Government regulation is one reason. But there are many other reasons (some are arguably more important), one of which being localization.
Check out other Asian markets (South Korea, Japan, Russia) and you may notice something interesting: many western companies failed to excel there too, even though there are no strict regulations.
eBay was not affected by GFW when they competed with Alibaba's Taobao marketplace a few years ago in China. eBay failed due to their own strategic mistakes.