Internet & Tech

Weibo the winner

Sina has China’s top social networking platform

Weibo the winner

Social networker: Charles Chao

Is Facebook finally going public? According to CNBC this week, the social networking giant is considering filing for an initial public offering that could value the company at more than $100 billion.

That’s almost double the valuation from earlier this year, when Facebook raised $500 million. Only a small group of companies like Exxon Mobil, Apple and General Electric have stock market valuations above the $100 billion mark.

Kaixin001, a Chinese social-networking site, is also hoping to share in some of valuation magic when it lists itself, before the end of the year. But that might be too hopeful. Its closest rival Renren is now trading at $8.27, or about half of its May IPO price.

Also a concern for Kaixin001: the intense competition in China’s social network market. The company has to square up to a range of Facebook-clones (see WiC89). And now it faces a new challenge in the explosive growth of China’s largest microblogging service, Sina Weibo.

That might sound strange – outside China it’s hard to imagine Twitter displacing Facebook? But Sina Weibo is much more than a Twitter-clone, having added new features and functionality at a frenetic pace. Its offering now includes a location-based service (resembling Foursquare) and an instant messaging tool, as well as other social networking functionality like discussion groups and event sharing.

Sina has also added a recommendation service that suggests new friends, as well as content feeds that may be of interest, says tech news blog TechRice. “We did a lot of enhancements and innovations,” Sina chief executive Charles Chao told TIME magazine back in February, claiming a “much more advanced product” than Twitter.

“People tend to think this is Twitter. It has a lot of Twitter features, but I think it’s more like a combination of Twitter and some features from Facebook.” Perhaps that is fuelling the explosive growth in Sina Weibo’s customer base. In the two years since microblog services became widely available in China, it has attracted more than 140 million users. Renren took five years to reach that number. Weibo has also surpassed both social networking site Renren and Kaixin001 to be the country’s second most-visited site, trailing only Tencent’s QQ, the instant-messaging service.

Users are also spending significantly more time on Sina Weibo compared to Renren. According to data from Shanghai firm RedTech Advisors, only 20%-25% of Renren’s users are active, while more than 80% of Sina Weibo users log in on a regular basis.

Moreover, Weibo is still growing rapidly, adding about 37 million users in the first quarter of this year; Renren, on the other hand, added 5 million in the same period. (Chao has said Sina will spend $100 million marketing Weibo this year, suggesting those numbers will continue to grow.)

This interests the advertisers, of course, and Sina has done more work than Twitter to develop features more suitable for commercial use. Pictures and videos can easily be posted and reposted, for example. That makes it easier for marketers to promote their products or distribute coupons. Companies like L’Oreal are already turning to Weibo to advertise.

“Months ago, people were crazy about social-networking sites. Today the majority are addicted to microblogs,” Daisy Zhang, chief executive of CIC, a social business intelligence provider, told the China Daily.

Industry observers even predict that the success of Sina Weibo could see social networking sites like Renren and Kaixin001 rendered obsolete. Gang Lu, a blogger on China tech blog TechNode, agrees, writing that Weibo is “now the most powerful social media channel in China,” and that “the integrated nature of Sina’s products can be expected to attract users.”

But it’s not all good news for Chao (Cao Guowei). Sina’s shares fell sharply this month after senior management sold part of their stake to private equity firms. Since the $100 million sale was agreed on June 3 the stock’s fallen 30%, reports Wall Street Journal. The newspaper says investors feel the management’s stake sale sends a bad signal. But Chao has retorted that management has no plans to sell any more stock.

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