How Chinese Tweets Can Pad Your Nest with Cash

Alexander Moschina
by Alexander Moschina, Managing Editor, Investment U

How Chinese Tweets Can Pad Your Nest with Cash

by Alexander Moschina, Investment U Research

Thursday, July 22, 2010

Imagine if you couldn't tweet. Think of all those clever observations you couldn't share. Envision yourself, unable to tell the world that you ordered the cream of asparagus over the chicken noodle!

What if you couldn't get play-by-play updates on the Lindsay Lohan trial... from Lindsay Lohan?!

That's exactly the situation facing 420 million people in one fast-growing market - and the location may surprise you...

"Tweet?"

Okay, maybe you don't tweet. But there's a good chance that someone near you is doing it right now, contributing to the 750 posts that are added to Twitter every second.

The social networking website, launched in 2006, is one of the fastest-growing online communities in the United States. With 106 million registered users and roughly 300,000 new ones signing up each day, it's no wonder you can't avoid hearing about Ms. Lohan's tweets.

And considering the U.S. has some 220.1 million Internet users, Twitter's numbers are certainly nothing to scoff at.

But in China, things work a little differently.

"How Do You Say "Twitter" in Chinese?

China is the global web-surfing leader, with nearly double the number of U.S. daily users (around 420 million). Like us, they e-mail, they shop, they watch videos, they read the news...

But they don't tweet.

Due to the Chinese government's growing concerns about civil unrest, Twitter and a number of other popular websites were blocked over a year ago (just prior to the 20th anniversary of the Tiananmen massacre). And since then, Chinese citizens have been eager to fill the void.

Over the past year, dozens of Chinese Twitter clones have launched... and then been subsequently shut down, leaving eager potential users constantly searching for the next social media outlet...

Along Comes Sina

Sina Corporation (Nasdaq: SINA), a Shanghai-based online media company, provides Chinese customers with online advertising services, corporate e-mail, video messaging tools and even a shopping website.

Founded in 1997, Sina is best known for its extremely popular blogging site (appropriately titled Sina Blog), so it was no surprise when the company decided to produce its own take on Twitter.

In August, it launched Sina Microblog (known in China as "Weibo"). The Twitter-like site goes a step beyond its predecessors by not just mimicking the social networking tool, but making improvements to it.

The service allows users to attach audio and video to their posts, comment on posts by other users, and offers a more advanced portal page than Twitter's, where one can search for individual entries, topics and view the most popular users.

And the best news? The Chinese government is showing no signs of shutting down the site. This is likely due to Weibo's compliance with China's online censorship guidelines (the site employs heavy word filtration) and the fact that such a major corporation backs it.

On July 15, recognizing the importance of such a site making it through the Chinese government's red tape, Susquehanna Financial Group leisure goods and services analyst, C. Ming Zhao set a $50 target for Sina's stock. And the market listened - SINA shares jumped over 8% the same day and continued to climb steadily.

The people of China are clearly overjoyed to once again have an online space to post their thoughts. The site boasts more than five million users already, and Sina projects that it will have 50 million by the end of the year.

The fact that Sina has been given the go ahead by the Chinese government warrants optimism, but the overwhelming demand for the service it provides is what seals the deal.

Alexander Moschina

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