RedTech Advisors On Sina Weibo Regulatory Risk And Censorship

Research Note
Sector: Internet
Aug 11, 2011

Risky Business
Sina Weibo Intensifies Censorship Of Tragic Train Crash
Companies in note
Sina, Tencent

Summary
 Digital Kow-tow: Censors are deleting fast and furiously at
Wenzhou Train Crash: Sina’s microblogging platform Weibo to kow-tow to
On July 23, two bullet government sensitivities about the recent train crash in
trains collided in eastern Wenzhou. During the past week, censors have intensified
China, killing at least 39 their efforts to wipe the platform clean of any “controversial”
people and injuring more posts and done away with whole groups tracking the issue.
than 192. The accident was After relatively robust coverage of the event last week, this
first reported on Sina’s is a turn for the worse that risks backlash among users on a
microblog, China’s most very public and sensitive event in China. Moreover, the ham-
active microblogging site, handed way in which Sina is executing the cleansing implies
with more than 140 million pressure from the government and once again resurrects the
registered users. In the debate over regulatory risk for Sina’s most promising asset.
days following the crash,
the microbloggers issued a Highlights
barrage of posts,  Regulatory Risk: Lingering concerns over regulatory risk
expressing everything from are warranted. Incidents like the Wenzhou crash and the
sympathy for victims to subsequent public anger and concern expressed through
outrage at the government Sina weibo serve as a reminder that the risk of shutdown
for fast-tracking the train still lingers and in a place like China it always will. Though
project. The government Sina Weibo remained open for business during the recent
has recently signaled that it train crash in China, it’s started to systematically delete
will be more closely comments and neuter what had been reasonably robust
monitoring microblog coverage of the tragedy. This is damaging the Weibo brand.
platforms.
 Trusted Partner: Sina Weibo exists at the whim and fancy
of Beijing. So far, the government has been smart about
letting Chinese use the platform as a place to vent, as long
Recent Notes as some topics remain taboo, like Falun Gong, Taiwan
independence, the bald spot on the back of Hu Jintao’s head,
Looking Good: Jiayuan Q2-11 and now, apparently, the train crash in Wenzhou that killed
Earnings Preview 39 people. The week after the crash Sina Weibo users kept
up a lively discourse on the tragedy, expressing sympathy,
Asia Tech & Anti-Depressants
concern, anger, rage, fear, frustration and disappointment.
At some point, this candid debate became too much for
The China Tech Letter Beijing, and led to the tightening of Weibo’s leash.
Buy! Buy! Buy! Chinese Go  Keeping It Interesting (And Boring): In being a trusted
On An Online Spending Spree partner, Sina risks stifling the vibrant expression that makes
Weibo attractive, which would severely diminish its value.
Matchmakers: China’s Online Since the majority of Weibo users are young and highly
Dating Game educated, we believe they are not the types to be easily
engaged by a platform that increasingly self-neuters. The
RenRen: Anti-Social Behavior trick for Sina will always be keeping the platform lively and
genuine enough so that it remains relevant, while also
Taomee: A Real China keeping it tame enough to allay government concerns. This
Internet IPO is a challenging balancing act and will become more so as
China’s middle class grows and starts to care more about
politics, corruption and other social issues.

www.redtechadvisors.com michael.clendenin@redtechadvisors.com

Research Note: Sina Weibo Aug. 11, 2011

Regulatory Risk: First, we were amazed at how Sina and Tencent
microblogs were the first to break the news of the tragic train crash in
Wenzhou on July 23. Then we were impressed by the robust coverage of
the event by microbloggers, who posted fast and furiously, spreading rumors Overt censorship is
and reality, venting anger at the government and offering their sympathies to damaging the Sina
the victims. Now we are shocked at the audacity with which Weibo is Weibo brand.
cleansing the historic record of the event, deleting any posts that might run
afoul of government sensitivities and thus risking a backlash among users
that had turned to the platform because it offered them a sense of what was
really happening in Wenzhou and, moreover, allowed them to vent their
frustrations over social and political issues, like government corruption. This
is damaging the Sina Weibo brand.
Figure 1

Digital Cleansing: For 10 days running, the three most popular topics on Sina Weibo were all related to
the crash, but on August 2 Chinese mysteriously became more interested in Chinese Valentines Day, TV
anchor Yansong Bai and soccer.

Source: Sina Weibo

michael.clendenin@redtechadvisors.com www.redtechadvisors.com
Page 2 of 8 © RedTech Advisors (China) Ltd., 2011. All rights reserved

Figure 2

Anger Management: After the crash, many posts started as news related, then they quickly switched to
a combination of sympathy for victims and fear and concern over riding trains, China’s primary method
of long-distance transportation. Soonafter, a lot of anger and frustration built up over rumors of
incompentance and corruption at the Ministry of Railways. Sina is now busy deleting these posts.

Weibo’s role
in covering
the Wenzhou
crash and
typical user
expression.

These types of
posts are the
ones that Sina
is most
aggressively
deleting now.

Source: RedTech Advisors


Trusted Partner: Sina Weibo – and its rivals -- exist at the whim and
fancy of Beijing. So far, the government has been smart about letting
Chinese use microblogs as a place to vent – and did they ever during the
Government will more
train crash, posting more than 10mn messages on Sina and 20mn on
closely monitor
Tencent. But we believe Sina’s belated move to delete substantial blocks of
microblogs in future.
posts related to the train crash is a direct result of increased government
pressure to rein in the platform over the past week. An editorial in yesterday’s
state-controlled People’s Daily – an important mouthpiece of the government
– was a clear signal that the government is going to more closely monitor
microblog platforms in the future because of the level of anger, frustration
(and rumor) that was expressed on microblogs after the crash.
Figure 3

See this link to read the original Chinese article, titled “People’s Opinion:
How To Refute Rumor In The Weibo Era?”

A platform with 195 million users has a distinctive
feature of news media, and has indeed become
an important news source for other media. In this
context, it is not an unnecessary act to discuss
“where is the moral bottom line of weibo.” Not
only do media insiders need to be cautious using
weibo, but also ordinary posters should be honest
and responsible for their own speech.

It is not entirely reliable for
individuals to discipline
themselves, but luckily, an
internet public opinion place in
an open environment has a good
self-purifying system. ‘The eyes
of common people are sharp’.

Weibo’s development has just started. So far,
although the voices on weibo have an aspect that
mixes the genuine and the false, overall, it has
had undeniable contribution to promote the right
to know, right to express, right to participate and
right to monitor citizens. To pursue and guard the
truth is the value and basic prerequisite for new
media to develop and thrive. As long as weibo
users always remain rational, objective and
moderate, and weibo management holds firmly to
the principle of “good treatment, good usage,
good management”, weibo can for sure have a
more positive impact on facilitating social
progress.

Source: People’s Daily


Keeping It Interesting (And Boring): Sina Weibo is the most active
of all the microblogs, taking about 90% market share by user time. Why?
One reason is because it’s so good at rooting out scandals and such. So a
blatant attempt to sterilize the platform of a topic of such high interest as the
train crash naturally risks alienating users. Since the majority of Weibo users
are young and highly educated, we believe they are not the types to be easily
duped by ham-handed propaganda and their satirical jibes are evidence of
that (see picture).

The trick for Sina will always be keeping the platform lively enough and
genuine enough so that it remains relevant, while also keeping it tame
enough to satisfy any government concerns. The Wenzhou crash shows that
this will always be a challenging balancing act and will become increasingly
difficult as China’s middle class grows and starts to care more about politics,
corruption and other social issues.
Figure 4

“I'd rather believe this than the official explanation for the train crash.”

Source: Sina Weibo via Penn Olsen


Figure 5

Handicapped: A recent survey of 4,000 Weibo users in eight cities showed they most value Weibo for
letting them express themselves. If this is lost, then Sina Weibo loses one of its core assets.

Why Chinese Microblog

Keep Up With Friends 42%

C ollect Info 47%

Relaxation 54%

Share & C hat 56%

Record life 59%

Express Opinions 74%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Source: SinoMonitor (July 2011)

Figure 6

A user generated poll placed on Weibo after the crash.

Source: Sina Weibo via Penn Olsen

What Will Users Do?: So, it’s pretty clear that the Great Eye of Mordor is
fixed upon Charles Chao, little Sina Weibo and all its copycats. UltimateIy,
the question is do users rebel and start to use the platform less, or does this
bout of overt censorship fade from memory within a few weeks as bits of
juicy gossip about celebrities and corrupt local officials takes center stage
once again?

While we believe damage has been done to the Weibo brand, it’s not enough
to counter it’s valued usefulness as the most open tool for mass
communication on the Internet in China. The train crash has not only


confirmed the power of microblogs in China, but also revealed just how much
candid discourse the central government will tolerate. The line in the sand is
now clear: users can harass and poke fun at local and maybe even provincial
level officials. In some cases, they can even criticise select central
government officials, but the central government as an entity is off limits. Criticism of certain
individual officials is
So we expect Chinese microbloggers to continuing their muckraking in small OK, but general anger
cities and to flock to rumors of titilating affairs between celebs and to hunt at the government is
down ne’erdowells that have purportedly wronged the masses with some not fit for Weibo.
alleged slight. So the short-term regulatory risk to microblogs still remains
low. But if we look a few years out, eventually these microbloggers will want
more than the scraps of small-time politicos and bunglers. There will
inevitably be more high-profile events that will focus people’s anger toward
the government, and many of these people will turn to microblogs to vent.
And every time they are blocked or deleted, a little more value leaks out of
Weibo.
Figure 7

A Weibo No-no: At left, a mock movie poster featuring top Chinese railway officials posted
to Sina Weibo in response to the train collision near Wenzhou. The poster references a
propaganda film about the founding of the Communist Party, “Beginning of the Great
Revival,” but instead leads with “In honor of the 90th anniversary of the Communist Party:
The Fright Driven Train Crew.” The red words at the bottom say “Heaven is only a train
ticket away.” … What’s (Sort Of) Acceptable: At right, 20-year-old Guo Meimei got in hot
water when she started posting pictures of herself with gifts from a “godfather” and joked
that she was the CEO of the China Red Cross. It turned out to be false, but not before
microbloggers unleashed a tirade of criticism against the Red Cross, alleging corruption.

Source: Sina Weibo


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Last edited: 11 August 2011
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RedTech Advisors On Sina Weibo Regulatory Risk And Censorship

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