China’s thriving online community has enabled the development of highly successful domestic internet services such as Sina Weibo and WeChat. But some of the conversations enabled by these platforms, and which have made them so popular, could come back to hurt the companies.

Sina Weibo, the leading microblogging platform, has more than 500 million registered users and has helped one of the nation’s earliest internet companies stay at the top of the game. Similarly WeChat, a messaging application for smartphones that is approaching 400 million users, put Tencent, another Chinese internet pioneer, back at the forefront. Interaction drives participation.

The leading internet firms are seemingly under threat. Since the early summer the government has been cracking down on online activity to control what is being said in the virtual world.

At the beginning of September, a legal interpretation of the Criminal Law was extended to cover defamation and “spreading of rumors” on the internet. Social media posts that are seen by more than 5,000 people or forwarded more than 500 times and fall under the above categorizations could land their authors a three-year jail sentence.

Although the law is not new, this is the first time that defamation regulations have been expanded to cover the online world, underscoring its prominence as a public sphere. Like in other countries and some US states, by making defamation a criminal act as opposed to a civil matter the Chinese government raises the risks involved in making public comments.

So how does this effect brands? On a communications level, it means users are migrating from publicly facing social platforms like Sina Weibo to private networks like WeChat. Since this is a closed setting users are willing to share more about themselves to closer contacts. Some of the things they are willing to share is what brands they buy and what products they use. Getting into this inner circle is every brands dream as it is surrounded by trust and influence.

Do you know how to get into the inner circle?

Read this entire article from China Economic Review here.