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Companies to cash in on social media expansion

(Xinhua)

13:28, April 28, 2012

By He Wei in Shanghai

BEIJING,April 27 (Xinhuanet) -- China has the largest and most active population of social media users, and that has created unique opportunities for companies hoping to engage with a vast and increasingly affluent market, a new McKinsey study has found.

Of the 5,700 Internet users surveyed in China's first- to third-tier cities, 95 percent are registered on a social networking site, or SNS, the highest proportion worldwide. The consultancy said the country had 300 million social media users at the end of 2011.

China also has by far the world's most active social media population, with 91 percent of respondents saying they visited an SNS in the previous six months, compared with 30 percent in Japan and 67 percent in the United States.

Apart from frequency, Chinese netizens spend 46 minutes a day visiting SNS, in sharp contrast to seven minutes in Japan and 37 minutes in the US.

Local sites dominated the rather fragmented SNS landscape. The survey found that on average each user has about three accounts registered on different sites, 1.4 times that of the US. In the survey, users identify Qzone, Sina Weibo and Renren as the top three sites.

That has posed hurdles for companies keen to use social media tools for marketing, as it would be more difficult for them to precisely locate their potential clients, said Davis Lin, a partner at McKinsey.

Fueled by the increasing Internet population and the maturing of online payment systems, China's e-commerce sector is expected to topple the US as the world's largest in 2015 when sales reach 2.7 trillion yuan ($420 billion).

Under such circumstances, it is important to note social media's unique role in influencing consumer purchasing patterns in China. Two-thirds surveyed said they rely on online recommendations from friends before shopping, while just 38 percent of US netizens do this.

The word-of-mouth effect valued by Chinese consumers is critical for companies looking to engage Chinese consumers more effectively, said Ari Silverman, Lin's colleague.

The survey segmented respondents into six distinct groups based on motivation and behavior. "Social enthusiasts", who spend 69 minutes a day on SNS, are critical to merchants as these people are most open to advertising.

"Resenders", who see social media as a means to promote themselves, are also brand friendly as they are willing to contribute to Web pages on a particular brand's products.

"'Opinionated users' could become a brand's worst enemy if not managed well," Silverman said. This group of consumers regards SNS as a place to express their opinions and tends to be vocal on their shopping experiences.

The key to success is for companies to understand the landscape and different types of users, Lin said.

Also fundamental is the need to clarify the role that each platform will play in the overall engagement strategy, and integrate these engagements into regular business processes, he said.

(Source: China Daily)

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