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You have to give credit to Rupert Murdoch, sometimes.

Back in late September, 2006, Rupert Murdoch announced that his wife Wendi Deng would be spearheading News Corporation’s efforts to penetrate the Chinese market with Fox Interactive Media’s popular social networking site MySpace.

After this news hit the media, some expected an acceleration of Murdoch’s plans given China’s booming market. The Asian ad industry is poised to grow to a whopping $110 billion by 2010. By comparison, the US market by then will soar to a “mere” $32 billion according to Merrill Lynch, or $25 billion according to eMarketer.

But it’s now been over two months and still: no joint venture for China. Of course, it’s not like Murdoch has been idle.

Murdoch knows that he needs to expand MySpace into Asia while Asian social network Cyworld targets America. Just last week, Murdoch announced that he had struck a 50/50 joint venture deal with Softbank Corp. to introduce MySpace in Japan.

Talk about deterrence: strike Cyworld in its backyard before it can hit you on your turf.

On Friday, talk stirred up again about China. But it was more of a non-news item: “News Corp. to launch in China if we find the right partner.” Anything new there? Not really.

We could be merely speculating, but it’s no surprise that Murdoch is getting impatient with a lack of presence in China for MySpace: there has been an uptick of VC activity in Chinese firms and just this week.

But something happened last week that lends credence to Murdoch working on something major as we speak.

Why the reminder today that China is also on his sights? Wendi Deng is a capable and experienced executive to tackle China. But in terms of operations? Well, enter Xie Wen.

Who’s Xie Wen? Now we move from deterrence to Darwin’s survival of the fittest.

Xie Wen was Yahoo!’s China President for 40 days. That’s right, days. It should be noted that Yahoo! China is part of Alibaba in a deal that saw Yahoo! integrate its Chinese operations in Alibaba, invest $1 billion in Alibaba and take 40% of the Chinese firm. Alibaba is led by Chinese visionary Jack Ma. It’s safe to say that Ma and Xie Wen did not see eye to eye, leading to the premature departure. According to Business Week:

In what seems to have been a hastily written press statement cluttered with grammatical errors, CEO Jack Ma said that Xie had resigned “for personal reason [sic].” (Alibaba controls Yahoo! China and is 40% owned by Yahoo!) Added Ma, “Even though he worked for Yahoo! China for a short time, Xie Wen’s insights into China’s Internet industry and his honest character has [sic] left a deep impression on our team.”

What’s behind Xie’s sudden departure? Yahoo! China would not comment beyond a terse press statement. But many people who follow the industry believe that Xie left because he and Yang couldn’t see eye to eye about Yahoo! China’s future. Xie had proposed a change in focus for Yahoo! China, which has been struggling in the Chinese search market and is not a leader among the portals either.

Xie wanted to try a Web 2.0 strategy, addressing the exploding demand for user-generated content. Yang wanted to stick to the company’s portal model and, unimpressed by Xie’s strategy, forced him out.

We could be wrong, but is there a more Web 2.0 play than MySpace? Didn’t Murdoch say earlier this year that he would not be adopting a portal strategy? Hmm…

We’re not sure if there is any truth to our assertion, but if Murdoch has yet to reach out to Xie Wen, someone might want to forward this to the Chairman. We can’t…

Interestingly, over the past years, there has been a musical chairs game between executives of Yahoo!, MSFT and Google in China. Obviously, these firms usually think of protecting themselves in terms of non competition agreements against the other two since they are loosely or directly competitors.

But News Corp.’s FIM’s MySpace, not really? I’d be surprised if a judge viewed MySpace to be a competitor of Yahoo! - so unless the personal reasons are indeed health related (we wish of course that they are not), it is not an altogether implausible idea.

Star Wars indeed.

Disclaimer: Oddly enough, News Corp. is involved in an ongoing litigation matter against and yours truly pertaining to, ironically enough, non-competition matters…

Source: Will Yahoo!'s Xie Wen Jump to MySpace China?