China internet use – a snapshot of online audiences

23/05/2011

By: Danny Meadows-Klue

The energy of the Chinese internet industry is as loud and ceaseless as the building work in Shanghai’s skyscraper forest. China’s internet market is vast, and growing. More than 470m people are online in China, accounting for around 35% of the country’s 1.3billion citizens. In the net bars and offices of Shanghai, Danny Meadows-Klue discovers a hunger to use the web that spans from business to education. The urban landscape in China is changing fast, but the digital landscape many times faster. Most Western firms have no idea what’s coming…

Getting a taxi to take you where you want in Shanghai is challenging. The language barrier is so absolute that most cabs now have a special number lost foreigners can phone for an interpreter. As a Westerner it’s easy to feel lost and daunted, but a friend of mine added extra perspective this week. “The taxis get lost because the roads keep moving”, she said, without a hint of irony. She was right of course, from my hotel window there’s the half-buried history of an arterial road now under a warehouse thanks to a new, even bigger arterial road. The traffic never stops in this engine of a city with 23m people racing to build the new China.

Nowhere is that race clearer than on the web. Sites with hundreds of millions of users and billions of page views a week are the norm. Online traffic is so great in China that Western adservers keel over and video is too costly for many publishers because of the millions of potential streaming views. In many ways the internet in China is synonymous with the new success formula for business. Learn from the West. Learn fast. Improve and apply it. Now.

477m people are online already in China. China’s internet use accounts for over half (55%) of all people online in Asia, and is growing at the fastest rate of any country in real terms. 27% of rural China is now connected to the internet, and though speeds are often slow, and connections often shared, there is a staggering growth rate of over 15% year on year (17% in 2010).

What’s waiting for you online at .cn?

What you find online is a perfect mirror to the global tools. In search, BaiDu replaces Google; in social media the newly floated RenRen, QQ and Kaixin001 replace Facebook; in video YouKu replaces You Tube; in microblogging Mblog replaces Twitter; and in ecommerce TaoBao replaces eBay. Thanks to local consumer insight, the challenge of language and some help from government policy, national competitors to the global dotcoms have blossomed more so than any other market. Many have already become best-in class, and now they’re looking Westwards for expansion.

With a third of Chinese internet users shopping online (35% according to CNNIC in January 2011), online retail is becoming a primary focus for both mall based retailers and manufacturers. China’s exploding economy and insatiable demand for branded goods is causing a step-change of the role the web plays in the purchase process. The migration to blended buying – with online research fuelling offline purchases – is happening faster in China amongst the newly affluent professional classes than it ever did in the European or American markets. China is leapfrogging the agonisingly slow development of ecommerce in The West and getting the formula right straight away. With BMWs and Mercedes gliding through those Shanghai motorways, there’s no shortage of designer goods on display. But thanks to the web they’re breaking out of the shopping malls and are now only a click away.

Mobile is different here

With 3G starting to mainstream, smartphone handsets have followed the leap into apps seen in other markets. TV channels are packed with offers for the latest smartphone and in the Shanghai streets teenagers are busily chatting, texting and playing with apps and games on mobiles as intensively as you’ll find in Singapore, Sydney or Stockholm. The new generation of devices have step-changed internet use and around two thirds (65%) of internet users are already accessing mobile web content. With the rapid churn in handsets, most of the 750m mobile phone users should be expecting internet access in some form within a 36 months. It’s forced device manufacturers like Nokia to rethink the China market where low cost local competitors have started to raise the bar for value by flooding the market with cheap devices. The cameras may not be as good; the processors not as fast; the screens not as clear, but the cheap devices are getting fast take-up. Everyone in China wants a smartphone.

This means the Chinese experience of the web is fundamentally different to Western Europe or North America. The mobile web is the first intensive contact with the internet many consumers have. The experience of mobile pages shapes their expectations and the quality of mobile sites influences their relationship with brands. To be digital in China, you need to be mobile.

In marketing what’s the same and what’s different?

Much of the digital marketing mix looks the same the world over. The rapid rollout of connectivity has flattened the landscape, with a similar blend of acquisition, retention and brand building tools available to most marketers. Give or take mobile, the same is true in China. Search plays the critical role in discoverability of content; social media is how a new generation are connecting together; email has been the engine of business communication; and websites (if you can get them to load on a mobile) can deliver deeply immersive brand experiences.

But much is different in the detail – try applying the sophisticated rules of search engine optimisation in Google to the local BaiDu platform, and you’ll miss the key tricks. Rather than the elegant PageRank algorithm for setting link-equity, here it’s a numbers game: the more links, the greater the equity. In social media the relationship between Facebook and RenRen follows a similar pattern. In general the global dotcoms have had more engineering resource for longer, so the platforms are subtly more advanced; but the speed of innovation means processes and approaches are quickly copied and mainstreamed. China has the economy of scale to rival the US, something that no other digital market enjoys, which is why these domestic digital pure-plays have most of the ingredients they need to succeed globally.

Social is catching up

The last three years of digital development across Europe and the Americas were dominated by social media moving from the margins to the mainstream of marketing. In China 235m people are members of social networks already, with a staggering 290m taking part in blogs. RenRen, Sina and Weibo all have the type of geometric growth Google saw in the early 2000s, with Weibo already crossing the 100m registrations mark and set to near double by the end of this year. Twitter-style micro-blogging (presence applications) only have 10m users at present but seem to be doubling in the first quarter of the year. In a world where all digital audiences seem to grow quickly, RenRen is rising faster than Facebook ever did – and in a country where Facebook is generally inaccessible, that growth rate is unlikely to slow. The awkward relationship between government regulators and the freedoms of the web has materially bolstered the domestic digital markets, with consequences similar to the protectionism of the French government to its film industry thirty years ago.

Online advertising: Trends to watch

Ten years ago, one of the game changers of digital marketing in the west was the growth of search engine advertising. That too is now happening in China, and though companies keep the actual spend levels quiet (as they did in the West), it looks furious. BaiDu’s simple auction system guarantees good position in the listings, and following the lessons from Google in making online advertising easy, the simplicity is fuelling market demand. Snapping at BaiDu’s heals, Soso and Sogou are offering both consumers and marketers choice in what remains a comparatively young sector.

Video advertising too is set to mainstream. It’s hampered today not just by the connection speeds. Like the US and Europe a few years ago, more video inventory is needed in order to deliver more video advertising. This in part will resolve itself as consumer connection speeds increase, as well as the richness of content from national media owners. As this happens, agencies are likely to switch significant video ad budgets out of TV and onto the web. Big changes await.

The future of China’s internet industry will be aggressive and explosive. Today there is chaos. Websites produce statistics you can’t trust. Agencies have staff who are barely trained in the basics. Technology architectures are held together with workarounds because the demand is growing out of control. Like the skyline and road network of Shanghai, the digital landscape is in the constant churn of rapid growth. But it won’t be long before, out on the streets, those taxi drivers never get lost thanks to the local timely equivalent of Google Earth, smartphones are in the hands of all, and the 477m Chinese internet users have swelled to more than one billion. When China becomes the dominant online market, a very different web will have arrived.

Danny has been coaching firms in digital marketing for over 15 years. More than 45,000 people have attended his talks and courses in over 30 countries. He set up and ran the UK and European IAB trade associations for almost 10 years, was the pioneering publisher of Telegraph.co.uk, held the Vice Presidency of NBC’s European internet business, and has been a government policy advisor in the UK. He is chairman of the Digital Training Academy that coaches marketing teams to improve their ROI and founder of the Digital Strategy Consulting practice that creates internet marketing strategies for brands. He is a Commissioner at the digital marketing regulator in the UK, and the publisher of Netimperative and Digital Intelligence. He now coaches management teams, helping them accelerate their businesses and transform their organizations. Contact him on Danny@DigitalStrategyConsulting.com or http://uk.linkedin.com/in/dannymeadowsklue

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