Douglas Crets

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Giving Credibility to the Shadow Education System

How Four Essential Changes in China’s Social Web Will Affect Global Business

Image representing Jack Ma as depicted in Crun...

Image via CrunchBase

The following list of five areas of China’s social web, and the five areas where they have changed are my personal assessment of these technologies. I believe that areas of change in China’s Internet will have pretty big implications for how people in other parts of the world do business. To me, it doesn’t seem like much of a surprise, for instance, that advertising models may take cues from Sina’s weibo microblogging platform. If you compare weibo with Twitter, the weibo platform does things that Twitter would only dream of trying, in terms of advertising delivery, commerce, and marketing opportunities. I say “would only dream” of trying, but I should say, “should try.”

Keep reading for my list of five important developments and what I think they mean for worldwide advertising, marketing, social networking, and reputation graph use on the global web.

Alibaba and the Taobao and Alipay Saga

First, some context to bring you up to speed: Yahoo! China CEO Jack Ma has gotten lots of flak for spinning off the Alipay third party commerce system from Alibaba, without even telling Yahoo!, the American company with a 40% stake in the company. Putting all of Yahoo!’s business troubles aside, the significance around Alibaba and Alipay is Ma’s  drive to exploit changes in the consumer-to-consumer marketplace. In addition to creating a challenger to Google’s Android, Ma is pitching to the word of mouth commerce crowd, influenced buyers who use social media and consumer-generated content and lifestyle reputation to make their purchasing choices.

Focusing his attention on a third party mobile e-commerce solution means that Ma wants to make as much shopping as possible mobile. That does not necessarily mean that all of commerce is on a mobile device. It means that all shopping can be done anywhere, and the tools for doing it can be taken anywhere. And by tools, I don’t just mean hardware. I mean identity and the kind of information usually reserved for banks.

Ma knows that online users can settle their own accounts, manage their own transactions and their own lines of credit through a socially-regulated system of e-commerce. After all, Taobao handles  With the powerful social networking systems being developed in China, Ma can take a run at the government engines of growth and commerce, and let consumers handle their own shopping.

Mr. Ma also said Alibaba Group wants to take on state-owned enterprises. He said Alipay, an affiliate providing online-payment services that was recently transferred out of Alibaba Group to a separate company controlled by Mr. Ma, already has made a contribution to Internet users by challenging banking services.

“If banks don’t change, we will change banks,” he said. Mr. Ma has been criticized for his decision to transfer Alipay’s ownership because he didn’t seek approval from Alibaba Group’s board of directors, on which Yahoo has a seat. But he has said the transfer was necessary because of restrictions by the People’s Bank of China on foreign control of online-payment companies seeking new licenses would have prevented Alipay from obtaining one, because of Yahoo’s involvement.

At first glance, it may not seem clear why changes to how China’s consumers pay for goods on the web would be among the top five important developments in the country, and then the global payments and shopping system. This has really pissed off his competitors, including Baidu and most recently, the CEO of RenRen, China’s largest social network.

The reasons are twofold:

1. People trust their friends more than they trust institutions. As China grows more nimble in the social networking category, these kinds of transactions threaten any social network that does not already have a real name identity system in place. If they do have one, the company with an e-commerce system in place wins big. That’s Alipay, Alibaba, Taobao.  Essentially, Ma is one step away from checkmate.

2. People listen to their friends, more than they listen to advertising. Tencent and other challengers have been teaming up with companies like MSN, because they were convinced by those companies that the future of Chinese media is in the traditional advertising on the web that was so successful for the United States and other Western countries. Well, WAS successful. That success is steadily eroding.

You see where this is going, right? China is one step ahead of the future of online media and shopping / advertising. I should not have to say much more. Over 800 million people use the Internet in China. China does not have a long history of traditional advertising behind it. Even if you look at the beginning of outdoor display advertising or television advertising, there has not been a decent sized middle class for the impact to be significant beyond a financial impact. I’m not an expert in advertising, but having a social model for delivering advertising through platforms that are about consumer-driven content means that there is no strong need for television, radio, or normal display advertising. What you get instead is an understanding of influence on the web.

Tencent and the Social IM Network

Tencent has seen this challenge, and their answer: tying up a partnership with American Express to challenge Alipay. What’s happening at Tencent is the second of the five important changes to China’s social web.

I was ready to say that Tencent’s purchase in the social web is declining,  and because of that it’s worth noting just one thing: QQ is the largest registered user social network in China, with 100 million people. It operates much like our current conception of mass media in the United States, in that it’s seen as a more broad based and less granular platform for consolidating advertising messaging.  You can kind of see Tencent’s QQ as the canary in the coal mine. Watch the relationships it makes with content providers, advertising agencies and other media companies. That will show you that out-moded ideas are going there to die. It’s also the fast follower, trying to do what other first-to-market companies like Alibaba are attempting to do.

What you see in the QQ warehouse are the technologies and the media that need a last stretch of beach to lay and bloat.

Sina weibo

This one gets a little tricky. Sina weibo is the Chinese answer to Twitter, but it’s much more than a platform for microblogging.

The things that make Sina weibo important are structural as well as procedural.

Procedural first. Sina’s taking great lengths to legitimize the platform, registering the real name parts of the service and assuring government leaders that it is on top of rumor-mongering, something that tends to get out of hand on a highly personalized service.

Now structural. This video explains how Sina Weibo is framed and used. But all you ahve to know is that Sina Weibo is creating a platform for conversation that leads to conversion, because it offers rich media, advertising, display marketing, and communications between people, including all the same lists features and aggregation features that you can find with Twitter. They also have private groups, and enterprise pages, that are a lot like Facebook brand pages. The evolution of weibo is really the evolution of all the other features on the web that already exist in several different platforms in many Western countries.


iPhone in China — Today at the iOS 5 announcement, Apple revealed its 4s phone, a world phone. It’s now going to be possible to have the same kind of social phone experience in China as it is anywhere else in the world. Looks like global sharing just made the world flatter.

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