Corporate China
PUBLISHED : Monday, 25 November, 2013, 4:41pm
UPDATED : Tuesday, 26 November, 2013, 5:23pm

Weibo: Qualcomm, Sohu launch counteroffensives

BIO

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young’s China Business Blog (www.youngchinabiz.com), commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, “The Party Line: How the Media Dictates Public Opinion in Modern China.”
 

Top officials from leading cellphone chip maker Qualcomm (Nasdaq: QCOM) and web portal Sohu (Nasdaq: SOHU) were tweeting away on their microblogs last week, in what look like efforts to counter recent negative developments for both. In the former case, one of Qualcomm's China vice presidents, Shen Jin, was hyping the potential of both 3G and 4G in China, just as his CEO was admitting that Qualcomm has come under pressure in the market due to negative fallout from the recent Edward Snowden spying scandal. Meantime, Sohu founder Charles Zhang was talking about the importance of copyright protection, in what looks like a response to criticism of selfish motives behind Sohu's role as a lead plaintiff in a recent copyright infringement lawsuit against online search leader Baidu (Nasdaq: BIDU).

Both of these cases highlight one of the big advantages for executives who deliver their messages over social media like Sina (Nasdaq: SINA) Weibo, the Chinese equivalent of US social networking (SNS) giant Twitter (NYSE: TWTR). Put simply, these SNS platforms let company executives give their thoughts on topics without any background or context, allowing them to feed incomplete and often misleading pictures to their thousands or even millions of followers. Company press releases and official company SNS accounts also do the same thing; but at least in those cases readers are more skeptical, since such channels are clearly marketing tools.

All that said, let's take a look at the latest weibo comments starting with Qualcomm's Shen. Before we look at Shen's thoughts on 3G and 4G, however, it's helpful to look at concurrent comments from Qualcomm's global CEO Paul Jacobs last week. Jacobs said in an interview that negative publicity from the Snowden scandal is definitely affecting Qualcomm in China, though he didn't elaborate. His comments don't come as a huge surprise, since other telecoms-related firms ranging from Cisco (Nasdaq: CSCO) to IBM (NYSE: IBM) have made similar remarks in the last few weeks about their business in China. 

Against that backdrop, Shen's comments look like an attempt to stress the importance of Qualcomm's role in the China telecom's market, as the nation prepares to roll out 4G licenses most likely by the end of the year. Qualcomm is the world's largest maker of chips for both 3G and 4G phones, and has also invested big money to recently develop a chip that will run on the homegrown Chinese 3G and 4G technology being used by leading telco China Mobile (0941.HK; NYSE: CHL).

Shen's tweets themselves aren't all that interesting, mostly commenting on how the transition from 3G to 4G will be smoother in China than the previous migration from 2G to 3G. He also predicts the migration to 4G will be much faster than that to 3G. To me, this looks like Shen's response to the negative effects that Qualcomm is feeling in China, as he tries to assure himself and others that his company will remain a leading player in the market.

Next let's look at Charles Zhang, who has adopted a defensive posture since Sohu and a group of other major Chinese Internet firms teamed up with the major Hollywood studios to sue Baidu for copyright infringement two weeks ago. Obviously a move like that was self-serving not only for Sohu, but also for other online video companies that joined the suit, including sector leader Youku Tudou (NYSE: YOKU) and Tencent (0700.HK).

But in this instance, Zhang, whose outspokenness already makes him less popular among China's Internet leaders, seems to be taking extra efforts to defend his actions. In several weibo posts, he discusses the importance of copyright protection, elaborating on how copyright protection benefits everyone. While I agree with Zhang in general, I'll also be a bit cynical and say his words look at least partly motivated by the fact that Sohu's own video service has spent millions of dollars over the last two years to buy the rights to a wide range of both domestic and international video products.

Perhaps Zhang's own lack of likability is leading him to mount this mini defensive of his actions, or perhaps people genuinely question his sincerity. But either way, his tweets, while certainly valid, do seem to paint a picture of an executive on the defensive, as Sohu tries to shore up its faltering position in the market and reportedly mulls an IPO for its online video service.

To read more commentaries from Doug Young, visit youngchinabiz.com

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