Why American Internet companies fail in China

Editor’s Note: The piece originally appears on LinkedIn, we reproduced it here under Kaifu Lee’s authorization. Kaifu is the founder of Chinese incubator Innovation Works , he also served as Google and Microsoft VP.

Almost without exception, American Internet companies failed in China.  The chart below shows the failure of American companies in China, and the three big winners: Alibaba, Baidu, and Tencent, that emerged as a result (the collective market capitalization of these three companies is about $150 billion).

Many attribute the American company failures to government regulations or favoritism.  While these played a part in their failure, there were other more relevant reasons related to the companies themselves:

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