Chinese Social Media Brief: Overview, SNS Analysis and Key Trends

1. Chinese Social Media Brief 25 April 2014 Imagination / China Social Media Brief/ April 2014

2. 2 Chinese Social Media Brief #1 Overview of Chinese social media #2 Social Networking Sites analysis #3 Key trends

4. Imagination / China Social Media Brief / April 2014 Chinese social media Overview The most fragmented and competitive social media landscape, each social media site and e-commerce platform has at least two major players.

5. Imagination / China Social Media Brief / April 2014 Chinese social media China VS America total population: netizen population: mobile netizen population: netizen average age: urbanization rate: social media user population: social media user penetration among population: social media user penetration among netizens: time spent online weekly: time spent on SNS daily: 1.3 billion 591 million 464 million 25 years 72% 598 million 45% 91% 21 hours 46 minutes 317 million 245 million 182 million 42 years 82% 228 million 72% 67% 23 hours 37 minutes

6. Imagination / China Social Media Brief / April 2014 Chinese social media Understanding the user The world’s most socially engaged and active netizens > 7 out of the top 10 active regions on social networking sites (SNS) are in China’s tier1 2 cities. 30% and 50% of Chinese social media users are creating and curating original content on SNS, compared with 1% and 9% in the West respectively. Highly trust and rely on SNS as source of information. 80% of Chinese social media users say they use social media channels to search for information about products and brands. 66% of Chinese social media users follow on average 8 brands, while 33% of Americans have ever followed a brand on social media sites. Heavily influenced social shoppers 43% of China’s netizens are interested in products shared by friends on social networking platforms. 51% of Chinese car buyers decide against a brand after reading negative comments on social media sites. More than 50% of Weibo users access e-commerce platforms after noticing relevant information on Weibo.

7. Imagination / China Social Media Brief / April 2014 The Renren / Kaixin001 dynasty Real name Real connection The Weibo dynasty Anonymity Casual connections The WeChat dynasty Privacy Mobility Chinese social media Evolution China has been experiencing a light-speed SNS evolution. 2008 – 2009 2010 – 2013 2014 – ?

9. Imagination / China Social Media Brief / April 2014 Chinese social media site Overview The most popular Chinese social media sites 0 Qzone Wechat Tencent Weibo Sina Weibo Pengyou Renren 100 200 300 400 500 600 700 800 Registered users Monthly active users Note: The figure of Sina Weibo Monthly Active Users is represented by Daily Active Users

10. Imagination / China Social Media Brief / April 2014 Chinese social media site Qzone Implications: For brands that are looking for maximum message coverage among younger social users, especially in lower tier cities. For brands that require flexibilities to highly customize their pages and micro-sites to integrate multimedia content and applications. For brands that want to communicate to specific demographic groups by using Tencent's targeting self-serving system (GDT) to choose where, when and to whom to display their ads on the platform. Overview: Tencent Group’s biggest open platform. China’s biggest social networking site in terms of registered and active users, paid service subscribers and quantities of updated feeds. Demographics: Users are largely recruited from Tencent’s top instant messenger QQ. The active users tend to be lower end netizens, new netizens and users of lower ages from Tier 2, 3, 4 cities.

11. Imagination / China Social Media Brief / April 2014 Chinese social media site Qzone user page Activity classification What others are following Status updates Someone you may know Send a birthday gift Feed classification Game and Application All feeds What others are playing

12. Imagination / China Social Media Brief / April 2014 Chinese social media site Qzone brand page Activity classification Verified account Interactive zone Active follower Latest feeds Posts Shared videos Album

13. Imagination / China Social Media Brief / April 2014 Chinese social media site Qzone key figures Posts on the first day of 2014 1 billion Monthly active users 623 million Posts on the first hour of 2014 28 million Active users from mobile terminal increased by 10.4% Average photos uploaded daily 200 million Active APP users 184 million

14. Imagination / China Social Media Brief / April 2014 Chinese social media site Sina Weibo Implications: Weibo is best for thought leadership and broadcasting messages on a more public scale to increase brand awareness and campaign reach. For brands that intend to use this platform as their key and primary information hubs and trigger points to drive traffic to other digital platforms. The stand-out attribute of recreation usage on Sina Weibo gives marketers an edge when marketing with fun and leisure related content. Overview: Weibo means micro-blogging in Chinese. Sina Weibo was China’s first opened micro-blogging service in 2009. A hybrid of Facebook and Twitter. However it launched multi-media functions one and half years earlier than Twitter. Currently there are 404,000 enterprise accounts on this platform. Recreation and emotion are the top 2 topics on Sina Weibo. Demographics: Sina Weibo enjoys high penetration among Chinese high end groups with monthly income of over RMB 8000 from Tier 1 cities. 90% of Sina Weibo users are between 15 to 34 years old. 86% of web users are active members of Sina Weibo.

15. Imagination / China Social Media Brief / April 2014 Chinese social media site Sina Weibo user page Hot topics All feeds Someone you may be interested in Popular micro-blogs Status update and content sharing Feed classification Follower classification Official applications Popular tools

16. Imagination / China Social Media Brief / April 2014 Chinese social media site Sina Weibo brand page On going activities Survey research Account contact External links Account introduction Followers, Fans, Posts Focal area New feeds

17. Imagination / China Social Media Brief / April 2014 Chinese social media site Sina Weibo key figures Daily active users from mobile terminals 38 million Average daily posts 130 million Daily active users 60 million Total posts on the first minute of Horse Year 808298 Enterprise accounts 0.4 million YOY increase 20% YOY increase 52% YOY increase 55%

18. Imagination / China Social Media Brief / April 2014 Chinese social media site WeChat

19. Imagination / China Social Media Brief / April 2014 Chinese social media site WeChat Implications: For brands that want to improve their customer service by creating real-time and more personal conversations. For brands that aim to engage and seek support with their most devoted fans by in-depth communications. The internal mini-site functions of service accounts give service-oriented companies an edge when providing basic services. For brands that want to broadcast original and highly relevant content to their followers once a day, which can be almost guaranteed to be read. A potential new channel for e-commerce business with smaller product lines or those who sell on convenience. Overview: Originally Tencent group’s mobile text and voice messaging application. Evolving to a versatile platform with introductions of offline to online payment, gaming, LBS, e-commerce and social networking features. Registered users reached 600 million in only 3 years. Companies registering their service or subscription accounts reached more than 2 million in only 15 months. Demographics: WeChat enjoys higher penetration among affluent Chinese groups with monthly income of more than RMB 3000 compared to other social networking sites, making up of 58% of the total WeChat users. 61% of WeChat users are male and 39% are female users. 80% of users are below 35 years old.

20. Imagination / China Social Media Brief / April 2014 Chinese social media site WeChat WeChat Instant messaging SNS Gaming E-commerce Payment LBS / O2O Office Accounts Smart Home Text message Voice message Walkie talkie Video chat Group chat Send contents from other apps Picture exchange Stickers Geographic location Upload posts with text or photo Browse friends’updates Comments/likes Share others’links “Look around”to find and talk with strangers “Drift bottle”to send message to strangers Mobile gaming Check friends’scores Invite friends to play E-commerce An e-commerce button, directly displaying some products Merchants sold via brands’service accounts Payment Consumption on WeChat Consumption on other apps Scan QR code to pay for purchase on PC website or at offline store Scan QR codes for offline payment Scan QR codes to search for and buy products on WeChat Navigation using the location friends send to you Search for discounts and group buying activities nearby Subscription account Send followers push notification once everyday Service account Send followers push notification once a monthin a new chat window Customized menu with up to 15 functions Sell products within service accounts Skyworth TV allows users to control their TV through WeChat Search and pay for movie and drama through iCNTV account on WeChat and syncs them with Skyworth TV

21. Imagination / China Social Media Brief / April 2014 Chinese social media site WeChat Fever for next self-service advertising platform. Tencent is testing to integrate some trial WeChat subscription accounts with its self- service advertising system Guangdiantong (GDT). Currently WeChat supports text link ads at the bottom of mobile pages and the average click- through rate is around 3.5. As WeChat is promising to become more open, targeting advertising on WeChat will be supported and competed fiercely with more formats of ads. WeChat forecast in 2014 From selling convenience to a versatile lifestyle service platform. After Tencent taking 20% of stake in Dianping-a restaurant rating and group buying website-it is predicted that Tencent would focus its strategy on broader O2O market segments to seize the dominant position in the O2O field. With access to Dianping’s huge local lifestyle information a new category of “Food No.1” was added on WeChat in Febuary 2014. It is expected that WeChat would leverage more location base services, such as table booking and group buying in the near future. From e-commerce to social shopping. Currently WeChat is selling limited merchants from its B2C platform Yixun directly. With partnering up with Meilishuo, a Chinese Pinterest clone, WeChat is going to add a new fashion channel to its mobile payment service later in 2014. Offline purchase payment with WeChat will be a new norm. Initiating a trial run with Wangfujing’s flagship store in Beijing WeChat was available to complete payment in store on February 14th 2014. Tencent is expected to roll out a new POS solution in larger scale to start O2O payments for general merchandise.

22. Imagination / China Social Media Brief / April 2014 Chinese social media site WeChat Instant messaging via voice, text, video call Friends Discovery Games Add contacts by Wechat ID, QQ and mobile contacts Starbuck official Account page Intimate social networking circle Mobile Payment service Instant messaging via voice, text, video call Lays brand campaign

23. Imagination / China Social Media Brief / April 2014 Chinese social media site WeChat key figures Monthly active users 272 million Time spent per user monthly in Sep 2013 226 minutes YOY Increase 124.3% YOY Increase 148% Average photos uploaded daily 200 million Message sent within one minute on Year of the Horse’s eve 10 million

24. Imagination / China Social Media Brief / April 2014 Chinese social media site Renren

25. Imagination / China Social Media Brief / April 2014 Chinese social media site Renren Implications: For brands whose communication content strategy is highly oriented towards college students and young professionals. With an official censorship policy and a specific category limitation for small business, big brands enjoy more flexibility for customizing their business pages. The feature of real name guarantees more authentic metrics in terms of followers, responds and reposts to measure campaigns’ effectiveness and ROI. Overview: A equivalent Facebook of China. Renren retargeted its users on post-90s and repositioned from SNS (social networking services) to SMS (short message service) to reinforce instant messaging and group messaging. Uploading photos and updating status make up of 70% of user generated content. Demographics: Most of users are university students and recent graduates. Around 7 in 10 (69%) of Renren users tend to be light users who visit its website less than once a day. 52% of total Renren registered users are post 90s. More than 75% of the total 54 million monthly active users are post 90s.

26. Imagination / China Social Media Brief / April 2014 Chinese social media site Renren user page Friends recommended Useful functions Account recommendation Update posts Feed classification Group classification Useful tools Popular application New feeds

27. Imagination / China Social Media Brief / April 2014 Chinese social media site Renren brand page Timeline Hot topics On going activity Message board Content classification New feeds

28. Imagination / China Social Media Brief / April 2014 Chinese social media site Renren key figures Percentage of users access to Renren through mobile 80% Average numbers of friends each user follows 187 Time users spent online monthly 9 hours Average number of friends each post-90s follows 253 Brands each user follows on average 6 brands Average number of friends each post-80s follows 137

29. Imagination / China Social Media Brief / April 2014 High Satisfaction Adoption Low High Promising Essential OvervalueExperimental Qzone Douban Tudou Kaixin001 Jipang Renren Tencent Weibo Youku WeChat Sina Weibo Chinese social media site Which platform to watch in 2014? Social marketing ROI: In 2013 Weibo yielded effective results to only 47% of companies in terms of branding and sales promotion. Only 24.2% of companies had a positive opinion in terms of WeChat's effectiveness in producing results. Source: Forrester social marketing survey, Q2 2013

30. Imagination / China Social Media Brief / April 2014 Chinese social media site Which platform to watch in 2014? Social platform investment forecast in 2014: More companies are further increasing the use and investment on Wechat. Nearly 60% of companies surveyed by PR Newswire say that they will increase their budgets allocated to WeChat in 2014. Sina Weibo is still the most popular platform for companies and brands. Even around 50% of companies surveyed will increase their budgets to Sina Weibo in 2014, a noticeable drop from 69% in 2013. Key conclusion: While WeChat is strong in networking, self expression and communicating with friends, Sina Weibo is better for getting news, acquiring information about brands and organizations. Sina Weibo is strong in increasing brand awareness and campaign converge but WeChat is better with consumer engagement and brand loyalty development. WeChat is emerging as a social shopping and E-commerce platform. With the introduction and openness of integration payment system to all business, WeChat is gaining popularity for B2C business to be the next influential e-commerce platform. The effects of brand campaigns on Wechat can’t be tracked and measured meanwhile social marketing on Sina Weibo is more matured and effective in terms of ROI measurement.

31. Imagination / China Social Media Brief / April 2014 Case study Best practice WeChat red envelop game WeChat has developed a social media equivalent of the traditional red envelopes containing money that are given at Chinese New Year. A gifting feature allows a user to either send money direct to a person or, alternatively, to send an amount to a group of friends and let the app divide the cash randomly among them. The results was that 4.82 million engaged users on new year’s eve and 20 million envelopes handed out. The main benefit for Wechat is the fact that users who play the game must have their WeChat’s payment systems activated. The launch of Hongmi phone on Qzone In 2013 Xiaomi collaborated with Qzone exclusively to launch its Hongmi phone where users could reserve Hongmi phones on its official page. Since it began on 31st July 2013 the reservation reached 1 million in half an hour and 5 million in 3 days. 100,000 Hongmi phones were sold out in 90 seconds and the total reservation reached 7.45 million. The fan base reached 13 million since Xiaomi’s certified official page was opened in 13 days comparing to 2 million fans on its Sina Weibo official account and 1 million on Wechat.

33. Imagination / China Social Media Brief / April 2014 Chinese social media site Key Trends Humanization Monetized influence Personalization Overcoming skepticism

34. Imagination / China Social Media Brief / April 2014 Chinese social media Humanization China's population has been greatly influenced by family relationship, togetherness; social harmony and a great nation rather than individualism and freedom. This cultural difference explains why Chinese consumers place much more emphasis on brands’ sharing behaviours than Germans, Americans or French. Smart phones and social media take this truth to the next level by allowing brands to better connect with consumers and be part of their life 24/7/365. It challenges brands in China to humanize to open up their company and culture, and inviting customers in for co-creations of their products, service or processes. The pioneering brands experience the business value of brand humanization by acting like partners rather than owners. Being considered meaningfully different by target consumers produced a 37% higher contribution to brand value. Zara, which is seen by Chinese consumers as a 'Dreamer’, increased brand value by 60% in 2013. Nivea has a clear personality in China with a brand value rise of 36% compared to 2012.

35. Imagination / China Social Media Brief / April 2014 Chinese social media Humanization – Case studies Coca Cola In 2013 Coca Cola launched a nickname bottle campaign on Sina Weibo. It allowed consumers to customize their own bottles by choosing prominnet buzz words as their nicknames that the brand had collected from Chinese social networking channels. Firstly utilizing Weibo’s E-wallet, Coca Cola enabled consumers to customize and pay for the order on one single platform. With RMB20 every social user can have a chance to realise his/her star dreams and show his/her own Coca Cola bottle on social networking sites. This campaign saw 20% sales increase compared to the same period the year before. Volkswagen People’s Car Project was an integrated campaign and social media platform, asking Chinese car drivers to submit their ideas for car designs of the future. To sustain repeat engagement the campaign integrated five social networks, implemented social and gamification features, and an on-going plan for new functions, content and incentives. The best and most unique ideas are incoporated into current cars and influence future car development, culminating in the production of a final concept car. The program grew awareness and brand perception, and returned year- on-year sales increases.

36. Imagination / China Social Media Brief / April 2014 Chinese social media Monetized influence When celebrities and key opinion leaders have been utilised maturely for sponsored content on Chinese social networking sites, their social influence on business value has been questioned. At the same time, monetized fan economics revealing the power of die hard fans on the business are emerging, capturing the interest and care of advertisers. 34% of businesses feels that their social strategy is connected to business outcomes. The founding executive editor of Weird Magazine Kevin Kelly once argued that to be a success online, you don’t need a huge audience. You just need 1000 true fans, who are willing to pay you. Boston Consulting Group studies show that 7% of the customers drive 40% of sales.

37. Imagination / China Social Media Brief / April 2014 Zhenyu Luo The Logic Show producer and host Zhenyu Luo was the first person to utilize WeChat to promote his paid membership by charging his followers RMB 1200 for a two year subscription. In 6 hours he has received 1.6 million membership fees from his 5500 die-hard fans. Kun Chen Chinese celebrity Kunchen, who is followed by 63 million fans on Sina Weibo created his self official paid account on Wechat. It costs RMB168 yearly to follow his account to get access to his selected and exclusive content such as his voice morning greeting. Additionally, he used this account to promote his new books, records and movies.

38. Imagination / China Social Media Brief / April 2014 Chinese social media Personalization The development of social media has influenced the way in which brands reach and interact with their consumers. The emerging communication channels of consumer’s preference challenge advertisers to adapt and react quickly. More importantly, the focus on personal two-way communications seems to be fundamental to enter consumers’ lives and hearts. Consumers in emerging markets are leading the way in their use of newer channels for brand interaction: 35% of Chinese and 29% of Indian consumers have used a brand's smartphone app to engage with a brand to which they are loyal in the past six months, compared with 17% of US and 14% of UK consumers. In addition, an average 39% of consumers in Brazil, India and China had actually interacted with a brand they were loyal to using social networks in the past six months, compared with only 14% of mature market consumers.

39. Imagination / China Social Media Brief / April 2014 Chinese social media Personalization – Case Studies Starbucks Starbucks initiated a WeChat campaign named Naturally Awake. By connecting with Starbucks' official account users can send an emoticon message to Starbucks, who replies with a link to a song that fits their mood base on the sent emoticon. It was one of best practices utilizing WeChat to deliver personal content without manpower in the back end. Louis Vuitton As one of the pioneering brands to open its WeChat official account, Louis Vuitton started to employ one to one personal customer service on WeChat in late 2012. By connecting with Louis Vuitton official account, consumers can ask any questions and will receive direct answers from real and professional customer advisors from 10AM to 7PM everyday.

40. Imagination / China Social Media Brief / April 2014 Chinese social media Overcoming skepticism As China's population grows with Internet and media rigorously censored by the Chinese government, the nature of social media makes it the preferred information source for Chinese netizens. They value a lot the voice of their friends and influential bloggers on social networking sites about companies and their brands, products and service. However, the rising number of manipulated fans and artificial writers is creating massive and unreliable content on SNS. When it comes to advertising, Chinese netizens are very savvied, particularly critical with brands that get it wrong or don’t respect fans. If the message is unauthentic or too promotional fans will jump out to question, which puts the brands' authenticity in risk. A recent Alibaba survey found that 59% of online merchants consider trust the largest obstacle to online business growth in China. Online fraud has cost Chinese consumers at least ¥30.8 billion (US$4.8 billion), and 32% of Chinese web shoppers have reportedly fallen victim. Some 64% of Chinese customers are worried about food safety issues, a total peaking at 68% for 31–40 year olds. China registered a brand advocacy score of 30%, compared with the US on 13%, the UK on 12% and Brazil on 6%. Owned advertising, in the form of content and messaging on brand websites, was the second most-trusted advertising source in 2013, with 80 percent of Chinese respondents indicating they trust this platform, up 20 percentage points and from a sixth-place ranking in 2011.

41. Imagination / China Social Media Brief / April 2014 Chinese social media Overcoming skepticism – Case Studies McDonald's On March 15th 2013, CCTV reported that one McDonald's store in Beijing sold overdued food. However, for Chinese consumers who are facing much more severe food scandals everyday, this news raised a question among social networking platforms ”Do you believe CCTV or McDonald's? Further social users were initiating a campaign to show their brand trust of going to McDonald's the next day of the news. Vanish From the insight that simply saying “new and improved stain removal products” is not convincing enough for Chinese skeptical consumers, Vanish launched a social campaign “do it yourself to believe it”. Stain removal testing kits were developed and sent to mothers who had applied to take part in. Within 8 weeks 63,000 mothers had used the kits and created online and offline reviews and recommendations, creating a successful product launch.

42. Imagination / China Social Media Brief / April 2014 Want to talk? Chinese Social Media Brief Author: Cuimei Lai Creative Strategist E: Cuimei.Lai@imagination.com T: +852 3513 1300 Imagination Asia Limited 32/F Cambridge House 979 King’s Road Taikoo Place, Island East Hong Kong W: www.imagination.com T: @ImaginationLabs Media and General Inquiries: Pablo Cot Gonzalez Head of Marketing and PR, APAC E: Pablo.CG@imagination.com M: +852 6051 1300 D: +852 3513 1340 Los Angeles Detroit Toronto New York London Cologne Stockholm Mumbai Singapore Hong Kong Beijing Shanghai Tokyo Melbourne Sydney © 2014 To the best of our knowledge the information contained in this document is correct at the time of going to press. We do not accept any liability for errors or omissions. This document is not in any way to be published or circulated or reproduced in whole or in part. It has been prepared by Imagination Europe Limited (‘Imagination’) solely for use by it in the presentation of ideas and images to its clients and is for discussion purposes only. To the extent that material used in this document has originated with Imagination, the copyright to that material vests in Imagination. Copyright in other material used in this document vests in third parties and is not licensed for publication. Any person acting contrary to this warning does so at their own risk and may incur liability to third parties by doing so. They may also be liable to indemnify Imagination against claims made and damages awarded against it, and related costs incurred by it, in respect of allegations of breach of third party rights.