Here are the references (my comments in bold):

Facebook sees China’s social networks as key competitors
We face significant competition in almost every aspect of our business, including from companies such as Google, Microsoft, and Twitter … We compete broadly with Google’s social networking offerings, including Google+, and also with other, largely regional, social networks that have strong positions in particular countries, including Cyworld in Korea, Mixi in Japan, Orkut (owned by Google) in Brazil and India, and vKontakte in Russia. We would also face competition from companies in China such as Renren, Sina, and Tencent in the event that we are able to access the market in China in the future.

China’s blockage is a risk that Facebook may face elsewhere
It is possible that governments of one or more countries may seek to censor content available on Facebook in their country, restrict access to Facebook from their country entirely, or impose other restrictions that may affect the accessibility of Facebook in their country for an extended period of time or indefinitely. For example, access to Facebook has been or is currently restricted in whole or in part in China, Iran, North Korea, and Syria. In addition, governments in other countries may seek to restrict access to Facebook if they consider us to be in violation of their laws.

Facebook is still very hungry to enter China
We plan to continue the international expansion of our business operations and the translation of our products. We currently make Facebook available in more than 70 different languages, and we have offices or data centers in more than 20 different countries. We may enter new international markets where we have limited or no experience in marketing, selling, and deploying our products. For example, we continue to evaluate entering China. However, this market has substantial legal and regulatory complexities that have prevented our entry into China to date. If we fail to deploy or manage our operations in international markets successfully, our business may suffer.

China’s lack of Facebook penetration highlighted as a key hurdle for Facebook’s ambition
There are more than two billion global Internet users, according to an industry source, and we aim to connect all of them. We have achieved varying levels of penetration within the population of Internet users in different countries. For example, in countries such as Chile, Turkey, and Venezuela we estimate that we have penetration rates of greater than 80% of Internet users; in countries such as the United Kingdom and the United States we estimate that we have penetration rates of approximately 60%; in countries such as Brazil, Germany, and India we estimate that we have penetration rates of approximately 20-30%; in countries such as Japan, Russia, and South Korea we estimate that we have penetration rates of less than 15%; and in China, where Facebook access is restricted, we have near 0% penetration. We continue to invest in growing our user base, particularly in markets where we are relatively less penetrated.

Admission that China may, in fact, be impossible for Facebook
China is a large potential market for Facebook, but users are generally restricted from accessing Facebook from China. We do not know if we will be able to find an approach to managing content and information that will be acceptable to us and to the Chinese government.

One board member’s China fund garners a mention
James W. Breyer has served as a member of our board of directors since April 2005. Mr. Breyer has been a Partner of Accel Partners, a venture capital firm, since 1987. Mr. Breyer is also the founder and has been the Chief Executive Officer of Breyer Capital, an investment firm, since July 2006. Mr. Breyer is also a co-founder and has been co-lead on the strategic investment committee since inception of the IDG-Accel China Funds.

Posted on Sina Weibo, China’s largest Twitter-like platform, he had 400 forwards and 50 resumes in his inbox within 10 hours.

Here’s a translation:
Would you be as kind to co-workers, as smart, as willing to debate and challenge as we try to be?

Are you passionate about social media to the point that Weibo is the first thing you look at in the morning?

Can you make a ppt pretty? Can you photoshop? Could you make this picture look even better?

Could occasionally work every minute you are awake, as I sometimes do?

We are a company of marketers, not linguists. If your English is not perfect, please do not let this stop you applying.

You know my Weibo name (Angry Editor)… Do you have impeccable attention to detail?

Send us your resume!

In Social we are hiring 5 new developers. Positions for these technically minded individuals are open at levels – ranging from managing developers to software development engineers. These positions are based in Beijing.

John Yurcisin
johnyurc at amazon dot com
Director, Social
Amazon.com

It is interesting to note:
- How Nokia still dominates in terms of the number of devices surfing the Internet.
- How quickly iOs and Android have become top-5 devices for Internet searching and surfing. The next version of this graph is almost certain to show iOS and Android vying for number 1 slot.
- There is a vast universe of devices not represented on this chart. Many of the cheap Chinese phones do not identify themselves when going online. This makes it hard to track usage of these devices.

Launched with little fanfare last week, the US Consulate has installed air quality monitoring equipment that now Tweets at 9am and 2pm each day.

Why is the US government doing this?

The official statement says it is “an unofficial resource for the health of the Consulate community”. Unofficially, it is because there is skepticism about the numbers produced by the Chinese government.

My suggestion: It would be great if the US government set up a similar Twitter feed in Hong Kong and then created a “Compare the Air” app which allowed people to see which city suffered the worst air pollution on a given day.

Clearly a single pollution monitor on top of a single building does not represent the city-wide state of pollution, but these Twitter feeds show the power of trusted data.

UPDATED April 9: Due to a Tweet from a highly credible source, China’s Internet is now echoing with unconfirmed rumors that Facebook signed an agreement with an unknown partner to enter China.

Overnight much has been written about the Facebook/China rumor, with speculation now focusing around a Baidu partnership. Bill Bishop added that Alibaba, Sohu and China Mobile were other possible partners.

Baidu, several people have noted, has not distinguished itself in social so far. Bill Bishop also Tweeted some well-needed skepticism: “don’t get 2 excited about a possible facebook deal for China. remember Myspace.cn w blue chip backers. a disaster here. long b4 us blew up”

Notable postings to watch include: Robin Wauter at TechCrunch, Kai Lukoff, Bill Bishop and Marbridge Consulting.

WRITTEN APRIL 8: Hu Yan Ping, manager and founder of Internet research center DCCI, Tweeted on Sina Weibo an hour ago:

“Facebook really is about to enter China, the agreement is signed. A domestic website will work with Facebook to create a new site. This new site is not interlinked with Facebook.com. Will this live or die in China?”

In the first hour the Tweet received 500 retweets and 178 comments.

Among the initial speculative comments:

– Many said the the tie up will be with portal giant Sina.

– Some suggested the tie up will be with search giant Baidu.

– Some joked that Tencent had really bought Facebook.

In recent months Mark Zuckerberg has met with founders of China net giants Sina, Baidu and Alibaba. Opening a Facebook equivalent in China seems about the only way to enter a market where the government has such a strong say on how the Internet operates.

Who is Hu? According to a conference bio: “Yanping Hu has engaged in China Internet research since 1995 and was the Chief Editor of China Internet Weekly.”
What is DCCI?
DCCI, which stands for Data Center of China Internet, is an Internet research company that does Internet monitoring, interactive marketing, measurement, analysis, optimization services.

Anyone from Palo Alto have other details (or a confirmation)?

Any predictions you would add (or change)?

(1) eCommerce to see wider adoption, driven by convenience, lower-price alternatives to traditional retail, and improved trust & safety. Gross merchandise volume (GMV) is expected to reach Rmb723B in 2011, or less than 4% of retail sales.

(2) Social commerce. Expect social sites to be an emerging and important traffic generator for eCommerce companies. Synergistic relationship between social networks and commerce merchants will fuel growth for both segments.

(3) Gaming segment likely to see re-rating with good game titles launch. Highly anticipated games in 2011 include Duke of Mountain Deer, World of Warcraft Cataclysm, etc., which could generate greater player interest and, as such, sector rerating.

(4) Video advertising to prompt ad dollar shift from TV to internet. With the recent IPO of Youku, a broader range of online video content, growing online video user base, and a familiar ad format, TV advertisers are likely to accelerate the ad budget shift from offline to online.

(5) Mobile Internet to see increased competition. We expect Internet leaders like Baidu and Tencent to formally launch middle-ware products that could include third party application distribution platforms; compete with existing players UCWeb other mobile game platforms.

(6) Search continues to see solid growth, with wider market adoption. Baidu still maintains dominance, other players such as Soso and Sogou still unlikely to gain meaningful market share.

(7) Solid consumer spending trend supports good advertising segment growth. Expect continued good macro environment to support consumer spending. We believe the sector growth story remains intact: Internet usage growth, particularly in lower-tier cities, to drive ad budgets online.

(8) Expect transition from time-base pricing to CPM-base pricing to accelerate in 2011, but remain gradual, driven by user-segregation and better online adserving/tracking technology. Yet, leading portals will still benefit from their own brand influence.

(9) 2011 Rmb appreciation to improve sector profitability. Expect sector margins to have very slight improvements from Rmb appreciation, as only a small portion of costs are in US dollars (game licensing fee, overseas video/sports content fee, and some servers, etc.). Benefits to come from translation gains from Rmb-denominated EPS to US$-denominated EPS.

(10) More IPOs likely in 2011. We expect investors will likely continue to look for growth investment opportunities in 2011. We think China’s internet segment offers good secular growth, as well as a number of sizable private companies. We believe more new listings are likely.

China’s Social Media, a SPRIE Seminar

Date: March 16, 2011
12:00 PM – 1:15 PM
Open to the public
No RSVP required

Speaker
Thomas Crampton – Asia-Pacific Director at Digital Influence, Ogilvy Public Relations Worldwide

Much has been written lately about the Chinese government’s efforts to control and censor the Internet. Internet censorship is an important issue, but it is not the top priority of the country’s 420 million Internet users. Their top priority? Connecting with other Chinese online. The Internet has opened access to information for ordinary Chinese citizens in ways that were unimaginable just a few years ago. Coming from a world where information was pre-filtered by editors at state-run media, China’s Internet is freewheeling by comparison. Rather than kill social media, controls imposed by the government have created a vibrant and unique social media domestic ecosystem.

Thomas Crampton, who runs social media strategy in Asia-Pacific for the marketing and communications company Ogilvy and Mather, will speak about what social media means to China and Asia. A former foreign correspondent for The New York Times and International Herald Tribune, he formerly looked at the region in terms of political, economic and social issues. In his current role he has been participating in the changes as social media affect Asia economics, politics and society.

Location
Philippines Conference Room
Encina Hall
616 Serra St., 3rd floor
Stanford University

Since then, new social media platforms have become relevant – on both sides of the Great Firewall – and so the team reworked the infographic. They have also widened the scope to include more platforms within some of the categories.

Major changes include:

Three new categories: professional social networks, which may become more important with LinkedIn’s China future still uncertain, mobile chat, and online music.

GroupOn’s Chinese platform: Although just launched, if their planned investment is anything to go by and they get over some of their initial obstacles, GroupOn China is likely to become a major player in the next few months.

Quora: Although different to Yahoo Answers, which it replaced, Quora is now the Q&A platform everybody is talking about. On the China side we have included its direct equivalent, Zhihu, as well as Baidu Zhidao and Tianya Wenda, which are more like Yahoo Answers.

More Tencent: This Chinese internet giant has been given a lot more face than last time, with the addition of their microblog and the highly populated but relatively inactive Qzone.

Making graphics like this is, of course, far from an exact science. Many of the changes are debatable and the Chinese equivalents also have very different features from their equivalents. Inevitably, there is also the difficulty relating to category crossovers.

Suggestions welcomed in the comments!

By Andrea Fenn

When in the mid-2000s automobile brands like Volkswagen or Honda started leveraging Chinese online forums to talk about their nameplates, the world of Chinese social media was muddy ground for doing business. Rules were unclear, governmental control was tight and the Chinese Internet audience seemed more interested in online games than in brand and product information.

Five years later, social media have become a core platform for brands to spread messages to their audience and to build supporters’ communities. This is because of the unrestrained growth of Internet usage in China, and because Chinese Netizens have evolved to a more mature, informed and consumption-prone audience.

China’s Netizens: Many and Active
According to the China Internet Network Information Center, the official voice about Internet usage in China, the Chinese Internet population has today reached around 404 million. With a 5.2% growth from 2009, China’s Internet population is the world’s biggest, bigger than the entire population of the Middle East.
But what is even more pronounced is the level of participation of Chinese Internet users in social media. The latest China Social Network Report indicates that roughly 54.7% of Netizens in China users today own or visit blogs, and 47.3% have a page on one or more social networking site (SNS). More than 25% write 10 or more posts on forums, blogs or SNS every day, and 92.3% of Netizens visit social media pages at least three times a week, while 27.1% have pages on five or even more different social networks.
Social media is progressively becoming a crucial element in the lives of Chinese people, as it allows them to gain entry to social circles and information that would not be otherwise accessible because of distance, governmental control or other constrictions.

Farflung Relations, Dull Media
Firstly, the sheer size of the Chinese territory is a limit to keeping long-distance relationships, getting in touch with old friends and meeting new people outside one’s work nucleus. Thanks to social media, Netizens can keep the threads of their lives together and expand them without resorting to overnight train journeys or expensive long-distance calls. As a consequence, China is the only country in the world where people say they have more friends online than offline, stated an MTV Research in late 2008.

Secondly, because of the restricted availability of information on traditional media, social media have become an invaluable resource for Chinese to access the “other side of the story”, and information they would not be able to find anywhere else.

This is true for political discussion and social issues, but it is also true for brands. As many foreign products are often unavailable outside tier-one cities and official information about them is often limited or only available in foreign languages, social networks have become the privileged forum for Chinese consumers to find news about brands and products and share experiences about their shopping habits.

Trust “Strangers With Experience”
According to the 2010 TNS Digital Life Report, China is the first country in the world for number of Netizens who join social networks to find information about brands. And the Internet is a trusted source, as 2010 Global Web Index indicates that Netizens trust reviews and insights on social media three times more than a recommendation from an acquaintance in a bar.

International Brands Join the Conversation
Facing the thirst for information and consumption of Chinese Netizens, international brands are entering full force the Chinese social media space. Not long ago it was not unusual for even internationally reputed brands not to have a Chinese-language version of their website. Today, most brands have a branded page in SNS like Kaixin or Renren, from which they broadcast tailored messages for their Chinese audiences.

This is true for multinational corporations with a huge retail footprint in China like KFC or Coca-Cola, which have been active on social media since early times and now have communities of hundreds of thousand fans on Chinese SNS.
However, it is also true for brands that have been slow in penetrating the Chinese market or that have lagged behind in terms of brand definition in China. Sportswear brand Reebok has suffered from unclear brand positioning and poor sales in the past few years, and is now straightening its status in the Chinese market by aggressively building communities and buzz on social media.

Chinese Brands: Slow Start, But Now Innovating
While Chinese brands have been somewhat slow in understanding the potential of social networks, now they have developed their own approach to social media, and are quickly moving to leading the way in the field.
The reason is mostly cultural: as western social networks like Facebook and Twitter are blocked in China, the Chinese counterparts developed in China are not just replicas, but rather new original creations that incorporate elements of the local culture and Internet customs.
The Sina Microblog, the Chinese alternative to Twitter, try to appeal to multimedia-loving Chinese Netizens and thus has extremely well developed video and photo sharing functions, better even than Twitter itself. At the same time, because 140 Chinese characters can say much more than 140 alphabetical characters, Sina Microblog is being used for more complete communications than mere short messages, which made it more suitable for a wider range of audiences and purposes.

Local brands have been better interpreting the peculiarities of “Made in China” social media, and in the past few months they have crafted extremely successful digital campaigns that will set the tone of advertising trends in China for the years to come.

Strong Case Study: Vancl
Most notable is the case of ready-to-wear brand Vancl: in April 2010, Vancl created parody versions of its own commercial, substituting official sponsor celebrity writer Han Han with new figures and modifying the slogan, and distributed it online without disclosing the official provenience.
The strategy aimed at leveraging the growing popularity of “online mockery”: the tendency of Chinese Netizens of ridicule, distort and customize online content as a means to express themselves.

The mocking campaign generated immediate reactions online: Netizens posted thousands of user-generated mock-versions of the Vancl commercial, and the phenomenon of online mockery became subject of wide attention in the Chinese public opinion. Few months later, the term fan ke ti (Vancl-ization) has already become a new popular idiom in the Chinese Internet vocabulary.

While it is hard to predict what changes will take place on Chinese social networks in the close future, lessons such as Vancl’s suggest that the social media space is bound to become more crowded with local companies.
“Made in China” campaigns are soon bound to become trendsetters for the direction of online marketing in China. To be successful, online marketing efforts of western brands will have to pay more and more attention to the peculiarities of the Chinese Internet culture and structure.

Andrea Fenn is Regional Digital Strategist at Ogilvy 360 Digital Influence Shanghai, the social media strategy team of Ogilvy. Andrea helps foreign brands or organizations understand and plan communication strategies on Chinese social media. He also writes on Chinese and foreign media about communication, social issues and lifestyle in China.

Before attacking the messenger, Social Bake is a highly credible source of statistics on Facebook, which is why I did not dismiss this as an error not worth noting.

According to Social Bake, there are now 659,060 Facebook Users, ranking China as the 82nd largest nation on Facebook and a penetration 0.16% of the online population and 0.05% of the general population. To get an idea of scale, there are roughly 420mn netizens in China and 160mn users registered on Renren, the China-based social network aiming to IPO later this year.

Nations Social Bake places at a similar speed of growth are a catalog of African nations with troubled histories, such as Somalia, Sierra Leone and the Central African Republic.

Social Bakers is not very clear about how they gather statistics for nation. I presume these are people who self-declare their location as China. To log onto Facebook from within China, users need to use a proxy service, which would show an IP location outside of China.

It would be interesting to know what has driven registration in recent months. Was it the film “The Social Network”? Are the new users students who return to China from overseas studies? (There were more than 130,000 Chinese students studying in the US in 2009)

Below are the demographics Social Bake provides for China’s Facebook population insight.

Facebook holds sway as the default social network in many parts of the world across all Internet demographics. In China, where Facebook is blocked, a handful of homegrown social networks attract segmented audiences, ranging from upmarket urban youth to university students and migrant workers.

While the world’s big focus these days is on Renren preparing to go public, these other networks deserve a look:

- Douban – a more specialized social networking site, attracts art students and those passionate about books, cinema, culture, and music. Users connect according to their interests and often hold offline activities, such as trips to local art exhibitions.

- Kaixin001 – a platform designed for a more mature audience of young professionals, has a membership that is heavily dominated by white collar workers in Beijing; Guangzhou, Guangdong; Shanghai; and second-tier cities. Users do not upload personal content but rather share information they find elsewhere, often relating to health, relationships, and professional advancement.

- QZone – the first and largest social networking site in China, attracts youth from teens through age 25, often from second- and third-tier cities. A sizable portion of migrant workers, many of whom share personal diaries in a blog-like format, use QZone.

- RenRen – the platform in China most similar to Facebook, attracts university students who use the platform to connect and interact with classmates. The site is organized around users’ school and graduation class. Many users upload videos and photos of their activities.

Quick summary:
Kaixin = Cool girls
Facebook = Expat foreigners
Douban = Hipsters
Renren = College students
Qzone = Teens in second and third tier cities

The Ogilvy Beijing social media team created the below archetypes to bring these personalities to life. Another posting that has generated a good deal of interest is the Beijing team’s infographic of China’s social media equivalents. The equivalents graphic will soon be updated, so suggestions welcome!

Beyond censorship, these actions now may have financial impact on China’s most prominent Internet properties. Deutsche Bank last night downgraded their outlook for Sina, based on potential government action against Sina Weibo.

Although filtered, Sina Weibo has evolved into one of the most open media platforms in China. There have been many open critiques of the government on Weibo. These have included questioning official statistics, condemning corrupt officials and arguing against policies like the recent measures requiring a Beijing ID card to  buy property in the capital.

Pressure via Weibo has brought change, since many of those using the service are high profile, including nearly 300 local and national delegates to the CPPCC, according to the People’s Daily. The People’s Daily cited Li Dongsheng, a delegate and board chairman of electronic device manufacturer, TCL gained 130,000 new Weibo followers last week after posting that he would listen to netizens’ ideas for inclusion in his motions. He now has 490,000 followers on Weibo. One example of legislation is a law protecting children that has been proposed in the wake of a Weibo-led campaign to save children from begging on the street.

Such high level users will do something to protect Sina Weibo, but the service may face constraints beyond censorship if the unrest carries on in the Arab world. Additional limits could include the slowing of speed to post (for government inspection) or limits to the number of re-tweets.

Deutsche Bank acknowledges Sina’s dominance, innovation and leadership, but expressed concerns big enough to warrant an investment downgrade.

As Deutsche Bank put it (emphasis is theirs):

Run-up on weibo enthusiasm may reverse
While we continue to recognize Sina’s dominance, innovation and leadership in the portal space, and view its weibo microblog service as a breakthrough in internet-based communications, we do believe that the risks of tightening government regulation around its “Twitter-like” service continue to mount. We believe the occurrence of (admittedly sparse and lightly attended) demonstrations across China over the weekend may move the authorities to disable aspects of microblog services that they view as destabilizing.  Further Mideast unrest could also lead to tightening.

Downgrade on valuation.
We downgrade to Sell (from Hold) as Sina now stands at USD85.52, well above our PT of USD58. Our valuation methodology is based on 1.1X PEG using a 3-yr CAGR. PT implies 27x 2011E PE. Upside risks include lenient government regulations and strong weibo monetization. We aim to re-evaluate our assumptions going forward.

A recent report by the investment bank describes the evolution of China’s Internet as a sort of “Three Kingdoms”, the classic piece of literature about the fluid alliances between rival warlords in the early imperial era.

The three kingdoms, as defined by CLSA, are Baidu/Sina, Alibaba/Sohu and Tencent/Google. Each pair with meaningful synergies that may lead to further collaboration.

Baidu/Sina Faction
- Customer bases are complementary, offering cross-selling opportunities.
- Sina’s real estate portal has worked with Baidu to expand its reach through search.
- During the World Cup, Sina was said to work with Baidu’s Aladdin to drive traffic to its World Cup micro-site.
Next steps: The next cooperation may take place with Sina’s Weibo mini-blog, where Baidu could help Sina reach small companies looking to conduct social commerce and search. By CLSA’s assessment, this combination of search and social media would make Baidu/Sina the most powerful kingdom.

Alibaba/Sohu Faction
This collaboration combines the ecommerce powerhouse, Alibaba, and a dark horse in the search space. This fills a void in the ecommerce world, creating an online shopping search platform that has the most comprehensive product and merchant information.

Tencent/Google Faction
Last but not least, Tencent and Google. Both companies complement each other well where Tencent excels in customer experience on the front end and Google’s back-end analytics and ad-serving platform are top-notch.

While there would not likely be any mergers between these six players, CLSA expects further cooperation for them to gain: Speed to market; Access to new customers base; and Operating leverage in a shorter time frame.

She has been passed as the tenth largest tweeter on earth by Yao Chen, a Chinese actress who is the most followed person on Weibo, China’s nearest equivalent to Twitter.

The power of Yao Chen’s microblog has been further demonstrated in the last couple days due to the strain put on the servers for our blog by a posting on this news by Jeremy Webb, a colleague from Ogilvy’s Beijing office. (Ok, not THAT much strain, but the posting did get thousands of re-tweets on Weibo and nearly 10,000 visits in 24 hours).

Chinese actress Yao Chen with her 4,927,256 followers (or “fans” as they are called on Weibo) surpassed Oprah Winfrey’s 4,927,206, Jeremy wrote.

This is the first time that the ten most followed microbloggers were not the ten most followed twitterers and is a great demonstration of both the size of China’s online population and the impressive growth of the Chinese platform.

Weibo, or Sina Microblog, is thought to have around 50 million users while the US-based Twitter, which is blocked for the vast majority of people in China, is estimated to over 200 million users. NOTE: China social media geeks may point out that famous users of Tencent’s Twitter equivalent have many more followers than Sina, but many seem of those seem to be zombie or automatic follows.

In terms of style of posting, it is not surprising that Oprah lost her place in the top ten: Oprah just posts a few times per month while Yao Chen posts several times a day and makes the most of the Chinese platform’s powerful features, for example adding a photo to every “tweet”. (Something that is very easy to do on Weibo.)

For some more on Weibo, as highlighted by Jeremy:

Sina Weibo’s 4 Steps to Dominance in China (TechRice)
Sina Weibo: 5 Must Follows (BloggerInsight)
7 things Sina Microblog (Weibo) has that Twitter doesn’t (Ogilvy Digital Map)

I wrote the below article for China Business Review, the magazine of the US-China Business Council. I’d be interested in feedback from the readers of this blog! Tom

As Chinese consumers spend more time online, foreign companies should deepen their knowledge of domestic social media platforms.

by Thomas Crampton

Much has been written of late about the PRC government’s efforts to control and censor the Internet. The government’s censorship of websites is an important issue, but it is not the top priority of the country’s 420 million Internet users (netizens). Their top priority? Connecting with other Chinese online. The Internet has opened access to information for ordinary Chinese citizens in ways that were unimaginable just a few years ago. Coming from a world where information was pre-filtered by editors at state-run media, China’s Internet is freewheeling by comparison.

Quick Overview
Chinese Internet users are actively engaging in social media—especially home-grown social media platforms. Domestic social media platforms differ in various ways from Western platforms.

Companies should learn how Chinese consumers use social media and take advantage of the platforms to conduct consumer research, launch products, manage public relations crises, and more.

Rather than eliminate social media, restrictions on foreign websites and social media have resulted in a flourishing home-grown, state-approved ecosystem in which Chinese-owned properties thrive. YouTube, Facebook, and Twitter are blocked in China, but their Chinese equivalents are expanding. By some measures, usage of Chinese social media is some of the most intense in the world. A Boston Consulting Group study found that Chinese Internet users are online for an average of 2.7 hours per day, considerably more than other developing countries and more on par with usage patterns in Japan and the United States (see Understand and Tap Into China’s Digital Generations).

Numerous factors help drive Chinese, more than other populations, to engage in social media. These include rural-to-urban migration that has separated families, the loneliness of the one-child generation, and a distrust of information from government-controlled media.

A 2008 MTV Music Matters survey found that young people across Asia have made a similar number of friends online and offline. Only in China, however, did young people actually have more friends online than offline. This points to a convergence of the offline and online worlds, where it is less important to distinguish between what happens online from the “real world.” In China, more than in many countries, social media has become deeply integrated into people’s lives.

Chinese netizens actively engage in discussions that could directly affect companies. A recent study by OgilvyOne in China found that 55 percent of China’s netizens had initiated or participated in online discussions about companies. Understanding social media is no longer a luxury for companies operating in China—it is an imperative. Formerly, a lack of engagement with netizens could be considered a lost opportunity. Now, the penetration and impact of social media is such that failing to understand what consumers are saying about a company online has become a business risk.

Comparing social media platforms
To explain the development of social media in Asia, Ogilvy’s 360 Digital Influence team has developed a series of social media “bulls-eyes” that place international platforms on the outside ring and their local equivalents on an inner ring (see Figure).

With China, as with other countries, this bulls-eye system has strengths and weaknesses. For example, the bulls-eye shows that the equivalent of Twitter in China is Sina Weibo (www.sina.com.cn), and the two equivalents of YouTube are Tudou and Youku (www.tudou.com and www.youku.com, respectively).

This comparison is helpful, but it can also be misleading. China’s social media platforms and online behaviors vary in important ways from those that may be considered their international equivalents. This variation is not all due to censorship. In China, as elsewhere in Asia, local variations of Internet usage are driven by language, culture, levels of economic development, and the underlying digital ecosystem. Digital ecosystems—the platforms around which populations focus online communications—can vary wildly between countries and within a single country. Substantial differences can exist even in countries at similar levels of economic development. Even without government blocks, Internet users in Japan and South Korea, for example, flock to domestically developed social media platforms such as GREE (www.gree.jp) and Cyworld (www.cyworld.co.kr), respectively, rather than internationally known sites.

YouTube vs. Youku and Tudou
Different social media usage patterns tell a great deal about the Internet and the country involved. For example, Chinese netizens use online video platforms quite differently from how Americans use YouTube. Rather than short videos of cute animals or silly domestic mishaps that may be popular among YouTube watchers, Youku and Tudou are filled with longer form content, up to 70 percent of which is professionally produced. Users in China spend up to an hour per day on the sites, compared with less than 15 minutes spent by Americans on YouTube. In the way they present programs, the Chinese sites seem more like online television stations or a replacement for digital video recorders. Though individuals in China produce and post videos, a large portion of online video content is longer-format professional videos. Much of this content consists of foreign programs pirated, subtitled, and uploaded hours after broadcast in the United States. An odd consequence is that the stars of programs such as Prison Break have a huge fan base in China, despite the series never having been broadcast on Chinese television.

In addition to the pirated programs, demand for original content on Youku and Tudou has resulted in a boom of companies that focus purely on online video. In some ways, the sites resemble a variation on US-based television service Hulu more than YouTube.

The television-like feel of Youku and Tudou reflects the usage pattern of young Chinese. University students in China often express skepticism when told that their country has one of the highest levels of social media engagement in the world, because they expect that the United States would rank first.

In my favorite demonstration, I ask students in a classroom to raise their hands if they have watched China Central Television (CCTV) in the last week. Generally, no one raises their hand. When I ask who has watched a video on Youku or Tudou in the last 24 hours, every hand in the room goes up, accompanied by amused laughter.

This switchover to social media does more than demonstrate the popularity of new media—it affects the whole advertising industry. In China’s case, certain demographics can no longer be reached effectively via traditional media channels. As the anecdote above shows, a well-crafted television advertisement on CCTV could miss university students entirely.

Twitter vs. Sina Weibo
Some differences between Chinese and foreign social media are rooted in culture and language. At first glance, Sina Weibo is a latecomer to the microblog phenomenon. But launched in 2009, just about three years after Twitter, Sina Weibo is by far the most popular microblogging platform in China. (The PRC government has blocked Twitter, though a small number of Chinese and resident expatriates hack their way around the blockage.)

Similar to Twitter, Sina Weibo allows users to post 140-character messages, and users can follow friends and find interesting comments posted by others. Small but important differences in the platform have made some say it is a Twitter clone, but better. For example, unlike Twitter, Sina Weibo allows users to post videos and photos, comment on other people’s updates, and easily add comments when re-posting a friend’s message.

Though mobile phones are used to send less than 20 percent of Twitter updates in the United States, nearly half of Sina Weibo’s updates are sent via mobile phone. This phenomenon points to the growth of China’s mobile Internet, one of the biggest trends in China and Asia.

Perhaps the most striking difference between Chinese and foreign social media, however, is the length of communications expressed via microblogs in Chinese versus English. One measure is to look at what Dell Inc., a company skilled at social media, can communicate on microblogs in Chinese compared to English. Twitter holds messages to 140 characters, which is quite short in English, especially if users want to include a URL. Dell often uses its Twitter feed, @delloutlet, to promote special offers, such as this posting: “Today’s Deal: Get FREE Eco-Lite Sleeve with the purchase of any Dell Outlet Insprion Mini 10 or 10v Netbook! http://bit.ly/77fUFG.” This message came in at 136 characters, almost the maximum length.

Since each character in Chinese is a word, @delldirect, Dell’s Chinese-language feed, can write much more using the Chinese-language Zuosa microblogging platform (http://zuosa.com). As translated by Ogilvy’s Beijing team, a similar message reads:

Dell’s National Day Sale runs from Sept. 11 to Oct. 8. To celebrate the 60th anniversary with the motherland, Dell Home Computers is offering 6 cool gifts and deals on 10 computer models. These exciting offers will run non-stop for 4 weeks. Also, get a free upgrade to color casing and a 512MB independent graphics card, as well as other service upgrades. All offers are on a first-come, first-served basis. What are you waiting for? Act now!
Even with a message this length—114 characters in Chinese—there is still enough space to put in a webpage link. In other words, 114 characters in Chinese translates into 434 characters in English, well beyond the text limit of a “tweet” in English. This language efficiency turns microblogging in China into a more blog-like platform.

Like Facebook, but different
Throughout much of the West, particularly the United States, Facebook holds sway as the default social network, gathering all demographics. The same does not hold true in China, where a handful of social networks attract segmented audiences, ranging from upmarket urban youth to university students and migrant workers.

Douban (www.douban.com), a more specialized social networking site, attracts art students and those passionate about books, cinema, culture, and music. Users connect according to their interests and often hold offline activities, such as trips to local art exhibitions.

- Kaixin001 (www.kaixin001.com), a platform designed for a more mature audience of young professionals, has a membership that is heavily dominated by white collar workers in Beijing; Guangzhou, Guangdong; Shanghai; and second-tier cities. Users do not upload personal content but rather share information they find elsewhere, often relating to health, relationships, and professional advancement.

- QZone (http://qzone.qq.com), the first and largest social networking site in China, attracts youth from teens through age 25, often from second- and third-tier cities. A sizable portion of migrant workers, many of whom share personal diaries in a blog-like format, use QZone.

- RenRen (www.renren.com), the platform in China most similar to Facebook, attracts university students who use the platform to connect and interact with classmates. The site is organized around users’ school and graduation class. Many users upload videos and photos of their activities.

Bulletin board systems
Beyond these sites that have more modern Internet functionality, some original forms of social media still flourish in China. Bulletin board systems (BBS), which were a primal form of the early Internet, allow people to post basic messages online (see the CBR, January-February 2009, Blogs, Bulletin Boards, and Business). In contrast to many countries, a wide range of BBS still flourish in China today, with users relying on them for critical consumer comments about products and services from clothes and cosmetics to restaurants and cars. Postings are anonymous, which encourages users to give unvarnished views. Writing under pseudonyms, many users that frequently post on BBS build reputations and sizable followings. Anonymity does, of course, also open the system to abuse by competitors writing negative comments.

The Internet as social media
A broader impact of China’s deep involvement in social media is that some netizens only experience the Internet through social media platforms. This is partly because of the large population of new netizens coming online at any given time. According to the China Internet Network Information Center, China had 420 million netizens by the first half of 2010, up 36 million Internet users over year-end 2009. When new users join the Internet, a friend will often introduce them to one particularly relevant service, such as how to communicate with friends for free via Sina Weibo or buy goods via China’s e-Bay equivalent—Taobao (www.taobao.com), so that service becomes their concept of the Internet. These examples show how many Chinese netizens would not distinguish between social media and the Internet itself. To them, the Internet is social media and vice versa.

Case studies in China’s social media
For companies operating in China, the rise of social media opens opportunities to engage with consumers and, at times, avert serious problems. By ignoring social media, companies may not see a consumer-led crisis coming.

Companies can use social media in China to conduct consumer research, shift brand preference, launch products, and manage crises. Even monitoring online conversations can yield striking results. For example, while conducting daily online monitoring for a client, Ogilvy found a brewing consumer protest over the client’s shop in Guangzhou. Early in the week, a disgruntled customer had posted complaints about customer service and announced his intention to visit the store that coming Saturday to express his dissatisfaction. Other netizens said they would join, exchanged mobile phone numbers, and discussed where to meet. By Wednesday, a group of 30 disgruntled customers had plans to meet at the store on Saturday. Because the original complainer had posted full details of his experience, the company was able to contact the customer and rectify the situation. In response, the customer announced online that he would cancel his visit to the shop. He was impressed with the direct outreach and the fact that the company listened.

An example involving a nationwide consumer recall shows how companies should use social media and speak the language of consumers. In this case, consumers had different concerns from what the company expressed in public statements about its recall. The company also posted general information about the recall, but consumers online wanted more detailed and practical information. By actively listening to consumers on BBS and other social media sites during the recall, the company adjusted its online messaging to answer consumer questions. As the recall went into full swing, the number of people visiting recall-related forums remained high, but fewer people left comments or asked questions because their questions were being answered sufficiently.

Oddly ignored
As China’s population moves online, consumer behavior shifts. Oddly, many companies have failed to acknowledge the shifts in their marketing strategies. Social media has grown to become the shared commons where Chinese consumers offer opinions, ask for advice, and discuss brands. Ignoring the Internet could be considered a lost opportunity in the past, but in China today, ignoring social media is a business risk.

The future will rely highly on mobile and tablet devices, Gary said (see video below for more details), while adding that Tudou is currently working to make the entire video library accessible on these devices.

With Android, mobile devices in China are increasingly replacing laptops as the primary device and quite often as the only device. Chinese people think that mobile technology is smarter and more user friendly. Mobile devices are also much cheaper than laptops.

China is known for a more aggressive monetization policy than in the West and this is likely to continue. Mobile devices make micropayments a lot easier so we will see a strong increase on that front in China, Gary added.