Home Facts industry

Online still a growing market

Online still a growing market

Write: Laria [2011-08-09]

Online still a growing market

The number of China's micro-bloggers more than tripled during the first half of this year, and the number of group-purchasing users more than doubled, although the growth rate of Internet users is slowing, data from the China Internet Network Information Center (CNNIC) showed. [Related coverage: China's Internet Development]

China has spent seven years enlarging its Internet population from 1 million to 100 million. However, it will take less than two years to increase the figure from 300 million to 500 million based on the current growth rate.

The total number of Chinese Internet users hit 485 million by the end of June, up 6.1 percent on the half-yearly figure from the previous year, the data showed. The figure was almost the same size as the entire population of all 27 European Union countries.

Micro-bloggers

The number of Chinese micro-bloggers jumped to 194.97 million during the past six months, nearly as many as the entire population of Brazil, the world's fifth most populous country. The number was a mere 63.11 million as of December last year, data from CNNIC showed.

According to a report released by the Chinese Academy of Social Sciences, China's micro-blogging websites have increased to 88 as of December 2010. The figure was 17 in January.

As one of the busiest micro-blogging platforms in China, Sina Weibo's users will number 200 million by the end of this year, said He Xi, a researcher with Analysys International. Sina Weibo's accounts numbered 140 million as of March, He said.

Chinese actress Yao Chen had attracted more than 10 million followers on Weibo as of July 27, making the 32-year-old celebrity "the most followed person" in China, Xinhua News Agency reported. According to the report, Yao's followers exceeded 5 million in January, outstripping the US talk show host Oprah Winfrey and just 2 million behind Lady Gaga's world record of 12 million.

China had about 174 million active micro blogs in the second quarter, an Analysys International report said on July 26.

On July 21, Sina and Taiwan-based cell phone maker HTC Corp co-launched Weike, the first social-networking smart phone on the mainland.

Ray Yam, the Chinese mainland president of HTC Corp, believes that cooperation between cell phone manufacturers and micro-blogging carriers could become a trend when "the mobile Internet era catches on".

Weike is designed for Sina Weibo users. It could simplify the process of updating micro blogs, and sharing photos and music. Weike has a button that enables the phone to log on to the user's Weibo account directly.

About 34 percent of Chinese people who use their cell phones to surf the Internet would update their micro blogs through them, CNNIC's report said.

Cell phone users

In addition, CNNIC's research also showed that 318 million Chinese people would use their cell phone as one way to surf the Internet, up 14.95 million on last year's figure. However, the growth rate hit a three-year low of 4.9 percent compared with the highest growth rate of 61 percent during the second half of 2008.

Thanks to the rapid growth in mobile phone e-commerce and mobile phone advertising, the market value of China's mobile Internet industry reached 6.44 billion yuan ($991 million) in the first quarter of this year, up 43.4 percent quarter-on-quarter, an iResearch report found. By 2013, the number of China's cell phone Internet users may exceed PC Internet users, Beijing Television reported.

However, CNNIC's report suggested that the increase in China's cell phone Internet users may slow down since the current increase is based solely on new subscribers. Most of the potential cell phone Internet users have already converted to mobile Internet clients.

China had about 920 million of them as of June, Beijing Times reported on July 26, citing information from the Ministry of Industry and Information Technology. The number of users will increase rapidly again only if the carriers can improve their network environment, cut surfing charges or develop new services targeted on rural cell phone users and senior citizens, CNNIC's report said.

Meanwhile, the number of users of China's third-generation (3G) networks remains small, which acts as a restraint on the expansion of the mobile Internet industry. The nation boasted 73.76 million 3G-network users (including a small number of wireless network card and landline 3G users) by the end of May, the report said.

Group-buying websites

The number of group-buying users jumped 125 percent in the first six months of this year compared with the same period last year, reaching 42.2 million, the report showed. But the service quality of some of the small- and medium-sized group-buying sites was questionable, the CNNIC report said.

The financial situation of a great number of group-buying websites is not as good as the soaring client base indicates. Many of the small group-buying websites have closed because of bad financial results, according to a Beijing Business Today report.

The number of group-buying websites surged this year to meet increasing demand. China had nearly 5,000 group-buying websites as of June, according to a report posted on Analysys International's website.

Larger group-buying sites, such as gaopeng.com, are likely to lay off as much as 25 percent of their staff, TechWeb.com.cn reported on July 27. Groupon's China arm has more than 3,000 employees in more than 120 Chinese cities.

Online gaming

The number of China's online game users rose slightly during the past six months. A total of 7.27 million online game players were added from January to June, the report said, pointing out that the rate of increase was as low as 2.4 percent for the first six months of this year compared with the same period last year. The nation has 311 million Internet video-game players.

The absence of new types of games was behind the slowdown in the online gaming industry. The country's online gaming developers failed to introduce adequate new products, the report said.

Nevertheless, according to a chinanews.com report, the nation's online video-game industry may face a fresh round of rapid growth in the near future.

The nation's online game market was valued at 8.76 billion yuan in the second quarter of this year, up 3.1 percent, the report said.

The value of China's online video-game market could reach $8 billion by 2014, according to Pearl Research, a San Francisco-based consulting company.

"That rate of growth is faster than the core video game industry in the US," wrote Dean Takahashi, an online video-game researcher at technology blog VentureBeat.