WSJ
JUNE 27, 2011
China's 'Twitter' Has Big Dreams
Sina Weibo Wants to Become Country's 'Facebook' as Well, but Must Compete in a Fierce Market
By LORETTA CHAO
BEIJING—Charles Chao has built Sina Corp. into a Chinese Twitter. Now he wants it to be a Chinese Facebook, too.
Mr. Chao, Sina's chief executive, has led the company's transformation from an online portal focused on news and blogging to China's most talked-about social-media company. Since he launched Sina Weibo—which lets users send short, Twitter-like messages to their followers—less than two years ago, the service's popularity has exploded, with more than 140 million users as of March, by Sina's count. RedTech Advisors LLC, of Shanghai, estimates that Sina Weibo has 57% of China's microblog users and 87% of its microblog activity.
Bloomberg News
Sina CEO Charles Chao, shown in April, has led the company's transformation from an online portal focused on news and blogging to China's most talked-about social-media company.
But in the ultracompetitive world of China's Internet industry, such leads are hard to keep, and Sina faces pressure from rivals, who are pouring resources into the social-networking sector. Chief among them is Tencent Holdings Ltd., an industry giant with a big pile of cash that has been aggressively promoting its own microblogging site.
In an interview, Mr. Chao laid out a series of changes he is making to Weibo (which literally means "microblog") to broaden its offerings and attract more users.
A new version of the site, now being tested, will change its look with prominent sections recommending users of interest and offering games and other applications. Mr. Chao is trying to make it easier for users to define their relationships with other users—such as by labeling those who are real friends, as opposed to those who are just "fans." And there will be special services, like "personal assistants," to help the site's most influential users with technical questions.
Weibo's initial incarnation was "the right way to enter this market," said Mr. Chao, a former journalist in his 40s with a serious demeanor. But now there is "a great need for people to communicate, to share among friends, among people who know each other."
Social-networking sites have taken off in much of the world, with users across the globe becoming increasingly interconnected. But unlike many other markets, China—which has more than 450 million Internet users, more than any other country—isn't dominated by big U.S. companies like Twitter Inc. and Facebook Inc. In fact, China's government blocks access to those two sites for users inside the country. MySpace China, an affiliate of the U.S. social-networking site that is partly owned by News Corp., has struggled. News Corp. also owns The Wall Street Journal.
Instead, a host of domestic Chinese companies are competing to fill the space. RenRen Inc., which runs one of the biggest Facebook-like sites in China, raised $743 million in a U.S. initial public offering in May that it is using to beef up its offerings. Rival Kaixin001, held by Happy Networks Ltd., also operates a social-networking site similar to Facebook. Chinese search giant Baidu Inc. is trying to turn its popular message board, Baidu Tieba, or Postbar, into more of a social network, and had its own microblogging service, Baidu Shuoba, or Baidu Talk, which failed to gain traction against Sina and now has been suspended. Sohu.com Inc. and NetEase.com Inc. offer microblogs.
Tencent has a successful online-game business, but executives say they are focusing their efforts on social networking and on their Weibo site in particular, including efforts to have third-party developers make applications for it, as Sina is doing. Tencent's challenge lies largely in Sina's users, generally a cosmopolitan set of social "influencers" from which Sina can expand outward and downward, compared with Tencent's younger users in China's lower-tier cities, from which it is harder to move up, analysts say.
China's Internet companies have generated enormous enthusiasm among investors, and some of their valuations have reached levels similar to those of their U.S. counterparts, even though China's online-advertising market is still smaller than the U.S. market.
Chinese social-media websites collectively have hundreds of millions of users who swap messages and play games on the sites using phones and computers. Facebook itself is considering entering China despite the difficulties of dealing with government censorship—especially for a site that has been used as an organizing tool by protesters in the Middle East and one that has been blocked in China for nearly two years.
Weibo won't be turning into Facebook, Mr. Chao said, but will have more Facebook-like features to allow for "stronger social relationships based on our new applications."
Analysts say the transformation will be a challenge. Sina, which was launched in 1999 and trades on Nasdaq, is far smaller than some of its rivals. Its market value of nearly $6 billion is a fraction of Baidu's more than $40 billion and Tencent's nearly $50 billion. Tencent has significantly more resources to spend on marketing, with $1.7 billion in cash as of March, compared to Sina's $577.6 million.
In addition to the more than 200 million users Tencent claims for its microblogging site—it's hard to compare the companies' user counts, with their different methods of counting—Tencent has legions of users of its flagship product, QQ, China's most popular instant-messaging platform, and runs a social-networking site called Qzone.
Mr. Chao said he wasn't worried. "It's not a competition about how much cash you have," but about "product improvement" and "end-user experience," he said.
IChinaStock, a research website for global investors, says Tencent, which already has social connections between its users, is closer to becoming "China's Facebook," but that "in terms of media influence, it will be very difficult for Tencent Weibo to surpass Sina Weibo."
The growth of social media in China comes even as the government has increased efforts to regulate Internet use. Over the past two years, an increasing number of overseas websites have been blocked in China for long periods of time, damping participation in ever more global social networks despite the legions of Chinese Internet users. Users around China have reported slower and less stable access to popular overseas websites such as Google Inc.'s Gmail, and researchers say it appears traffic to Google's servers is being limited. Chinese websites, including Sina, are required to police themselves to keep their government-issued operational licenses, a costly task involving dozens of employees who monitor the sites around the clock.
Although Sina is known for its heated discussions, at times over controversial issues such as local government corruption and soaring property prices, most talk on the site isn't political. When sensitive topics arise, the company can be creative in limiting conversation without cutting it off altogether—for example, by blocking searches of sensitive keywords but not stopping people from publishing them on their own microblogs.
For topics known to be taboo in China, such as the spiritual group Falun Gong, Tibetan independence and the government's violent 1989 crackdown on student protests in Tiananmen Square, the company sometimes removes messages entirely.
When asked if he was concerned a government crackdown might affect the outspoken nature of Weibo, Mr. Chao said that Sina had years of experience in dealing with content regulations while maintaining its websites and that he was confident the company could handle it.
Read more:
Top of Form
Bottom of Form
Sina's Weibo Has Become An Essential Chinese Government Tool
October 14, 2011 | about: SINA
Sina Corp. (SINA), owner of China’s leading microblogging site Weibo, was up 18% yesterday after a high-ranking Chinese government official made positive remarks about the importance of microblogs on the Chinese society. The stock was down 45% from this year’s high since April due to the fear of government censorship on microblogs in China.
As I wrote in my article that compared Weibo and Twitter, 70% of microbloggers in China rely on Weibo as their primary source of news, and 60% believe the news is trustworthy, according to a study done by Chinese Academy of Social Science.
In response to the growing public opinions in microblogs, approximately 5,000 government departments and 4,000 government officials have set up Weibo accounts to connect with their local constituents, while improving their public profiles among China’s 485 million internet users. During the first half of the year, top ten government microblogs have attracted over 5 million followers, with an average of just over 6,000 entries for each microblog.
In September, under a directive of the Ministry of Public Security, public securities bureaus and some police officers across China set up over 9,000 Weibo accounts to “use correct, authoritative, transparent news to answer people's concerns in a timely way, clarify facts and clear up misunderstandings.” According to the Ministry, their Weibo accounts have attracted millions of followers since inception.
Like any other internet site, Weibo is unlikely to face censorship if it operates within the Chinese law. As Weibo grows in importance, the Chinese government is likely to increase its use of Weibo as a tool to communicate with the public, because it benefits the Chinese society and its people by promoting transparency within the government, an initiative that is widely supported by Premier Wen Jiabao.
Weibo created a strong momentum in information disclosure that is difficult for the conservative Communist Party hardliners to undo, according to Zhan Jiang, a journalism professor at Beijing Foreign Studies University. Shutting down Weibo would be an impossible task, because it would generate tremendous social unrest within the Chinese public in that the government will be perceived unfavorably by a well-informed generation that cherishes transparency. As I stated in my article on the recent drop among Chinese equities, preventing social unrest is the Communist Party’s top agenda, and there is no need to shut down Weibo because the growth of internet in China is positive to both the government and the country.
Weibo can succeed in China, not only as a communication channel between the Chinese people but also as a tool for the government to foster stronger ties and greater trust with its constituents. The key is for Weibo to be customized according to the Chinese regulation, culture, and society, just as Baidu, (BIDU), Renren (RENN), and Youku (YOKU) are free to operate in China, while their Western counterparts Google (GOOG), Facebook, and YouTube are disrupted or blocked.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
China Reins in Liberalization of Culture
Sim Chi Yin for The New York Times
An Internet cafe in Beijing. China is trying to rein in microblogs.
By SHARON LAFRANIERE, MICHAEL WINES and EDWARD WONG
Published: October 26, 2011
BEIJING — Political censorship in this authoritarian state has long been heavy-handed. But for years, the Communist Party has tolerated a creeping liberalization in popular culture, tacitly allowing everything from popular knockoffs of “American Idol”-style talent shows to freewheeling microblogs that let media groups prosper and let people blow off steam.
Protesters in August forced the closing of a chemical plant in Dalian. Blogs may have fanned the protest.
Now, the party appears to be saying “enough.”
Whether spooked by popular uprisings worldwide, a coming leadership transition at home or their own citizens’ increasingly provocative tastes, Communist leaders are proposing new limits on media and Internet freedoms that include some of the most restrictive measures in years.
The most striking instance occurred Tuesday, when the State Administration of Radio, Film and Television ordered 34 major regional television stations to limit themselves to no more than two 90-minute entertainment shows each per week, and collectively 10 nationwide. They are also being ordered to broadcast two hours of state-approved news every evening and to disregard audience ratings in their programming decisions. The ministry said the measures, to go into effect on Jan. 1, were aimed at rooting out “excessive entertainment and vulgar tendencies.”
The restrictions arrived as party leaders signaled new curbs on China’s short-message, Twitter-like microblogs, an Internet sensation that has mushroomed in less than two years into a major — and difficult to control — source of whistle-blowing. Microbloggers, some of whom have attracted millions of followers, have been exposing scandals and official malfeasance, including an attempted cover-up of a recent high-speed rail accident, with astonishing speed and popularity.
On Wednesday, the Communist Party’s Central Committee called in a report on its annual meeting for an “Internet management system” that would strictly regulate social network and instant-message systems, and punish those who spread “harmful information.” The focus of the meeting, held this month, was on culture and ideology.
Analysts and employees inside the private companies that manage the microblogs say party officials are pressing for increasingly strict and swift censorship of unapproved opinions. Perhaps most telling, the authorities are discussing requiring microbloggers to register accounts with their real names and identification numbers instead of the anonymous handles now in wide use.
Although China’s most famous bloggers tend to use their own names, requiring everyone to do so would make online whistle-blowing and criticism of officialdom — two public services not easily duplicated elsewhere — considerably riskier.
It would “definitely be harmful to free speech,” said one microblog editor who refused to be named for fear of reprisal.
This newly buttoned-down approach coincides with a planned shift in the top leadership of the ruling party and government, an intricate process that will last for the next year. During such a period, tolerance for outspokenness outside official channels tends to shrink, and bureaucrats eager for promotion show their conservative stripes.
The crackdown also follows popular uprisings across the Middle East that appear to have given China’s leaders pause regarding their own hold on absolute power. In the view of some, it also tracks the influence in China’s ruling hierarchy of hard-liners like Zhou Yongkang, the public security chief who helped preside over the suppression of riots by ethnic Uighurs in western China’s Xinjiang region.
On Tuesday, Xinhua, the state news agency, reported that Mr. Zhou was urging authorities “to solve problems regarding social integrity, morality and Internet management” and that he had called for “the early introduction of laws and regulations on the management of the Internet,” among other things.
Nobody outside China’s closeted leadership knows the true reason for the maneuvers, beyond a general and intangible sense of uneasiness over the degree to which freer speech is taking root here.
The microblogs, or weibos, are perhaps the prime example. In the last year, weibos have become the forum of choice for Chinese to pass on news and gossip about scandals involving government and the elite. The two largest, run by the privately held Sina Corporation and Tencent Holdings, each count more than 200 million registered users.
In the face of official censorship, their weibos are filled with salacious tales of official malfeasance, such as a July frenzy — photographs included — over a Yunnan Province city official’s sex orgy. Industry insiders say the principal weibo (pronounced way-bwah) regulators, based in Beijing and the Shenzhen Communist Party Internet offices, have been assailed by government leaders elsewhere for allowing the scandals to spread online unchecked.
In fact, the government could easily shut down microblogs. Officials disconnected the entire Internet in Xinjiang for 10 months after the ethnic riots there in 2009. But their growing popularity makes that highly unlikely. The number of users has quadrupled in a single year.
Song Jianwu, dean of the school of journalism and communication at China University of Political Science and Law, said Chinese leaders accepted the need for such outlets for expression. But in the case of weibos, he added, “they are also concerned that this safety valve could turn into an explosive device.”
He said the government might gradually require more and more users to register under their real names, while demanding that operators monitor posts more closely. “I think they will do it in a step-by-step fashion,” he said. “We hope and we have suggested that they will do it in manner that is not antagonistic.”