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LinkedIn tackles China with a startup approach

The company hopes to grow its China user base to as high as 50 million

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China has been a tough market for U.S. Internet companies to crack, but LinkedIn has high hopes it can buck the trend and increase its user base in the country to as high as 50 million over the next five years.

"This is a very long-term investment, it's not an experiment," said Derek Shen, head of LinkedIn's China operation on Friday.

The social networking site officially entered the nation's market back in February, and is targeting China's growing number of working professionals, numbered at over 140 million, according to the company. To reach those users, it launched a Chinese language site called Lingying.

LinkedIn, however, wants to avoid the same fate as other U.S. Internet companies that have struggled to take off in the nation's competitive market. Google, eBay and Groupon have all come up against local roadblocks, including stiff competition from domestic rivals, and China's notorious online censorship.

In LinkedIn's case, the company studied the Chinese market for four years before finally deciding to enter the market, Shen said at China 2.0 Forum, an event in Beijing organized by the Stanford Graduate School of Business. Currently, the site has about four million users in China.

The failure of some international companies in China may be due to their structure or lack of incentives for the operation to succeed, Shen said. "So we decided in China, we wanted to do a startup," he added.

LinkedIn's China operation is actually a joint venture with two venture capital groups. The team is small, at 15 employees, Shen said, with its early focus devoted to improving the access speeds to LinkedIn's Chinese language site by establishing a data center in the country.

The company wants to build its presence in the nation's four largest cities, where 70 percent of LinkedIn China's existing users already come from. Making the Chinese site better suited for local users is another priority. Email is not as popular in China, and so the team is working on incorporating features to let Chinese LinkedIn members send messages to each other via SMS texts or through other domestic social networking services.

But the China operation hopes to be more than just a local startup. Shen, who previously worked as an executive with Google China, compared his work to building an agile spacecraft that can report back to its "mothership" LinkedIn.

"We need to make sure the spaceship looks like the mothership, and also be able to integrate and collaborate with the mothership," he said.

Although LinkedIn executives believe the company has a ripe opportunity in China, it has also agreed to abide to the nation's strict rules on censorship. To operate legally, local social networking sites often delete content or shut down accounts relating to anti-government information.

LinkedIn China will do the same, but only censor when required by the Chinese government, Shen said. The site, however, will maintain transparency on all censorship matters, he added.



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