The ante’s been upped in China’s social networking wars. Facebook plans to partner with China’s largest search engine Baidu.com, Inc. (NASDAQ:BIDU) to build a social networking site from the ground up. The move would smuggle Facebook behind the Great Firewall – a place where few other foreign social networks are able to tread.
Shares in BIDU rose nearly 5 percent in pre-market trading on the news although it could be a while before Facebook.cn becomes a reality. “If there is a deal, it must still make it over some imposing regulatory hurdles in China, and it will attract some attention from Capitol Hill,” writes Gady Epstein at Forbes.
Epstein’s optimistic the deal will ultimately work, though, as Zuckerberg appears “fully committed to make the kinds of concessions to do business in China that did not come so easily for Google.”
China’s social networking market is particularly brutal. Renren.com claims 160 million active users in the PRC, and it got its start as a Facebook clone. It was such a perfect clone that it matched Facebook’s DNA down to the chromosome – going so far as calling itself “A Mark Zuckerberg Production” on its homepage in the early days.
Everything that Facebook does, Renren does, too. The site launched in 2005, and spread virally across college campuses in China before eventually opening up to the public (just as Facebook did one year earlier). It recently launched Renren Places, a “Like” button and a Groupon-style deal-of-the-day feature. In many ways, then, Facebook’s biggest competitor in China will be itself, as it will need to find a way to differentiate itself from Renren.
That won’t be easy. Although Renren closely mirrors Facebook’s functionality, the site’s also started launching its own innovations from streaming music services to paid brand pages which operate like mini-sites on Renren.com. Some reports indicate Renren is charging as much as $90,000 for its customizable brand pages.
Renren could also generate a huge warchest when it moves ahead with a planned IPO. The company appears to be diversifying in the run-up to that IPO, too. Just last week, I wrote about Renren’s launch of a LinkedIn/Quora clone dubbed Jingwei.
Clearly, Zuckerberg has his work cut out for him. But a high-profile partnership with Baidu should give Facebook plenty of marketing clout and – just as importantly – a decent working relationship with China’s ruling elite. Both are requirements if Facebook hopes to challenge Renren.
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