162 Million: 2007 Chinese Internet Usage

July 22, 2007

The new Chinese internet usage figures have come out.  There are now 162 million Chinese internet users according to the government, up from 137 million last year. 

Now we must caution that we’re not comparing like for like.  The previous figure had been based on someone who had spent an hour online per week, the new figure is on someone who accessed the internet in the previous six months

Related to this, Information Week has an interesting story on internet penetration – with an estimate of 3% rural penetration and some strong resistance to internet use.

Where are the Chinese searchers?

July 11, 2007

I thought I’d share a useful little table from the Wikipedia article “Digital Divide in the People’s Republic of China“.  The regional tables are very interesting in that they quite starkly show differential development.

For example the East of China has 14% internet penetration while the rest of the country averages 6.7% – so twice the proportion.  What’s bigger is the ratio of domain names per 10,000 people (5 to 1)  and the websites per 10,000 people (6 to 1).  This means that outside the East they are largely consumers.  It also indicates that a higher proportion of Eastern internet users are home users rather than work or cafe surfers (thus more likely to maintain personal sites).

This is not surprising as the east of China is more prosperous (and urban and commercial).  So the growth of the Chinese internet may be uneven – as the Middle and Western China become more connected – although the higher proportion of people in rural areas may slow this down somewhat.

This indicates that, yes, Baidu is still in there for the long term – as these users will tend to go to Baidu rather than the foreign Google or Yahoo.  It also indicates that the market may be changing – with lower volume items that are easier to ship inland rather than, say, cars.  It may be interesting to see if these areas where saving is high are open to foreign investments (although that last bit is more an educated guess than deep seated analysis).

Internet Cafe crackdown

July 8, 2007

The Chinese government has started a new crackdown on internet cafes.  This may well slow the growth of the internet.

The first reaction may very well be “so what”, after all they are usually gamers and chatroom habitues.  Not necesarily target markets for financial products or foreign luxuries.  However they are the internet users of the future, and this could have a knock on effect.

The Other Digital Divide: Town vs. Country

July 8, 2007

One other factor in the Chinese digital divide is the higher usage in the town compared to the countryside (link is PDF).  As the more remote parts of the US and the UK are still off broadband, this is not that surprising.  Add this to the fact that the countryside is a lot poorer than the cities this makes even more sense.

This could provide a crick on internet development in China as the low hanging fruit have mostly been plucked, although with the growth of cheaper technology such as mobile internet transmission this may be less important than we think.

Still it is likely that we will see a greater reaching out to the countryside, and how this plays out we’re not at all sure.  Our pet theory is that the high savings rate of the Chinese countryside combined with the liberalisation of rules on Chinese citizens investing overseas may mean that there could be a boom in investment products while travel and luxury cars may not see any great growth due to logistics.