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Monday, April 5, 2010

Social networks are key to cracking China

Business social media can unlock the door to the world’s second-largest economy

Written by Wayne Gibbons

A surge in Chinese exports for January has kicked the world’s fastest-growing economy back into life, at least in the eyes of Westerners. But China is still a difficult place to do business. Is there an opportunity for business social networks to break down trade barriers?

China is celebrating its 4,708th year. It is the year of the tiger and the country is safe in the knowledge that its economy is back on track. The trade figures make promising reading. Chinese exports for January are up, manufacturing is at its highest output since August and the service sector is recovering on the back of its traditional industries. Although much of this growth in trade is with non-Western countries, such as Brazil and India, interest in the West has not diminished. The feeling is mutual.

With the growth of domestic consumption, however, Chinese firms have switched emphasis from trading with overseas companies to internal trade. The domestic market has matured and this is attractive for any business outside the region. It also has a huge skilled market of IT programmers who are now starting to compete with India for outsourced software development.

However, trading with China is tricky. Cultural issues, regionalised business practices and ethics and the sheer number of willing business partners are huge barriers to entry.

Derek Ling, head of, China’s largest business social network with more than four million users, claims that service-sector SMEs in China are crying out for links with Western businesses, offering legal advice on business issues, partnerships for the travel industry and local accountancy. Using a social network, he says, is a window on local businesses that previously have been very difficult to reach. Tianji has just launched an English-speaking version of the site to help fuel links with Chinese service-sector businesses. It can unlock doors, but it is up to Western businesses to push them open.

It brings into question the role of social networks in business. For China, social media has been a sticky issue recently. Facebook and Twitter have been banned and a row erupted with Google over privacy, but business social media is different. It is geared towards creating links, developing leads and recommendations for businesses. It is the recommendations that really drive these sites. It is important for CIOs to make a distinction as it is becoming a trend to ban social networking in the workplace.

Social networking has an opportunity to facilitate trade not just in China but in any country. Business social networks can thrive by offering users the ability to establish community trade groups, marrying local expertise with international opportunity. It is a unique position that traditionally would take months, even years to establish, during which time alien firms leave themselves open to abuse from unknown quantities. Business social networking goes some way to limiting the risk by offering a platform for recommendation, but those networks have to have local knowledge, to have been established with local connections in mind. Any international connection is therefore a window of opportunity on an already established community of businesses.

This is where true trade links can be established. For a region such as China it makes more sense than ever to investigate social networks as a first port of call for researching and making new business contacts. Small to medium-sized businesses in particular are recognising the benefits of opening their doors to new opportunities and nowhere is this more evident than in the IT sector.

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