Everybody's "Facebook" in China

Nowadays the Facebook fever exists almost everywhere around the world, but not necessarily in China – RenRen (Everybody in English, and formerly called Xiaonei), the Shan Zhai version of Facebook, turns out to beat Facebook as China’s largest social networking sites with over 70 million users.

There are two major reasons, which also shed light on how the Shan Zhai phenomenon (see my recent article) nurtures successful Chinese businesses.

The primary reason is a rather embarrassing one. In fact, it is generally not possible to access Facebook in China because the Chinese government has simply blocked the world’s largest social networking website from its people in attempts to “control” information (well, nothing is impossible…). Thanks to Shan Zhai, in this case the government’s unintended efforts to “relax” the online social networking sector, RenRen benefits tremendously from keeping its greatest rival out of the competition.

Another reason is that RenRen, which has the qualities of a successful Shan Zhai business, actually does a better job than Facebook. As a social networking website, RenRen acts faster on developing more features that fill the needs of local users. It has introduced an instant messaging platform – of course, it is in Chinese – long before Facebook did. It has also provided users with different themed online forums – a very popular form of communication in China – where they can share more culturally relevant materials. It has also been way ahead on running a website that is fully comprehensible to all Chinese users, while Facebook still receives complaints nowadays regarding translation errors. For these reasons, most Chinese users are generally willing to stick with RenRen (see various user experiences).

As a business, RenRen adopts a flexible business model that allows it to grow faster with substantial and stable profitability. Both RenRen and Facebook announced around the same time that they had turned profitable, but consider how long they have been in business – Facebook has been founded since February 2004, and RenRen since December 2005. A possible explanation to RenRen’s rapid growth is that RenRen started out rather as a for-profit website when it was launched. While RenRen offers free basic services like Facebook, it also provides paid upgrade services for those who want to customize their profiles. Moreover, RenRen leverages its largest user base and thus manages to rent out webpage space to multinational enterprises that want to penetrate the Chinese market, such as Coca-Cola, Wrigley and Proctor & Gamble, for mass advertising. Because of Shan Zhai, RenRen is able to harvest remarkable profits without having to manipulate user information as Facebook did.

Since Facebook may not overcome these Chinese difficulties in the near and medium term, RenRen shall continue to succeed as everybody’s “Facebook” in China.