Internet use in China has exploded over the past five years, but it may just be getting startedWhile internet penetration has more than quadrupled since 2005, it still only stands 38 per cent (see chart to the right). However, it is unlikely that it will be able to maintain its breakneck pace; older and rural residents account for majority of the unconnected now.
Despite limited penetration, Chinese users are very engaged online. According to a fascinating new report from the Boston Consulting Group, Chinese users spend more time online per day than Americans—by about an hour. The Chinese outpace their American counterparts in several notable online activities too:
- 79 per cent of Chinese internet users listen to music online (versus 61 per cent of Americans)
- 64 per cent play games online (versus 46 per cent of Americans)
- 79 per cent instant message (versus 21 per cent of Americans)
- 40 per cent micro-blog (versus 13 per cent of Americans)
Without reading too much into the results, there are a few potential explanations:
- With relatively limited penetration, Chinese internet users are disproportionately young, who you would expect to spend more time online anyways
- Since the internet is relatively new, online behaviour patterns not as entrenched. In other words, Chinese internet users can jump straight into whatever the latest trend is.
Photo: Boston Consulting Group
One area where Chinese consumers noticeably trail Americans is e-commerce; only 36 per cent of Chinese shop online. Online shopping accounted for approximately 5 per cent of total retailing in China last year. By comparison, e-commerce accounted for about 12 per cent of consumer spending in the U.S. last year.Nonetheless, Boston Consulting Group is forecasting that Chinese e-commerce sales will more than triple to $360 billion between 2011 and 2015. E-commerce as a share of total consumer spending rose to 14.3 per cent, from 11.8 per cent, between 2008 and 2011. That is more than 5 times total e-commerce sales in the U.S. last year
However, despite the massive business opportunity, it is not necessarily a boon for western tech companies. The market is shut off for a lot of companies, unless they comply with governments regulations. Google has has several high-profile run-ins with the government, and Twitter and Facebook are both nominally banned.
Nonetheless, the size of China’s internet market is staggering. With another 200 million or so users forecast to come online in the next few years, China could be the next great source of innovation online and a bellweather for the Internet’s direction as a whole.
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