Web 2.0 in China: Build Or Buy?

Sage Brennan has a good column this week about the online startups (Web 2.0 ones, as he describes it) in China, and whether it makes sense for bigger media to buy them: “There are the usual reasons big companies might buy one of the leaders in the space, like Toodou, Yoqoo, 56.com, or mofile: they don’t know the technology or market as well as the startups, burn rates are low, to get more entrepreneurial leaders into the upper-middle ranks, to buy a recognizable brand, to add stickiness to existing services, etc.”
He makes some good points:
— For Baidu.com, acquiring one of China’s many YouTube clones would make sense for the above reasons, plus the fact that Baidu engineers could then optimize the acquired site for Baidu search, something that none of the Chinese video startups seem to have done very well on their own.
– It would also makes sense for News Corp.’s MySpace unit, which does not have a presence in China (but is speaking to IDG VC and others on China launch), to buy a video community company (and also tie up with a selection of other companies), after a long line of Internet giants — the most recent being Google — have shown how tough it can be to dislodge a local competitor.

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