China’s social-media boom (b)

In previous blog, I discussed the China Social Media Market and analysed Chinese Social Media Major competitors. Now, I will move my focus on the Chinese social media users.

Deep dive: China’s distinct social-media users

Based on the motivation and behavior, Chinese Social Media users are recognized in four groups

Social Enthusiasts

Social enthusiasts spend a large portion of their time maintaining friendship networks; they account for about 15 percent of social-media users.

Normally, they  are the heavy users of social media. The McKinsey's report indicates that average online time was 69 minutes a day, compared with an overall average of 46 minutes per day. 68 percent of social enthusiasts users are update their webpage in daly base.

They use social media to build and maintain their circles of friends: 68 percent of respondents in this segment post daily updates on their lives, while only 41 percent of all users do. And they care about the number of friends they have: 76 percent agree that having a large circle of friends is important to them, while less than half of average users say so. The data incateds the segment is more educated and slightly younger than average. This group of users are enjoy to try all function on social netword and happy to see brand ads on their sites.

Resenders

Resenders, who account for 15 percent of research population, actively repost messages, such as jokes, from other sources. Although they do not post original material, they often have large numbers of followers. They are the one of the major active social media users group. They are brand friendly users which see social-media sites as a means to promote themselves. 32 percent of respondents indicate that "driving traffic to my blog and generating followers" is important, compared with an average of 18 percent for research population.

 In addition to being friendly to brands, these users are happy to contribute to Web pages devoted to a particular brand’s products. More than 40 percent say they make group deal purchases, and 69 percent say they spend money on things they see on social-networking sites every month—a level that exceeds even that of social enthusiasts.

Readers

Resenders generally do not participate, but read what others have posted. They make up about 14 percent of users. In Chinese, these group of users are divers, because of these users always stay behind and never or rarelly post message or other type of informtion to interate with other users. The research found only 13 percent of Readers may response to other's microblogs. Readers are brand-friendly. Only 7 percent of Readers will take comments on someone else's wall. They also rarely post their own content on the web. Normally, They do not reject online promotion activities initiatively. Normally, Readers also spend significant time on social media, which around 55 minutes a day, just after Social enthusiasts.

 Opinionated Users

Opinionated users are counted as 14 percent of research population. These groups of users nomally have strong opinions and large personal followings. They also have very strong personal opinion about all products and issues. They intent to make purchase decision beased on their own experience or idea and try to use their strong opinion to impact on their friends and family. So, if this group of users did not manage very well, they would become a brand's worst enemy. They spend an average of 60 minutes on social-media sites every day, and more of that time is devoted to uploading content than reading it. More than 60 percent of interviewers in this segment treat social-media sites as important places for them to delivery their opinions, while only 26 percent of research population do. Normally, they have negative opinion about online advertisement and perfor to compline  the bad experience. To this group of website users, company should carefully to design the website and function to reach Opinionated Users.


If overseas social media webiste intend to enter to China market and gain succeed, they should really careful about these four types of social media users, monitor what they are saying about their brands, and build close relationship that know how to delivery messages efficiency.

Engagement with the digital Chinese consumer
If overseas social media websites  intend to enter to China market, normally, they may face three big challenges: 
(1) some executives lack familiarity with social media and do not know how to mine consumer insights from this ocean of data, or how to translate those insights into actions, especially in the country's dynamic ecosystem.
(2) existing social-media knowledge and analysis frequently is not actionable; participating in the social-media space requires companies to build capabilities and focus on execution.
(3) executives may be unsure about how to fit social-media insight into traditional brand-planning processes

Chinese social media has lot of difference with western market, the culture, regulation system and political issue are the three critical areas that social media webistes, especially overseas social media webistes should consider extremelly carefully when theyintend enter into China social media market. 

Reference
Chiu, C, Lin, Davis & Silverman, A 2012, China’s social-media boom, viewed on 23 September, http://www.mckinseychina.com/2012/04/25/chinas-social-media-boom/

China’s social-media boom (a)

(1)The most populous nation moves online

Chinese social media market is an unique market which without all major foreign  social media websites, such as Twitter and Facebook, but Chinese social media industry has the largest population of internet users and social media users and fastest growing market of social media. Until December 2011, China had 513 million internet users, compared with 67 million in Germany, 121 million in India, and 245 million in the United States.

China also has the fast growing population of internet users. Chinese e-commerce is expected to triple by 2015, when sales could reach 2.7 trillion RMB (about 420 billion USD) - 20% higher than the projection for the US market.

A recent market research from McKinsey & Company introduced the consumer behaviour of Chinese internet user. A new McKinsey survey of 5,700 Internet users in China has found that 95 percent of those living in Tier 1, Tier 2, and Tier 3 cities are registered on a social-media site; in addition, the country has by far the world’s most active social-media population, with 91 percent of respondents saying they visited a social-media site in the previous six months, compared with 30 percent in Japan, 67 percent in the United States, and 70 percent in South Korea. The survey, which explores the behaviour of Chinese consumers on social networks, is the first of its kind in China.

Another research from Netpop indicates that 92% of the 243 million broadband consumers in China (224 million) ages 13+ contribute to social media. This is compared with only 76% of the American broadband population. Furthermore, 41 million of them are contributing content online through six or more activities (uploading photos, publishing blogs, posting ratings/reviews, etc.). 

Coppy Cat??? or Good Leaner???

In the digital age, people are pushed to do similar things to support our digital life. The picture below shows what Chinese and US netizens use to share video, purchase online, maintain social networks, search online, and blogging. Although there are some inappropriateness here because some features of the applications we use are not exactly the same, the picture vividly depicts how similar a way of life we are sharing with each other as long as we are netizens.

 Population Map, how big of the Chinese Social Media Population convert to Real Country's Population

(2) Deep dive: China’s unique social-media landscape

Because of technology and politic issue, local Chinese sites competely dominate the landscape. Facebook and Twitter are fixtures of daily online use in West and in other Asia countries, there is no access to these sites in China. Currently, Chinese market is dominated by 5 major market players.

 

 Qzone, which 44 percent of respondents said they use the most. The website is owned by media conglomerate Tencent, which is bundled with the top market share instant message tools in China QQ. Users are allow to create their own Web pages for posting updates, photos, and videos.

Sina Weibo and Tencent Weibo, with 19 percent and 8 percent respectively. Weibo means “microblogging” in Mandarin. Weibo products offer many similar features of Facebook and Twitter. Users may post personal updates with a 140 character limit, up;oad photos and videos, and message other users. Actually, Sina Weibo is a very creative products. Sina Webo introduced a multimedia function a year and a half before Twitter did. Tencent Weibo is the primary competitor. Although Tencent Weibo has lower market share than Sina Weibo, the strong customer base of QQ, another major product of Tencent contribute large customer growth to Tencent Weibo.

Renren with 19 percent market share, ren means "people" in Mandarin. RenRen means everybody. Previously, RenRen was named schoolmate network. Like Facebook, it began as a social-networking site exclusively for college students. While now open to a general audience and changed name to People to extand its target market.Although it is still dominated by university students and recent graduates.

Kaixin with 7 percent market share, Kaixin means "happy" Mandarin. Kaixin is one of the major competitors of RenRen, the targets white-collar office workers. It is also a Facebook-like site.

to be continues... ^_^

Reference
Chiu, C, Lin, Davis & Silverman, A 2012, China’s social-media boom, viewed on 23 September, http://www.mckinseychina.com/2012/04/25/chinas-social-media-boom/

Social Media - A bright future or a falling trends

Recently, Social Media industry leader Facebook formally launched to public market, but 2 recent issue dramatly shaked the public expectation to the Social Media. It was a happy hour when Facebook offically launched to public market on 18 May 2012.The NASDAQ opening bell is rung remotely from Facebook's California headquarters by Mark Zuckerberg and other Facebook executives as the company makes its debut on the stock market. In this IPO, Facebook offered 15 per cent of its available stock in the IPO, so there was enough to meet demand. The other 85 per cent is still owned by Zuckerberg and other Facebook executives, employees and early investors. The IPO successfully help Facebook become the one of the most valueable company which has a market value of about 105 billion USD, more than Amazon.com, McDonald's and Silicon Valley stalwarts Hewlett-Packard and Cisco.

 

Facebook Rings Nasdaq Opening Bell May 18th 2012

(1) Facebook share price fast decreased since the fist day that Facebook launched to the market. The dramatically decrease of Facebook share price dramatically shake the investors' confiderence to the future of social media industry.

In the first trading day, Facebook slight increased 23 cents or 0.6%, to close at 38.23 USD. Since the second trading day,  downturn become the only topic of Facebook price during following 12 weeks

Here's are the closing prices each week since the first day of trading on May 18:
— May 25: Closed at $31.91, down 17 percent for the week.
— June 1: Closed at $27.72, down 13 percent for the week.
— June 8: Closed at $27.10, down 2.2 percent for the week.
— June 15: Closed at $30.01, up 11 percent for the week.
— June 22: Closed at $33.05, up 10 percent for the week.
— June 29: Closed at $31.09, down 5.9 percent for the week.
— July 6: Closed at $31.73, up 2.1 percent for the week.
— July 13: Closed at $30.72, down 3.2 percent for the week.
— July 20: Closed at $28.76, down 6.4 percent for the week.
— July 27: Closed at $23.71, down 18 percent for the week.
— Aug. 3: Closed at $21.09, down 11 percent for the week.
— Aug. 10: Closed at $21.81, up 3.4 percent for the week.
— Aug. 17: Closed at $19.05, down 13 percent for the week.
— Aug. 24: Closed at $19.41, up 1.9 percent for the week.
— Aug. 31: Closed at $18.06, down 7 percent for the week.
— Sept. 7: Closed at $18.98, up 5.1 percent for the week.
— Sept. 14: Closed at $22, up 16 percent for the week.
__ Sept. 21: Closed at $22.86, up 3.9 percent for the week.
— Sept. 28: Closed at $21.66, down 5.3 percent for the week.
— Oct. 5: Closed at $20.91, down 3.5 percent for the week.

Share price trends since the first tradiing day.

The current Facebook share price slipped to 20.32 USD. Some market Analysts forcasted the share price will raise to 60 USD per share after Facebook released the IPO offer price.  But, the dramatically decreased share price failed most investors' espectation.

Forbes editors examine the fallout following the social networking behemoth's stock market tumble.

 

 Facebook's highly-anticipated IPO was plagued with problems, potentially costing thousands of dollars to many small investors and further damaging Wall Street's reputation on Main Street.

(2)General Moto withdrawn the advistment investment from Facebook but kept the free company page only.

 

General Motor is the third largest advertiser in the US and spends around 40 million on Facebook per year. 25% of these amount is for advertising and rest goes on maintaining. The rest of 30 milliong spended on maintaining those pages. General Motor now has withdrawn the ads from Facebook because they found the Social Media such as Facebook may unable material impact on their customers. Based on the words from person from General Motor, he said "In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers."

In conclusion, after Fackbook suffered these two BIG ISSUE market analysts start doubt the market future of social media. Comments from Sir Martin Sorrell, chief executive of the world's largest advertising holding group WPP, he said: "Facebook, Google+, Twitter are advanced forms of social interaction. We used to write letters to each other and now we correspond through Facebook and Twitter. If you interrupt that with a message you may run into trouble." He said that he had some "fundamental doubts" about the ability to monetise social platforms. 

So, Whats Your Opinion? Dose Social Media Is the Bright Future or Just the Market Bubble?

Reference
The Associated Press 2012, Weekly changes in Facebook stock prices, viewed on 11 September, http://finance.yahoo.com/news/weekly-changes-facebook-stock-prices-220504348--finance.html

Wrenn, E 2012, The great Facebook purge: Social network begins clearing out the 80million fake profiles which make up 10% of all users, viewed on 11 September, http://www.dailymail.co.uk/sciencetech/article-2209485/Facebook-share-price-hits-time-LOW-revealing-83million-FAKE-accounts.html.

 

Worstall, T 2012, The Fall In Facebook's Share Price Doesn't Make Sense, viewed on 11 September, http://www.forbes.com/sites/timworstall/2012/09/01/the-fall-in-facebooks-share-price-doesnt-make-sense/.

 

EBay Failed In China

 In 2004, eBay had just entered China and was planning to dominate the China market. Alibaba was a local Chinese company that helped small- and medium-sized enterprises conducting business online. Most people in the West had barely heard about it.

 

When eBay entered the China market, Yun Ma, founder and CEO of Alibaba, was alarmed that “someday, eBay would come in our direction.” He knew too well that there was no clear distinction between small businesses and individual consumers in China.

In early time of Taobao, it launched a defensive strategy to competing consumer to consumer acution site, not to make money, but to fend off eBay from taking away Taobao customers. The website Taobao - meaning "digging for treasure" was formally launced to the market and set the free of charge policy for individuals buying and selling virtually any consumer goods.

 
                                                              (A typical front page of Taobao)

EBay, on the other hand, began its most aggressive campaigns to dominate the market . Soon after Taobao was launched, eBay signed exclusive advertising rights with major portals Sina, Sohu, and Netease with the intention of blocking advertisements from Taobao. In addition, eBay injected another $100 million to build its China operation, now renamed “eBay EachNet,” and was spreading its ads on buses, subway platforms, and everywhere else. The just want an quick and deadly strategy to take out all major market competitors and fastly dominate all China C2C market

Taobao set cleverly strateg to fight back.  They deeply understand the Chinese market and culture at that moment. During that time, internet popularity in China still at a low lever, although the growth rate was reached double digital in previous years, most of Chineses were more willing to accept the traditional media as the platform of market promotion, such as News Paper and TV Taobao secured advertisements for Taobao on major TV channels. In 2004, one could easily feel the heat of fierce competition between eBay EachNet and Taobao. Since its name means “digging for treasure” in Chinese, it attracted a lot of attention by a smart play on words. While most people in the West had never heard of Taobao, its name was heard loud and strong in China.

Actually, a lot of market expert put the big question market with Taobao's future.  Unlike eBay EachNet, which charged its sellers for listing and transaction fees, Taobao was free to use. Neither Ma nor any members from the management team gave a definite timeline as to how long this “free period” was going to last. “Free is not a business model,” the doubters said. Some thought Taobao's CEO Yun Ma was crazy and nicknamed him “Crazy Ma.” But the market change fast proved the Crazy Ma's expectation.

According to a Morgan Stanley report, Taobao was more customer focused and user friendly than eBay EachNet. With most users not sophisticated about auctions, the majority of Taobao’s listings were for sales. Only 10 percent of its listings were for auctions, while eBay EachNet had about 40 percent of its listings for auctions. Taobao had also better terms for its customers: it offered longer listing periods (fourteen days) and let customers extend for one more period automatically. EBay EachNet did not have this flexibility.

Taobao’s listings appeared to be more customer-centric while eBay EachNet’s listings more product-centric. For example, Taobao’s listings were organized into several categories, such as “Men,” “Women,” and so on, while eBay EachNet stuck to its global platform, grouping users into “Buyers” and “Sellers.”  

(A typical page of Taobao, just like an Asian grocery shop, crowd and plent of products are put on the shelf. Taobao's visitor may easily to catch the any kinds of product category)

 (eBay frontpage as a Coles and Woolwooth, clean and well organise by various function area. But some times, you may unable to quick locate the necessary products)

It was clearly that Taobao had an upper hand against its global counterpart because it really understood Chinese customers. As a result, Taobao had higher customer satisfaction than eBay EachNet. According to iResearch, a Beijing-based research firm, the user satisfaction level was 77 percent for Taobao versus 62 percent for eBay EachNet.

 (The above picture indicates the 2005 China online shop market share. 淘宝网Taobao was the market share leader with 57.74%. eBAY controled second largest market share at that moment which was 31.45%. The current second laregest online shop 拍拍网 PaiPai only had 3.76% market share)

By March 2008, Taobao kept its advantage to  eBay EachNet in China’s consumer-to-consumer (C2C) market, with 86 percent market share in terms of users, while eBay EachNet had only 7 percent market share. “The competition is over,” Ma exclaimed. “It’s time to claim the battlefield.” Actually, on cecember 20, 2006, Meg Whitman anounced new eBay China strategy which joint venture with Beijing-based Internet portal Tom Online, which provides wireless value-added multimedia services. It was, in reality, a formal announcement of eBay’s withdrawal from the online auction market in China. 

In 2009, the raise up of the Chinese online shopping website slightly decreased the Taobao's market share to 79.9% but still can not change the domination position. Meanwhile, eBay was keeping lose its market to 6.2%. Actually when eBay dramtaically lost its market share to under 20%, it already declaimed failed of eBay in Chinese market.

The case of Alibaba provides an invaluable lesson for multinationals to succeed in China market:

 

 The  Ex-CEO of eBay (currently as CEO of HP) stated the learning from fault of eBay in Chinese market during a Technology Conference in China.

(1) eBay failed to recognise that the Chinese market and the business environment are very different from that of the West. EBay sent a German manager to lead the China operation and brought in a chief technology officer from the United States. Neither one spoke Chinese or understood the local market. It was eBay’s biggest mistake. 

(2) Because the top management team didn’t understand the local market, they spent a lot of money doing the wrong things, such as advertising on the Internet in a country where small businesses didn’t use the Internet. The fact that eBay had a strong brand in the United States didn’t mean it would be a strong brand in China. 

(3) Rather than adapt products and services to local customers, eBay stuck to its “global platform,” which again did not fit local customers’ tastes and preferences.

Reference

Chaffey, D, Ellis-Chadwick, F, Mayer, R, Johnston, K, 2009, Internet Marketing: Strategy, Implementation, and Practice, Pearson Education, England.

Helen, HW 2010, How Ebay failed in China, viewed on 2 September, http://www.forbes.com/sites/china/2010/09/12/how-ebay-failed-in-china/

Rob, H 2006, eBay's China Challenge, viewed on 2 September, http://www.businessweek.com/the_thread/techbeat/archives/2006/12/ebays_china_cha.html