Chinese tech firms forced to choose home or go elsewhere

The barrier to entering the US or China market is becoming higher

FOR teenagers who like to sing along with Ariana Grande and Flo Rida, Musical.ly is a must-have. The app that lets users lipsync and dance in their own music videos boasts 100 million users and partners with pop stars like Grande and Meghan Trainor. It’s not easy to tell Musical.ly is Chinese — and that’s deliberate. To find success in America, its parent company has ignored China, its home market and a country with 700 million internet users.

The reason is simple, says Alex Zhu, co-founder of Shanghai-based Musical.ly: China’s internet is fundamentally different from the one used in much of the rest of the world.

Two decades after Beijing began walling off its homegrown internet from the rest of the planet, the digital world has split between China and everybody else. That has prevented American technology companies like Facebook and Uber, which recently agreed to sell its China operations, from independently being able to tap the Chinese market.

For China’s web companies, the divide may have even more significant implications.

It has penned in the country’s biggest and most innovative internet companies. Alibaba, Baidu and Tencent have grown to be some of the world’s largest internet companies, but they rely almost entirely on domestic businesses.

Their ventures abroad have been mostly desultory, and prognostications that they will challenge American giants internationally have not materialised.

For Chinese web startups like Musical.ly, the internet split has also forced them to choose — either create something that caters to China’s digital population or focus on the rest of the globe.

In many ways, the split is like 19th century railroads in the United States, when rails of different sizes hindered a train’s ability to go from one place to another.

“The barrier to entering the US or China market is becoming higher and higher,” said Kai-fu Lee, a venture investor from Taiwan and former head of Google China.

NYT