MICROBLOGGING sites are all the rage in China, with major industry players sparing no expense and resorting to lavish marketing campaigns to attract users to the latest craze in social networking.

Sina.com is currently the market leader, capturing about 86 percent market share on browsing time basis, compared with competitors like Tencent, Sohu and NetEase, according to data from Internet consultancy iResearch Inc.

In terms of numbers of active users, Sina has a 56.5 percent market share, more than double that of Tencent.

Microblogging is a web service that allows subscribers to post short messages to other subscribers. Twitter doesn't operate in China, allowing comparable services offered by Sina and other microblog sites to cash in on the popular format.

Unlike a Facebook-style network, where friends, colleagues and families register to see each others' postings, anything posted on microblogs are open to anyone to see.

Microblogging goes beyond the information-transmission model that has characterized traditional web portals.

The postings are brief - typically no more than 140 characters - and can be written or received through a variety of devices, including mobile phones. Photos, audio messages and video clips can also be attached to microblog postings.

Domestic microblogging operators also allow users to comment and repost others' entries, making interaction between the information publisher and the receiver even more convenient and prompt.

No figures have been made public on how much money Sina and its competitors plan to spend in their campaigns to win users, but they have all made it clear they won't be stingy.

Sina plans to double its marketing for microblogs and predicts a large increase in number of users. The media conglomerate is trying to reinvent itself as a user-targeted platform.

"Sina's strategy is to combine the social networking service of microblogs with real-time searches, e-commerce, and consumer network functions," Charles Chao, Sina's CEO, told an information technology symposium in the southern city of Shenzhen a few weeks ago.

Expanded marketing is expected to establish a better relationship with companies and government agencies that want their messages delivered to millions of users on Sina's microblog.

Chao said the profit-making model will be more mature and the income more steady when the user base is expanded and the company solidifies its dominant position in the market.

Possible listing

Sina is still navigating its way through the competition.

Last week it launched an independent domain name, Weibo.com, fueling speculation that it is preparing to spin off its microblogging division in a possible listing. Chao said in the company's 2010 earnings report that Weibo had already signed up 100 million users.

Sina's rationale is that the new name, when compared with the old t.sina.com.cn, will enable more convenient media exposure and user familiarity. The likelihood of a listing will depend on the success of product development and the market situation.

The company posted a US$19.1 million loss for 2010, largely due to a write-down on an equity investment. Revenue for the year rose 12 percent to US$402.6 million.

Sina.com shares are listed in New York as American depositary receipts. The shares have risen 58 percent this year.

Still, Goldman Sachs in February downgraded Sina shares to "neutral," citing the limited upside of income from microblogging and competition from Tencent's popular QQ online chat platform. At the time, it put a target price of US$85 on the stock, which closed at about US$119.35 last Friday.

Jin Yu, an analyst at China International Capital Co, said he thinks Sina's competitive advantage is sustainable and predicts the share price will rise to US$201 in three years.

Chao calls microblogging a "revolution" in the Internet industry.

Nearly 75 percent of the company's US$110 million of fourth-quarter revenue came from web page-based advertisements. Sina is now trying to steer toward a greater share of revenue from the microblog segment, which in the long term will serve as both a social network platform as well as a news portal. However, its major competitors in China are less dependent on advertising revenue streams.

Biggest threat

Tencent, China's biggest overall Internet company based on user base and market capitalization, has always been regarded as the biggest threat to other social network operators. It claims 490 million active QQ instant messaging users. Its online chatting tools are a different format from microblogging.

Teenage QQ users pay 10 to 20 yuan (US$3.06) on a monthly basis, enabling them to do things like buying clothes for their online avatar, decorate their homepages or pay for online purchases.

These kinds of value-added service contributed to nearly 80 percent of Tencent's total income, while advertising revenue stood at less than 1 percent.

Another competitor is Sohu, the country's third-largest Internet portal. It successfully spun off its online game unit Changyou in a separate listing on the Nasdaq two years ago. Income from the online game sector contributed more than 53 percent of its revenue, while advertising sales generated 38 percent of income.

The fourth major player, NetEase.com, operates the world's most popular online game, Activision Blizzard's World of Warcraft, on Chinese mainland. Last year, World of Warcraft, together with other online games developed by the company, contributed nearly 90 percent of revenue.

Sina, which has relied more heavily on ad revenue than its rivals, is now trying to revise its business mix.

Sina was founded in 1998 by Wang Zhidong, a Peking University electronics department graduate and programmer. In 2000, it became the first Chinese Internet company to go public, and it was the first company to successfully introduce the web portal model to the Chinese mass media.

The portal drew its strength as a one-stop shop for news, entertainment and sports. Six years ago, the company expanded into blogging services and found success in getting entertainment stars, prominent media commentators and property tycoons to open highly publicized official blog sites.

In the Internet realm, dominance can be a fleeting distinction. Sina soon found itself challenged when Renren.com and Kaixin001.com started up social networking sites that proved popular with classmates and work colleagues anxious to share daily tidbits about their lives.

Sina found its news platform and blogs apparently not enough to keep people, especially young people, on its sites. They wanted instant messaging and photos uploaded by friends.

The company has found it needs to move with the trends to stay on top. And for now, that means heavier investment in microblogging. By refocusing on microblogging, Sina is now hoping to enhance its market standing.