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With Which Stakeholders Does LinkedIn China Cultivate Relationships

August 30, 2016

Although LinkedIn, a social networking giant is a well-recognized brand worldwide, it has encountered potentially daunting challenges doing business in the Chinese market because of the fact that many foreign internet companies had failed. From its very inception, LinkedIn China and Chitu have been enthusiastically developing creative and strategic ways to cultivate relationships with their stakeholders. Based on the data collected, those stakeholders are, investors, board of directors, employees, government, media, industry peers, consumers and users.

 

Investors.
 

LinkedIn China chose to enter the Chinese market neither by itself, nor by working with big Chinese internet companies; instead, it cooperated with “two local players — China Broadband Capital and a Chinese affiliate of Sequoia Capital, an American venture capital firm” (Mozur & Goel 2014, para.29). These two companies have helped LinkedIn China manage its relationship with other stakeholders, such as Chinese government officials.

 

Furthermore, these companies offer local resources, such as marketing insights and media networking. The availability of these resources is one of the most important secrets to LinkedIn China's seeming success (Interviewee 1, personal communication, February 24, 2016; interviewee 3, personal communication, March 25, 2016). Investors, though, are not directly involved in LinkedIn China’s daily operations. However, they do care about new-user growth on LinkedIn China’s platforms. Because its stock evaluation is closely connected with user growth, LinkedIn China is periodically updating its investors about increases in membership (Interviewee 2, personal communication, March 24, 2016; interviewee 4, personal communication, March 25, 2016).

 

Board of Directors. 
 

LinkedIn China has an independent directorate made up of five members, including chairman of LinkedIn, Reid Hoffman; the CEO of LinkedIn, Jeff Weiner; the founder of Sequoia Capital China, Neil Shen; the president of CBC Capital, Edward Tian and CEO of LinkedIn China, Derek Shen (Qi, 2014). Board members hold a meeting each quarter to study how to better develop LinkedIn China, thus, ensuring that LinkedIn China is running more like an independent startup company (Tongxin, 2014). Compared with other foreign companies in China, LinkedIn China enjoys much more freedom because of its structure of and trust from broad of directors. Generally, many LinkedIn China’s decisions, including the creation of Chitu, could just be made between CEO, Derek Shen and two investors of LinkedIn China (Yang, 2016).

 

Employees. 
 

From adjusting the roles of local employees, to providing incentives that are designed to boost morale, LinkedIn China builds stable, long-term relationships with its employees. The following evidence, demonstrates that LinkedIn China is very considerate and selective in cultivating relationships with its employees.

 

Providing each and every employee with stock shares and generous rewards, has been among the most effective incentives and loyalty building strategies that LinkedIn has implemented (Interviewee 3, personal communication, March 25, 2016; interviewee 4, personal communication, March 25, 2016; interviewee 5, personal communication, March 25, 2016). Using this incentive mechanism, LinkedIn China is more like a local startup, which effectively motivates employees’ enthusiasm through communicating the important message that ownership of every employee is valued by the company. 

 

Moreover, through the researcher’s direct observation of information posted on Chitu, as well as interviews she conducted, she found that LinkedIn China constantly creates “little surprises” for employees, such as sending birthday or holiday cards, as well, as preparing rewarding gifts with LinkedIn’s logos for employees whose performances are excellent. This demonstrates LinkedIn China’s efforts at fostering a good working community (Interviewee 1, personal communication, February 24, 2016; interviewee 3, personal communication, March 25, 2016).

 

Government. 
 

One fundamental reason that LinkedIn can enjoy free rein and permission to operate in China, is because of its willingness to comply with the Chinese government’s censorship rules. In contrast, China has denied entry to Twitter and Facebook for years. LinkedIn CEO, Jeff Weiner also mentioned that for the company to obtain a license and be able to scale in China as LinkedIn desires, it would be necessary to allow the content to be filtered (Zen, 2015).

 

Furthermore, LinkedIn China has promised the Chinese government it would spare no efforts on facilitating the economy’s growth, and would create as many business opportunities as possible (Qi, 2014). LinkedIn has been positioned as a useful ally as the government attempts to put Chinese job growth in the driving seat (Interview 3, personal communication, March 25, 2016; interviewee 4, personal communication, March 25, 2016; interviewee 6, personal communication, March 26, 2016). A couple of journalists note the following:

 

LinkedIn is well positioned to be acceptable to China because it can make the employment market more efficient, ultimately spurring economic growth. China's Internet regulators often argue that the main goal of development of the Internet should be to bolster economic growth (Mozur & Goel, 2014).

 

LinkedIn China also understands clearly that cooperating actively with local government, and building trust with it, would enable it to obtain more corporate clients and partnership benefits (Runjian, 2015). On the 7th of September, 2015, LinkedIn China contracted with the Shanghai government to provide talent solutions, which is LinkedIn’s core strength—internet technology and professional networking databases. This partnership accommodates the requirements of local industries in the Shanghai metropolitan area, by tapping into Shanghai’s abundant supply of blue collar and professional workers. LinkedIn China also offers university students resources by which they can optimize their curriculum design. Two months later, a similar contract with the same goal was signed with the government of Chongqing—a city that attracts much foreign investment in southwest China. For the city itself, with the partnership, it can become the first experimental unit that brings in global talent, thus, better satisfying companies’ needs for hiring and elevating them to become bigger enterprises (“LinkedIn’s another startup,” 2016).

 

In terms of why LinkedIn China, as a pure internet company, has to build a relationship with the local government, Derek Shen elaborates as follows:

 

On one hand, LinkedIn China can help cities like Shanghai and Chongqing build their own name cards and innovative brands. On the other hand, bringing in more overseas talent is also the objective. China certainly needs that. LinkedIn China understands well that the current adjustment of the Chinese economy would inevitably bring the flow of talent, along with professional communication. Meeting the local government’s political and economic goals, such as business investment, would directly result in finding the relevant corporate clients. After all, the government also wants to be seen as professional. (“LinkedIn’s another startup,” 2016, para. 6)

 

To build a relationship with the Chinese government, LinkedIn China keeps close watch on China’s ever-changing economic and diplomatic policies and is ready to make proactive efforts to respond to said policy changes. With the rapid growth of the Chinese economy, the further promotion of “Internet Plus” plan, which seeks to drive economic growth by integration of internet technologies with manufacturing and business (“China Pursues Internet,” 2015), China has been encountering the most unprecedented opportunities for entrepreneurship development (“China enterprise news,” 2016). Talent is at the core of the engine that drives China’s economy. LinkedIn China seizes the chance to cultivate relationships with all levels of government by helping them absorb all sorts of overseas talent, and bringing in more international innovative resources. One piece of evidence is that LinkedIn China has cooperated with the government of Shenzhen (one of the most entrepreneurial cities in China) in holding its first overseas innovation contest with the objective of attracting global talent. LinkedIn China expects itself to be a bridge for helping Chinese companies go global and bring foreign talent to China (“LinkedIn China helps”, 2016).

 

Media. 
 

Since its founding, Chitu has attracted extensive media attention, most of which is curious about LinkedIn’s double-brand strategy in China. According to one of the interviewees, “When Chitu started its large-scale invitation for registration, it was also the date for the China Internet Conference, 21 July, 2015. A number of web portals and industrial media has conducted exclusive interviews with Derek Shen, CEO of LinkedIn China, and subsequently, has disseminated relevant information gleaned from those interviews to crucial aspects of their media; i.e., their home pages, and Wechat Headline, and many other outlets.” (Interviewee 4, personal communication, March 25, 2016). Chitu has, therefore, from its very inception, enjoyed maximum media exposure.

 

Chitu also enjoys a long and stable relationship with China’s financial, technological and internet mainstream media (Interviewee 3, personal communication, March 25, 2016; interviewee 4, personal communication, March 25, 2016). To consider several examples, the financial and technological channels of the top four web portals in China—Tencent, Sina, Netease, and Sohu; the leading industrial media, Pingwest, TMT, 36Kr and Hu Xiu; traditional media channels, such as national and local news, and television and radio broadcasts. A LinkedIn China executive states, “Users on professional social networking platforms come from a wide range of industries; thus, we have to communicate and maintain relationships with as many mainstream media as possible, since our users can easily get access to them. In light of the communication effect, we spend more efforts in the main web portals and industrial media.” (Interviewee 4, personal communication, March 25, 2016). The interviewee further explains that,

 

Analyzing the feedback from media over the past year, allows us to conclude that, both LinkedIn China and Chitu have gained sound reputations within mainstream media circles. Such a status results from the frequent communications of our CEO and the public relations team with the media, and the transparency we keep in terms of company updates and products information. When there is an initiative need of interview, we will coordinate company resources and reply to the reporters at the earliest. (Interviewee 4, personal communication, March 25, 2016).

 

Moreover, as a result of the rapid development of Wechat, many We-Media individuals have emerged in the Chinese internet industry. They are influential writers from Wechat magazine and generally have large groups of fans and followers. Chitu’s public relations personnel keep close communication with key opinion leaders in the industry on many We-Media channels. One of the interviewees disclosed that “In August, 2015, we held a seminar for insights exchanges between Derek Shen and writers from Hu Xiu media. 12 writers and several Hu Xiu editors made their presence there. They had a face-to-face interaction and discussion concerning the professional social products, Chitu and strategies of LinkedIn China” (Interviewee 4, personal communication, March 25, 2016).

 

In addition, LinkedIn China and Chitu maintain their relationship with media by providing them with hot topics every now and then (Interviewee 3, personal communication, March 25, 2016; interviewee 5, personal communication, March 25, 2016). For example, there once was a topic, “How to deal with it when you don’t agree with your boss,” which was created on Chitu to promote user engagement. This topic generated a large number of comments, of which Chitu gathered and analyzed, 1000, statistically. The collected statistics were quite revelatory in revealing the attitudes and opinions of young Chinese professionals. Chitu provided these statistics to the media, in order that they could be disseminated among the general populace. A win-win relationship between Chitu and the media is thus established (Interviewee 3, personal communication, March 25, 2016; Interviewee 4, personal communication, March 25, 2016).

 

Industry Peers.
 

China’s domestic internet giants, such as Tencent, are LinkedIn China’s industry peers as well as stakeholders (Interviewee 1, personal communication, February 24, 2016; interviewee 2, personal communication, March 24, 2016; interviewee 4, personal communication, March 25, 2016). LinkedIn China implements its relationship cultivation strategies by seizing the opportunity to cooperate and create a win-win situation for both parties.

 

Believing that it is necessary to have comprehensive cooperation with the Chinese social media star companies (Interviewee 3, personal communication, March 25, 2016; interviewee 4, personal communication, March 25, 2016), LinkedIn China has integrated Sina and Tencent (two giant media companies in China) into its platform so members can easily import their Weibo contacts, invite other professionals to join their networks, and reach a broader audience with their status updates. A bigger step is to cooperate with Wechat, which is a widely-used tool for communication in China. Members from LinkedIn China, who have Wechat, can link both accounts, so that they can broaden their professional reach and share relevant news and insights across both networks. This is an obvious indicator of China’s acceptance of this U.S.-based channel, a success that Twitter and Facebook have been unable to experience (Interviewee 1,personal communication,February 24,2016; interviewee 2, personal communication, March 24, 2016; interviewee 5, personal communication, March 25, 2016; interviewee 6, personal communication, March 26, 2016).

 

According to Katie (2014), this cooperation has a positive effect on B2B marketing in China. On Wechat, there are many individuals in the sales and customer service fields; they communicate with customers on a more personal level. For LinkedIn China, it is considerably important to establish a solid base on real-time media channels, since Wechat is the fastest-paced means of communication and the No.1 instant messaging app in China with 468 million users worldwide (Kemp, 2014). With this cooperation, LinkedIn China gains more users and traffic, because users from both Wechat and LinkedIn China can browse posts on a regular basis and have more engagement (Qi, 2014).

 

Under a similar goal, LinkedIn China promotes its email culture by allowing users to find new contacts through connecting with email address that are commonly used in China, such as QQ mail, Gmail, Yahoo mail, Hotmail and outlook (“LinkedIn’s another startup,” 2016).

 

As for Chitu, it has chosen to build strategic partnerships with Alibaba in China. On the Aug. 14 2015, Chitu announced its partnership with a new sesame credit system (introduced in the later section of this study) from Alibaba’s Ant Financial Group, which makes user profile information on Chitu becomes a factor of personal credit evaluation. This function allows users to have more trust when using Chitu to interact with others (“LinkedIn China announced,” 2015).

 

Further, LinkedIn China has been actively developing relationships with top universities in China with the objective of helping graduates build professional careers and increasing universities’ global influence (“LinkedIn China collaborates,” 2014). Universities are peer institutions as well as LinkedIn China’s customers. Evidence shows that since Nov, 2014, started with Peking University, LinkedIn China has promoted its “Ivy Plan” by collaborating with more than 15 top schools. Its endeavors include introducing the American way of finding employment. Moreover, LinkedIn China even went further—taking for graduates, their first professional photos (“LinkedIn’s another startup,” 2016).

 

Lastly, LinkedIn China strategically demonstrates its capacity to reach more users by teaming up with the top car-hailing company, Didi Kuaidi—Uber's biggest competitor in China before the acquisition. This approach is expected to improve user experience and give both brands a boost in China. Didi Kuaidi would work with LinkedIn China in product integration, staff recruitment, information technology and brand development (Bien, 2015).

 

Consumers and Users. 
 

Customers and users are key stakeholders for LinkedIn China and Chitu, because they represent revenues and profits in the long run (Interviewee 2, personal communication, March 24, 2016; interviewee 4, personal communication, March 25, interviewee 6, personal communication, March 26, 2016). LinkedIn China's current business model is based on B2B (business to business), 50% from recruitment solution, 20% from advertising, 30% from headhunters, PR and a premium subscription (“Understanding Business Models,” 2012). Though customers may get accustomed to free Internet services from all kinds of apps in China, there is a great tendency that an increasing number of them are willing to pay if the products are of great quality, since China is experiencing an era where consumers are willing to pay more for goods and services—but only so long as those goods and services are of good or superior quality. This current trend may be compared to past times when Chinese preferred saving to spending (“Will LinkedIn’s development.” 2014).

 

LinkedIn China mainly serves two categories of customers: (1) Chinese companies who strive to expand overseas, such as Huawei (a leading Chinese IT company). LinkedIn China partners with Huawei to provide talent recruiting solutions in the local markets; (2) Companies like Baidu, Tencent and Alibaba, who hire overseas bilingual talent to work for them in China. With 364 million users worldwide, LinkedIn China is committed to helping those Chinese companies find talent, and at the same time, boost employers’ brand images by allowing companies to present their corporate cultures on LinkedIn’s platform (Yirong, 2015).

 

Personal data on LinkedIn China, which provides more information than a resume does, can be better utilized by human resource departments in companies to find the right job candidates (Interviewee 1, personal communication, February 24, 2016). Accurate and efficient advertisements about employers could be placed on LinkedIn China based on users’ detailed data such as age, district, school, major and previous job description. Further, LinkedIn China maintains a favorable relationship with its customers by serving their needs—providing talent solutions (“LinkedIn’s another startup,” 2016)

 

As for LinkedIn China’s users, they are passive job-seekers and constitute 90% of the professional population in China, among which two different groups are formed according to motivations and career goals (Qi, 2014). One obvious group of users are those who speak English, have overseas, or multinational company work experience, and are in need of connecting with the world. There had been four million Chinese users even before LinkedIn officially set foot in China, and it has continuously grown to be 13 million within a year (“LinkedIn’s global vice,” 2015).

 

During this time, LinkedIn China unweariedly built relationships with and increased its user base by sharing online messages and holding offline activities, promoting its brand and educating users to accept the professional networking culture. For example, in order to get more recognition from users, on the May 23, 2014, LinkedIn China held its first offline activity in Beijing by inviting its investor, Shen Nanpeng, and LinkedIn’s founder, Reid Hoffman, to discuss entrepreneurship (“Will LinkedIn’s development,” 2014). LinkedIn China endeavors to improve its relationships with users by promoting interactions between users and career experts, thus providing valuable shared knowledge for users (Qi, 2014).

 

However, the aforementioned efforts to attract more users would not be enough. LinkedIn China’s president Derek Shen once mentioned to media that, if the company could not reach a younger and more local user market in China, it ran the risk of going belly up (Shuting & Junjie, 2015). So it would be easy to guess that another group of targeted user groups are young Chinese professionals who want to focus on developing their careers domestically, and have no need of speaking foreign languages or going abroad for work. This group, according to what was discussed earlier, belongs to the users of Chitu (See more in the coming posts).

 

The content above is derived from Chapter 4 of my master's thesis - A Case Study of LinkedIn China and Its Sub-Brand Chitu - with a focus on Public relations and social media strategies. Excerpts and links may be used, provided that full and clear credit is given to Li Yingying and www.liyingying.us with appropriate and specific direction to the original content.

 

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