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Consumers’ willingness to disclose truthful personal information online underwrites the continuing success of Chinese social networking sites (SNS) such as Qzone and Renren.com. As we know, SNS make huge profits by utilizing the users’ profiles, status updates, social connections and their friends’ recent activities for advertising and marketing purposes (Quinn, 2010). SNS allow advertisers to tailor their ads more effectively and target to social media users more precisely, especially those who expressed interests or liked their brands or products on SNS. As a result, Tencent became the world’s third largest Internet company, after Google and Amazon, with the revenues of $1.8 billion in 2009, including over $144 million in ad revenue and net profit of $760 million, capitalizing on 637 million registered users of its social networking site Qzone (Madden, 2011). By the end of 2011, Chinese users of social networking websites reached 244 million, or 47.6% of Chinese Internet users (CNNIC, 2012). DCCI (2011) predicts that Chinese marketers will increase their advertising spending on social media from 1,730 million yuan ($279 million) in 2011 to 4,160 million yuan ($671 million) in 2013.
However, the inappropriate use and weak security of consumers’ online data on SNS will raise their online privacy concerns, undermine their trust, increase their risk perceptions, curb consumers’ enthusiasms of sharing valuable personal information online, diminish the effectiveness of targeted ads on SNS, and attract regulators’ attention. Few Chinese commercial websites have realized the importance of gaining Internet users’ trust by conspicuously announcing and strictly implementing their online privacy policies. Only 2 per cent of the Top 1500 Chinese websites, 8 per cent of the Top 100 commercial websites and 4 per cent of the Top 100 B2C websites seem to comply with the FTC (1998) four fair information practice principles of (1) Notice/awareness, (2) Choice/consent, (3) Access/participation, and (4) Integrity/security (Kong 2007). One of the biggest Chinese online security firms warn Internet users that the SNS have become the major culprit of abusing online privacy and the SNS users will have to deal with many privacy security risks when using social networking services (Rising, 2009). Among other things, SNS themselves are vulnerable to various attacks from hackers and cyber predators who covet subscribers’ personal data because security, access controls, and privacy are weak by design on most SNS (Rising, 2009; Shin, 2010). Consequently, young Chinese Internet users have exhibited a very high level of online privacy concerns (Yao & Zhang, 2008). Research also shows that Chinese social media users have expressed low acceptance of all kinds of display ads on SNS with only 30% of them approving and 10% ever clicking on them (CNNIC, 2009). To protect Chinese citizens’ online privacy, the People’s Congress has been working on a national law after it passed the Tort Liability Law specifically listing Chinese citizens’ right to privacy in 2010. Many Chinese scholars believe that the Tort Liability Law can be evoked to protect Chinese Internet users’ online privacy (e.g., Ma, 2011; Xu & Luo, 2010). Observers also raised the concerns that Chinese new privacy law might be more stringent than Western privacy laws (e.g., Antisdel & Ghalayini, 2011). Sooner or later, Chinese government will enforce new privacy laws and regulations in social media.