It’s consumers like 26-year-old Amy Zhang in Shanghai who hold the future of China’s marketing in their hands. Zhang is among China’s millions of Internet users who increasingly go online for ideas about what brands to buy, where to shop, and even where and what to eat. “A few years ago, I relied on my closest friends for restaurant recommendations, so the information I had was kind of limited,” she says. “Now, before I book restaurants, I first log onto websites like to see what other people have said about these places, and I can find reviews of most restaurants in Shanghai.”


As in so many other countries, one of the hottest areas of Internet growth in China is “social media” – interactive, community-driven sites that allow “netizens” to interact with each other online. While American companies like Facebook, YouTube and Twitter dominate Western markets, many of China’s 300 million Internet users are like Zhang and are gravitating toward home-grown sites, such as Youku for video sharing and QQ for social networking.


Home-grown or otherwise, social media is booming in China. According to a recent study by Netpop Research, 92% (or 224 million) of mainland Chinese broadband netizens use some form of social media, compared with 72% (or 105 million) in the U.S. “Not only is [China] the world’s largest Internet market, but Chinese netizens are also very active as both consumers and producers of online content,” says Michael Netzley, an assistant professor of corporate communications at Singapore Management University’s Lee Kong Chian School of Business. Indeed, China’s netizens are active players on many sites, moving beyond simply watching videos, uploading photos taken with mobile-phone – a case in point: 76% respondents in Netpop’s survey say that they forward content online.


Not surprising, the country’s enthusiasm for social media hasn’t been lost on corporate marketers. As Netzley notes, China’s netizens “are accessing social media more frequently by mobile devices [than they ever have], so marketers have many digital channels to go through.”


Social media is clearly not just a form of entertainment in China; it has become instrumental in determining what they buy, particularly as they grow more wary of traditional channels of communication. In CNNIC’s 24th Internet Development Statistical Report, 48% of respondents said that they trust online information more than television.


And as more Chinese consumers seek others’ opinions before making a purchase, social media has a big role to play in the success of product’s success. In a culture where word-of-mouth marketing is dominant, Chinese consumers are using multiple sources of online information to learn about products. Netpop found that user-generated content, including consumer reviews, forum discussions and blog entries, influence 58% of purchase decisions in China, compared to 19% in the United States. According to another survey conducted this year by research firm CIC, more than half of Chinese consumers surveyed said social media channels were particularly important in influencing purchases of mobile phones, consumer electronics, cosmetics and baby care products.


According to Kaiser Kuo, director of digital strategy for China at communications and PR company Ogilvy, “The real place where conversations about brands occur over the Chinese Internet is on bulletin board systems (BBSs),” the online forums allowing people to post — usually anonymously — “threaded” messages (that is, showing a running commentary of text messages). One example is Tianya, which contains hundreds of such communities for netizens who discuss everything from social issues to beauty tips.


Such is the attraction of all these sites that CIC’s survey of 640 Chinese netizens shows that even when they are not actually shopping, 90% of Chinese consumers pay attention to the Internet. Many even enjoy monitoring their favorite brands and sharing their opinions in online communities. Nearly 50% of the respondents agree that reading positive comments online can reverse or soften a negative perception they might have of a brand and 56% say Internet word-of-mouth is useful for getting to know a brand.


Power at Their Finger Tips

What’s most striking about social media marketing is that it puts power into the hands of consumers, who are fully aware that their online conversations can sway a company’s brand equity, for better or for worse.


It’s particularly dangerous if there’s bad news, warns Netzley. “China’s netizens can easily get caught up in a feeding frenzy,” he says. “Bad news [about companies] gets echoed both loudly and frequently [online] and the comments can become especially negative if nationalist sentiments figure into the mix.”


Jonah Berger, a professor at Wharton’s marketing department agrees that social media marketing is indeed more difficult to control than traditional forms of media, such as newspapers and television. As he observes, “Allowing consumers to shape the brand may have pitfalls if the discussion goes in a way the brands don’t like.”


It’s something that Starbucks knows too well. In 2007, the Seattle-based coffee chain got a bitter taste of netizens’ wrath in China when a news presenter, Rui Chenggang, used his blog to protest against the Starbucks outlet that had opened a few years earlier in Tiananmen Square’s Forbidden City in Beijing. “This is not globalization but an erosion of Chinese culture,” Rui protested in his blog entitled, “Why Starbucks needs to get out of the Forbidden City.” The post received 500,000 views in two days, with many angry netizens supported Rui. The heated debate was soon covered by both traditional and online news channels, and Starbucks was forced to close its Forbidden City outlet, but not before fuelling plenty of dismay and distrust among millions of Chinese consumers.


To keep tabs on consumers’ conversations, companies can use software to sift through blogs, BBSs and other social network channels to find out what people are saying about their products. Using this technology lets companies monitor negative word-of-mouth and take measures to prevent public relations crises from breaking out on the Internet. Among the newer tools on offer is OBuzz, which was launched by Ogilvy & Mather earlier this year to provide — in the firm’s words — “an unadulterated glimpse of pure consumer sentiment.”


Companies are also leveraging such tools to interact with target consumers in new ways. Last year, Apple launched a marketing campaign on the popular social networking site for university students called RenRen (formerly known as Xiaonei). One part of that included “Apple College,” a page providing information about its products, tutorials for switching from PCs to Macs and monthly prizes for members. RenRen members were also encourage to become “iPod Spotters” and use their iPods to upload photos they take with their iPods to share with an online photo community.


Even lesser-known brands are reaping the benefits of social media. Miss Niu Niu, an up-and-coming online publication for young women, didn’t have the capital to invest in a television or print advertising campaign when it was launched, so it used free social media tools to drive traffic and raise its profile among consumers. Within six weeks, it had 135,000 visitors to its site and over 6,000 followers on China’s social networks.


A Two-Way Dialogue

But as Rand Han, founder of boutique marketing agency BA360, notes, it’s not just cash-strapped companies that should be plotting new social media marketing strategies. “In this increasingly social world, why do brands continue to invest in expensive, ‘one-way’ [traditional] communications [that simply send a campaign’s message to consumers without getting any feedback in return], when they could invest in two-way relationship-building methods that are cheaper?,” he asks.


As more companies adopt Internet marketing strategies, competition for netizen attention will intensify and companies will have more opportunities to experiment with the online campaigns. That’s been the case with how advertisers’ actual products are integrated into sites such as “Su Fei’s Diary,” a 40-episode Internet “show.” Produced jointly by Sony Pictures and China Film Group, the story revolves around Su Fei, a fictional 18-year-old who moves to Shanghai to start a new life. The web drama allows viewers to follow Su Fei’s blog and vote in online polls about how the plot will unfold. Episodes have been distributed for free across popular Chinese video sites, including Sina and Youku, attracting more than 15 million views within three months of its debut. Among the initial sponsors were and Clinique, which were offered opportunities to place their products on Su Fei sets and ways to engage with young consumers that is impossible on TV or radio.


In addition to building brand awareness, some companies use online communities to maintain brand loyalty among existing customers. Rather than marketing on a major social networking site, German auto maker BMW launched its own Internet community a few years ago so that BMW enthusiasts from around the world (including the 150,000 BMW drivers in China) can create user profiles, upload photos and videos, discuss driving experiences with a particular car models, and share feedback on the latest designs.


It’s easy to see why companies in China want to take advantage of the recent social media surge, but how can they develop successful online strategies for reaching and engaging consumers? Wharton’s Berger says marketing through social media first requires a change in the mindset of corporate market departments. “While prior approaches focused on speaking to the consumer, these new forms of media encourage a two-way dialogue where consumers ‘talk back’ to [and share their impressions about] brands,” he says. But while this can allow companies to gain deeper insight into how consumers react to their products “they must be managed carefully,” he adds.


Such careful management requires a deeper understanding of a target consumer’s likes and dislikes than is necessary with traditional marketing. Robert Hsiung, founder of Onecircle, a social networking site for high-net-worth Chinese, says that such sites can provide targeted branding opportunities. “You need to think about who you want to reach, and then choose the right platform for talking to them,” he says. “Many of China’s social networking sites now target niche populations with specific characteristics. ”


Additionally, Netzley says adapting online strategies to local tastes is critical. “You cannot simply mirror [your strategy] in Europe or the United States [in Asia],” he says. “Anybody entering China needs to have local expertise or local advice, which is highly in tune to what’s going on in China.”


Experts also advise companies to be prepared, and open to, getting feedback from customers. Monitoring consumer conversations is only the beginning. Leveraging social media involves joining the conversations, be it through discussion-based communities like BMW or through “viral” (or shared) content like “Su Fei’s Diary.” It also means social media tactics should be integrated into a company’s overall marketing strategy. “Rather than simply buying ads on MySpace, they should make interactive [social media] elements part of their marketing programs,” writes Donna L. Hoffman, a professor at the UCR Sloan Center for Internet Retailing, in a recent article in McKinsey Quarterly.


According to experts, the most successful social networking campaigns provide genuine value to consumers. They are also flawlessly implemented – a particularly critical success factor given that speed and ferociousness with which netizens can exposed shoddy campaigns. In 2008, PC manufacturer Lenovo posted videos across China’s video-sharing sites featuring a man looking for a “Red Laptop Girl.” The viral campaign aimed to promote Lenovo’s IdeaPad notebook and garnered a temporary spike in viewership. However, Chinese netizens caught the company red-handed, so to speak, when they discovered that the story was fabricated.


Finally, Benjamin Joffe, founder of consulting firm PlusEightStar, encourages companies to view online channels as a form of consumer engagement that can lead to greater innovation. “Brands need to realize consumers and people in general are not just targets but stakeholders,” he says. “Engaging with consumers is generally limited to grabbing their attention with a funny viral video, but generally stops as soon as the [campaign] finishes. Also, it has little or no impact on the inside workings of the company. It remains in ‘push’ or ‘broadcast’ mode,” rather than in “pull” mode.


But is all this simply a short-lived fad? Experts say no, citing the high growth rates of broadband technology in China. According to a recent report from JPMorgan called, “Nothing But Net,” China’s Internet usage is relatively low and predicts a surge in social networking through mobile devices as 3G technology develops in the country.

As for what lies ahead for social media marketing in China, Netzley says he sees “tremendous opportunity and encourages companies to stay informed about new innovation on the Internet. “Online gaming, product placement, online sponsorships – these are going to become huge for marketers,” he predicts. “The consumers are there; the technology is there. You simply need to figure out how to use these channels wisely.”