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China social media companies have global potential

Country's social sites can excel beyond domestic market due to adaptability, innovative edge and good overseas track record of predecessors such as Renren, say observers, but language barriers persist.

Chinese social media companies such as Renren and Sina might have modeled themselves after popular Western forerunners Facebook and Twitter, but their ability to integrate innovative functionalities into their platforms ahead of competitors and strong overseas expansion plans mean they can grow beyond their domestic market, say industry observers.

Graeme Beardsell, chief customer development and marketing officer at Experian Asia-Pacific, believes that Chinese social networking sites have the potential to go global as the local industry is fast-growing and quick to adapt to change.

He noted that while these companies tend to "incorporate global concepts", they often add value to their offerings with more advanced features than their Western counterparts. For example, Sina Weibo allowed users to embed multimedia content more than 18 months before Twitter introduced the feature, the executive pointed out.

Additionally, the strong showing of Chinese social media companies overseas bode well for other local companies to venture abroad too, Beardsell said. Renren, for one, launched its initial public offering (IPO) on the New York Stock Exchange last May and has continued to do relatively well amid a weak economy outlook.

Deco You, a Beijing-based analyst at iResearch, echoed Beardsell's point that Chinese social media companies are not mere copycats, and have evolved to become full-fledged platforms that are differentiated from Western alternatives through different features and functionalities.

Some of the top Chinese social media sites include Sina Weibo, as well as Facebook-like platforms such as Renren Network and Kaixin Network, he added.

However, he pointed out that China's social companies will find it "very difficult" to go global because of the language barrier, since most of their sites are in Chinese.

Beardsell did note that these companies are addressing this issue, saying that more of these sites are adding other languages to appeal to a wider global audience. Tencent and Sina are examples of companies providing partial site content in English, he added.

Different social trends
The two market observers also noted that there are distinct trends in China's social media scene that differ from global ones.

You pointed out that in terms of monetization, the social media advertising market is "not very big" in China compared with Facebook. In fact, the country's social advertising market did not hit 1 billion yuan (US$158.4 million). By comparison, a report by ZDNet Asia's sister site, CNET, stated that advertising made up 85 percent, or US$3.1 billion, of Facebook's overall 2011 revenue of US$3.7 billion.

Instead, more revenue is generated via virtual currency and social games on Chinese social platforms, he said.

Beardsell also noted that while professional social networks such as LinkedIn has flourished in many overseas markets, such sites have grown slowly in China because the model does not fit well with the local business environment. "A trusting personal relationship has to be cultivated before business transactions can take place," he said.

He did point out that there are Chinese sites such as Tianji and Ushijie that have emerged and are attempting to bridge the cultural gap by tailoring their services to suit the local business environment.

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