MySpace in China?

Is China ready for the virtual chumminess and gaudy templates of News Corp.'s (NYSE: NWS  ) MySpace? According to this morning's Wall Street Journal, Rupert Murdoch's media empire is in talks with International Data Group to introduce the social-networking site in the world's most populous nation.

It's really not much of a surprise. The site attracts nearly 80 million unique visitors a month, but even that gargantuan sum is just 6% of the population of China. Yes, just 10% of China is currently online, but that only serves as a bigger incentive for early entry into a market on a clear upward path.

There are other reasons why MySpace wants in. After a couple of years of stellar gains, MySpace traffic growth has slowed in recent months. With two-thirds of MySpace traffic coming from stateside users, a little overseas exposure would help ease the sting if domestic usage really is starting to peak.

Getting in early is the key. Baidu (Nasdaq: BIDU  ) , China's most popular website, recently rolled out Baidu Space. Despite the spacey name, it is more of a blogging site than a MySpace clone. However, it's important for MySpace to establish itself before Baidu's site begins loading up on social-networking bells and whistles. Baidu's reputation as a haven for pirated MP3 file searches is the kind of thing that would naturally help it in competing with a youth-oriented social-networking site.

The climate hasn't been kind to outsiders trying to cash in on China. Google (Nasdaq: GOOG  ) has actually lost search-engine market share to Baidu over the past year, while there have been high-profile resignations at both eBay (Nasdaq: EBAY  ) and Yahoo! (Nasdaq: YHOO  ) .

News Corp. may have a secret weapon here in Mrs. Murdoch. Really. Wendi Deng was born in China and was working for Murdoch as a junior executive in Hong Kong when the two met. According to Journal sources, she will sit on the MySpace China board.

Naturally, that won't be enough to make MySpace China work. You also have to worry about a restrictive government that may frown upon the kind of uninhibited social networking that is par for the course domestically. It's worth a shot, anyway. There is too much at stake.

Thanks for the add, China.

Yahoo! and eBay have been recommended to Stock Advisor subscribers. Baidu was singled out toRule Breakersreaders in last month's issue and has already gone on to soar 39% higher. What two new picks will be singled out later this month? A free trial subscription will clue you in.

Longtime Fool contributor Rick Munarriz has been a fan of China's growth stocks for several years now. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.TheFool has a disclosure policy.


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