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China & The Internet. India Has a Lot of Catching Up to Do!
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The Chinese Government recently released some very interesting statistics - That of the number of Internet users in the country – the number at this point is pretty exciting. 210 Million are the number of Internet users in China – that’s about 5 times the number of Internet users in India!
The number also is quite significant because it’s up 50% from last year. In February 2006, the number was at 105 Million according to Google. Quite clearly there has been tremendous growth in the Internet Market in China in the last 2 years.
I still haven’t been able to find the exact statistics with respect to the time spent by individuals on the Internet and also the frequency of visits to the Internet but I do have certain other statistics that might be able to shed some light on the usage patterns of Chinese on the Internet with respect to depth and velocity.
Studies by the Data Center of the China Internet (DCCI) and Internet Society of China (ISC) show that China’s online communities are expanding at a double-digit clip. This obviously is a sign of interactivity. The figure however could be misleading because the studies do not show a base number; thus communities could be at 10, 000 and growing at double digit rates (which is not too impressive) or they could be at 10 million and growing at double digit rates – now that’s something worthwhile. If the growth of online communities really is phenomenal then marketers need to consider carefully the idea of using Social Media Optimization and engaging conversations with audiences through social media (and then possibly making them loyalists as well).
It is important to note however, that for engaging Chinese audiences through Social Media, one would probably need Chinese specialists – not only due to the language barrier but also because of the understanding of cultural nuances. I think this indicates that even though the Internet now is “global”, it really isn’t as “global” as we think. Having said that, it is facilitating some amount of cultural diffusion (however not as much as one would expect). One example would be Games2Win.com, which now makes a lot of Indian Culture specific games – but gets most of its traffic from the US & Scandinavian Countries.
I would love to know some of your thoughts on the “Global Internet”
Some of the other Statistics released by the DCCI and the ISC state that online game players reached 59m in 2007, up 20% year on year from 48m in 2006. Free-to-play games dominate the market, accounting for 80% of all games played. This is quite interesting especially because it indicates that games are now seriously being looked at as an entertainment medium. Free-to-play games also give an opportunity for marketers to effectively engage audiences.
Another interesting statistic – this one by iResearch states that nearly 55m of China’s 210m reported that Internet users attempted online shopping in 2007 and that Internet-based transactions surpassed US$8bn. While this figure is not too high its extremely interesting solely because of the $8 billion figure.
One needs to note however, that while the Internet is growing strongly in China (it will overtake the US in terms of subscribers in a few months), the usage patterns in China are extremely different from the Western World – I think however, the patterns are pretty similar to what we may see in India and that’s why I think its important for us to examine the changes in China closely.
The first similarity comes with demographics – 70% of people using the Internet in China are under 30.
So what are the Chinese using the Internet for – mostly to distribute pirated content. This includes film, TV, music etc. A lot of this content is from the Western World and this worries the government in China for a couple of reasons:
a) They like to filter the cultural objects that the population interacts with
b) This is stemming the growth of the domestic commercial media
(I don’t see the Indian Government being overtly concerned about free for all though)
In terms of making revenues online, the biggest market comes from Mobile VAS content. China has about half a billion mobile consumers who are now using the Internet through their phones and purchasing trivial things like jokes, ringtones, video clips etc. from portals. Most of the money goes to the portals. It’s a volumes business. Expect us to say the same about India a few years down the line.
To give you an idea of the scale of this business – The Economist gives an example of the ring tone from a hit song, “Mice Love Rice”, which generated over $10m in sales in 2005.
Mobile internet portals in China are KongZhong and Tom Online – check them out if you wish to be a part of Cultural Diffusion on the Internet 
The Economist also lends another insight into gaming in China, which we briefly discussed earlier – Nintendo’s, Sony’s and the X – Box’s of the World are not selling like hot cakes in China. Gaming is happening through cyber café’s – so gaming is social, but its not ‘isolated’ social i.e. a person sitting at home alone and then reaching out to others. It’s more ‘cumulative’ social – people meet and interact with each other and also attract with a few more people. This could be due to space constraints, which also dictate culture. I also think this will hold true for India because of:
a) Space
b) We as a people are used to being in constant contact with each other. Human interaction is extremely important for us.
We have already written in our various posts on gaming about how the new models on gaming in China (and the World over) are all about engagement for a long term period. Games are looking to make revenues not for selling the initial services but for selling services within the games themselves such as weapons or a new form of clothing etc.
Thus one will see initial entries into games that are extremely cheap or even free for that matter. In order to progress in the game or make the gaming experience richer, the user may have to pay.
I think the difference between India and China with respect to the Internet lie in the Censorship domain. Access to many foreign websites such as Wikipedia are restricted. Google searches are filtered. China’s premier search engine is Baidu – which has faced allegations of subliminal propaganda and piracy. E – tailing in China is still restricted because of a Government controlled payment system that blocks out the scope for several financial intermediaries. That’s something we need to learn from.
It’s quite clear that the Internet in China offers unique possibilities – and so will the Internet in India. The challenge for India – Can We Deliver the Numbers that China has managed?
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Yes, China has done quite well as far as online activities are concerned. As for India, there is a lot more to happen. Thanks for the statistics you offered…(will help a lot for further reference).
Well, since the last few years India has catch up well with Internet and web 2.0. The social communities have been widely accepted in the country (as proved by the popularity of Orkut and myspace). People are indulging into it in huge numbers. Gaming industry is also doing good in the country though there are not many local sites or software.I hope things would become better down the years.
E-commerce is still to gain its pace in India and I feel there is a good reason to it. I would like to use the social communities like ‘orkut’, as instances, who are doing great business in India. I feel if one tries to find out the reason behind its success, the answer becomes clear why e-commerce is not a hit in India. It is, i feel, all about understanding the Indian psyche. I completely agree to you that understanding the culture of the place is immensely important. The sites like Orkut have touched the right nerve and they have played with the Indian psychology of communication well. In the same way the shopping portals have to localize themselves before opening up the world for the Indian users. The trust factor matters here and that can only be gained by catering to the needs of the users, operating on the same platform they are in.
Internet on mobile too has to go a long way because of price constraint that it involves.I don’t feel it will reach out to the mass unless it settles down for an affordable price.
Like China, India too has resource, man power and brain which can bring out great success in terms of online activities in India.
For further insight into it, refer to the following link:
http://maketicklive.com/blogs/