In a new report studying the internet usage of Indian SMBs (small and medium businesses), it has been revealed that SMBs will be one of the major forces spending and driving internet growth in the country.
Based on the expenditure of these businesses in the past year and the growth in spending, it is predicted that SMBs will increase spending on Internet activities by 16%. In 2009 this expenditure amounted to $1.45 billion. The corresponding figure for Chinese SMBs was estimated to be $7 billion dollars by the same firm, Access Markets International Partners, which conducted the study on Indian SMBs.
While the figures for spending differ hugely between the Indian and the Chinese SMBs, there are similarities in the aspects of the internet that the SMBs intend to spend on. Internet infrastructure is below par in both the countries and therefore the top priority of these businesses is to first enable that level of connectivity, speed and ease of access that will help them to engage in activities which will prove to be fruitful for them. The study notes this and goes on further to say that there is a considerable gap in the use of internet related technology such as broadband, e commerce etc in India.
Moreover in China the study estimates that in 2009 SMBs spent $3.7 billion on Internet access compared to $3.3 billion dollars on the rest of all myriad activities of the internet. Expenditure on acquiring broadband access is one of the highest in China and spending on wireless technology is also growing at a fast pace. The same investment and growth rate is not present in India but here too DSL and cable modem remain the most preferred modes of internet access.
And here we arrive at a slight shift in the outlook of the SMBs in the 2 countries. It is estimated that in 2009 China spent $1.5 billion dollars on their personal online presence, which is way more than India. So in China the companies are not majorly concerned in personally mainitainig company websites. This means that there is scope for growth in expenditure in this particular space in India. Consequently the study says that most Indian SMBs are showing a major interest in setting up their own web sites providing necessary information and online services related to the company online within the next year
Yet both countries exhibit a high level of usage of e commerce majorly through third party service providers. In India, the study found that one in four such businesses in India have websites, most of which are hosted on third-party vendors’ or service providers’ servers. While the corresponding figure is not available for Chinese SMBs, it does look like the SMBs in both countries are very interested in e commerce activities either conducted through their own websites or through external platforms. This spells out a good opportunity for all companies who intend to capitalize on this demand.
Another notable opportunity that emerges from these studies is the demand for internet infrastructure. As stated in the words of Dr. Vu-Thanh Nguyen, Singapore-based research analyst at AMI-Partners. Dr. Vu-Thanh Nguyen, Singapore-based research analyst at AMI-Partners, ”More than 59% of China SMBs are without PC and Internet access. For China Internet access providers and PC vendors, this spells tremendous opportunities in terms of customer base and future growth.” In India a dismaying more than 50% of PC-owning SMBs yet do not subscribe to any kind of broadband service.
When it comes to online advertising it has been observed that in China, email marketing and internet banner displays are the most popular forms of online marketing but in India 90% of internet connected SMBs use digital social media for promotion in combination with banner displays and other forms of online advertising. This might mean that Indians have caught on to the more developed platforms for interacting with customers at a faster pace than in China. Infact WATBlog recently covered Google’s new initiatives in India to encourage SMBs to invest in online advertising.
All in all the conclusions are obvious. Both the developing economies are in the initial stages of establishing an all pervasive internet presence by currently focusing on fundamentals such as the basic infrastructure and connectivity. Once these fundamentals are acquired, there will be a rapid adoption of services and platforms to attain the next level of business engagement.
Often there are many parallels drawn between the trends in western countries and the developing economies. Several studies on the SMB internet usage in US have also been conducted by agencies. Although the dynamics of usage and advantage are far more nuanced in the US and it will take a few years for Indians and Chinese to reach that stage, yet there is one noteworthy observation. As the title in this report by emarketer notes, “Those on the Web reap the greatest benefit.” It has been found that those US businesses which have been very proactive in adopting online platforms and are actively responding to customers not only through queries or directed advertisements but also through reviews and information have generated the maximum sales online.
This is noteworthy for it echoes the basic philosophy for all owners and entrepreneurs. Grab every opportunity available and make the most of everything.
In summary, I think that SMBs will be greatly benefited from engaging in online commerce and hence should do so at the fastest pace possible. Moreover Indian and Chinese SMBs offer huge potential for internet infrastructure and service companies.
What do you think?
