ALEX COHEN, host:
From NPR News, it's DAY TO DAY.
Are you ready for 1.3 billion potential new friends? Yep, as of today, MySpace has set up shop in China. The social networking site is a relative latecomer to China's huge Internet market. It's following on the heels of Google and Yahoo. But MySpace plans on using a different strategy to succeed.
Marketplace's Sam Eaton joins us now. Sam, first of all, why does MySpace want in in China?
SAM EATON: Alex, basically, it's lots of eyeballs. China has more than 137 million Internet users and that number is going up everyday as economic growth continues there at its breakneck pace, 10 percent plus. It's the second largest market to the United States and could easily become the first in the years ahead. And that will mean a lot of growth for companies that can get in early. Basically, every Internet company with global ambition wants a piece of China. And MySpace, the brainchild of, or actually one of the company's Rupert Murdoch's News Corp is no different.
COHEN: MySpace says they're going to do something a little bit different in China. What exactly is their Internet strategy?
EATON: Well, they think that - basically, they're going to learn from the mistakes of the first few waves of Western Internet companies that put down their stakes on Chinese soil. Unfortunately here, Alex, the track record isn't a very good one. You have Amazon.com, eBay, Yahoo and even Google, all extremely successful brands in the U.S., losing ground in China despite hundreds of millions of dollars in investments there. And in most cases, they've underestimated their local rivals who beat them at their own game.
MySpace hopes to avoid that by setting up a separate Chinese version of the company to run the Web site and that will supposedly give the company more sway with Chinese authorities as well as more credibility with Chinese Internet users.
MySpace is also helping that the timing is right. Social networking and entertainment and gaming sites have become hugely popular in China. And MySpace wants to use its own brand to ride that wave.
COHEN: Anyone who's spent any time on MySpace.com knows it's chock-full of racy stuff. How's that going to apply with Chinese censors?
EATON: Sure. It's definitely been a problem there for Yahoo and Google, struggling with the censors there. And then you have a Chinese company, bydu.com, which has been the leader there. Some say that's because bydu.com is more adept at navigating the Chinese censorship laws. I talked to China expert Bates Gill at the Center for Strategic and International Studies, and he says it shouldn't really matter whether the company has a local presence in China or not.
Mr. BATES GILL (China Studies, Center for Strategic and International Studies): Well, I think the sensitivities about Internet usage and the possibility that it be in the Chinese government's view, misused, will still remain whether it's a locally-based company or not.
ETON: Now Bates says it's political content that really the Chinese censors are focused on. And if you know MySpace, it tends to follow more along the lines of, kind of, the raunchy.
COHEN: Thanks so much, Sam. Sam Eaton of Public Radio's daily business show, MARKETPLACE. It's produced by American Public Media.
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COHEN: DAY TO DAY returns in just a moment.
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