 "To reach China, LinkedIn plays by local rules")
For American technology companies from Microsoft to Facebook to Google, China is a difficult, even impossible, place to operate.
But one company, the social network LinkedIn, has found a way to do business - by being willing to compromise on the free expression that is the backbone of life on the Western Internet.
LinkedIn's experience provides a blueprint, and perhaps a cautionary lesson, for Silicon Valley as it tries to crack the vast Chinese market. Other American tech companies are watching with great interest, wondering whether LinkedIn will find an equilibrium between free speech and Chinese law that it can live with.
"Over the next five years, things will continue to progress in a positive fashion over there, so it's important to be there today," said Kerry Rice, an Internet analyst at Needham, a brokerage firm. "If LinkedIn figures out how to navigate the operating environment in China, clearly other companies will try to imitate that."
LinkedIn's global English-language site has attracted four million Chinese members without gaining much attention from the Chinese government. But the company wanted to reach more of China's estimated 140 million professional workers, and so in February it introduced a Chinese-language version.
The Chinese-language site has attracted about a million new members and seems to have the tacit approval of the government. It is functioning without blockages even though the authorities have cracked down on other Internet services, including Instagram and Yahoo, in reaction to the pro-democracy protests in Hong Kong. The secret to LinkedIn's seeming success? Aside from its willingness to play by Chinese rules on expression, the company has relinquished seven per cent of its local operation to two well-connected Chinese venture capital firms. Having such a relationship with homegrown firms is crucial for foreign web companies seeking to operate in China, experts say.
"The government needs to know who they can call, and as a foreign company you need to know before your site gets shut down so you have a chance to do something about it," said Duncan Clark, founder of BDA China, a consulting firm that advises foreign companies on China's tech sector. "That's worth a lot, to have that channel."
A spokesman for LinkedIn, Hani Durzy, said the company opened a Chinese-language site because of its "belief that the creation of economic opportunity can have a profound impact on the lives of Chinese individuals, much as it has elsewhere in the world."
"While we strongly support freedom of expression," he added, "we recognised when we launched that we would need to adhere to the requirements of the Chinese government in order to operate in China. So the decision to proceed in China was one that we weighed heavily."
On the Chinese- and English-language sites in China, the company censors content that the authorities consider politically sensitive, using a combination of software algorithms and human reviewers. People whose posts are blocked get an emailed form letter advising them that a posted item contains "content prohibited in China" and "will not be seen by LinkedIn members located in China."
LinkedIn also does not provide Chinese-language users certain important tools - like the ability to create or join groups or to post long essays - that allow people elsewhere to have public discussions and form communities.
Although LinkedIn's strategy has given it access to Chinese speakers, analysts say it poses risks for the company's reputation and growth strategy.
Like many American tech companies, LinkedIn, which is based in Mountain View, Calif., has promoted itself as dedicated to free-market principles. Too much censorship could cause users to flee.
What's more, if LinkedIn's business grows larger in China, that could give the government more leverage to make demands about what type of content is permissible globally.
The company has already stumbled a bit in its entry into the Chinese market. It angered some non-Chinese customers, who found that posts they made in English while in China were blocked globally as part of the company's effort to protect its Chinese users from anything that could attract unwanted government scrutiny. LinkedIn moved to loosen its policy last month, allowing posts blocked in China to be seen elsewhere.
But one company, the social network LinkedIn, has found a way to do business - by being willing to compromise on the free expression that is the backbone of life on the Western Internet.
LinkedIn's experience provides a blueprint, and perhaps a cautionary lesson, for Silicon Valley as it tries to crack the vast Chinese market. Other American tech companies are watching with great interest, wondering whether LinkedIn will find an equilibrium between free speech and Chinese law that it can live with.
"Over the next five years, things will continue to progress in a positive fashion over there, so it's important to be there today," said Kerry Rice, an Internet analyst at Needham, a brokerage firm. "If LinkedIn figures out how to navigate the operating environment in China, clearly other companies will try to imitate that."
LinkedIn's global English-language site has attracted four million Chinese members without gaining much attention from the Chinese government. But the company wanted to reach more of China's estimated 140 million professional workers, and so in February it introduced a Chinese-language version.
The Chinese-language site has attracted about a million new members and seems to have the tacit approval of the government. It is functioning without blockages even though the authorities have cracked down on other Internet services, including Instagram and Yahoo, in reaction to the pro-democracy protests in Hong Kong. The secret to LinkedIn's seeming success? Aside from its willingness to play by Chinese rules on expression, the company has relinquished seven per cent of its local operation to two well-connected Chinese venture capital firms. Having such a relationship with homegrown firms is crucial for foreign web companies seeking to operate in China, experts say.
"The government needs to know who they can call, and as a foreign company you need to know before your site gets shut down so you have a chance to do something about it," said Duncan Clark, founder of BDA China, a consulting firm that advises foreign companies on China's tech sector. "That's worth a lot, to have that channel."
A spokesman for LinkedIn, Hani Durzy, said the company opened a Chinese-language site because of its "belief that the creation of economic opportunity can have a profound impact on the lives of Chinese individuals, much as it has elsewhere in the world."
"While we strongly support freedom of expression," he added, "we recognised when we launched that we would need to adhere to the requirements of the Chinese government in order to operate in China. So the decision to proceed in China was one that we weighed heavily."
On the Chinese- and English-language sites in China, the company censors content that the authorities consider politically sensitive, using a combination of software algorithms and human reviewers. People whose posts are blocked get an emailed form letter advising them that a posted item contains "content prohibited in China" and "will not be seen by LinkedIn members located in China."
LinkedIn also does not provide Chinese-language users certain important tools - like the ability to create or join groups or to post long essays - that allow people elsewhere to have public discussions and form communities.
Although LinkedIn's strategy has given it access to Chinese speakers, analysts say it poses risks for the company's reputation and growth strategy.
Like many American tech companies, LinkedIn, which is based in Mountain View, Calif., has promoted itself as dedicated to free-market principles. Too much censorship could cause users to flee.
What's more, if LinkedIn's business grows larger in China, that could give the government more leverage to make demands about what type of content is permissible globally.
The company has already stumbled a bit in its entry into the Chinese market. It angered some non-Chinese customers, who found that posts they made in English while in China were blocked globally as part of the company's effort to protect its Chinese users from anything that could attract unwanted government scrutiny. LinkedIn moved to loosen its policy last month, allowing posts blocked in China to be seen elsewhere.
© 2014 The New York Times News Service