Team Finland Future Watch: Opportunities for Finnish companies and organisations in Chinese social media


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Team Finland Future Watch: Opportunities for Finnish companies and organisations in Chinese social media

  1. 1. FinNode – Threats and Opportunities for Finnish Companies and Organizations in Chinese Social Media Finpro China Version: draft 3/2/2012
  2. 2. Table of contents Overview (Current situation study) Evaluation and Analysis (Trends of using social media in China) s. TWO Case Studies s. THREE Key Opportunities 1/28/2013 s. ONE s. FOUR © Finpro 2
  3. 3. Part One: Overview (Current situation study) 1/28/2013 © Finpro 3
  4. 4. China Social Media Market (Overview) • China is the biggest market for internet and mobile in the world, and also now a booming social media market. • Users of social media grow rapidly in China, especially SNS, Weibo (microblog), IM, Group buy. User size and penetration rate of Social media in China Users 1/28/2013 Penetration rate Growth rate © Finpro 4
  5. 5. China Social Media Market (Overview) Top 3 internet application with fastest annually growth rate (2011) • Weibo is the hottest application in 2011, and becoming the most important channel for internet users to obtain information and news. • IM is the most popular communication tool in China, QQ, MSN, Weixin, Fetion, Miliao, etc, are popularly used. For instant, Weixin has more than 100 M registered users. • China e-commerce market is expected to grow significantly, and will become the largest market in the world by 2015 estimated 18 trillion RMB. Social media development powers the e-commerce market‟s rapid growth. Friends‟ comments and word of mouth greatly influence consumer behaviours, with social media campaign contributing to 61% of online buying activities. Top 3 mobile applications with fastest annually growth rate (2011) Top 3 internet applications with largest user base (2011) Top 3 mobile applications (2011) • LBS application combines with SNS will become the new way of community communications. 1/28/2013 © Finpro Source: CNNIC 5
  6. 6. China Social Media Market (Overview) Development of social media in China BBS  BLOG  SNS  Multi Social Media • Recent survey of 5,700 Chinese internet users has found that 95% of those are living in tier 1, tier 2 and tier 3 cities are registered on a social media site. • Chinese SNS users are most active according to the survey. • 91% of respondents visited a social media sites in previous six month, compared to 30% in Japan, 67% in USA and 70% in South Korea. • Chinese government policy blocks many western social network sites, but there are equivalent social networks sites available locally. Web search engine Social networking service Japan USA 30 % 67 % Microblogging South Korea Video hosting service 1/28/2013 China © Finpro 70 % 91 %
  7. 7. China Social Media Market (Overview) • Active platform Average Communicate with friends Photo sharing Users have different usages for different social media platforms. SNS are mainly used for entertainment and making friends, Microblog are mainly used for information and communication among friends, and LBS are mainly used to search for restaurants and entertainment. Video sharing Entertainment Obtain news and info News 17% of golden online consumers contributed half of online consumption, 80% of those golden online consumers use microblog and SNS. Entertainment • Social • Microblogging is the main social media in China, 97% social media subscribers use microblog, 70% use SNS, 66% use both microblog and SNS, and about 10% use LBS services. News and info sharing Obtain product info Services Have restaurants info Work related Source: Nielsen 1/28/2013 © Finpro 7
  8. 8. China Social Media Market (Overview) Application/service providers Service providers Advertiser © Finpro Payment service providers Banks Users Games/tools application developers SNS / Platform providers 1/28/2013 Technologies providers • Main business models for social media market include: • User fee, such as VAS. For example, Qzone provides many value added services to users and generating income from games and other services. Games are important application which brings in huge revenues to SNS. • Advertising revenue. This is the main business model for many SNS. • Social + E-commerce model is now gaining popularity. For example, Kaixin cooperates with Taobao and Renren cooperates with Elong. • SNS are also penetrating ecommerce market leveraging their huge user base and social features, for example, Renren launches its group buy service Nuomi to start ecommerce business. Telecom operators Advertising Agency 8
  9. 9. China Social Media Market (Overview) Development trends of social media - People will spend more time on social media, and social media will become the most important platform for information, business, entertainment, etc. - Social media will be ubiquitous in the future. Mass media and social media will be seamlessly integrated across devices and platforms to offer relevant, dynamic, personalized experiences for people anywhere. Especially with the fast development of smart phone, the mobile social network will enable people to connect social media anytime, anywhere. - Social media + E-Commerce will be popular in the future. - New technologies and applications will encourage the development of social media, such as cloud computing, web 3.0, etc. 1/28/2013 © Finpro 9
  10. 10. Overview – Social Network Sites • China Social network market is growing rapidly and estimated to reach 10 billion RMB in 2014. • Value added services, games and advertising are main incomes for SNS. Social network is becoming an important platform for advertisers with fast increasing investment on advertising. Games are powering the development of SNS and have become the most important income source of the sites. • New applications and business models will develop in accordance to the users‟ needs in the future. LBS and ecommerce look to be the new opportunities in SNS. Unit: 100 M RMB 1/28/2013 2008-2014 China SNS market segmentation of revenue China SNS market size © Finpro 10
  11. 11. Overview – Social Network Sites • • Starting from 2008, China SNS sites are developing rapidly and now 4 th place where internet users spend their time. Chinese Social network sites have some distinctive features compared to their counterparts elsewhere. • Qzone. It‟s similar to MySpace where users are allowed to create their own web pages for posting updates, photos, and videos. The main users are teen age. • Renren. Ren means “people” in Chinese and the site is like Facebook. Started as a SNS exclusively for college students, it is now opened to general public and users are dominated by university students and recent graduates. • Kaixin. Kaixin is another Facebook-like SNS. The company started as an online game portal, it targets whitecollar office workers. 1/28/2013 © Finpro 11
  12. 12. Overview – Mobile Social Networks • China now has 372 million mobile internet users, and 252 million smart phone users. As smart phone becoming more popular, mobile applications grew in numbers, thus powering the rapid development of mobile social network. Currently, there are many mobile social network applications, some from well established social network sites and others from new ones catered only for mobile users. • Mobile social network combines Social+Location+Mobile (SoLoMo) to give users a different way to social network. Many local companies launch mobile LBS applications, such as Digu, Dianping, and Jiepang. • New mobile social applications based on IM and contact list (similar as Kik) are also getting popular in China. Weixin, MoMo, and Miliao all gained tens of million users very quickly with Weixin gotten more than 100 M users. • Almost all mobile applications are free of charge, revenues are mainly coming from advertising and sponsorship for now. Business models are being developed at the moment. App Session Growth by Country, FY2011 870 % 527 % 427 % China 1/28/2013 © Finpro Agentina Israel 398 % 388 % 369 % India Saudi Arabia Brazil 363 % 351 % Belgium Thailand 340 % Russia 12
  13. 13. Overview – Weibo (Sina, Sohu, Tencent, Netease) • Weibo (microblog) become the most popular social media in China, with more than 88% internet users (mainly 19+ years old) are using in China. • Weibo is the main information channels for internet users, and a potentially dominant e-commerce platform. 43.28% Weibo users follow 1-5 enterprises, 20.83% users follow 510 enterprises, and more than 50% users follow discount info, news of brands, etc. • The main operators include: • Sina weibo, 300M registered users at end 2011 • Tencent weibo, 300M • Both Sohu and Netease had tens of millions The monthly time consuption of Social network sites and Weibo users , Jan 2010 – Sep 2011 The penetration rate of Weibo users 1/28/2013 The monthly active users of Social network sites and Weibo Jan 2010 – Sep 2011 © Finpro 13
  14. 14. Ecosystem Analysis and Value Chain • Social media accelerate the development of e-commerce. New function/application which microblog users wish for in 2010 Entertainment Most popular applications for SNS users in 2010 E-Commerce 25,29 % Search IM 31,67 % E-payment 33,51 % Video Video 34,06 % Share info News 35,82 % Games E-commerce 36,10 % Music Music 44,79 % Email 0,00 % 1/28/2013 Photo 51,46 % 10,00 % 20,00 % 30,00 % 40,00 % 50,00 % 60,00 % © Finpro Diary 28,20 % 37,90 % 40,30 % 43,70 % 49,00 % 51,30 % 58,40 % 68,90 % 0,00 % 10,00 % 20,00 % 30,00 % 40,00 % 50,00 % 60,00 % 70,00 % 80,00 % 14
  15. 15. Ecosystem Analysis and Value Chain • Social media changes consumer behaviors. Words of mouth and friends‟ recommendations become an important factor which affects consumer‟s action. Phase 1 Attention Interest Desire Memory Action Interest Search Action Share Phase 2 Attention Advertising / media Information sites Search sites Online shopping sites Information sharing sites Interest Social recommendation Action Social share Phase 3 Attention Advertising / media network 1/28/2013 •Information sites •Social e-commerce tools (recommendation) •Social e-commerce sites •E-payment © Finpro Social e-commerce service (assessment, interactive) 15
  16. 16. Ecosystem Analysis and Value Chain • The ecosystem of socia network and social media Application developers (games, tools, etc) • Tools • VAS • Advertisement Advitsers Advertising agency SNS/Social media E-commerce platform Users SNS software service providers Current main revenue of SNS 80% Internet advertisement Earning model Application / service 1/28/2013 Add-in /event ad 15% Member fee Ecommerce Marketing & promotion VAS Shopping recommendation Online / offline interactive Marketing ad Recommen dation © Finpro 5% 16
  17. 17. Key Player Analysis • Qzone • China’s biggest social network, the registered users reach 481M • Created by Tencent in 2005 • Users can write blogs, send photoes, and listen music • Customized to the individual member’s taste • most Qzone services not free, such as games and other applications • A mobile version available at extra cost • The total income of Qzone in 2011 Q2 reached 1,7456 B RMB. • Renren • Started in 2005 targeting students at China’s elite universities • Approximately 137 million actiated users as of September, 2011 • The real name user base • Renren Desktop client application providing real time news feed updates while also facilitating instant messaging among users • Location-based services • Renren launch to provide group-buy services in June 2010. • Advertising and internet VAS are two main income source of Renren. In 2011 Q2, the total income of Renren reach 30.4 M USD, the advertising income reach 16.9 M USD, the VAS income reach 13.5 M USD, which mainly rely on internet games. 1/28/2013 © Finpro 17
  18. 18. Key Player Analysis • Kaixin001 • Launched in March, 2008 • The registered users reach 130 M in April, 2012 • Kaixin001 cloned and brought the most famous successful Facebook applications to the Chinese market before anyone else, e.g. Friends for Sale, Happy Farm. • Social e-commerce, mobile phone and open platform will be three main target field for future development of Kaixin • Douban • Launched on March, 2005 • The largest Chinese website devoted for movies, books, and music reviews • About 30 million registered users • Attracted a large number of intellectuals whoare eager to discuss social issues • The main income are from advertisement and cooperation with e-commerce companies • The virtual city service launched in Sep 2011, which help Douban to enter game field and establish new business model. 1/28/2013 © Finpro 18
  19. 19. Key Player Analysis • Sina Weibo • Launched by SINA on August, 2009 • More than 300 M registered users in 2012 • A hybrid of Twitter and Facebook • Chinese celebrities including businessmen, media figures, scholars, organizations, religious figures, government departments and officials joining the platform • A verification program for known people and organizations • More than 50% users use Weibo service through mobilephone • More and more enterprises open Sina Weibo as one marketing channel • Advertisement, social games and open platform are three main income resource of Sina weibo now. • Tencent Weibo • Launched by Tencent on April 2010 • Based on the huge user base of QQ, Tencent Weibo quickly have about 3 hundreds million registeres users. • The users of Tencent Weibo are mainly young generation, especially students. • Tencent Weibo mainly combine with other Tencent applications to make business. 1/28/2013 © Finpro 19
  20. 20. Key Player Analysis • Weixin • Launched by Tencent on Jan, 2011 • More than 100 M registered users on April 2012 • A similar application like Kik and Talkbox, support iOS, Android, Windows mobile and Symbian • include voicemail, video, photo and text to support social communication • LBS function enable to find friends • Weixin become the top hot application in 2012 1/28/2013 © Finpro 20
  21. 21. Social Media Landscape @China 2012 ed-2012-china-social-media-landscape/ 1/28/2013 © Finpro 21
  22. 22. Part Two: Evaluation and Analysis (Trends of using social media in China) 1/28/2013 © Finpro 22
  23. 23. Service Offerings and Business Models (Social Network Sites) • Main Service Offerings include: Online Community, Social Gaming, Video Sharing, Open Platform, E-commerce, User Review, Job Recruiting, Online dating and many more…. Advertise ment Marketing and Promotion • Advertising, value added services, and games are main incomes for SNS, other sources of revenue, like member fee, ecommerce and revenue sharing from open platform, are still under development 1/28/2013 © Finpro Gaming SNS Revenue Sharing from open platform Value Added Services Social + E-Commerce 23
  24. 24. Service Offerings and Business Models (Mobile Social Networks) • Mobile Weibo, mobile communication (Weixin, Momo, Miliao, Feixin), and LBS are the main services used by the mobile SNS users. Other services include mobile gaming, mobile video and photo sharing, mobile ecommerce • Right now almost all mobile social net work applications are free of charge, revenues are mainly coming from advertising and sponsorship for now. Business models are being developed at the moment. • Potential Business Models • Advertising • Mobile Gaming • LBS + E-Commerce • Revenue sharing of open platform • Mobile value added service • Paid digital content 1/28/2013 © Finpro 24
  25. 25. Service Offerings and Business Models (Weibo) • Offerings– Individual Weibo • allows users to send feeds in the form of text (up to 140 Chinese characters), photo, video and music to their opted-in followers, interest groups or selected individuals privately. Other services include messaging, photo album, groups, music and video sharing, and many other social networking features. 1/28/2013 © Finpro 25
  26. 26. Service Offerings and Business Models (Weibo) • Offerings – Corporate weibo • Weibo offers an open application programming interface (API) platform that allows Weibo users to access a rich collection of applications internally developed and those offered by third-party application developers. Corporate Weibo services include weibo marketing, brand image building, comprehensive data evalluation, customer communication, third party Apps etc. 1/28/2013 © Finpro 26
  27. 27. Service Offerings and Business Models (Weibo) • Offerings -- Open platform Weibo open platform provides services e.g. Website connection, Web Apps Mobile Apps, LBS services, Gaming etc. 1/28/2013 © Finpro 27
  28. 28. Service Offerings and Business Models (Weibo) • The business model for Weibo is still unclear. • Interactive precise advertisement generates most income for Weibo right now, but still very low for such enormous user base. For example, Sina Weibo direct advertising revenue reached over $10m which is roughly 10% of the total ads revenue on Sina (source: Sina 2012 Q2 financial report). • There are other income models at early development stage; however, they are not yet proven to be very successful. • Real-time search • Mobile value-added service • E-Commerce platform • Marketing and promotion • Paid digital contents • Premium member fee • … 1/28/2013 © Finpro 28
  29. 29. Application & Services Trends in Demands (Especially for Young Generation) What the young generation do with application & services Meet friends Information searches Buy stuffs Find a job 1/28/2013 Study & learn Entertain Apps & Services © Finpro Express feelings 29
  30. 30. Application & Services Trends in Demands (Especially for Young Generation) • Comparing the characteristics of Generation Y (1982-1999) to Generation X and Baby-boomers, we found huge differences in value, lifestyle, consuming behavior, etc. • Since the largest user group of social media are under 30 (70%), it is especially important to understand Gen Y preferences and demands. • In China, we refer to Gen Y as Post-80s and Post-90s. They live in an environment of tremendous economic growth, social changes, high technologies, and rigorous education standards. In addition to their excessive Internet uses and high regards of Western values; and as the result of China‟s one-child policy, they are also living the life of “Little Princes and Princesses” in their families. Characteristics Effects on demand Effects on provider Self-conscious Customization and personalization Streamline offerings and all-inone solution will not work Time is precious Ease to start and ubiquitous JIT and location-based Needs of social Connect with friends (closed circle) and platform to meet new people (open circle) Rich emotional expressions to increase intimacy High expectation Bug-free, ad-free, reliable, and free information 1/28/2013 © Finpro 30
  31. 31. Application & Services Trends in Demands (Especially for Young Generation) Characteristics Effects on demand Effects on provider Peer pressure User segmentation Leverage the power of community and continuous monitoring opinion leaders Advanced technology User-friendly interface and wireless connectivity Device independence and user behavior analytics Price sensitive Cost-effectiveness and tradeoffs Develop earning model based on free users. Use influential customer reviews as trusted source. Convince users to invest in pre-payment. Thirst for information Information quality, up-to-date and accessibility Easy payment Innovation in payment method Mobile payment: NFC Brand awareness Brand centric Get involve with brands advocates to drive engagement Multicultural and globally oriented mindset More language and culture varieties and consistency across nations and religions 1/28/2013 © Finpro 31
  32. 32. Market Demands, Users & Trends (Social Network Sites) • • • • • • SNS developed quickly in China, especially in 2008--2010 16% handset functions are catered for SNS and 73% users chat with their friends SNS is a major application that drive user growth and development. Needs to communicate is highly important to Chinese internet users No. of SNS users is growing at a stable pace Digital marketing & promotion activities analytic guide SNS responses and even to lead 1/28/2013 © Finpro 32
  33. 33. Market Demands, Users & Trends (Mobile Social Networks) • • • • 1/28/2013 © Finpro Mobile internet users reach 356 million by end 2011, an increase of 17.5% compared to 2010 Mobile IM and weibo are hot, with weibo recognized as the fastest growing app in 2011 Popularity of weibo had reduced the overall IM income of the operators Operators are starting to advertise and market to the massive weibo users base 33
  34. 34. Market Demands, Users & Trends (Weibo) • • • • • Weibo is fastest growing application in China 2010-12. It is developing rapidly and estimated to reach 460 million users by 2013. Nearly 89% of internet users in China are weibo users. It is extremely popular among young generation. Weibo has nationwide coverage. Groups and fans response instantly on news, events, comments etc. It is highly regarded by governments, media and advertisers in China. Businesses use weibo for marketing and branding activities; results are varied. It is also the most popular digital platform for celebrities to connect with their fans. 1/28/2013 © Finpro 34
  35. 35. Market Demands, Users & Trends (Weibo) • A total of 6.5% Sina Weibo users visit e-commerce websites after visiting Weibo including daily deal sites, C2C websites (like Taobao) and B2C Websites (like 1/28/2013 © Finpro 35
  36. 36. Part Three: Case Studies 1/28/2013 © Finpro 36
  37. 37. Case Study – Foreign Companies (Starbucks success on Sina Weibo) International coffee giant Starbucks launched a Sina Weibo account on May 14, 2010. Their goals were to: enhance brand awareness among consumers aged 25-40 in China; promote products; and create a platform to directly communicate with customers. Name: 星巴克中国 (Starbucks China) Homepage: Fans: 433,705 Posts: 2,612 Accordingly, Starbucks commenced to not only inform Weibo users of developments such as new product launches (including seasonal offerings) and branches, but also to interact with their new fans through tactics such as: launching a coffee-related survey, leveraging hot topics and important festivals, and responding to Starbucks-tagged posts. The results have been spectacular. To date Starbucks has attracted more than 433,000 fans to its Weibo account and has achieved a high level of user engagement, drawing more than 100 comments on average per post. 1/28/2013 © Finpro 37
  38. 38. Case Study – Foreign Companies (Examples of Starbucks Weibo posts) 1/28/2013 © Finpro 38
  39. 39. Case Study – Foreign Companies (Netizens flame KFC over soymilk) On July 12, 2011, a netizen alleged on Sina Weibo that KFC‟s soymilk was made by soybean powder rather than with fresh ingredients. A picture of the soybean powder boxes was uploaded to back up the claim, along with the line “KFC deceived me”. This post was forwarded thousands of times, eventually leading to the reporting of the issue by most tier-one media in China. Name: 肯德基 (KFC) Homepage: Fans: 184,864 Posts: 490 KFC issued a statement on both its website and Sina Weibo on July 29, 2011, 17 days after the issue was first discussed online. Over 400 comments and over 800 pickups were generated after the statement was posted on KFC & Yum‟s (KFC‟s parent company) official Weibo accounts. (Link) KFC‟s late response hurt consumer trust. What to learn from this case: • Address concerns quickly in social media, Sina Weibo especially. A message suggesting that a statement was on its way might have allayed consumer fears • Develop a holding statement and Q&A, and use Weibo to amplify both 1/28/2013 © Finpro 39
  40. 40. Case Study – Foreign Companies (KFC – Timeline) Image uploaded to Weibo adding “KFC Netizen snapped deceived boxes on me” July 12, 2011 1/28/2013 Image forwarded (more than 16k times, generating 1.9k comments) © Finpro Story spreads, finding its way into BBS forums such as ChinaDaily BBS Statement issued on July 29, 2011 Story reported by mainstream media 40
  41. 41. Case Study – Chinese Companies ( flying high on Sina Weibo), a travel information sharing website based in Beijing, launched a Sina Weibo account on June 23, 2010. Their goals were to improve brand awareness and to create a bridge between Sina Weibo and the Qyer website. Name: 穷游网 ( website) Homepage: Fans: 498,650 Posts: 13,800 Fans are interacted with through the sharing of travel tips and other useful travel-related messages, such as flight discount and hostel recommendations. also identifies and forwards netizen‟s posts that include travel content and photos. To date has attracted nearly 500,000 fans to its Weibo account and its posts have seen a high pick-up rate. 1/28/2013 © Finpro 41
  42. 42. Case Study – Chinese Companies (Examples of posts) 1/28/2013 © Finpro 42
  43. 43. Case Study – Chinese Companies (Annil accused by netizens) On June 24, 2012, a netizen claimed on Weibo that her daughter was missing, and begged other users to forward her post to help find her daughter. She mentioned that her daughter wore a dress manufactured by children‟s apparel company Annil when she became missing, and accordingly posted a photo of the garment. The post was quickly picked up and forwarded by thousands of concerned netizens who tried to help the mother. Name: 安奈儿Annil Homepage: Fans: 498,650 Posts: 13,800 A day later, netizens learned that the girl was not, in fact, missing. Annil was then accused of exploiting people‟s sympathy to gain public exposure and increase brand awareness. On June 26, Annil issued a statement on Weibo claiming that it didn‟t fabricate the story. On the contrary, the company said that it was deceived by the post as well. Based on 135 comments published, however, most netizens remained unconvinced. The issue was also reported by various media, especially key general media in Jiangsu. 1/28/2013 © Finpro 43
  44. 44. Case Study – Chinese Companies (Negative Annil commentary) The post with the photos of missing girl and the Annil dress Negative comments in reaction to Annil‟s statement 1/28/2013 © Finpro 44
  45. 45. Part Four: Key Opportunities 1/28/2013 © Finpro 45
  46. 46. Current and Future Business Uses of Social Media in China • World‟s largest and actively social internet population • 500+ million and growing • 50+ % spend 12+ hours a week online • 95% living in big cities with 2.5+ million population, and registered on a social networking site • Spend an average 46 minutes per day on SNS • World‟s largest e-commerce market world by 2015 • Trust in delivery network and e-commerce • Trust in peer-to-peer recommendations • Building trusted social influencers will be crucial to online interaction with Chinese netizens. • Per McKinsey: „As e-commerce rises, a compelling opportunity for brands will be to prompt immediate purchases online by consumers searching for product information using social media.‟ • The key to unlocking these immediate purchases will be through harnessing netizen recommendation. 1/28/2013 © Finpro 46
  47. 47. Key Opportunities Social Media and e-Commerce • There were loads of investments poured into these sectors the last several years in China. • e-commerce industries are now consolidating • Social media are evolving with new applications catering toward more business and products marketing and promotion – looking at ways to start monitizing the massive user base. • While foreign companies aren‟t legally allowed to operate Social Networking Sites, they can however leverage their international experiences to address various social networking needs, including: • Digital and social marketing expertise to build brands and influencer groups • Growth hacking skills and know-hows to build massive audience rapidly • Cloud infra-structure skills and know-hows to support massive social and e-commerce network • Branding and marketing skills and know-hows to internationalize local Chinese brands, products and services • Big data analytics experiences to optimize revenue monitizaton • Innovativeness, originality and creativity to energize and internationalize Chinese entrepreneurs Social+Locate+Mobile (SoLoMo) • Social Media going mobile as smart phones gaining market shares • LBS applications on SNS is on an uptrend to facilitate instant community communication at location 1/28/2013 © Finpro 47
  48. 48. Finnode China Software and Digital Media Team: Hong Kong: Beijing: Justin Di Shanghai: Ryan Yao Guangzhou: 1/28/2013 Eric Cheng Nelson Chen © Finpro 48