Chinese IR confronts social media
One day recently, a Chinese internet stock was down 25 percent in the first hour of NASDAQ trading.
No one could figure out why – unless they could read Chinese and they were monitoring Sina Weibo, a Chinese-language hybrid of Twitter and Facebook.
It turned out an ex-employee had used China’s most popular microblog (‘weibo’) service to question his former employer’s business ethics, and investors following the chatter had picked up on the negative news.
Social media are growing at an astonishing rate in China, with the number of weibo users growing 300 percent to 250 mn in 2011, according to the latest report form the China Internet Network Information Center (CNNIC).
That’s two and a half times Twitter’s worldwide total and more than the 230 mn Americans who have access to the internet.
While US companies have plunged into social media for marketing and some have tested the waters for IR, from live-tweeting earnings announcements to sharing video and slide decks, Chinese companies face a more chaotic challenge.
Facebook and Twitter have obvious counterparts in the form of Renren and Sina Weibo. In actuality, Chinese social media platforms are vastly fragmented. Renren competes against Kaixin001, 51.com and others, while Sina Weibo is one of many weibo sites.
‘In hypercompetitive China, many of these social media websites have a lot of players fighting for their user base. It can take them longer to get to a dominant scale and profitability,’ says Crocker Coulson, president of CCG Investor Relations.
No wonder, then, that social media stocks that listed in the US last year like Renren and video sharing sites Tudou and Youku.com have been on a volatile ride. Lashou, considered China’s Groupon, went on a roadshow in November but pulled its IPO.
It’s a fast-evolving space, Coulson notes. Most recently, the government cracked down with a real-name registration policy for social media sites, meaning slower growth for new sign-ups.
Sina Weibo is looking to an ‘enterprise edition’ to pick up the slack, signing up numerous brands ranging form Burberry to Lenovo.
‘Leading social media platforms like Sina Weibo are incredibly widely used for information and commentary, quickly creating viral news flow in China. There are tremendous consequences for business and politics,’ Coulson goes on.
But aside from a handful of CFO discussion forums on Sina Weibo, there’s hardly any sign that Chinese IROs are using social media in China, and a look at the English websites of NYSE-listed Renren or NASDAQ-listed Tudou, Youku.com, Baidu, Sina, Ctrip.com, China Dangdang and Jiayuan.com finds no evidence of social media being used in IR for non-Chinese audiences.
Coulson points out that Chinese companies are nobbled by being unable to access Twitter and Facebook from within the Great Firewall of China.
‘Chinese corporations are cut off from an increasingly vibrant means of communication, both from a brand perspective and potentially from an IR perspective,’ he says.
How Chinese companies are coping with the opportunities and pitfalls of social media, both in the US and within China, will be the focus of a webinar staged this week by CCG Investor Relations and Deutsche Bank’s ADR group (Thursday, 9.00 am HKT, Wednesday, 8.00 pm EST).
The webinar, with your correspondent as the moderator, will tackle the topic from three angles. Alan Hellawell, head of Asian telecommunications, media and technology equity research for Deutsche Bank in Hong Kong, will lead off with an overview of the crowded and volatile social media field in China, including how government policy will play a role.
Next Sylvie Luk, TMT analyst for iMeigu.com and Snowball Finance, will talk about how analysts, investors and financial journalists are beginning to use social media to cover Chinese companies.
Finally, Coulson will talk about practical lessons from western companies that have found social media a boon to driving investor engagement. He will address best practices in areas such as crisis communications and how to address social media in disclosure policies.
For more information about the webinar including how to listen, go to www.ccgirasia.com.