To understand the Internet in China, it is necessary to look at it through the lenses of users and learn how they experience it in their daily lives. The Internet is not monolithic in China or anywhere else but rather a broad canvas across which users can move among interests and activities. It is crucially important for companies that want to reach consumers in China to understand them on their terms and not impose mental maps drawn from other markets.
In previous reports on China’s digital generations, we relied on six segments, based on income and age, to provide that perspective. Those six segments are still valid but do not accommodate rapid recent growth among older generations and rural residents. Accordingly, we have added a rural and a senior segment. (See Exhibit 1.)
The segmentation helps identify both top-down and bottom-up views of the Internet market in China. The view from the top has some surprises. The rural market has 26 percent of Internet users and 22 percent of Internet hours—big numbers for a segment that has not received the attention that the urban and youth segments have. In fact, the rural market has more users than the young-seeker segment—individuals aged 26 to 35 who have not been to college—which historically has led the pack. The senior segment may be the latest to use the Internet, but it is catching up quickly. The average senior user is on the Internet 3.5 hours a day—almost as much time as active middle-aged users. (See Exhibit 2.)
Our segmentation is broad and basic, filtering the market through the screens of age, income, and location. And while it is battle tested, there is no substitute for companies doing their own consumer research, developing their own insights, and targeting discrete groups of consumers through multiple channels.
The Internet in China continues to be dominated by entertainment, especially video. But there is growing usage in e-commerce, community-oriented, and information activities. The eight segments, however, do not participate in these activities equally. (See Exhibit 3.)
Younger users tend to spend more time online but, other than young professionals, are not yet spending large sums of money online. Middle-aged users spend less time online than their younger peers, who grew up with the Internet. The willingness of middle-agers to experiment online rises with education. Although seniors and rural residents have been largely overlooked and are newer to the online world, they are rapidly making the Internet a part of their lives.
Teenagers. Teenagers are big fans of IM and all forms of online entertainment. Like their older peers in college, they are also starting to use such services as Sina Weibo to communicate with friends. They spend 2.6 hours a day online—the lowest among all the segments.
University Students. More than any other segment, university students use the Internet to communicate with friends and family and to build online communities. They are the heaviest users of IM and, along with young professionals, the most active users of weibo, devoting 1.4 hours a week to this service. Despite limited disposable income, they spend 2.1 hours a week shopping online—the third-highest total among the segments. Nearly all university students are online at least monthly.
Young Professionals. Members of this segment are online the most and are the most adventurous. The average user spends 3.9 hours a week watching online videos, 3.2 hours on IM, and 2.6 hours shopping online. Young professionals spend the greatest amount of time on e-commerce, leading or tying other segments in every individual activity except for stock trading, where they are beaten by the active-middle-aged segment and seniors. Like university students, nearly all young professionals log on to the Internet at least monthly. (See “A Day in the Life of a Young Professional.”)
Young Seekers. Members of this segment are the same age as young professionals but are less educated and have lower incomes. They are the heaviest users of online entertainment services, especially videos and games, but their online lives are much richer than just movies and fun. Young seekers spend more time reading news online and conducting online searches than any other segment.
They are also the second-most-active online shoppers. Responsible for 28 percent of all Internet hours, they are a group to be reckoned with.
Active Middle-Agers. While these users spend less time online than young professionals, they have similar usage patterns, with entertainment and community their two largest categories of online activity. They like to shop, trade stocks, and conduct banking online but are not yet big users of online search, compared with other segments. Along with the senior segment, they spend the most time per
week on e-mail.
Moderate Middle-Agers. This segment is demographically analogous to the young-seeker segment. These users have less income and education than active middle-agers, but—unlike their younger peers—the gravitational pull of the Internet is much weaker for them. Their daily average usage of 3.3 hours is lower than all segments except teenagers and rural residents. As a share of total time online, they are relatively active online shoppers and readers of online news.
Seniors. You can call them senior, but don’t call them unsophisticated. Of the eight segments, they spend the most time reading news online—four hours a week. They also spend more time trading stocks online than active middle-agers. (In interviews and focus groups, they say that their children frequently help them with this activity.) The Internet allows them to stay in touch with their children and grandchildren through IM and email. (See “Gray and Getting Used to the Internet.”)
Rural Residents. Although rural residents are relatively light users, their three hours a day online are not put to waste. The Internet enables them to access goods and services that otherwise would be out of reach. They like to shop online and they spend more time than any other segment, except young seekers, playing online games—about 2.8 hours a week. They are also big users of IM. (See “Basic Necessities.”)
Over the four years that we have tracked the digital generations in China, many Internet users have moved from one segment to another or migrated to more sophisticated activities within a segment. The Internet is becoming entwined with routine activities at work and at home.
Young Professionals and Young Seekers. This shift is especially apparent among teenagers who went on to become young professionals and young seekers. As recently as six or seven years ago, these individuals were high school students watching traditional television, chatting with friends through QQ in Internet cafés, and experimenting with Baidu search.
Upon graduation, the future young professionals went to university, while the future young seekers entered vocational school. But their online experiences were remarkably similar. They stopped watching broadcast television, gained access to computers, and plunged into online videos, social networking, and information gathering. They started using e-mail and relied on search to answer academic questions. As a college student in Beijing said, “It’s more about relationships and information.” They also started to buy online.
The online paths of the two segments diverged when the individuals entered the workforce. While both groups spent less time on QQ chat, the young seekers gravitated toward online games and the young professionals started posting on Sina Weibo and other microblogging sites. Today, the young professionals spend more time on community-oriented services in order to make work and career connections, whereas the young seekers are more inclined toward information services, especially online news, while continuing their focus on entertainment. A recent graduate working in Beijing said, “Work requires me to learn faster and more,” while a 26-year-old young seeker living in Zhongshan, in Guangdong Province, said he was looking to “connect to the society, learn new things, and relax.” Members of both segments are active online shoppers, but young professionals bank and trade stocks online with greater frequency.
Active and Moderate Middle-Agers. These two segments also began their Internet journey from similar spots a few years ago. They started by experimenting with chat applications and online games and surfing the Web. Neither segment would qualify as heavy users. As one active middle-ager said, “It was more about entertainment.”
In the last two years, active middle-agers have become adventurous in their online activities. Of the 22 online activities we tracked, the active segment spent more time than the moderate segment on all of them except for music, search, and navigation. Active middle-agers are starting to view the Internet as a part of their everyday life, while moderate middle-agers still view it as an adjunct.
Two quotes sum up the contrast. An active middle-ager told us that the Internet was “part of my life. I get information, go shopping, watch video, and play games.” A moderate middle-ager, on the other hand, said he was “not that addicted to the Internet, but it is convenient and helpful.”
While the eight segments help to illuminate the differences within China, the Internet has the power to draw the sprawling nation together, by both serving as a soapbox for a national conversation and extending companies’ commercial footprint.