The Liberating Internet

I am quoted in the recent article entitled "The Liberating Internet" from Guanxi: The China Letter. A PDF of the article can be found here.

The article does a pretty good job profiling the net culture behind and within BBS in China. It quotes Charles Zhang's "internal research" to provide some impressive numbers about Internet use:

Chinese Internet users numbered more 150 million and possibly up to 200 million. The United States, by contrast, had 154 million active Internet users in January 2006. Chinese Internet users spend nearly 2 billion hours online every week; people in the United States, 129 million.

The article also breaks down GTER, a famous BBS for those who are applying for student visas for the United States. This is classic "user experience" word of mouth which I discussed here previously (as opposed to "news" or "crisis" word of mouth like we have seen with Foxxcon and Apple recently. For more on this case, see here, esp. "related links").

Issue based BBS communities thrive anything that is complex, expensive, has lack of transparent information, and/or expensive. In this case, no one knows the "right" answer for how to pass the visa interview, so thousands of experienced interviewees will weigh in on what went right or what went wrong with an interview:

Because a personal interview is involved, the results are unpredictable, and a denial means the end of a dream and the loss of years of effort on the part of the student and his/her family. On GTER, students get to share their experiences with one another and offer tips on how to "beat" VOs (visa officers), including how to answer certain questions, how to present materials, and details on the different tastes of various VOs.

A typical post to GTER might recount--sometimes word by word--the interview process with the VO, and tens to hundreds of follow up posts will help analyze the reasoning behind each question the VO posed and why the answers the students gave may or may not be right.

The article also mentions the relatively high status of Chinese net stars as well as Xujinglei's fame as a blogger are also discussed. I discussed these issues previously here and here and here.

Guanxi is a subscription based, monthly publication from Berkshire Publishing. Lyn Jeffery from Virtual China is an adviser. More info can be had from liz (a) berkshirepublishing.com publishing or by going to Berkshire's site. berkshirepublishing.com

Automobile: In China, the Chery Army sounds-off online

Recently, US based Nielsen Buzzmetrics' Bill Stephenson wrote about China's Chery Automobile on his Automobuzz blog, saying that while there are few messages on BBS (online message boards) in the US about Chery for now, he expects that this will change when the car makes it expected debut in the US within the next couple of years. He advised US based automobile brands:

I know many OEMs in North America are anxious about the arrival of this vehicle to the U.S. I've heard comparisons of Chery to Hyundai's arrival in the U.S. and considering the gains that automaker has made (most notably in the last few years), it makes sense to stay close to consumer reaction to these future imports.

He also cites a hot conversation about Chery vehicles on a Malaysian BBS sites as one example of the type of conversations that may occur.

Taking a look at Chinese BBS, I think we can find even more interesting insights for those interested in learning more about consumer perception of the Chery brand.

In our review of a set of 1,200,000 automobile messages in July, we found that there were 7025 mentions of Chery's QQ minicar, compared to Buick's Sail with 2714 and Chevy Spark 1105 mentions. QQ beats its closet competitor Chevy Spark by almost 700% (see here for GM's concern about how "close" is to close).

If you want to find the real home for QQ fans, however, you should go to MyChery.net where you will find "Chery's Army" (新奇军). Here are some pretty amazing stats about this forum which started in April, 2003.

• Members: 23,450
• Number of total messages posted to date: 7,682,203
• Average number of posts per day (our estimate): 9,000
• Number of new members per day (our estimate): 120
  

As a brand, can you imagine being able to listen in on 9,000 comments from 23,450 of your biggest fans every day? If you are Chery, you can do that at Mychery. You could also watch Chery related forums on Xcar.com.cn (I mentioned this in a previous post), as well as Auto Sohu, Auto PConline, Autohome, and Che168. If you want to monitor other brands, they are all there as well, including fan sites for other models like Polo, Bora, Tiida and many others. All told, we estimate there are 3-5 million consumer messages a month on automobile related Chinese BBS sites.

What is driving Chery conversations, especially those about Chery QQ? One big element behind all the buzz is a nationalistic pride in one of China's automobile brands already exporting around the world. Here is one example:

I love my home town, my country, my army friends [New Chery Army], and Chery! I hope China can be a powerful auto producer soon!

Like some kind of sport, QQ fans who travel around the world excitedly share sitings of Cherys being sold in other countries.

Similar to many online communities, the passion for the car which instigates the relationships drives these relationships offline as well.

Here you see QQ fans share contact info with each other (this conversation received 60,000 page views and 299 replies).

Here, you see QQ fans attending a fellow QQ owner's wedding:


In the end, "value for money" is a big driver for QQ buyers. In China, you can get the car for around US $5,000 with many of the same features as more expensive, comparable models, and with decent quality. As one of my Chinese colleagues told me, Chery's cars like the QQ make the "American dream" (his words) of owning a car more attainable.

So what can US automakers learn from these conversations about Chery? For one, while Chinese brands may not have the greatest reputation for quality overseas, the quality, at least for Chery, is "good enough" to support intense passion of even the savviest Chinese online consumers. You won't have so many fans if the product sucks, nationalism or no nationalism.

Automakers can also learn very specific details about user experience and opinion.

One poster here complains about engine problems:

My QQ has engine cuts out without warning after only half a year. The problem even occurs when I simply make a turn. What kind of car is this?

They also share motivations for why they buy QQ:

I bought Chery QQ because of its high value price, rather than patriotism.

Text mining of millions of messages (such as what we do at CIC data, please pardon the shameless plug) can provide systematic, detailed analysis and consumer insight about Chery as well as any other make and model sold in China. For example, when mentioning QQ, what are online consumers talking about? What percentage of conversations discusses accessories, pricing, quality etc.? When they talk about these things, is the sentiment positive or negative? What is the most outstanding accessory in terms of buzz volume and sentiment? With text mining, you can find out.

So the question is: Will Chery and Visionary Vehicles be able to create the same kind of buzz and passion in the US? Certainly, Chinese nationalism won't help sell cars in the US. But if they are smart, they will find some other unique passion point for the car such as "value for money" (or simply, a good, cheap car), and position it as a no-nonsense, practical car sort of like the Beetle was for my parents generation or the Honda Civic was when I was growing up. Doesn't every generation need a Beetle or Civic? See here for more thoughts along these lines.

Chery has been successful in creating a brand with strong buzz in China. There is no reason why, with the right partners in the US, Chery can't be successful in the US. Haier, and especially Lenovo, have made inroads in the white goods and computer industries (see here and here for more on this). Why not cars? If American automobile makers aren't listening to the Chery army in China, perhaps they should be.

Related articles:

China Daily: GM charges Chery for alleged mini car piracy
Seeking Alpha: The Next Auto Invasion is Coming - From China This Time
Businessweek: China's Power Brands
Christian Science Monitor: Ever heard of Lenovo, Haier, CNOOC? You will.

Q&A in Ketchum's "In the Know"

There is a Q&A bit with me in the most recent Ketchum's media newsletter "In the Know." You can download the PDF here.

In Bangkok August 16 and 17

I will be speaking at a conference in Bangkok on August 16 and 17. If any readers are interested in meeting up, please drop me a line at sam at cicdata.com.

Dell corporate blog comments on ProcessorGate

Direct2Dell, Dell's English language corporate blog, has commented on ProcessorGate both in English and Chinese here .

• We have acknowledged the issue, and we have corrected the error in all materials.
• We have directly apologized to Dell China customers who were affected, and also informed them of the difference between the two processors.
• For customers who were not satisfied with these actions, we offered full refunds for returned T2300E-based systems.

Steve Rubel gives the response a good grade here. However, I have yet to see the Chinese version of the reply posted on any Chinese blogs or BBS forums. Is this a PR move for English speakers (and stock holders) or will Dell also reach out to those actually affected by the situation? If anyone finds instances of the Chinese response, please let me know.

Another interesting analysis of the situation comes from Corporate Social Responsibility blog here with more in depth look at it here in their PDF newsletter (hat tip to Imagethief for the link). The newsletter provides a history of Dell's struggle with negative media coverage in China as well as the bigger picture MNC's face here.

This analysis, in particular, is spot-on:

This phenomenon of taking companies to task for real or perceived problems is, I think, most noticeable in two broad areas. First, it seems that computer and related electronic products are often targeted because consumers of such items are more likely to be hooked up to the Internet and reasonably savvy about how to get their point across in BBS forums. There are, for example, numerous IT forums in China and several large and widely-read online magazines covering IT and related issues. Perhaps the only other product groups to attract more online attention are food and beauty products. The second broad area of online attack is multinational corporations. This is not to say that local companies are not attacked, but newspapers seem particularly eager to follow up on stories involving well known foreign brands. KFC, McDonald’s, Siemens, Nestlé, SKII, Wal-Mart, Nike, and others have all found themselves in the mainland media in the past year or so for various transgressions, ranging from product safety, through unions and advertising, to lay offs. The main reason for targeting large and well known brands is obvious: leading companies attract attention and negative stories about them sell papers (as is the case elsewhere). But I think it’s sometimes true that foreign corporations can attract more attention than local companies for a mix of reasons, including being held to a higher standard, pockets of local resentment at MNCs (for a range of reasons), and fewer connections (political or otherwise) that would keep them off the front pages of local newspapers.

Processor Gate: Dell engaging social media in Asia Pacific

Imagethief has further thoughts on Dell's "processor gate" here. However, what is even more interesting to me is that T.R. Reid, Dell's AP regional director of corporate communications, put up a comment to Imagethief's post, the same comment that was in the Business Week article here.

We made and have acknowledged an error in our marketing material. That error has since been corrected. While there's no performance difference between the T2300 and T2300e in notebook computers, customer experience matters most. So we contacted customers when we realized the error, apologized, and explained the comparable performance. Most customers were satisfied. For those who were not, we offered refunds for returned systems. Some customers have taken us up on this offer. We welcome discussion of Dell in the blogosphere, in China and elsewhere. We're learning from and contributing to blogs, on a range of topics. As for China, we are the second-largest supplier of computer-systems in the country, which suggests a large and growing number of customers see value in what we offer. We serve customers in more than 2,000 cities in China. And we just opened a second manufacturing plant and are one of the country's largest exporters (to Japan and South Korea) in any industry.

First off, I think it is brilliant that Dell is engaging bloggers like Imagethief so quickly (within 1 day of the post going up). It is representative of Dell's proactive approach to social media PR that can be seen in their recent launch of its English corporate blog and its engagement with bloggers in general. While there have been mis-steps (i.e. the attack by PR intern of Jeff Jarvis on his own blog), and not all A-list PR bloggers are satisfied (read Steve Rubel, among others), all in all, I extend kudos to Dell for its approach. They are on the right track.

In the end, however, while Imagethief is certainly an influential and brilliant blogger, especially for within Asia Pacific PR, I don't think he is really the guy that Mr. Reid should be engaging. I would guess that very few Chinese netizen notebook fans read Imagethief.

So lets take a look at what they did with the original crisis. Looking at the progression of events, we see that Dell is actually paying attention to Chinese social media, though they seem to not move quite as fast.

On June 28, 5 days after the first consumer complaint on BBS, and 4 days after IT168 set up a special forum about the issue, Dell issued what is reported to be an "official statement" through IT168 and reported by IT168 on its special Dell Complaints page(my translation):

The CPU manufacturer (Intel) had previously confirmed that the letter "E" is not a critical part in the processor naming convention. Our documentation doesn't include this fact and we sincerely apologize for any subsequent customer misunderstanding.

On July 5, IT168 communinicated that Dell was willing to offer a refund:

After IT168’s active contact with Dell, Dell is promising to provide a further solution to this issue. Those consumers who have been involved in this incident can get refund through normal sales procedure

Analysis: Dell was a little slow in responding to the brewing incident (5 days for IT168 vs. 1 day for Imagethief), but at least they were listening. While the language was very "official" corporate-speak style, at least Dell did not issue a press release. Dell wisely went through IT168 as a mediator instead of addressing consumers directly in the forums. Engaging "angry" consumers in a public space where messages recorded for all time is a bad move and would have only increased chaos.

What I think was ultimately the biggest wrong move was to not offer the refund to begin with on June 28. IT168's notebook forums are filled with notebook experts who actually pay attention to things like processor part numbers and know what "virtualization" technology is and care about it. To tell these experts that this technology is "not important" will do nothing to placate them. It may not be important to most consumers, but it is important to these very knowledgeable and very vocal "super" consumers. These are the kind of consumers who are the ones that friends, families, and procurement managers go to when seeking advice about what computer to buy. Simply put, these are the last guys you want to piss off.

One thing that should not be missed in this whole episode is that there are more players than just Dell and "the consumers."

The lawyer clearly had his own interests in taking on this case.

But more interesting is the role of IT168, the website. Would this processor issue have created so much buzz if IT168 had not created a special section for the crisis to stimulate interest? IT168, throughout all communications, is portraying itself and being portrayed as fighting for consumer rights. In the end, IT168 may be the biggest winner in all of this, and having a crisis (whether instigated by IT168 or not), definitely brought the site increased exposure.

In the end, it appears that there can be a fine line between BBS sites as "mediators" of crisis' and "instigators" of crisis'. We see a similar case with KFC's TVC "University-Gate." The crisis was "facilitated" on TianyaClub with prominent placement of conversations. Later, KFC sponsored a TVC rewrite contest on Tianya. Nice benefit for Tianya. Similar things are happening in the US, with The Consumerist receiving increased exposure thanks to its continued exposure of questionable AOL customer retention practices (though they certainly are not getting any of AOL's advertising dollars).

Disclaimer: I have done my best to present the case accurately based on our thorough review of media, BBS, blog conversations surrounding this case which can, be at times, contradictory and ephemeral. If there is something I have missed, or something that is not accurate, please do let me know.

See also:
Micropersuasion: Dell Customers in China Seek Revenge Over Processorgate

China Dell Hell (aka Processor Gate)

Dell Credibility Crisis

I got a quote in a Business Week article, "Mad as Hell in China's Blogosphere." The article touches on increasingly vocal and active consumers on Chinese BBS and blogs taking on companies. I previously touched on this online consumer activism, what I call "Crisis 2.0," here.

The BW article cites a recent Dell incident as a case study where a consumer complaint on a BBS about a processor eventually led to a class action suit.

Here is the timeline for Dell's "processor gate."

June 23: First consumer complaint on IT168 BBS notebook forum

June 24: IT168 forum administrator invites others to complain about Dell

June 24: IT168 sets up special "Dell Hell" section to track issue

June 28: Dell responds to the incident, says "sorry"

June 29: Lawyer Ma Jianrong invites forum participants to join a class action lawsuit

June 30: Story moves to mainstream media, dubbed "Processor Gate"

July 4: CCTV reports the class action suit

July 5: Dell offers refund; consumers not mollified


Troubles in social media are unfortunately not new for Dell. See related articles on "Dell Hell" in US last year:

Buzzmachine: Dear Mr. Dell (original Dell Hell post)
BusinessWeek: Dell in the Blog House (analysis of Dell Hell in US)
Onalytica: Measuring Blog Influence on Brands (Dell as case study for CGM influence on Brands)

Dell recently set up a blog in the US to deal with its "credibility" crisis.

More recently, Dell is having problems with notebook batteries catching fire and being caught on consumer digital cameras here, here and here. These stores are also getting picked up in the Chinese blogosphere. Dell Hell is now a global phenomenon.

See also Pacific Epoch: Customers To Sue Over Dell Chip Controversy