rate of growth is only going to slow in a relatively mature market.

Some of China’s top web and tech companies are already venturing in search of the next billion customers. They needn’t look too far. India has over 800 million consumers (judging by the number of eligible voters in the recent general election), and there are hundreds of millions more spread across emerging markets in Southeast Asia.

But these Chinese firms are finding that their neighbors are not so keen on talking.

At the beginning of 2013, China saw a major milestone as the nation, for the first time, invested more overseas than it digested in foreign direct investment. Authorities want Chinese companies to rise up the value chain, build brands, conquer new markets – but regional tensions, especially over disputed islands and territory, are threatening to trip up China’s great leap outward [1].

The geopolitical antagonism varies in intensity by country. The Philippines, Taiwan, Vietnam, Japan, India, Indonesia, and Malaysia are all currently involved in territorial disputes with China over islands, land, or maritime boundaries. What should be China’s new customers are now its feuding neighbors.

Tensions seem to be highest in Vietnam.

Goodbye, Vietnam

In May, Vietnam was rocked by deadly anti-China riots that killed at least 20. A Chinese oil rig in a disputed maritime zone flared up simmering anger in Vietnam over a number of areas also claimed by China.

Both Baidu and Tencent, two of China’s biggest tech firms, have faltered in Vietnam – a young and mobile-first market where smartphones are now taking off in a big way – over the past couple of years.

Photo credit Guido da rozze.

Tencent’s WeChat lost a great deal of early momentum in Vietnam when, in early 2013, some Vietnamese netizens organized a boycott of the China-made messaging app. The hair trigger that set off the boycott was the presence, deep within WeChat, of Chinese-language maps that show disputed islands as part of China’s territory. The slight was arguably tenuous (it only appeared when a user changed the app’s language settings to Chinese), but it was enough.

In the year that followed, WeChat made little progress in Vietnam and its moment of opportunity has passed. WeChat’s official Vietnamese Facebook page has just 31,000 ‘likes’ at present. Rival messaging app Viber is now battling the homegrown Zalo for dominance in Vietnam, and Viber claims to have 12 million users in Vietnam. Tencent has never revealed any country-specific numbers for its messaging app and did not respond to questions for this article.

The ramifications and loses have been much more severe for Baidu, China’s top search engine. Baidu ventured into Vietnam in July 2012 and promptly stumbled over the first hurdle. Baidu launched its online forums, called Tieba, in Vietnam, but immediately ran into regulators who said they had not received the mandated registration application to run a social network – since that’s what Tieba essentially is. Eventually Baidu got approval for the site and seemed to be about to use it as a launchpad for more sites and services in Vietnam, much as the web giant has done in Brazil and Egypt.

But, fast-forward to today, and Baidu’s Vietnamese Tieba is gone. Baidu declined to make an official statement to Tech in Asia about what happened in Vietnam during 2012 or specify when the Vietnamese site shut down.

A Baidu source explains to Tech in Asia that Baidu’s Singapore-based research lab, which opened in July 2012 to conduct research in natural language processing in Southeast Asian languages that could be used in fields such as online search, is no longer focusing so much on Vietnamese. Instead, the lab is now concentrating, after Baidu’s setbacks, on the Thai and Indonesian languages.

Negative connotations

A warmer welcome