Oct. 13, 2013, 8:46 p.m. EDT
What Twitter can learn from Sina Weibo
Commentary: Social-media outlook looks stronger in the East
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By Craig Stephen
HONG KONG (MarketWatch) — As Twitter’s IPO
grows closer, one view going round is that one of its Chinese counterparts —
Sina Weibo — is riding on its coattails of social-media euphoria.
U.S.-listed Sina Corp. /quotes/zigman/82699/quotes/nls/sina SINA -0.66% , which owns
China’s leading “weibo” (microblogging) service, has seen its share price jump
over 50% since the summer.
This kind of thinking can be traced back to the
traditional way of sizing up Chinese Internet companies: You take a Silicon
Valley flagship and then try to find a cloned counterpart inside the Great
Chinese Firewall. Instead of Google /quotes/zigman/93888/quotes/nls/goog GOOG +0.41% you have Baidu
/quotes/zigman/97715/quotes/nls/bidu BIDU -1.13% , for
Microsoft’s /quotes/zigman/20493/quotes/nls/msft MSFT +0.56% Skype you have
Tencent’s /quotes/zigman/43868 HK:700
+2.24% /quotes/zigman/43867/quotes/nls/tctzf TCTZF +0.57% QQ service, for
eBay /quotes/zigman/76117/quotes/nls/ebay EBAY +0.27% you have
Alibaba’s Taobao, and for Google’s YouTube you have Youku Tudou /quotes/zigman/2786183/quotes/nls/yoku YOKU +1.35% .
So if Twitter does well, so too should its main China
progeny Sina Weibo — not to mention other weibo operators such as Tencent and
Sohu /quotes/zigman/83411/quotes/nls/sohu SOHU +0.61% .
But this type of reasoning now looks quite dated. China,
after all, is now the world’s largest Internet market and one that is
increasingly likely to lead rather than follow. Today, China has over half its
1.3 billion population connected to the web, along with hundreds of millions
more via smartphones.
A better question might be: What is Sina Weibo doing right
that’s got investors buying, and can the same thing also help Twitter?
Increasingly, we are seeing China forge its own Internet
culture, and more people are coming around to the view that you should look to
the East, not the West, to get an idea of what social media will look like in
the future.
For starters, Sina Weibo is not quite a direct replica of
Twitter. While Sina’s microblog shares a Twitter-like function, it is also like
Facebook
/quotes/zigman/9962609/quotes/nls/fb FB -0.22% in allowing
users to “like” items. And while Twitter is often used for news, Sina Weibo
tends to be more for entertainment.
It is also much more media-rich, with the use of video,
music and animated emoticons more common. This has allowed companies using Sina
Weibo to create sophisticated web pages for their brands.
Another distinctive feature of the Chinese market is that
it appears to be pushing social media in a more commercial direction. Not only
do Chinese users spend more time on social media, but various studies also
suggest they are more likely to use social media and friends’ recommendations to
influence them when making purchase decisions.
This commercial imperative was brought into the spotlight
when, earlier this year, Alibaba bought an 18% stake in Sina Weibo for $586
million, with the option to raise that to 30%. At the time, it was said the
alliance would help Alibaba explore new social media and e-commerce
opportunities.
The coming together of these Chinese giants of e-commerce
and social media is no mere coincidence. It occurs at a time of huge change in
the retail landscape, where online shopping is fast becoming a mainstream
activity.
This is happening globally, but online shopping occupies
a particular sweet spot in China, given the combination of a huge web population
and more limited bricks-and-mortar retail penetration,
While online represents just 5% of retail sales at the
moment, China is expected to surpass the U.S. as the world’s largest retail
e-commerce market this year. In the highly web-savvy South Korea, online
shopping is now approaching 20% of retail sales.
It is also becoming increasingly clear that social media
is now leading retail behavior in China, as brands interact with their customers
online. Names such as Uniqlo of Japan’s Fast Retailing /quotes/zigman/139215 JP:9983
-3.18% /quotes/zigman/139220/quotes/nls/frcof FRCOF -0.59% and Germany’s
Adidas /quotes/zigman/619217 XE:ADS
-0.54% /quotes/zigman/364540/quotes/nls/addyy ADDYY -0.52% are two that
have had recent success using social-media campaigns in China.
To many consumers in Western markets, there is a natural
resistance to what can seem as intrusive corporate or commercial features on
social media.
Cyclone Phailin pounds southeast India
Cyclone Phailin leaves a trail of destruction after hitting southeast India with 200-kilometer-per-hour winds, torrential rain and surging waves. Photo: AP
But in China, brands as well as celebrities appear a more
natural fit and are getting millions of followers or likes. For instance, even a
white-goods brand like Sweden’s Electrolux /quotes/zigman/177406 SE:ELUXB
-1.50% /quotes/zigman/177538/quotes/nls/eluxy ELUXY -1.00% has over 1.1
million Sina Weibo followers, while Microsoft founder Bill
Gates has over 3 million.
One explanation could be that China is still a relatively
young retail culture where consumers are more open to their friends’
recommendations or direct advertising from brands. But you also have to consider
this is a population which has grown up with an Internet and media that is
rigorously censored by the government.
Perhaps in such an environment of untrusted media, the
voice of brands, friends or influential bloggers have filled a void and stepped
up to become opinion leaders.
In that case, the commercial opportunities for social
media like Sina Weibo are possibly even larger in China, becoming such an
important broadcast platform by default. It now looks as if Sina is very handily
positioned as e-commerce takes off in China too.
It would be misguided to put Sina’s strength down to
Weibo riding on Twitter’s coat tails. Instead, investors should be asking if
Twitter needs to start learning some tricks from Weibo.
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Rev. per Employee
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