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LinkedIn Launches a Chinese-Language Site -- But Government Censorship Looms

Let's be fair, there is no easy out for any U.S. Internet business when it comes to China.

Base image: ymgerman / iStock

LinkedIn announced that it will launch a simplified Chinese language version of its site, making it easier for native Chinese speakers to use the social business network.

The company’s services have previously been available to users in China, although only in English, garnering about four million users inside the country.

But earlier this year, LinkedIn announced the appointment of Derek Shen as president of LinkedIn China. He is currently recruiting for a large staff that LinkedIn expects to have in the country. Currently, the company’s largest international office is in Europe.

The new deal there will be a joint venture with China Broadband Capital and Sequoia Capital China. As part of the deal, the two partners contributed $5 million in cash for a seven percent stake in preferred shares. There is a conditional option for them to pay $20 million more for another 21 percent of the joint venture.

In an interview, CEO Jeff Weiner said that LinkedIn had applied for a license to operate within the country that had yet to be approved.

“We think this makes sense to have our business grow in China, we need to offer a service that is local to create as much value as we can for its users,” said Weiner, who said the company had been mulling how to approach the market for two years.

It’s an important strategic move for the company, which already boasts more than 277 million regular monthly users, nearly half of which are mobile. Considering China’s economy is second in the world only to the United States, it’s a good country to target if you’re aiming to map the world’s network of professional users.

It’s also important for LinkedIn to start gaining a stronger foothold in China to take on the more popular incumbents like Tianji, which currently leads China as the country’s top social networking site for professionals. Other competitors are also battling for market share, like Dajie, Ushi and Zhenhedao.

But the move doesn’t come without a cost. Like many other tech companies before it, LinkedIn will work with the Chinese government, potentially agreeing to censor some content that the government requires it to in order to keep operating. Some of its servers will also be inside China, though the company will serve up as much information as it can from outside the country.

What that means in practice isn’t entirely clear, but LinkedIn’s Weiner promised to make its dealings with the Chinese government as transparent as it can.

Weiner said in the interview that LinkedIn was “opposed to censorship,” although that is precisely what LinkedIn will have to do at times to remain in business in China. “The government may, at times, require us to take down certain content, but we will try to stay true to our culture and values,” he said, in what is perhaps the hedgiest hedge of the day. “We’ll know a lot more as we operate.”

But, Weiner said, LinkedIn and the Chinese government did have common goals to “create economic opportunity, for us on a global basis and for them in the country.”

In a blog post, Weiner also addressed the issue: “LinkedIn strongly supports freedom of expression and fundamentally disagrees with government censorship. At the same time, we also believe that LinkedIn’s absence in China would deny Chinese professionals a means to connect with others on our global platform, thereby limiting the ability of individual Chinese citizens to pursue and realize the economic opportunities, dreams and rights most important to them.”

Let’s be fair, there is no easy out for any U.S. Internet business when it comes to China.

If you followed Google’s travails with entering China back in 2010, this should be familiar territory. After initially agreeing to play ball with the Chinese government on what is and isn’t subject to censorship, Google drew a line in the sand and uncensored search and news results on its properties accessed by Chinese users.

Other Internet giants also have shied away from China and are blocked there, including Facebook and Twitter. Both companies have expressed concern over potential issues with the government about the massive amount of personal information they collect about users.

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