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In China It’s Xiaonei, Not Facebook

Joel on October 19, 2008 - 4:17 pm in Archive, Companies to Observe

It’s eleven p.m. in China and 23 year-old Beijing University master’s student Peilin has just sat down in front of her brand new Lenovo IdeaPad. She clicks open QQ and MSN to instant message her friends. While she chats she uses Baidu to search for BBS message boards containing advice on peripherals for her new laptop. After pouring out her days thoughts and emotions in a diary blog hosted by Sina, she spends the last half hour before bed partaking in her guilty pleasure…searching through friend’s profiles on Xiaonei.

Xiaonei, the self-proclaimed “Facebook of China,” is the most popular social networking site among Chinese students. Started in 2005 by a Tsinghua University graduate, the company was later acquired by Beijing-based Oak Pacific Interactive. In 2007, Xiaonei expanded into the high school and young professional markets after initially limiting its user-base to college students. As a result, in April 2008 Xiaonei raised millions of dollars in investment led by SoftBank with additional contributions by SBI and JOHO Capital.

Can Facebook compete with Xiaonei in China?

If one were to compare these two companies based solely in terms of global market share and total market value, it seems reasonable to predict that Facebook will overtake the smaller domestic firm. However, the successes of Baidu over Google and Alibaba (Taobao) over Ebay prove that foreign firms’ achievements in other parts of the world do not necessarily translate so smoothly to China.

Xiaonei and Online Identity

Unlike the majority of online platforms in China, Xiaonei requires users to register with their actual names. While many users still opt to upload profile pictures featuring pets, children and other miscellaneous images instead of their own photos, all users are accountable for their contributions to the social community. With time, hopefully Chinese netizens will realize the advantages of having a uniform identity in both the real and online worlds. Xiaonei users have the incentive to use their full name and real photo, otherwise their friends cannot find them in the Xiaonei user database. However, the positives of holding a uniform online and real world identity can have a significantly greater impact on Chinese society beyond online social networks. For example, Alibaba is presently collaborating with select Chinese banks to utilize its business-to-business (B2B) transaction history database to issue lines of credit to domestic firms and thereby minimize default risk.

Netizens in other countries are already aware of how important it is to own their online identity. There are numerous books, websites and other publications dedicated to personal branding.

It will certainly take a while for Chinese netizens to reach this level of transparency, but Xiaonei is one step in the right direction.

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2 Comments
  • October 20, 2008

    By the numbers, Xiaonei has 15 million registered users and 8.8 million active users. I would say that it will be hard for Facebook to compete against them because they were the first mover.

    Great post Joel, keep up the good work!

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  • December 30, 2008

    Xiaonei is one great social network community, but there is one larger virtual social networking site should be noted, QQ instant message community have its own social network, it has the largest numbers of netizens in China now.

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