Pinterest: Entry into India and China

Elon University

2012

Interactive Media

COM 564 onto Public Opinion Through New Media

Pinterest: Entry into India and China

India12 pins

China9 pins

2 | Pinterest Entry Into India and China | White Paper | website

Table of Contents

INTRODUCTION Page 3

INDIA Page 4Overview INTERNET AND MOBILE ACCESS AND USAGE IN INDIA Page 5ROLE OF PUBLIC OPINION Page 6CENSORSHIP & COPYRIGHT ISSUES Page 7SOCIAL MEDIA OVERVIEW Page 7POTENTIAL BARRIERS TO ENTRY Page 8RECOMMENDATIONS FOR PINTEREST EXPANSION INTO INDIA Page 9INDIA INFOGRAPHIC Page 10

CHINA Page 11OverviewINTERNET AND MOBILE ACCESS AND USAGE IN CHINA Page 12CENSORSHIP OF PUBLIC OPINION AND INTERNET IN CHINA Page 12SOCIAL MEDIA OVERVIEW Page 13FURTHER BARRIERS TO ENTRY IN CHINA Page 13RECOMMENDATIONS FOR PINTEREST EXPANSION INTO CHINA Page 15CHINA INFOGRAPHIC Page 17

CONCLUSION Page 18

INFOGRAPHICS Page 20


Introduction

An overview on key considerations and recommendations for successful international transition

Entry Into India and China

With more than 10 million users, Pinterest is an on-the-rise social network that will quickly need to learn how to navigate international waters as its users base expands around the world. Pinterest is a content-sharing platform that allows users to ‘pin’ photos, links and vid-eos on visually appealing boards. While there has been promising success in user adoption, the young company is already facing scrutiny in regards to copyright laws in the United States. China and India are home to the first and third largest Internet using populations, respectively These rising BRICS nation’s represent two gigantic potential markets for a website like Pinterest; however, each country has their own barriers and concerns for a new social media outlet looking to grab a foothold in the market. This paper will evaluate the current situation in re-gards to Internet usage and regulations in India and Chi-na and make recommendations to enhance Pinterest’s

chance for successful entry into these countries.


India is a complex country from many perspectives: geographically, socially, politically, culturally and economically. Any entity that wants to do business in India will have to take into account such complexities.

POPULATIONThere is a population explosion currently taking place in India. Globally India is the sec-ond most-populous country in the world, with over 1.21 billion people (Census of India, 2011). India is also projected to surpass China to be the world’s most populous country by 2025. India’s population is projected to reach 1.6 billion by 2050.

Approximately 50% of India’s population is below the age of 25, and more than 65% fall below the age of 35. It is expected that by 2020 the average age of an Indian will be 29, compared to 37 for China (Census of India, 2011). This population explosion taking place right now can be alarming for the country’s government. For those interested in new business ventures, India is an ever-growing market with immense possibilities.

EDUCATIONAlthough literacy and education is on the rise in India, illiteracy is still a key issue in India -- especially in the rural areas. There is also a wide gender disparity in the literacy rate in India: effective literacy rates (age 7 and above) in 2011 were 82.14% for men and 65.46% for women (CensusIndia.gov.in, 2011).

ECONOMIC INEQUALITYAlthough India has been rapidly expanding economically, the growth has been highly uneven benefiting the skilled and wealthy disproportionately. Many of India’s rural poor have yet to receive any tangible benefit from the India’s economic growth. More than 78 million homes do not have electricity. At least 33% (268 million) of the population lives on less than $1 per day (Pal & Ghosh, 2007).

SOCIAL TENSIONSThe Indian society is currently experiencing various social tensions. They are related to the pattern of social change, in particular the rise of middle class, migration of people from villages to cities, increase in the degree of economic inequality, crime and unem-ployment etc. The lower castes are becoming more socially aware, and therefore striving to be more assertive. Inter-group conflicts related to caste have moved from the social to the political arena (Mishra 1998; Mishra 2009). Of late, certain conflicts based on reli-gious differences have been witnessed frequently, which have affected the social and political landscape (Varshney, 2010).

INDIA

INDIA

“It is expected that by 2020 the average age of an Indian will be 29, compared to 37 for China.”


Internet & Mobile Access & Usages in India

In 2007 there were an estimated 48 mil-lion Indians with Internet access. Today that number has more than doubled to 100 million Internet users, which makes the Indian Internet community the fifth largest worldwide (Internet Usage, 2011).

Of the estimated 100 million Internet us-ers in India, 38 percent are considered “heavy users” – meaning they spend eight hours a week or more browsing (Zittrain, 2008).

The knowledge the Internet brings to communities comes at a high cost, so most users with access are middle class, educated males in their early 20s. (Sinha, 2010).

Although India has a large potential user population, Internet access growth has been slower than other developing na-tions and is trailing China (Kannampilly, 2011). Much of the slow growth is due to India’s lagging infrastructure to support access, and 71% of India’s population lives in a rural area (Zittrain, 2008). Even more troubling is the lack of access to broadband Internet, with only an estimat-ed 8.6 million people having broadband access (Internet Usage, 2011).

INDIA

Internet and Mobile Usage in India

India Flag


continued from Internet and Mobile Usage...This demographic imbalance has caused a massive increase in mobile phone usage. A 2012 report from Gartner claims that mobile subscribers will rise to 696 million by the end of 2012 – a 30 million participant increase from the previous year (Gartner, 2012). Although India is having explosive growth in the mobile sector, the country is still significantly lagging behind China in total penetration. According to Gartner (2012):

The mobile service penetration in India is currently at 51 percent and is expected to grow to 72 percent by 2016, whereas China achieved 71 percent mobile penetration in 2011 and is forecast to grow to 119 percent in 2016.

The rapid increase of mobile browsing in India will have a dra-matic impact on the way users will access information in the coming years.

ROLE OF PUBLIC OPINIONAs the world’s largest democracy, public opinion in India plays a significant role in the governance of the country. There is no definite and automatic process for the formation of public opinion in India. However whenever an issue of public concern emerges, various sections of society express their views. The following agents play a big role in the forma-tion of public opinion within India.

Political parties and their campaigns: The party system is very strong in India, with a multi-party system and a predominance of small regional parties. Political parties publish jour-nals, pamphlets, leaflets, manifestos and posters to mold the public opinion in their favor. They sometimes also launch social movements for the resolution of problems faced by people. These campaigns have been carried out effectively through the use of social net-working platforms such as Facebook - as in the case of the ongoing Anna Hazare anti-corruption campaign (Satpathi & Roy 2011).

National Media: The local and national press has played a large role in molding public opin-ion, as it has always been strong in the country right from the colonial period. However the press has influence mainly on the educated masses (Wijesundara 2011).

Corporate Lobbying: External special interest groups influence decision making, put pres-sure on India governance. Thus there are professional pressure groups, socio-cultural pressure groups, Institutional pressure groups, and adhoc pressure groups, who all have important role in the making of public opinion (Pundit, 2000). There are also other known business groups like Associated Chambers of Commerce (ASSOCHAM), Confederation of Indian Industries (CII), the Tatas, Birlas, DCM, Dalmia and Hindustan Lever etc. who try to influence the industrial policies and laws of the government (NIOS, 2010).

INDIA


CENSORSHIP & COPYRIGHT ISSUESIndia has come under fire in recent years for trying to censor social media websites. The government has targeted Facebook, Twitter, Yahoo, YouTube and Google as sites that need to remove offensive material and self-censor content created by users. Google be-gan reporting the removal requests in 2010. In the second half of 2009 India submitted 142 requests, of which 77% were complied with. In 2010 India’s world ranking was third for removal requests and fourth for data requests (Freedom House, 2011).From January 2011 to June 2011 the Indian government made 358 requests to Google to remove content from the Internet (Kumar, 2011). Of the 358 requests only 255 (71%) dealt with criticism of the government, while eight were for hate speech and only one pertained to national security (Prakash, 2011). Google obliged to 51 percent of the requests.

In April 2011 the Department of Information Technology passed the Information Technol-ogy Act, Intermediary Guidelines Rules and Cyber Café Rules. These acts state that all intermediaries must remove content if it is “’disparaging’, ‘relating to... gambling’, ‘harm minors in any way’, to which the user does not have rights (Prakash, 2011).’”

Kapil Sibal, Union Minister for Communications and Information Technology also made it a point to propose an amendment to India’s Copyright Act. Critics of the amendment claim that it allows for anyone to send a notice complaining about infringement of copyright. The Internet companies will have to remove the content immediately without question, even if the notice is false or malicious, or face penalties. (Prakash, 2011).

This January, a Delhi court issued a summons to Facebook, Microsoft, Google, Yahoo and YouTube, among 16 others, to appear in court in March where the companies would face criminal charges for allegedly hosting objectionable content (Hindustan Times, 2012). The companies have urged the court to dismiss the charges and the hearing has been delayed until May.

SOCIAL MEDIA OVERVIEW Of the 100 million Internet users in India, more than 33 million are on various social net-working sites, the most popular being Facebook, Orkut and Twitter. The growth of the social media users is fast paced -- Facebook saw a 50% growth in the first half of 2011. It is reported that there are at least 45,000 new users connecting to these sites on a daily basis. At the current rate of growth, the projection for users of social networking sites by this year is 45 million (Techonzo.com, 2011). Simon Kemp (2011), managing director of Wearesocial.sg stated that:

The good news is that, given the levels of interest and excitement in the country around the opportunities the Internet is bringing to India, adoption and usage rates are set to con-tinue their impressive growth for many years to come. And, given that Internet penetra-tion is still only a paltry 8%, the sheer digital potential in India is amazing.

It’s clear that the total population must be taken into consideration when evaluating per-centage of technology penetrations.

INDIA


Currently ranked as the 75th most trafficked site in India, the United States-based Pinter-est.com has experienced great initial success and adoption by frequent Internet users in India (Alexa.com, 28 March 2012). However, there are a few barriers to consider when venturing further into the marketplace.

As Pinterest has not yet put a focus on expanding into specific foreign markets, it has left the door open for clones like Pinspire.com and Pintile.com (Silbermann, 2012). These websites are designed to look identical to the Pinterest aesthetic and offer similar features using similar phraseology while claiming to appeal exclusively to India (Wireless Duniya, 2012). Although Pinspire and Pintile do not have as strong a foothold in India Internet traf-fic (ranking 13,650th and 49,433rd respectively), their presence has found ground in some cities like Calcutta and Gurgaon and cause confusion especially for non-English speaking users. According to Silbermann (2012):

We’ll have to internationalize the site. A lot of internationals are using the site already, because it’s a very visual site,” Silbermann said. “But most of our focus is not on racing against clones. It’s trying to make sure that what we release is really high quality and really beautiful.

Language is another barrier for wider adoption in India. While Hindi is the most widely used language, spoken by 41 percent of the people, there are 14 other official languages in India (Central Intelligence Agency, 2001). When Facebook moved into India they started by adding Hindi and five other Indian tongues: Bengali, Hindi, Malayalam, Punjabi, Tamil, and Telugu (Einhorn, N. & Srivastava, M., 2009). At the time, Orkut an India specific so-cial network was dominating the scene and some were skeptical if Facebook’s late action of adding the languages would hinder it from widespread adoption. However, now three years later Facebook is the 3rd most trafficked site in India while Orkut.co.in is ranked be-low Pinterest at 80 (Alexa.com, 28 March 2012).

INDIA

POTENTIAL BARRIERS TO ENTRY


1. Terms of servicePinterest should keep social and reli-gious implications in mind when devel-oping terms of service (TOS). There should not be a ‘one size fits all’ for global agreement, since copyright and censorship restrictions vary worldwide. The recent censorship and copyright is-sues in Indian court for major US com-panies like Google and Facebook fur-ther reinforce the need for specific TOS. Religious, cultural and society values must also be taken into consideration while determining what constitutes a pin as offensive. Leaving the ability to report offensive pins will encourage us-ers to also monitor the site for content that violate the TOS.

2. Focus the target audienceSince a majority of Indians who cur-rently have Internet access are middle-class, educated and college-aged, the focus of Pinterest should be targeting those users initially. Furthermore, since males make up a majority of active In-ternet users, Pinterest should look to-wards their UK followers to determine why Pinterest is much more popular among males in that region.

3a. Put restrictions of photo file sizeDue to the extremely low availability of broadband access compared to the United States, Pinterest should consid-er optimizing their site for dial-up, DSL and 3G connections. What Facebook encountered slow connection issues when entering the mobile-dominated India user market was issues with the slower connections of mobile devices to download graphics (Einhorn, N. & Sriv-astava, M., 2009). The large file size of photos could become an issue for op-timal site loading, so Pinterest should put a restriction on the size of photos uploaded.

4. Expand to include other languages slowlyWhile English is the language of choice for the business world, there are also a variety of other languages spoken throughout India. Language customiza-tion is a key consideration, and Hindi should be the second language Pin-terest expands with, as that will satisfy over 40% of the population’s needs.

3b. Optimize website for mobile browsingSince it’s projected the future penetra-tion of India’s Internet connectivity will be on mobile devices, Pinterest should create an optimized mobile site for browsing. This includes smaller photos sizes, and an interface that is optimized for both touch and non-touch screens. Developing an easy way to share content on other social networks should also be considered.

Recommendations for Pinterest Expansion into India

INDIA


PINTEREST

TRAFFIC RANKINGS

PINTEREST

INDIA


Due to China’s rising global economic power and dynamic emerging market, many multi-national corporations want to move their business into China. However, there are a num-ber of factors that complicate business ventures in this country, especially in the realm of social media and Internet expansion.

POPULATIONChina is the world’s most populous country with 1.3 billion people. The majority of the Chinese population (73.6 percent) falls between the ages of 15-64 years, with 8.9 percent over the age of 65 years and 17.6 percent under 14 years of age (CIA World Factbook, 2012).

EDUCATIONWith one of the largest education systems in the world, China’s Central Government has prioritized basic education and provides nine-year compulsory education. While the gross national enrollment in senior high schools is only 43.8 percent (China Factfile, 2012), Chi-na’s “school-life expectancy” is 12 years and 92.2 percent of the overall population is con-sidered literate (Cia World Factbook, 2012).

ECONOMICSChina is the second-largest world economy behind the United States (CIA World Factbook, 2012). With the world’s fastest growing economy, it is predicted that China could surpass the United States within the next couple of years. The major contributor to China’s rapid growth is the change from a closed, centrally planned system to a more market-oriented economy; and, in 2010, China became the world’s largest exporter (CIA World Factbook, 2012).

CHINA

CHINA

“...A number of factors complicate business ventures...especially in the realm of social media.”


CHINA

Represents 100 million.

500 MILLION ONLINE1.3 BILLION PEOPLE

POPULATION Usage

st st

3636

China Flag

Internet and Mobile Usage in China

CENSORSHIP OF PUBLIC OPINION AND INTERNET IN

CHINAThe Chinese government has pursued a policy of information censorship in all media areas, including the Internet, which businesses must abide by in order to stay in the country. Frequent and difficult-to-understand changes are often made to the rules and regulations that govern multinational corporations operating within China, which can make it difficult for busi-nesses to navigate the murky waters of Chinese censorship. Cultural differences between the Western World and China also make business ventures difficult on a person-to-person level.

The Chinese government censors infor-mation on the Internet in a number of ways. A force of 30-50,000 people, nick-named the “Internet police,” patrol China’s Internet looking for conversations or topic that the Government does not want dis-cussed, like the 1989 Tienamen Square massacre. This patrol has also been known to set up fake websites on taboo subjects to lure in users who the Govern-ment can later prosecute (Dann & Had-dow, 2008). The most effective method of censorship is the ‘Great Firewall of China,’ a system of routers that funnel all outside web traffic and remove pages and full websites that contain any keywords the Chinese government does not want its citizens to browse (Dann & Haddow, 2008).


Some Chinese citizens have learned to use the Internet despite these restrictions. A proxy server allows users to access the Internet through servers in a different country, bypass-ing the government routers and the ‘Great Firewall.’ In 2000, a CASS-Markle survey of Chinese Internet usage found that 10 percent of people regularly used a proxy server and 25 percent occasionally used one. However, the same survey in 2005 found that only .6 percent frequently used a proxy server, and 2.5 percent used a proxy server often (MacK-innon, 2007). The drastic decrease in reported use could be contributed to further crack-down on these circumventing measures by the Chinese government, or may just be a re-sult of the fear Chinese citizens have surrounding the government and its Internet policies.

Any corporation that expands its activities into China must agree to the Public Pledge of Self-Regulation and Professional Ethics for China’s Internet Industry, a set of articles detailing the Chinese government’s policies and punishments corporations would suffer if they disobeyed Chinese Internet policy. Article 9 of the pledge includes five sub clauses referring to state regulations on the Internet and corporations’ responsibility to comply with these regulations. The language used by the Chinese government creates a polarization between information it agrees with, deemed “healthy,” and that which is counter to its poli-cies, ‘harmful’ (Internet Society of China, 2011).

SOCIAL MEDIA OVERVIEWSocial media use thrives in China’s huge market of Internet and smartphone users. How-ever, the presence of major social networks like Facebook, Twitter and Youtube has not yet reached China, where western-based sites like these have been blocked. The blockage has lead to the creation of Chinese equivalents that follow Government regulations and are used by the millions. For example, RenRen, a site similar to Facebook, has 31 million registered users. Sina weibo, the Chinese version of Twitter, has (Russell, 2012) million users, and according to their FAQ page (2011) Youku, a Chinese videosharing site, has 50 million users.

FURTHER BARRIERS TO ENTRY IN CHINASeveral cases of other social media and multi-national corporations’ moves into China provide insight as to what can be expected from relations with the Chinese government. Flipboard, the social reading application, saw China as an opportunity to reach a large market and is aiming to reach 5 million people this year (Russell, 2012). Flipboard is en-during a difficult partnership with China in order to reach this market. The company was hoping to use its existing relationships with content providers for China, but instead had to make completely new deals. Pairing with influential Chinese media and popular social media sites, like Sina Weibo, Flipboard has created an entirely localized service. China necessitated a more dedicated approach than any other market according to Alvin Tse, the head of Flipboard’s China division (Russell, 2012).

In early 2012, Alibaba Group began testing a website that is strikingly similar to Pinterest called Fa Xian (Lee, 2012). This site presents a problem for Pinterest because Chinese users may become attached, and it will have an advantage with government regulators as a Chinese company. Fa Xian has a better understanding of how to navigate the political waters of China as well as knowledge of what kind of content to avoid.Probably the most notable example of a multinational company’s move into China...

CHINA


CHINA

is Google. Observing the strategies Google used in China and the pitfalls that came with that will be a crucial lesson for Pinterest. For Google there were many unforeseen circumstances that created issues in China, including lessons about how to deal with the government regulations as well as potential Chinese employees for Pinterest. Despite the possible breaches in their careful censorship of information, the Chinese government was interested in Google because of how the government was represented in Internet search-es (Glanz & Markoff, 2010). In order to protect their users from the government, Google limited services to Chinese users and disalloweed access to Gmail, YouTube and Picasa. The government also went so far as to block gmail for users in China, they made an effort to make it seem as though it was an issue on the side of Google. Google commented on the breach saying, “we have checked extensively. This is a government blockage carefully designed to look like the problem is with Gmail” (Cho, 2011).

Another issue Google ran into was the cultural differences between Chinese and Western employees. Google hired a Chinese liaison that would speak to the government on their behalf and who would know about the Chinese political structure. However the liaison gave gifts, paid for by Google, to government officials in complete violation of company policy (Levy, 2011). The liaison did not speak English and did not fully understand the strictness of Google’s company policy and neither the liaison nor Google were able to communicate their culture’s approach to gift-giving in a way that did not break a cultural norm or company policy.

It is widely acknowledged that in 2009 the Chinese government hacked into Google, though the government denies this allegation (Levy, 2011; Areddy, 2011). The hack retrieved pri-vate user information from the Gmail accounts of Chinese political dissidents. According to Google’s investigations, the hack was sophisticated and was clearly targeted at certain types of information (Levy, 2011). This is what ultimately led Google to make the decision to leave mainland China. If Pinterest can learn from learn from Google’s experiences, the company stands a greater chance at success in its move to China.


CHINA

1. Terms of servicePinterest should keep social and reli-gious implications in mind when devel-oping terms of service (TOS). There should not be a ‘one size fits all’ for global agreement, since copyright and censorship restrictions vary worldwide. The recent censorship and copyright is-sues in Indian court for major US com-panies like Google and Facebook fur-ther reinforce the need for specific TOS. Religious, cultural and society values must also be taken into consideration while determining what constitutes a pin as offensive. Leaving the ability to report offensive pins will encourage us-ers to also monitor the site for content that violate the TOS.

2. Focus the target audienceSince a majority of Indians who cur-rently have Internet access are middle-class, educated and college-aged, the focus of Pinterest should be targeting those users initially. Furthermore, since males make up a majority of active In-ternet users, Pinterest should look to-wards their UK followers to determine why Pinterest is much more popular among males in that region.

3a. Put restrictions of photo file sizeDue to the extremely low availability of broadband access compared to the United States, Pinterest should consid-er optimizing their site for dial-up, DSL and 3G connections. What Facebook encountered slow connection issues when entering the mobile-dominated India user market was issues with the slower connections of mobile devices to download graphics (Einhorn, N. & Sriv-astava, M., 2009). The large file size of photos could become an issue for op-timal site loading, so Pinterest should put a restriction on the size of photos uploaded.

4. Expand to include other languages slowlyWhile English is the language of choice for the business world, there are also a variety of other languages spoken throughout India. Language customiza-tion is a key consideration, and Hindi should be the second language Pin-terest expands with, as that will satisfy over 40% of the population’s needs.

3b. Optimize website for mobile browsingSince it’s projected the future penetra-tion of India’s Internet connectivity will be on mobile devices, Pinterest should create an optimized mobile site for browsing. This includes smaller photos sizes, and an interface that is optimized for both touch and non-touch screens. Developing an easy way to share content on other social networks should also be considered.

Recommendations for Pinterest Expansion into China


CHINA

[TargetedKeywords]

[Chinese Firewall]

[30-50,000Internet Police]


CHINA

White Paper DesignShwanda JonesEmily KamischkeStephanie Olsen

Liz SchroyerKelsey Trabue

White Paper ResearchAntony EaratharaNolan Elingburg

Nolan EtherJessica GerberKaren GrunwaldRachel Johnson

Ryan StuartJessica Torrez-Riley

John West

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COM 564 onto Public Opinion Through New Media

Pinterest: Entry into India and China

Documents

Pinterest: Entry into India and China