The phenomenal rise of social media in China over the past couple of years has forced companies to come up with better ways of engaging consumers through this new platform and in order to better understand this topic, one of the panel discussions during the 2013 Fortune Global Forum was dedicated to answering questions such as "How is social media changing China," "How prepared are Chinese businesses to embrace social media as a means of support," and "What are the implications for international operators outside of China."

China's internet population hit 564 million by the end of 2012, according to a report from China Internet Network Information Center, and these users reportedly spend an average of 46 minutes per day visiting social media sites for a number of reasons, ranging from entertainment and reading the news, to expressing themselves and influencing others.

"In China there are two groups of people who use social media most often," said Liu Dele, one of the panelists and president of Youku Tudou, a leading internet video portal in China. "One is that of the entertainment-driven teens who just like to share their lunch, breakfast and whatever they have done with the rest of the world, turning their life into national news. And two is that group who wants to influence society in a constructive way."

Recognizing this major shift in people's online habits, businesses are gradually learning how to better utilize the social media platform to promote their goods and services, panelists said.

"Chinese internet users actually are pretty sophisticated, but Chinese companies are not as sophisticated in terms of using social media," said Charles Chao, chairman and CEO of Sina Corporation, operator of China's largest micro-blog service Weibo.com.

According to Chao, big companies which are used to spending high on advertising on traditional media channels such as TV are now putting a lot of effort into the study of social media as a way to engage with their customers -- whereas small and medium-sized companies still lag behind in this regard.

A number of third-party digital agencies have recently sprouted to help companies undertake social media marketing, Chao said.

To illustrate how effective social media can be in marketing, Liu from Youku Tudou cited the blockbuster success of several indigenously-made low-budget films.

"They (film producers) use the social media platform in an extremely smart way," said Liu. "Before they start production, they spread certain story lines and buzz words. Along the entire process of production, they also leak different stories, creating wave after wave of ‘secrecy.' And then they have the trailers. And while they are shooting the movie, they also do a documentary. So once the movie is ready, they first circulate the documentary."

The movies Liu was referring to all grossed over US$100 million at the box office, starting off with budgets below US$3 million.

However, the social media platform also proves to be a double-edge sword, panelists said.

"Social media has one thing; it can magnify reality a little bit. For example, if you have a fifth-grade crisis, it can turn into a first-grade one if you don't manage it well," Liu said. "(In times of crisis) the company should only talk about the truth and truth alone, and respond in no time as well as in a very transparent way, supported by data, by facts, names and locations."

Liu's view was echoed by Chao, who said that while social media brings about greater transparency, it can also be manipulated in a way that will damage another person or business or even government.

With the fast dispersion of smart phones across China, internet users are increasingly going mobile, requiring social media websites to launch an additional mobile version, panelists said.

According to Chao, when Weibo, now with 500 million registered users, was created in 2009, there were both a PC version and a mobile version and so far the mobile version has been proved to be much more popular than the PC version.

Youku Tudou's Liu agreed.

"If you look five or ten years down the road, the major user group of the internet will be that of the younger generation, [born in the] the '80s and '90s, who actually first get to know the internet through mobile internet," he said.

When comparing the differences between the functionalities and popularities between the social media in the U.S. and China, Tim Armstrong, chairman and CEO of AOL, one of the world's largest consumer brands, said that biggest difference was that Chinese social media companies focus on more integration of different services, whereas U.S. companies have been very feature specific.

The 2013 Fortune Global Forum took place in Chengdu, China's Sichuan Province, from June 6 to 8 under the theme of "China's New Future." 600 participants, including leaders of the world's best companies, offered their insights into the trends and forces that are redefining China's economic growth in China, the world's second largest economy, and in the rest of the world.