Yahoo was the first major American Internet company to enter the market, introducing a Chinese-language version of its site and opening up an office in Beijing in 1999.
Yahoo executives quickly learned how difficult China was to penetrate – and how baffling the country’s cultural barriers can be for Americans. Chinese businesspeople, for example, rarely rely on e-mail, because they find the idea of leaving messages to be socially awkward. They prefer live exchanges, which means they gravitate to mobile phones and short text messages instead.
Baidu, a Chinese search engine that was introduced in 2001 as an early competitor to Yahoo, capitalised on the national fervor for chat and invented a tool that allows people to create instant discussion groups based on popular search queries.
When users now search on baidu.com for the name of the Chinese N.B.A. star Yao Ming, for example, they are shown not only links to news reports on his games; they are also able to join a chat room with thousands of others and argue about him. Baidu’s chat rooms receive as many as five million posts a day.
As Yahoo found, these cultural nuances made the sites run by American companies feel simply foreign to Chinese users – and drove them instead to local portals designed by Chinese entrepreneurs.
These sites, including Sina.com and Sohu.com, had less useful search engines, but they were full of links to chat rooms and government-approved Chinese-language news sites. Nationalist feelings might have played a role, too, in the success Chinese-run sites enjoyed at Yahoo’s expense.