Marketers Must Understand How Internet Transforms Personal Connections in China

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As Consumers Become More Social, Learning Their Values Is Crucial

By: Laurel Wentz 

The internet has transformed China's closed inner circle of personal connections, referred to asguanxi, into a more open chain of relationships, said social-media giant S Y Lau of Tencent.

S Y Lau delivers a presentation at the Ad Age Digital Conference Tuesday afternoon in New York.
Patrick Butler
S Y Lau delivers a presentation at the Ad Age Digital Conference Tuesday afternoon in New York.

Speaking at Ad Age's Digital Conference on Tuesday, Mr. Lau described the opportunities for marketers who understand the values of Chinese consumers, from lack of brand loyalty to a hunger for respect. Mr. Lau is senior exec VP-president of online media business at China's Tencent, which includes the QQ messaging service, with 721 million active accounts. Just 14 months ago, Tencent developed a smartphone messaging app called Weixin and already has 100 million users, Mr. Lau said.

The numbers are staggering in a country with 513 million internet users: Every day more than 164,031 Chinese go online for the first time and 17 million new smartphones are activated. Jeremy Lin has 5.4 million fans on Tencent's social networks in China, and 370,000 people play mahjong on the networks at the same time, according to Mr. Lau.

Mining consumer insights, Mr. Lau said Chinese are impressionable and intrigued by brand imagery but unlikely to remain loyal to brands. Creating content, such as a campaign Tencent did with Nikethat led to the formation of 62,000 virtual basketball teams, helps build brand intimacy.

Consumers are also skeptical, he said, often a challenge for marketers participating in big events. To counter that, Tencent and BMW two years ago aimed to create the largest volunteer network by mobilizing consumers in a viral campaign to spread to their friends the spirit of the World Expo held in Shanghai.

At the same time, Chinese seek respect, or "face," meaning a good reputation in front of one's peers. One expression of that is a huge online market for virtual products. "Personal image is vital here," Mr. Lau said. "[People] spend billions of yuan on virtual goods to maintain their online image."

In a Q&A session at the conference, John Quelch, professor of international management and dean at the China Europe International Business School (CEIBS), noted that the Chinese government does block search results on a relatively few sensitive topics and that Chinese internet companies understand these limitations.

"But if you look at the upside of having 500 to 600 million internet users, and the information being exchanged, no central authority can control all that," he said. "There are restrictions on sensitive issues. There was a temporary shutdown for three days of the comments feature of micro-blogging sites. The government didn't attempt to shut down the posting or forwarding features, just comments. ...Reason prevailed, and after three days the restrictions were lifted. Maybe because they were ineffective, maybe because there was such a popular outcry."

Mr. Quelch said Chinese society was built around fear, with citizens used to only being close to "six people around my banquet table," but that's changing. "Chinese are learning to be social in a much broader societal sense," he said.

That's an important message for marketers. When one blogger posted a bad review of a Siemens refrigerator, the negative message was retweeted 170 million times in China, he said.

"You don't want to be the CMO of Siemens domestic appliances in China," Mr. Quelch said.

There is still a lot of room for growth within China for big internet companies such as Tencent and search giant Baidu, Mr. Quelch said. Although Tencent is developing a small, U.S. presence in Palo Alto, oriented around online games, Mr. Quelch predicted that when China's internet giants do look overseas, they'll be likely to act through joint ventures and local partnerships, and to enter other emerging markets rather than the most developed countries.

"Did you read my plan?" Mr. Lau asked Mr. Quelch with a laugh.



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HelloHollywood

Metan first launched in early 2009, and since then has made incredible inroads in developing the media market in China. Metan’s flagship series Hello! Hollywood is a weekly entertainment news show, covering Hollywood news, gossip, trends and pop culture. Hello! Hollywood premiered in September 2009 and today reaches a potential…

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