Learn from Microsoft’s struggle doing business in China

Microsoft, in particular their MSN platform, has had a long and difficult ride doing business in China. The company has had to fight hard for its market share, and, considering it is now facing an anti-monopoly investigation by the Chinese government (source: BBC News), has yet to reach a comfortable position. Along the way there have been casualties and scandals, as well as clever moves and beneficial partnerships. A look at some key points in MSN’s history in China can give you plenty of learning points, even if you are not a global corporation with billions of dollars to invest in new markets.

MSN China launches with Chinese website to heighten MSN experience

Microsoft launched MSN China in 2005 by teaming up with domestic company SAIL (Shanghai Alliance Investment Ltd). Although many internet users in China were already using MSN messenger and Hotmail email services, the launch of MSN China aimed to give them a stronger user experience by creating a portal specifically focused on Chinese users (source: Microsoft). Teaming up with a domestic company awarded them greater market insight, and by optimising their offering for the market with a dedicated Chinese website, Microsoft gave themselves a strong foundation from which to launch their offering to the Chinese market.

China’s strict regulations get Microsoft in hot water

How you deal with regulations whilst doing business in China is vital to your success. While Microsoft’s troubles may not be relevant for you, they highlight for any business owner the fact that the local laws can be as much of a PR issue as a legal one. Microsoft found this out the hard way. When it launched its MSN Spaces free blogging tool it decided to abide by the Chinese government’s strict censorship rules, banning users from posting content including words such as ‘freedom’,  and ‘democracy’ (source: The Guardian). This caused widespread discussion, with Western media devoting a lot of attention to the software giant’s actions.

Microsoft partners with popular domestic social network

In August 2011, Microsoft and RenRen announced a new agreement to provide universal access to the two platforms using one login. This allowed the messaging app and social network to closely integrate their features, meaning photos and status updates could be shared across both platforms. This came just a month after Microsoft announced that they had partnered with Baidu to offer English language search functionality for the platform (source: Reuters). Being able to work together with a local firm to create a combined offering can help you to reach local customers and use your partner’s trustworthiness to build a reputation and loyal customer base.

Tailoring product offerings to different markets

In 2012 Microsoft replaced MSN Messenger with their newly acquired Skype in every country in the world apart from China. Ranking fourth in the instant messenger market in China, MSN held a 4.56 per cent share. At its peak, there were 20million users, with the service being favoured by white collar workers, although by 2013 this number had dropped to 15million as rival domestic messaging services like WeChat, QQ, and Sina Weibo challenged MSN’s popularity. In a surprising move, MSN China even released a standalone app for Windows phones (sources: Global Times, China.org, WP Central). Not all Microsoft products have gone down well in China, but by recognising the ones that do and partnering with influential players in the market, they have managed to gain and retain a market share, even if it has not been as successful or as simple as the corporation may have hoped. (Image source: “Internet Explorer Icon” | www.freedigitalphotos.net)