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LinkedIn China president resigns

Derek Shen, who launched the professional networking site in China, quits in what could be a setback to the company’s mainland expansion plans

PUBLISHED : Friday, 23 June, 2017, 6:59pm
UPDATED : Friday, 23 June, 2017, 10:49pm

LinkedIn has lost its captain in China, its fastest growing market, in a move that could set back the company’s push in the country.

Derek Shen, the president of LinkedIn China, announced his resignation on Friday, about three and a half years after he helped the world’s largest professional networking site launch its China operation.

Shen, an experienced entrepreneur, said in a statement released by the company that “it is time for a new start” now that he has achieved the goal of rapidly expanding LinkedIn’s business in China.

LinkedIn is one of the very few western social networking sites that has managed to build a solid operation in the strictly controlled Chinese internet arena.

“It is difficult for multinational internet companies to grow in China and it is even harder to create a new business model in a well-established multinational firm. But now we can be proud to say that we have fulfilled our mission,” he said in the statement.

He said the company has entered a new phase of stable development and therefore it is time for him to make a new start in his career. He plans to work as the chairman of Danke Gongyu, a Beijing-based apartment rental start-up he invests in, while looking for new opportunities in China’s internet industry.

It’s very difficult for western internet firms to survive in China
Wang Xiaofeng, senior analyst, Forrester Research

Before joining LinkedIn China, Shen, formerly of Google, set up one of China’s major group-buying sites, Nuomi, which was later acquired by Baidu.

Shen’s departure, effective from June 30, comes about six months after LinkedIn was officially acquired by Microsoft in one of the biggest deals – US$26.2 billion – in the technology industry. Microsoft has a track record of big buys that have gone south, with acquisitions including Nokia’s handset unit and aQuantive, an online advertising company.

WeChat is top workplace communications app for 90 per cent of Chinese professionals

It is unclear whether Shen’s resignation is directly linked with Microsoft’s acquisition. But it could create difficulties for the company in terms of further expansion in China, where work-oriented social networking has not taken off in a big way, or at least not in the way LinkedIn had expected.

According to Shen, LinkedIn China’s user base has already grown sevenfold to 32 million and has brought in million of US dollars in revenue. But in 2014, when the China operation was launched, the original goal was to bring the service to 140 million professional in China.

“It’s very difficult for western internet firms to survive in China,” said Wang Xiaofeng, senior analyst with Forrester Research.

LinkedIn China has carved out a unique position in the country by targeting a rather niche yet premium market – well educated English-speaking professionals who have overseas education or work experience, or at least are working for multinational companies. But its localised effort – a professional networking app called Chitu for Chinese users who don’t speak English – is under siege by local rivals such as WeChat, Tencent Holdings’ dominant app, which has more than 900 million active users.

The annual WeChat user behaviour report released in April by Penguin Intelligence, a Tencent research arm, found that 87.7 per cent of WeChat users use the app for daily work communication.