Q3 WP Topic one-The Chinese IWOM Landscape_EN

The Chinese IWOM Landscape Editorial Summary With the launch of Dawning BBS in 1994, the Chinese Internet Community was born. The Chinese Internet population is now the largest in the world with 253 million users, and the Community is a major element of the Internet experience. The Community is redefining and revolutionizing relationships that individuals have with each other as well the relationships they have with institutions such as companies. This white paper, “The Chinese IWOM Landscape”, is Topic 1 of our “The Internet is THE Community” series of reports. In this white paper, we provide an overview of the development, the architecture and the power of Chinese Internet Word of Mouth (IWOM). © 2008 CIC 2

THE ARCHITECTURE OF PARTICIPATION: There are many different ways to connect on the Chinese Internet Online Gaming E-Commerce Just as in the West, The RSS Video Conversation Prism for China Sharing demonstrates that the Chinese Internet Community conversation Q&A Customer and sharing is filtered through Review similar types of participation architecture. The Chinese Wiki landscape is filled largely with BBS local players which have localized the applications and platforms. Blogs BBS Aggregator Of course, which applications and platforms are used and the Social Instant degree to which they are used is Bookmarks Messaging different. For example, BBS in China has been and remains the Photo Micro-blogging center of the Internet Community. For more on the architecture Music Life Stream of participation, see seeisee Chinese Social Media Prism inspired by Social Networks blog article here. Brian Solis and JESS3, 2008 © 2008 CIC 3

KEY STATS: Internet use and participation architecture continues to bloom Regular BBS Users Online* Internet Users in China* (Unit-million) 98.22 (Unit-million) 253 210 74.6 137 50.6 46.2 111 94 80 59 19.6 34 15.0 23 11.2 3.3 1 2 9 2001 2002 2003 2004 2005 2006 2007 2008 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Regular IM Users Online* Regular Blog Users Online* (Unit-million) (Unit-million) 195.4 107 170.9 49.4 34.7 46.5 47.3 15.8 2005 2006 2007 2008 2005 2006 2007 2008 © 2008 CIC *Data Source: CNNIC, The 22nd Statistical Survey Report on the Internet Development in China, July 2008 4

DEVELPOMENT OF INTERNET COMMUNITY ARCHITECTURE The Chinese Internet Community was born in the very early days of the Chinese Internet with the establishment of Dawning BBS in 1994 when there were only thousands of Internet users in country of a billion citizens. Subsequent the Chinese Internet Community architecture developed in a similar pattern to the West, however the early popularity of IM and BBS along with Q&A sites have made today's Chinese landscape distinctive. CIC starts “making sense of the buzz” in 2004 2006 2004 2008 SNS Customer 1999 Review Q&A Micro-blogging 2007 IM Video Sharing 2005 BBS Blogs 2002 1994 © 2008 CIC 5

CHINA INTERNET COMMUNITY PARTICIPATION: More active, more vibrant than the West The Chinese Internet Community not only supports the most expansive and developed participation architecture in the world, it also supports some of the highest participation rates in the world, with more netizens creating more content by percentage. For more on the habits of participation of the Chinese Internet Community, see seeisee blog article here. “I have expressed personal opinions and/or 56% 72% written about myself online”(1) “Online I feel free to say and do things I 32% 73% wouldn't do or say offline”(1) User-generated content (consumer reviews/rating sites, forum/discussion boards, 19% 58% blogs, etc.) influences purchase decisions(2) Percentage broadband users commenting blog, 28% 47% chat room, listserv or forum(2) Data Source: (1) IAC and JWT, China Leads the US in Digital Self-Expression, November 2007 © 2008 CIC (2) Netpop, Chinese Surpass Americans in Web 2.0 Use, November 2007 6

BBS BBS: Content driven by information/topics At the heart of the Internet Community architecture are BBS (Bulletin Board System), or online forums. BBS serves as an organized, easy to use aggregation of collective information and intelligence. With 98 million active anonymous participants publicly sharing topics, perspectives and passion, BBS is unmatched anywhere on the Chinese Internet. A whopping 98% of Chinese BBS users have contributed content to a BBS. The chatter from the hutongs and nongtangs have moved online with BBS serving as the country's water cooler. While there is certainly strong community, BBS is more about the content than it is about the individuals. Birth of Chinese BBS Developing Stage Commercialization Long Tail Boom 1994 1995-1998 1999-2003 2004-present Dawning BBS was University BBS began Commercial portals Free BBS software created in 1994 to bloom, most using make BBS a core like Discuz! And Telnet component, making PHPWind enable BBS BBS mainstream proliferate the long tail BBS ACTIVITY FAST FACTS • 98. 2 MILLION CHINESE NETIZENS REGULARLY VISIT BBS(1) • 60% OF USERS VISIT AT LEAST 3 BBS SITES MORE THAN 3 TIMES EACH WEEK(2) • 96% OF USERS SPEND AT LEAST 1 HOUR A DAY ON BBS(2) • 98% OF ALL USERS HAVE PARTICIPATED ON BBS(2) Data source: (1) CNNIC, The 22nd Statistical Survey Report on the Internet Development in China, July 2008 © 2008 CIC 7 (2) ReadWriteWeb, Old School BBS: The Chinese Social Networking Phenomenon, January 2008

BBS BBS: What motivates participation? Motivation for Participating on BBS* Reply Latest Topic Poster /View Reply (%) Share opinion 72.7 My Yaris consumes 9.7 liter oil per 100kms, what Seek for help 49.8 about yours? Help others 43.2 Stay in touch 20.3 New car research/homework with others on black Yaris 1.3at Attract others' 9.5 attention Other 0.6 Personal view about GZ Yaris Base: 315 valid responses CIC VIEW • FIND INFORMATION IN A LESS CONTROLLED ENVIRONMENT THAN TRADITIONAL MEDIA • FIND ANSWERS FROM OTHER 'FELLOW CONSUMERS' WITH ACTUAL EXPERIENCE • FIND INDIVIDUALS WITH SIMILAR INTERESTS AND BUILD COMMUNITY © 2008 CIC *Data source: CIC Efluencer survey, 2008 Q3 8

BBS CASE STUDY: Student uses BBS to navigate military bureaucracy On May 14, 2008, just days after the Sichuan earthquake, a young college student in Chengdu saw a news report that the Chinese military was having trouble finding a place to land a helicopter to bring aid to Wenchuan, the town at the epicenter. The woman, who is from Wenchuan and who had knowledge of a Original Post: “I know a good location for place to land the helicopter, posted a message on landing a helicopter… the topography there is flat various BBS forums pleading with the military to call with good field of vision…Please help rescue the her mobile phone number (which she also posted) so victims and my family members. Anyone who she could provide details to help out. Within 24 hours, knows how to contact the main disaster relief the military saw the message and contacted her, and organization please call me immediately. My phone number is 135××××××××. “ as a result of her information, the helicopter landed safely. This case demonstrates the power of the Internet Community to connect an individual to the right person within a massive bureaucracy. The Internet Community can help accomplish tasks which prior to the existence of the Community were impossible to accomplish. For more information about the power of netizens' link support following the Sichuan earthquake, you can refer to IWOM watch Special Edition, May 2008 © 2008 CIC 9

BBS CASE STUDY: Fans gather online to watch and report NBA finals Prior to Game 2 of the NBA finals on June 9, 2008, netizens set up two “live reporting” conversations in the Lakers fan forum and Celtics fan forum in the popular basketball community, Hoopchina. Within the few days surrounding Game 2 of the NBA finals, the conversation in the Lakers fan forum received 87,430 page views and 4,974 replies by an estimated 600 unique posters. Within the same time frame, the conversation in the Celtics fan forum received 28,966 page views and 1,926 replies by approximately 200 unique posters. Rather than watch the game on the big screen at a local pub, Chinese fans watch together online. Before match During match After match - Fancy game related pictures - Active and live game - Discussing conclusion and in conversation discussions updating game statistics Sample Quote: Sample Quote: Sample Quote: The conversation is sure to be hot! I KG!!! You are a god for winning so The Celtics won! Goodbye, Lakers support Perkins!! many points in that game! 这个贴，定是很高的楼啊,我是支持帕金 KG!!!!!这球真的只有神才能进!! 凯尔特加冕了，再见了湖人斯的 © 2008 CIC 10

Instant Messaging INSTANT MESSAGING (IM): Direct person-to-person communication Search engine IM Instant Messaging (IM) is the most widely used communication tool in the Internet Community, even Regular IM surpassing email in usage (77.2% vs. 62.6%). It is not uncommon for Chinese netizens to exchange IM ID's before email addresses. By June 2008, total IM Instant Messaging SNS IM users had reached 195.31 million.(1) Services China Mobile IM IM has become an important tool to connect within communities on certain platforms, including the C2C platform Taobao. Portal sites IM E-business IM 4.8% 3.3% 3.4% QQ 4.1% 4.2% Fetion Tencent QQ dominates China's IM market. Active MSN QQ accounts reached 341 million in Q2 2008 AliWangwang giving QQ an 80.2% leading market share, Sina UC followed by Fetion with 4.2% and Microsoft MSN Others with 4.1%. (2) 80.2% Data Source : (1) CNNIC, The 22nd Statistical Survey Report on the Internet Development in China, July 2008 © 2008 CIC 11 (2) Analysys International, Instant Messaging market report, 2008 Q2

Instant Messaging CASE STUDY: Instant Messenger icons serve to demonstrate support within the Internet Community L-China initiative on MSN In light of the turmoil surrounding the torch relay overseas, a mass MSN “Love China” signature campaign broke out online. The campaign was initiated by netizens to show both their support of the Beijing Olympics and support for China. People's Daily: 7 million MSN users joined the “Love China” initiative Rainbow signature initiative In May of 2008, Toyota and MSN jointly launched a “rainbow” signature initiative on MSN. For each “rainbow” signature added to a screen name, MSN and Toyota each donated 0.1 RMB to the earthquake relief. As of June 2nd, 6,216,469 MSN messaging users participated in the campaign, raising a total of 1,243,293.80 RMB for the earthquake victims. © 2008 CIC For more information about this case, please refer to CIC's IWOM watch Special Edition, May 2008 12

Blogs BLOGS: Content driven by personal expression Bloggers could be found in China as early as 2002. When portals such as Sina, Sohu and Netease launched blog platforms in 2005, blogging hit the mainstream. While celebrity and journalist blogs receive the lion's share of attention, most blogs are diaries or very personal expressions, much less anonymous than BBS. Embryonic stage Developing stage Prosperous stage 2002 2003 - 2004 2005-present • Blog was given its • Some hot blog events • Portal sites launch blog Chinese name such as “Muzimei dairy” platforms, making blogs • Blogchina was created provoked mass “mainstream” by Fangxingdong awareness of blogs • CNBLog was created by Isaac Mao BLOG ACTIVITY FAST FACTS • 107 MILLION CHINESE NETIZENS REGULARLY VISIT BLOGS(1) • 88% Internet USERS HAVE EVER READ BLOG, 70% EVER WROTE BLOG(2) • 75% OF ALL USERS UPDATE BLOGS MORE THAN ONCE EVERY MONTH(3) Data Source : (1) CNNIC, The 22nd Statistical Survey Report on the Internet Development in China, July 2008 (2) Universal McCANN， Power to the people - SOCIAL MEDIA TRACKER WAVE 3 © 2008 CIC (3) CNNIC, Blog market study, 2007 13

Blogs CASE STUDY: Personal expression of brand love on a blog inspires a poetry campaign for Lancôme On a personal blog, Lancôme found a fan who composed a powerful poem about the Lancôme Rose. The moving poem serves as a typical example of the brand advocacy and “love” that can be found on personal blogs. This in turn inspired Lancôme's “Rose Beauty” poetry campaign. Lancôme enriches my life and makes it more beautiful, the pure feeling it gives me, is like a rose blooming in the early morning after rain… Time goes by, things change a lot, but you, always you, are my favorite, we stand together, link youth never leaves © 2008 CIC 14

Blogs CASE STUDY: Blogs enable the Internet Community to share in grief Sample Quote: 祈福 / Pray 5月12日的汶川地震让我们这一辈子都会刻骨铭心，这也是我第一次亲身经历地震，这次的损失惨重，但这并不可怕，只要我们有重建家园的决心就行， Prayer: Let's pray for the victims that 让我们都为灾区人民祈福吧！！ everything will be recovered and rebuilt. We will never forget the earthquake that occurred on May 12th, 2008 and even though it caused a huge amount of damage, as long as we have the resolution to rebuild the homes, then the task is not as scary. Let us pray for the people living in the earthquake area! link Prayer: My heart is broken, all I can do is pray for the other victims. In the wake of the catastrophe, blogs became a platform for the country to come together to grieve and pray for the earthquake victims and their families. Typing keyword “pray + earthquake” on Popular blog sites like Sina blog, Sohu blog, and NetEase Blog search, yields more than Blogbus all have hundreds of thousands of entries 53,000 blog articles on prayer. link discussing and sharing personal accounts and feelings towards the tragic event. © 2008 CIC For more information about this case, please refer to IWOM watch Special Edition, May 2008 15

Customer Review CUSTOMER REVIEW: Netizens pick and pan restaurants, books and movies together Sites such as Dianping and Douban, where users can review and rate restaurants, books, DVDs, and in return can receive recommendations based on their individual preferences, have been growing in popularity since their creation in 2003. On Dianping, over 300,000 restaurants have more than 3 million customer reviews. A positive or negative review can make or break a restaurant's success. Customer review sites like Dianping, filled with opinions from the Internet Community, are another example of how IWOM is becoming a part of the daily life of Chinese netizens. Restaurant reviews Sample Quote: 前天帮爸妈一起去了西塘,中午在钱塘人家吃的午饭..看了点评去了 I went to Xitang with my parents the day before yesterday, and we ate at QianTangRenJia but only after checking the review on Dianping first. 攻略上推荐的地方，果然人气很旺。必须等在人家边上才能抢到位子。 This was a place that was recommended on Dianping and the business was really good there. link link © 2008 CIC *Data Source : In-depth understanding of Dianping 16

Video Sharing VIDEO SHARING: Members of the Internet Community are directors, publishers, and reviewers Online video sharing sites like Tudou and Youku are giving traditional television a run for its money. The content, much of which is uploaded by netizens, offers a great variety of netizen created content and republished content such as movies and TV shows from outside of the China like Prison Break and Ugly Betty. Just as on YouTube, the Internet Community uploads, tags and reviews videos. However, leading site Tudou streams 15 billion minutes worth of video every month compared with 3 billion minutes streamed on Youtube(1). Watching Video Clips (2) “Thinking about using the Internet, which of the following have you ever done?” – “Watch Video Clips” 89% 79% 56% Sep, 2006 Jun, 2007 Mar, 2008 Data source: (1) Shanghaiist, Tudou now bigger than Youtube? ,October 11, 2007 © 2008 CIC (2) Universal McCANN， Power to the people - SOCIAL MEDIA TRACKER WAVE 3 17

Video Sharing CASE STUDY: Intel campaign taps into the Internet Community's creative passion Due to the Internet Community's passion and involvement in creating, publishing, tagging and commenting on content, brands have started to look to the community on video sharing sites to create inspired content. Recently, Intel invited netizens to create video content around Intel Centrino which generated 720 original videos and 15 million views*. Sample Quote: 简单、明了、冲击力强，让人印象深刻，确实是好创意！ Simple, but clear and impressive. The creativity is definitely great! link 创意大赛，如果比的真的是创意，这个应该是当之无愧的冠军！ If creativity was the main criteria for this original video contest, surely this video should be the winner! link One of the prizewinners - The Da Vinci Code link © 2008 CIC *Data Source : Intel , Intel Centrino original video contest press release, Jan 2008 18

Q&A Q&A: Efficient solicitation of Internet Community's collective intellect Q&A sites like Baidu “I Know,” similar to Yahoo Answers, takes the popularity of asking questions on Question BBS sites, and makes it more efficient. Inspired by Naver in Korea, Q&A sites offer access to the Internet Community's collective intelligence as an alternative Best answer to using search algorithms when seeking information. Q&A Sample Evaluate the best Topic: Pepsi's Red Can answer Question: How many kinds of memorial cans are there? I've got only one kind. I noticed there were numbers 1 2 3 Other related 4 on it, and mine was 4. But when I asked the store attendant, he told me there was only one kind. questions Best Answer: Red Can is a limited edition. There are no more sold after National Day. Since there are many memorial cans, which one are you referring to? I only know about 6 kinds such as 73774, fireworks, expression, traveling symbol, MORE, Show on cans, and Beijing Opera which has 4 versions. Other answers Other answers: We use the color red everywhere during the holidays, Our flag is red. So, red is our national color. link © 2008 CIC 19

SNS SOCIAL NETWORKING SITES: Content driven by relationships Social networking sites (SNS) like 51, Xiaonei and Kaixinwang have taken the Chinese Internet Community by storm over the past year. SNS combines the community aspect of BBS with the personal expression aspect of blogging, allowing netizens with “real name” identities to more efficiently connect and share and play with other netizens. Networking games like “Parking Wars” perfectly display the two key drivers of the Internet Community: gaming and socializing. • BBS • Poll 39 million people, or 15.4% of • Decorate Homepage the Chinese Internet Community, • Diary have joined Social Networking • Games Sites.* The number of users is • Virtual gifts growing rapidly. • Music • Photo album • etc. © 2008 CIC *Data source: Universal McCANN， Power to the people - SOCIAL MEDIA TRACKER WAVE 3 20

SNS CASE STUDY: Apple's Campus leverages community and relationships Apple's “Campus” community on Xiaonei, which launched in May 2008, currently has over 35,000 Xiaonei members and more than 6,000 member generated discussion topics. Whenever community members share content, their contacts are immediately notified, which initiates a viral effect unfound on BBS sites. link Campaign Forum Products © 2008 CIC 21

Mobile Internet EMERGING CHANNELS OF IWOM: Mobile Internet Community With over 600 million mobile phone users in China(1), mobile phone is being used more and more frequently to access the Internet. With mobile social networks like Tianxiawang and Kongzhongwang, netizens can check RSS feeds, read blogs, write mini-blogs posts, and surf online - all from their handsets. Internet-Capable Mobile Phone Users(2) How to manage my (unit- million) diary? 73.05 50.4 Members: 37,654,930 44.3 Online members: 209,862 Sample Quote: 17 早上醒来,赖在床上不想起来,拿出手机看看好友 13 们在干嘛呢? When you wake up but don't feel like getting Jun, 2006 Dec, 2006 Jun, 2007 Dec, 2007 Jun, 2008 out of bed, pick up your mobile phone to check what your friends are doing? link Data Source: (1) Ministry of industry and information technology of China, statistics report, September 2008 © 2008 CIC 22 (2) CNNIC, The 22nd Statistical Survey Report on the Internet Development in China, July 2008

BBS Circles EMERGING CHANNELS OF IWOM: BBS Circles A sort of hybrid of SNS and BBS, a BBS circle is a group of individuals who build a dedicated network within a BBS based on a shared interest in a particular topic. Sample Quote: Baby Care Circle 我家宝贝以前吃饭都很好,最近不知道怎么拉,一吃饭就淘 4,820 members 气,不知道你们都是怎么处理的,望赐教。 My baby always had a good appetite before, but recently he doesn't feel like eating, I don't know why, if anyone knows how to deal with this, please let me know. link Sample Quote: Baby Sleep Circle 这里提醒各位新手妈妈，不光在宝宝会爬时睡觉挡一边儿，会走路了也一定要挡着睡觉的一边啊，这样，宝贝儿 1,781 members 的小屁屁，小头头就不会摔着了． A tip for new mommies, remember to put something beside the baby to prevent him from falling out of bed while he/she is sleeping. link © 2008 CIC 23

ABOUT CIC CIC is the leading Internet Word of Mouth (IWOM) research and consulting firm in China. Since 2004, CIC has pioneered the concept of Internet Word of Mouth (IWOM) that is redefining the relationship between brands and consumers. CIC coined the term Internet Word of Mouth and is the thought leader in utilizing it for strategy planning and application in marketing communications. CIC is committed to both providing objective third party strategic advice to clients and promoting the healthy development of the Internet Community in China. CIC’s research and discussion of IWOM’s impact and best practices can be found on company blogs, IWOM white papers and IWOM watch reports and through its IWOM roundtable events such as IWOM summit and IWOM classroom. CIC offers customized research and consulting service to its stable of retainer clients through its expert IWOM analysts supported by proprietary Chinese language based text mining technology (patent pending), data processing technology and data visualization technology. CIC’s retainer relationships stretch over multiple years with multinational clients from Fortune 500 companies. CIC’s continual development and evolution is driven by a unique, powerful and open mindset and learning culture which at its foundation continually seeks to understand how the Internet, and Internet Word of mouth, is redefining the relationships between brands and consumers. For more information, please visit www.cicdata.com (CIC website), www.seeisee.com (CIC Company blog in Chinese) and www.seeisee.com/sam (CEO's company blog in English). © 2008 CIC 24

OUR BLOGS: www.seeisee.com (Chinese) www.seeisee.com/sam (English) OUR WEBSITE: www.cicdata.com CONTACT US: Thank You info@cicdata.com This report is copyrighted material owned by CIC. Any improper use of this document or its content will be considered a violation of CIC IP copyright and CIC has the right to take legal action. 本研究报告归CIC公司版权所有。任何对本研究报告或报告中任何内容的不当使用都将被视为对CIC知识产权的侵犯，CIC有权诉诸于法律。

Q3 WP Topic one-The Chinese IWOM Landscape_EN

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