Chinese Internet businesses are in a catch-up phase. Considering that its 450 million online population represents only 35% internet penetration, this catch-up will continue for another 2 – 3 years. CLSA expects that number to increase to more than 800 million by 2013, while a recent study from the consultancy, McKinsey & Co estimated that 6 million people go online for the first time in the country every month. On average, China internet users spend 18.3 hours per week (2.6 hours/day) on internet access and 66% access Internet through mobile phones.
Historically, with improving economics, education and exposure, East Asians have exhibited obsessive inclination towards tech gadgets. Japan, South Korea, Singapore, Taiwan, Hong Kong, Malaysia adopted technology faster than economic growth during their expansionary phase. China will be no different and the same will reflect in both gadgetry and internet adoption. Although most of china internet businesses have been clones of US based internet business e.g. Baidd (Google), Sina,Sohu(Yahoo), Dangdang(Amazon), Youku, Todou(Youtube), Renren(Facebook) and many others. However in certain internet aspects, Chinese have been trend setters e.g. Happy Farm’s clear success in the China social games market was the inspiration for Zynga’s Farmville. Zynga has now a speculative $5 billion valuation not because its “_Ville” games were first or original, but because it aggressively advertised/distributed the social games idea on the then fast expanding Facebook platform. Similarly, the expansive use of Sina Weibo (twitter-like micro-blog) and its evolution into a social networking site is a much deeper use of the platform compared to the western counterparts Secondly the Chinese internet users have quite a distinct taste and style of communication. This is further complicated by government regulation on all internet activities and a preference for nurturing local businesses. Thus localized Chinese internet companies have a massive advantage over their western peers and most likely the potential 1.3billion internet market will be shared mostly among local players.
Important datapoints for 2010 were:
- · No. 1 sector in high growth was e-commerce. User of online shopping grew 48% last year. Much faster than the overall growth in internet population – 19%.
- · Online payment and online banking also grew 45% and 48% – this obviously is to support online shopping.
- · Social network continued to grow fast. User growth rate of Social Network site and blogs was 33%. Even instant messaging grew 29%.
- · Sectors growing slowly were: music, games and video – their users grew 13%, 15% and 18% respectively. These were slower than the overall growth in online population – 19%.
- · Microblog penetration reached 13.8%.
- · Group buying penetration was only 4.1%
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