This document discusses the impact of social media, specifically Sina Weibo, on public dialogue and business in China. It notes that Sina Weibo has become the largest media platform in China, connecting mainland China, Hong Kong, and Taiwan, with over 300 million registered users. Social media has led to a flatter, more interconnected information structure compared to traditional media, and weakened the influence of traditional media. It has also transformed how information spreads and how public opinion is formed. The document also discusses the opportunities and challenges social media presents for businesses in China.

1. Perspective Edward Tse
Adam Xu
Andrew Cainey
Impact of Social Media
in China

2. Contact Information
Beijing / Hong Kong
Edward Tse
Senior partner
+86-10-6563-8300
+852-3650-6100
edward.tse@booz.com
Shanghai
Andrew Cainey
Partner
+86-21-2327-9800
andrew.cainey@booz.com
Adam Xu
Principal
+86-21-2327-9800
adam.xu@booz.com
Booz & Company

3. EXECUTIVE Opinions may differ as to what have been the hottest topics
of the last year, but there is no longer any doubt as to where
SUMMARY
the largest number of hot topics is generated. In China, the
answer is obvious—it is Sina Weibo.
Sina Weibo, a Twitter ‘clone,’ was launched in August 2009.
Prior to its birth, six or seven microblogging websites had
already emerged in China. However, the latecomer became
the biggest winner. Leveraging Sina’s premium reputation as a
news portal and the earlier success of Sina’s blogging platform,
Sina Weibo successfully attracted 1 million registered users
within 3 months of its launch. Its growth was then explosive:
its users reached 10 million in April 2010, exceeded 100
million in March 2011, rose to 200 million in August 2011,
and had reached 300 million by the first quarter of 2012,
well over half of the total netizen pool of 500 million (as at
the end of 2011, according to the China Internet Network
Information Center). Sina Weibo’s reach is already starting to
spread beyond the mainland, with 8 million of its registered
users now being overseas, 3 million of those from Taiwan and
2 million from Hong Kong. Sina Weibo has thus become the
largest media platform connecting Chinese mainland, Hong
Kong and Taiwan.
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4. Initially emulating the successful 31% on Twitter. Depolarization and around a young woman called
American microblog Twitter, Sina flattening is one of the major features Guo Meimei, who boasted of her
Weibo has quickly evolved into of social media, leading to a mass extravagant lifestyle while working
a completely different product in spread of trivial information closely for a charity group; it was widely
China’s unique cultural and business related to daily life. As Thoreau presumed that her extravagance
context. Many people underestimated wrote in regard to an earlier advance could only have been supported by
the importance of Sina Weibo, in communications technology, “We embezzling charity funds, and the
believing that it focused more on are eager to tunnel under the Atlantic story had severely negative impacts
entertainment than originality and and bring the Old World some weeks on charitable donations, and in
innovation. They are now realizing nearer to the New; but perchance particular on the image of the Red
that the potential impact of the the first news that will leak through Cross, with which Guo Meimei had
hundreds of millions of original posts into the broad, flapping American ear been associated. The impact of the
and reposts created on this platform will be that the Princess Adelaide has free dissemination of information,
is enormous. the whooping cough.” However, in even if it is of a trivial nature, breaks
China’s media climate, which is still the blockade of public opinion
A comparative study done by HP relatively closed and dominated by control so long exercised by the
Labs at the end of 2011 found that the state media, even the exchange of Chinese authorities and contributes to
Weibo users mainly share jokes, fairly trivial information can achieve the progress of public dialogue.
pictures and videos, and 62% of all a new significance. For example, in
posts are reposts, twice as high as the 2011 an Internet scandal erupted
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5. THE IMPACT OF Social media has developed a flat
and interconnected structure, very
interconnected media points now
play a vital role in the formulation
SOCIAL MEDIA different from the centralized of public opinion. According to the
ON PUBLIC structure found in traditional print
media and television where there
white paper Crisis Management
in the Microblog Era released by
DIALOGUE is a complex process of collection Ogilvy PR, 6 of the Top 10 PR crises
and processing before information in China in 2011 were triggered
is delivered to the public. In the by microblogging, and all of them
social media era, each individual can generated a lot of attention on
be a ‘citizen reporter.’ Information microblogs.
originating from any media point
will spread across the whole media Social media has transformed the
environment rapidly but irregularly. mode of information spread from
Any media point passing on linear to interactive. Nan Fang Zhou
information can re-edit it and start a Mo (Southern Weekly), China’s most
new round of distribution. Interactions influential newspaper, used to have a
between media points may form famous advertisement boasting that
consistent or conflicting expressions of it had more than 800,000 subscribers
public opinion. This is the nature of and that each copy would be read by
the public dialogue mechanism in the three readers on average. Nowadays,
new social media era. each post on Sina Weibo is viewed
by 189 people on average, and each
This rise of this more vigorous repost leads to an exponential spread
public dialogue enabled by social of information. Celebrities with
media has weakened the influence hundreds of thousands of followers
of traditional media. Social media each can easily become Internet
have already created pop stars and Culture Icons. Almost all the top 50
celebrities through the ‘self-generated Weibo accounts are held by stars from
media’ of grassroots fan campaigns. the worlds of pop music and movies.
Media giant CNN has only 6.7 However, if activity, scope of spread,
million followers on Twitter, while and coverage are also considered
Lady Gaga has more than 20 million. rather than just the number of
Similarly on Sina Weibo, the actress followers, the top 50 account holders
Yao Chen has 21 million followers, come from quite diverse backgrounds,
while one of the most popular print including entrepreneurs, business
media titles, New Weekly, has only writers, commentators, and freelance
4.38 million. intellectuals. Each active blogger
posts, comments and reposts a large
Prior to the social media era, the amount of information, relevant
traditional media proactively or irrelevant to their professions.
investigated news and mounted Through social media, almost
concerted campaigns to elicit a public everyone can participate in the
response on key issues. Various formulation of public opinion.
parties also publicized their opinions However, in the social media not all
in the media, seeking to shape public media points are equally important.
opinion. Now, the traditional media’s A small number of individuals play
scope for such in-depth investigative key roles in spreading information
reporting and campaigning is and online discussion is mainly based
diminishing. Indeed, these media are on posts and comments by these
becoming increasingly dependent on Internet Culture Icons. According to
the realm of social media to identify the statistics of the CIC IWOM Data
new stories. Traditional media’s Panel, during the crisis of confidence
control over news reporting has thus in the Red Cross Society triggered
been weakened, as social media can by the Guo Meimei scandal, reposts
respond to breaking news instantly, triggered by the top three Internet
and spread the news at lightning Culture Icons exceeded a third of all
speed. These fragmented but widely reposts on the topic.
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6. THE IMPACT OF Social media companies have been
cultivated by angel investment
media platforms. Ford Motors’ smart-
talking puppet Doug proved to be
SOCIAL MEDIA and venture capital firms, with the a big success in its 2012 advertising
ON BUSINESS expectation that they will prove
to be highly profitable. There has
campaigns. Doug soon became popular
on Facebook and was ‘liked’ by more
certainly been a lot of interest in than 43,000 users. According to a
the e-commerce or advertising survey done by Ford, more than 60%
possibilities of social media. However, of interviewees would consider buying
thus far the social media business new cars from Ford because of their
model remains uncertain. fondness for Doug. Ford spent just
USD 110,000 on its advertising on
Facebook, the world’s leader in social Facebook, only a tiny part of its total
media, has attracted 800 million advertising budget of USD 95 million
registered users around the world, and in 2012. The small input brought a
has diligently harvested information large output. Yet this kind of success
on those users to entice retailers and story is not easy to repeat. Walt
advertisers. GameTop, the largest Disney excels in image marketing and
games retailer in North America, is one of the ten online advertisers
opened an online store on Facebook who value Facebook advertising
in April 2011. Apparel retailers Gap most highly; but it has yet to achieve
and J.C. Penney, premium retailer any significant success on Facebook.
Nordstrom, and many others have The ‘like’ economy is emerging, but
followed suit. However, selling businesses are still seeking ways to
products on a social media platform tap into it.
has not proven easy. It seems people
are usually more willing to shop on Many companies also hold high
websites on which they have already expectation for Sina Weibo. More
had a good experience, rather than on than 30,000 companies have begun
social media sites. promoting themselves through the
platform. One of the first movers,
Traditional large advertisers have also 360buy initiated its Weibo marketing
launched pilot programs on social in late August 2011. It added a
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7. ‘promotion’ button on its Weibo of them has only attracted 20,000- effect is. Brand value needs to
webpage which directly links to the 30,000 followers. Merely posting be maintained and enhanced by
360buy official website where the sales promotions is not enough to genuine interactions within the target
product in question is shown already develop the marketing potential of audience, rather than through “zombie
added to a shopping cart. Although social media. followers” (automatic reposting from
360buy has more than 1 million dummy accounts) or the “internet
followers on Weibo, it has not yet Social media has created a ‘like’ navy” (paid posters). Companies
seen any substantial increase in its economy. Both direct e-commerce that have historically attached high
sales volume. In September 2011, players and indirect social media importance to branding and value
orders generated through Sina Weibo marketing need to adapt to this creation should have an advantage
were only 5,000, compared to its total new context. According to Nielsen, in achieving this. It is a more difficult
of 700 million online orders in 2011. brand information spread through challenge for companies whose growth
Traditional retailers have also started interactions with friends on social relies more on a large amount of
to try marketing through social media platforms can achieve greater advertising promotion and expansion
media. For instance, Beijing’s Xidan effects than traditional advertising of their distribution network. Business
Department Store, the Shuangan in terms of brand exposure, brand competition in the social media era
Department Store, and Modern Mall identity awareness, and advance is ‘soft:’ the focus is on capability
all opened official Weibo accounts at purchases. The higher the brand building, value creation for consumers
the beginning of 2011; but so far each exposure is, the better the branding and organizational commitment.
Social media has created a ‘like’
economy. Both direct e-commerce
players and indirect social media
marketing need to adapt to this new
context.
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8. PUBLIC Many customer management
theories embrace a 90/10 strategy:
In China too the rules of crisis
management and public relations
RELATION IN to satisfy 90% of your customers, have been almost completely rewritten
THE SOCIAL you may have to ignore the needs
of the remaining 10% non-core
thanks to the impact of social
media. According to Ogilvy’s Crisis
MEDIA ERA customers. Enthusiastic followers Management in the Microblog Era,
of this ‘core customer’ theory use the Top 10 personal crises and Top
operations analysis tools to identify 10 public credibility crises disclosed
what percentage of customers are by traditional media in China in 2011
highly loyal and what percentage are were the same as those disclosed by
picky, tailoring their services and so microblogs, but the degree of public
controlling costs. Today, however, attention attracted by the coverage
this business strategy is increasingly was sometimes different. Among the
coming under challenge. On a social leading brand crises of the year, there
media platform, the reputation were two, involving Siemens and
of a company or a brand can be Coca-Cola, which were not on the
affected by a variety of stakeholders. traditional media’s Top 10 but became
Companies and consumers can all big stories on microblogs. Social media
have their say on a brand, product has become the frontline for brand
or service. Customers’ views may crises and public credibility crises.
not only be based on their own
experience but can also be affected Based on its wide experience in brand
by the opinions of others, including management consultancy and on its
non-consumers. analysis of the characteristics of the
new media environment, Booz &
Canadian musician Dave Carroll Company believes that companies
made a very big splash on the Internet need to adopt the following three
a few years ago. One of his guitars public relation principles in the
was broken during a flight with microblog era.
United Airlines in 2008. A furious
Carroll wrote a song called United 1. Prompt Crisis Management
Breaks Guitars and uploaded it to Mechanism
YouTube. The song got 4 million In the social media era, the response
views in just 10 days, and caused a time of all information points
drop of USD 180 million in United’s has been shortened. Once a crisis
market value. Such negative feedback breaks out, it will be reposted in
from a single customer can easily a very short period of time and
become a major talking point on cause serious social impact. For
the social media and adversely example, when misconduct by a local
affect brand image. Companies are furniture maker, Da Vinci Furniture,
increasingly faced with such risks in was reported on the Finance and
the social media era. Economics page of news portal Sina
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9. Net on July 10, 2011, it was reposted line between internal information and growing flatter. Users of social media
more than 5,000 times within 24 external information is getting blurry. vary from mainstream media with
hours and became the hottest Weibo Senior management, general staff, and millions of subscribers, to top stars
topic. Similarly, there were 100,000 all the stakeholders along the supply and Internet Culture Icons with tens
posts and reposts on Weibo about chain can be an information source - of millions of followers, to ordinary
an accident on the Shanghai subway intentionally or unintentionally. Old users followed by friends. Although
within hours of it happening. PR methods are no longer so effective. the amount of attention paid to
Real-time spread of a large amount Enterprises and government bodies different social media accounts
of information has brought huge need to systematically categorize varies enormously, the capacity for
challenges to enterprises and all their internal information and communication between different
government bodies. For organizations set up an integrated mechanism accounts—via reposts, comments,
caught in a crisis, providing prompt, for information management and following and being followed—is the
reasonable and acceptable responses disclosure. For information that same for all. Most ordinary accounts
is essential. The way the Shanghai will certainly become quickly may never attract much attention,
subway accident was handled may known by the public, enterprises but each account can communicate
provide some guidance. Within thirty and organizations must disclose it with any other account on an equal
minutes, Shanghai Metro posted two through official media in real-time. footing, allowing for incredibly
apologies and claimed the accident For information that is known by rapid dissemination of news and
was being carefully taken care of. lots of stakeholders and may become opinion. Once an incident is reported
Twenty minutes later, it advised known by the public, enterprises on a microblog, inappropriate PR
commuters to rearrange their travel and organizations should carefully responses—meaningless diplomatic
routes. Two hours later, it announced analyze it and eliminate any conflicts statements, excuses, and buck-passing
that all the injured had been taken to or inconsistencies it may contain, —only add fuel to the fire of the crisis.
hospital. Five hours after the accident, and then disclose the information in Siemens for example, when faced
it posted that all of its subway lines detail to major media and the public, with criticism over a problem with
were back in full operation. Such to avoid the reputation damage some of its refrigerator doors, hired a
intensive and transparent release of that can be caused by non-official public relation agency to try to settle in
information helped to maintain public release or distortion of information. private with the Internet Culture Icon
confidence in the subway network. For highly confidential information, Luo Yonghao. This approach might
information channels must be clearly have worked in the traditional media
2. Mechanism of Information defined in order to try to guarantee era, but here it actually escalated the
Disclosure and Management the information’s security. Enterprises crisis to the next level. According to
In the era of self-generated media, and organizations must avoid being Cheaa.com, the retail market share of
the entire audience can have its say. arrogant or complacent in taking the Siemens refrigerators dropped from
The traditional media, especially the security of internal information for 12.5% in September 2011 to 8% in
major outlets with mass audiences, granted. Appropriate information February 2012. The share drop caused
used to have absolute power in categorization needs to be a key part by this PR crisis probably far exceeded
shaping public opinion, and this of an integrated PR mechanism for the original expectation of the Siemens
made it much easier for enterprises crisis management. management. If Siemens had conducted
caught in crisis to deploy their PR a serious investigation and a more
resources to effectively influence the 3. Two-way Communications on an direct communicated more with
media coverage and so control public Equal Footing consumers, it could have been a good
opinion. In the social media era, the The media structure in the new era is opportunity for brand promotion.
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10. CONCLUSION In the face of the challenges brought
by the social media era, we believe
strictly defines channels for
information passage, sets up a crisis
capability building is vital for management mechanism, designs
enterprises to adapt and succeed. This processes for information release
covers supply chain management, and PR, manages relationships with
stakeholder management, quality customers and suppliers, coordinates
control of products and services, the provision of necessary claim and
improvement of company reputation, return services, and builds effective
enhancement of customers’ acceptance information-sharing mechanisms
of brand value, and PR capabilities grounded in the corporate culture.
specifically directed to social media.
In order to promote corporate In a fast-changing and dynamic
values and enhance brand identity, market like China, having a capability
enterprises need to design an all-round building strategies on social media has
crisis management mechanism which become an imperative for business—
categorizes internal information, whether multinationals or locals.
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11. About the Author
Edward Tse is
Booz & Company’s senior
partner and chairman for
Greater China, specializing in
definition and implementation of
business strategies,
organizational effectiveness,
and corporate transformation.
He has assisted several
hundred companies—head-
quartered both within and
outside China—on all aspects
of business related to China
and its integration with the rest
of the world.
Andrew Cainey is a
Booz & Company partner and
leads our Digital practice in
China. He has over 25 years
of management consulting
experience and has been based
in Asia for 15 years. He advises
local and multinational clients
across all major industries
with particular expertise in
financial institutions, health and
consumer.
Adam Xu is a Booz & Company
principal based in Shanghai,
focusing on consumer, retail
and digital. He has extensive
experience helping clients
achieve growth potential
in China. He has helped
both “traditional” consumer
companies and e-commerce
businesses in China to develop
digital strategy and build digital
marketing and sales channels
operating models.
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