"To start, the graph below shows that while more than 70% of Americans think the U.S. is a technologically innovative country, only 41% think that the United States is staying ahead of China on innovation. Meanwhile, more than 80% of the Chinese think that the U.S. is innovative and is staying ahead of China on innovation."
Insight into the Chinese marketplace that can benefit brands going global with social media...
BusinessA spat among professional networksClass war
Nov 19th 2009 | PARIS
From The Economist print editionDoes local beat global in the professional-networking business?
Getty ImagesUntold billions, five contactsIN THE three-way fight between the biggest online professional networks—America’s LinkedIn, France’s Viadeo and Germany’s Xing—this week the French contender scored a victory. Last year LinkedIn had struck a deal with Apec, France’s best-known professional-recruitment service, to offer search functions to its huge customer base of over 30,000 companies and 500,000 executives. But on November 17th Apec made a new deal with Viadeo, having noted that although LinkedIn could reach executives at France’s biggest international companies, it failed to connect enough people in the country’s thousands of smaller firms.
In professional networking, argues Dan Serfaty, Viadeo’s founder, having local depth is better than signing up a narrow slice of the highest-powered people around the world. A typical LinkedIn member would be an investment banker at Société Générale, a French bank, he says, “too proud to invite his friends to join or to pay for it”. In contrast, Mr Serfaty claims, Viadeo signs up branch managers for Société Générale, who use the site often and are happy to spend €5 ($7.50) a month on a subscription. Local entrepreneurs and provincial civil servants may be less impressive as members than Bill Gates, Microsoft’s co-founder, Mr Serfaty continues, but they are more engaged. (Mr Gates has been on LinkedIn since last year, and so far has made only five connections to other members.) At Xing, too, a hyper-local network which went public in 2006, the typical member is not a senior executive but a middle manager, says Stefan Gross-Selbeck, its boss.
“We have the most elite, international and aspiring people,” says Kevin Eyres, head of LinkedIn in Europe. The firm’s global approach, he says, has brought rapid growth in members at a low cost relative to its competitors. Having a large American membership is a particular advantage. In Mexico, for instance, Viadeo started from scratch and had to visit dozens of local alumni associations to recruit members, whereas LinkedIn could offer Mexicans the chance to connect to American business people right from the start.
In Italy and Japan, LinkedIn is number one even though it has not translated its site into the local language in either place. In China, however, LinkedIn has to compete against the Chinese-language website of Tianji, the country’s biggest professional network, which is owned by Viadeo.
Which is the most attractive model? All three networks have benefited from the crisis, as executives fearful of losing their jobs have rushed to burnish their contacts. But it is estimated that fewer than 1% of LinkedIn’s 50m members worldwide actually pay for the service, compared with around 10% of Viadeo’s members in Europe and 18% of Xing’s German-speaking members. LinkedIn, therefore, relies on firms’ human-resources departments and advertisers for most of its revenues, which reached $100m last year. The firm has been profitable for two years. Revenues at Xing and Viadeo come mostly from subscribers. In the first three quarters of 2009, Xing, with 8m members, brought in revenues of €33m, 33% higher than the previous year, and operating profits of €9m.
LinkedIn is concentrating on growing quickly around the world, not on extracting profits in each market, says Mr Eyres, and is only starting to localise. It could soon launch an initial public offering of its shares. In October Viadeo bought Unyk, a Canadian-based networking service with members in several countries including America and Brazil. That put the French firm in second place behind LinkedIn measured by number of members: it now has 25m in total. It too is contemplating a share offering. That may advance the day when all three firms are obliged to focus on profits, making the relative value of humble local managers versus masters of the universe clearer.
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