In the early days of the Internet in China, users gravitated to leisure pursuits such as watching videos and listening to music. Those activities are still highly popular, especially among younger users. China has local sites similar to YouTube, such as Tudou and Youku, which have agreed to merge, and similar to Hulu, where traditional programming is offered, such as iQiyi and LeTV.
As their comfort level and sophistication have grown, users have branched out from entertaining themselves to a more diverse mix of activities including those they once avoided, notably e-commerce. Between 2008 and 2011, the online share of consumer spending increased from 11.8 percent to 14.3 percent. Between 2011 and 2015, per capita online spending will likely rise by 15 percent annually, more than doubling the expected overall increase in consumer spending and reflecting both the rising level of trust by consumers and the greater protections put in place by merchants.
Along with e-commerce, users are spending much more time on community-oriented and information activities. Community-oriented activities include e-mail, instant messaging (IM), and forms of social media. (See Exhibit 4.) Sina Weibo, a Chinese version of Twitter, has attracted more than 300 million users in less than three years of operation. Sina Weibo once handled 32,312 posts per second, surpassing Twitter’s peak traffic record. Weibo (pronounced WAY-bo) means “microblog,” and there are several competing services, but Sina’s is the most influential.
Weibos are generating both national and local conversations on important social issues that have historically been kept under wraps. In July 2011, one of China’s bullet trains crashed in Wenzhou, in the southeast of the country, killing 40 passengers. Sina Weibo quickly became, in the words of a Wall Street Journal columnist, “a conduit for inconvenient truths and cynical speculations about the accident.”
Environmental activists have begun to post daily or even hourly readings of air quality in China’s pollution-draped cities. The publicity generated by these readings has forced the government to revise its policies on collecting and publicizing air quality data in a nation where hundreds of thousands of premature deaths are attributable annually to air pollution.
The government has an uneasy relationship with this new-found passion for public discourse. In late March, Sina Weibo and Tencent Weibo, the two largest microblogging sites, temporarily suspended the ability of users to comment on posts. This restriction was part of a temporary crackdown on social networking brought on by political unrest.
As the Internet in China becomes a home for digital shopkeepers and an instrument for public discourse and social change, it will also start to look and feel similar to the Internet of more developed nations. In fact, in some cases, Chinese consumers are more avid users of online services than U.S. consumers are.
For instance, 79 percent of Chinese Internet users send instant messages, compared with just 21 percent of U.S. users. They are also bigger consumers of online music (79 percent versus 61 percent) and e-reading (40 percent versus 7 percent). (See Exhibit 5.)
When Chinese consumers access the Internet from mobile devices, they are frequently more adventurous than their counterparts in Japan and the U.S., listening to music, reading books online, or engaging in social networking. (See Exhibit 6.)
Chinese Internet users are also maturing. Between 2008 and 2011, the average age of an Internet user rose from 24.7 to 28.9 and approached the average age of users in the U.S. (30.0) and Japan (30.4). The aging of the Internet reflects both new users and the general aging of the population. In 2011, the 51-and-older segment made up 24 percent of the Chinese population; by 2015, it will make up 28 percent.
Maturity means that future growth of the user base will slow. China’s Internet population is expected to increase by 8 percent annually between 2011 and 2015—one-half the annual rate of the previous two years.
However, opportunities will continue to expand, even as user growth flattens. Online retail sales, for example, are projected to grow more than 30 percent annually between 2011 and 2015. Companies that acquire scale and customer loyalty in China’s online market will have achieved a solid foothold, ensuring future growth.
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