LinkedIn Launches China Version, Addresses Censorship

Feb.27.14 | About: LinkedIn (LNKD)

Less than 2 months after hiring a top executive to head its new push into China, professional networking leader LinkedIn (NYSE: LNKD) has come out with a series of announcements on the new launch of a Chinese-language edition for its service, and also some figures for the size of its addressable market in China. The company has also rolled out its official Chinese name, Lingying, which translates roughly to "Leading Hero", perhaps encapsulating how it hopes to position itself in the market. And in a nod to the challenges it will face, its CEO Jeff Weiner has also put out a separate lower-profile announcement detailing how the company plans to handle sensitive issues involving China's strict censorship policies.

The sudden flurry of moves looks a bit more high-profile and louder than what we've seen in the past from LinkedIn, which up until now has kept a decidedly low profile in its China approach. A spokesman pointed out the company is still taking a slow approach, as the launch of a simplified Chinese edition of its service is still just a beta version. I realize the company needs to raise its profile a bit to attract users to its service, though I would also caution it to avoid moving too fast, since such moves are also likely to attract increased attention from hyper sensitive censors in Beijing.

The latest flurry of news from LinkedIn comes less than 2 months after it hired a new manager for its China operations, marking its formal move into the market (previous post). The company's selection of a Chinese name seems reminiscent of a similar announcement by Google (Nasdaq: GOOG) when it launched its search service in China nearly a decade ago, choosing the Chinese name Guge which translates to the poetic sounding "Song of the Valley". Of course we all know what happened eventually to Google, which withdrew from the China search market in 2010 after a high-profile spat with Beijing over censorship and hacking allegations.

LinkedIn has been moving cautiously to avoid a similar conflict, and also to avoid meeting a fates like those of more mainstream SNS sites Facebook (Nasdaq: FB) and Twitter (NYSE: TWTR), which have both been blocked in China since 2009. According to its latest announcement, LinkedIn has launched the beta site for the simplified Chinese version of its service in partnership with CBC and Silicon Valley venture firm Sequoia Capital, which is quite active in China investments (company announcement).

LinkedIn is also very aware of the risks of doing business in the market, and says it has entered "a new level of engagement with the relevant government authorities and adherence to local laws." CEO Jeff Weiner talks frankly about China's censorship requirements in a separate company statement, saying he disagrees with such policies. But he adds he is still moving ahead due to his broader belief that staying out of China would be a huge disservice to local professionals who want to connect with the rest of the world over LinkedIn's platform.

Weiner is also quite candid in outlining a number of steps LinkedIn will take to deal with the censorship issue, in a proactive attempt to tackle inevitable problems and negative publicity before they arise. The rest of the world will undoubtedly be watching to see how the company handles matters involving sensitive content, which is one of the company's biggest risks in entering the market.

The bigger announcement also contains some of the first figures I've seen for how big LinkedIn sees the China market for its services, which are used mostly by white collar workers for professional networking. LinkedIn says it hopes to connect around 140 million people in China with its global network that now numbers about 277 million users. Those numbers reflect the huge potential LinkedIn sees in China, since signing up even a quarter of the addressable users it cites would equal around 13 percent of its current user base.

The company adds that it currently has 4 million users in China, and I can personally testify that I am one of those and have probably 2-3 dozen local contacts on my network who are also based here in China. LinkedIn has actually quietly operated a Chinese-language mobile app in China for the last couple of years, and at least some of my connections are using that. All this boils down to my overall assessment that LinkedIn seems to be taking a very careful but also transparent overall approach to the China market, which could ultimately boost its broader chances for success.

Bottom line: LinkedIn's launch of a Chinese-language edition and detailing of its approach to China's censorship policies look like a prudent way forward that could boost its chances of success.

Disclosure: No positions