China has just proudly celebrated its twentieth "e-mail"
anniversary. The first mail being sent twenty years ago,
Internet has become popular for commercial purposes for
about a decade. The past ten years has seen the number of
Chinese "netizens" in China increase from 620,000 in 1997
to 210 million by December 2007, with a sharp increase of
73 million in the year of 2007, at an annual growth rate of
53.3%! In that same time the number of websites in China
soared from 1,500 to 1.31 million. E-commerce was also part
of this "web explosion", going from only three Chinese
portal websites in 2000 (sina.com, sohu.com and
netease.com) reaching US$500 million market value at that
date; to 20 abroad listed ones, sharing a total market
value exceeding US$50 billion.
We know that China's development is topical on all fronts,
and once again, it will soon take over the U.S's lead,
probably by the end of next year, becoming the largest
Internet-using country in terms of population. Not to
mention that, even while standing at the top position of
world's Internet-users, only 15% of the Chinese population
will be surfing. Enjoying one of the world's fastest
web-development, China has understood the great potential
which lied under each of those Internet based
opportunities. Evolving into an important industry in
China, Internet now bares a large influence on people's
daily lives, being furthermore, a symbol of China's future
long term and sustainable technologic, economic and social
growth.
In these booming years, information and entertainment have
been the dominant themes of Internet services in China. The
development of e-commerce is still far behind online
entertainment. Reports show that the most widely used
applications are for news browsing, information searching,
instant messaging, video watching and online gaming.
Accordingly, advertising and online gaming have been the
main business models of China's Internet industry for the
last ten years, representing almost 80% of the industry
revenues in 2007. Knowing that the Internet shows various
profitable options when used for corporate matters and that
e-commerce is know a mature industry in the western
economy, Chinese e-commerce businesses will without a doubt
become another major player in China's Internet industry
profit cake. Being in the same time a new stimuli to the
overall Chinese economy.
"Online advertising has been one of the major profit models
of China's Internet industry. It has maintained rapid,
sustainable growth in the past decade, growing from less
than US$20 million in 2000 to US$900 million in 2006 and
expected to come close to US$1.5 billion this year."
(Charles Chao, President and Chief Executive Officer,
Sina.com).
In terms of the frequency and time using the Internet, news
browsing, information searching and instant messaging,
Chinese "netizens" share the same profile as the ones in
developed countries. Focusing on the online advertising
industry, it only represented less than 5 percent of
China's advertising market in 2007. Knowing the attention
that is now vowed to the Chinese Web environment by
hundreds of millions, there is still an amazing potential
for growth.
Second important domain of success in China's Internet
story is it's information provider status. Web based
medias and traditional medias have long been integrated and
are growing hand in hand. Internet has now become one of
the most important news and information outlets in China by
using mature technologies and premium forms of daily news
communication. Take the astonishing example of one simple
number: 4 million. This is the number of views of the
Communist Party of China's (CPC) homepage on October 22,
when, following the 17th National Congress of the CPC,
members of the new Standing Committee of the Political
Bureau made their first appearance. Moreover, while
Internet's grasp on the corporate world is low, and while
e-commerce is still at its primary stage, the Alibaba group
(China's largest e-commerce company, build from scratch,
now a huge success story) made it clear that there were
huge business opportunities to concretize in the Internet
to business perspectives.
One of the major challenges that lies ahead of the Chinese
Internet environment is providing millions of Chinese
companies, especially small- and medium-sized enterprises,
with Internet services, IT Internet related solutions, and
Internet applications. We could also mention the fast
Chinese Web development in rural China, which accounts for
22% of the total Internet users and the development of
broadband cell phone surfing (consider a market of 500
million mobile users) to give you an idea of the size and
the number of projects that are on standby.
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Tim Lyons is Executive Director of Manage China. Manage
China is a company that helps foreign firms who are
interested in doing business in China.
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