Largest number of internet users in the world
“Largest” and “biggest” are appellations often conferred on China – for an increasing number of categories China is already the largest, one of the largest, or soon to be one of the largest markets in the world. Accordingly, China is home to the largest number of mobile phone users, television viewers - and now internet users. Researchers from China Internet Network information Center (CNNIC) counted 210 million internet users by the end of December 2007. This was a cool 73 million more than an year ago – an astounding growth of 53.3%. The number fell just short of the 215 million internet users that are believed to reside in the United States. However, due to the relatively stable number in the US, and the expected continuation of the heady growth in China, it can be safely inferred, that based on normal projections, China now is the home to the largest number of internet users in the world.
However, the development of the internet in China has taken a unique path and character, and marketing companies need to carefully study the nature of this development. China’s internet offers substantial opportunities – but to identify these one needs to look carefully at its unique character and texture.
User profile
While comparatively, the internet users enjoy better economic conditions than others, in absolute terms purchasing power of Chinese netizens is relatively modest – with nearly 3/4th of them having an income of less than RMB 2000 (around USD 285) per month (Source: Statistical Survey report on the Internet development in China – CINIC, January, 2008). Clearly, then this group does not offer an enormous market for lucrative e-commerce and other money spinning internet related commercial activities seen in the Western markets. In fact, as many as 53 million of the 210 million internet users live in villages (currently the per capita disposable income in rural areas is less than 1/3rd of that in urban areas). This rural thrust is because of the Chinese government’s decision to use technology as a tool for narrowing the widening urban-rural chasm and help its rural citizens benefit from the country’s prosperity.
Broadband and iCafes
While the incomes of the users are low, their mode of access is sophisticated. Most internet users use a fast broadband, and not dial-up to access the internet. Given the relatively low incomes, it is not surprising that a large proportion of Chinese internet users – particularly the younger users - access the net at internet cafes. Additionally, the use of mobile internet is on the rise and with over 500 million mobile phone connections in the country, its increasing utilization to access the internet augurs well for mobile phone related internet opportunities in China. This “out of home” character of internet access on the phone and in iCafes is unique to China and also shapes the way the Chinese use the net and its position in their lives. iCafes, in fact, have the potential for developing into a broader marketing channel than merely a source of providing internet access.
Not an elite tool
The changing composition of the internet users seems to suggest that it is no longer a tool for the elite and the well educated. Internet in China is now finding a broad base and helping to equip the consumers with information and entertainment. In fact unlike the West, the most frequent use of the net is driven by social and entertainment needs – particularly to download music and video, to keep in touch with friends through instant messaging and also access online news. The traditional uses for the net such as e-mail is significantly lower than in the West. While e-commerce is not totally missing – the popular Chinese sites such as www.taobao.com (consumer targeted equivalent of eBay in China) and www.alibaba.com (directed at businesses) have unique business models and characteristics specific to China. E-commerce in China is far from the faceless, large item, credit card facilitated purchases seen in the West, but is based on sales of small but relatively unique, hard to find articles, and given the absence of wide acceptance of credit cards, and apprehensions of the users, often payment is based on cash on delivery.
Web 2.0
Web 2.0 thrives in China with as high as 2/3rd of the internet users having uploaded something or contributed to the net in some form or the other. The users seem to be generous in sharing pictures, and also magnanimously share music and video (often, though not confined to, with themselves as stars). Xu Jinglei, a popular Chinese actress and film director, has the world’s most visited blog (http://blog.sina.com.cn/xujinglei ) with 86.97 million clicks in 18 months. Blogging is popular in China as it allows an easy avenue for expression, which has traditionally been hard to find in China. Blogging has caught the imagination of the Chinese who use it to express their views, share their feelings and express their personality.
Need for information
The explosion of the net and the overwhelming embrace from the Chinese populace needs to be seen in the context of the enormous degree and the incredible pace of change which has swept the Chinese society. Change implies an increase of opportunities, a multiplication of choices and the concomitant need for information and advice to exercise these choices. Unlike the countries which developed gradually over a longer period of time, the traditional Chinese information systems could not keep pace with the change. The traditional information network and media was anyway designed to pass the party doctrines to the citizens, and inculcate values of moderation and conformity, not to inform them about how they can improve their consumption of products and services. In other societies, consumption and choice is guided by experience of others, word of mouth, and experience passed down in families and friends. Today multitudes of Chinese are going abroad on holidays, buying automobiles, buying apartments, and have no one to turn to for information and advice in their immediate family or close circle of friends who have done these before. It is not surprising then that internet fills this vacuum and takes the role of the source of information and the guide.
The marketing opportunity
For marketing companies the rapidly expanding reach and influence of the net in China has created a new set of opportunities and challenges. On the positive side, they have a powerful medium with which to reach their potential consumers, inform them, educate them and woo them. The direct reach and the interactive nature of the medium provides it with the kind of engagement potential that the traditional media is just not able to offer.
Secondly, with the strong development of Web 2.0 in China , the flow of information between the manufacturer and the Chinese consumer has truly become a two-way phenomenon, and manufacturers need to tap into the enormous bag of consumer creativity. Companies are already using the net to encourage user contribution to the development of their brands, marketing communication and product portfolio. The net offers the opportunity to use the consumers, not merely to test products and brands, but to participate in their creation.
Thirdly, internet in China expands the reach of the marketer – as while many companies are still confined to operating in larger cities, internet has already achieved significant penetration in rural areas and small towns through internet cafes and community computers. Marketers need to think about how they can exploit this opportunity.
Fourthly, internet in China provides a tool for information dissemination but also creating a positive word of mouth. By actively providing detailed information, and engaging consumers to share their experiences in a controlled way, marketers can spawn off effective word of mouth campaigns for their brands.
Lastly, the potential for word of mouth can also backfire if the media is left unmonitored or if the response and redressal of grievances is not swift. Marketers need to make sure that they closely monitor what is being said about them and their brands, and take prompt corrective action if something seems amiss.
