How China is Dominating Global Internet

By | December 5, 2017

China and its internet have achieved many milestones in the last few years. Alibaba.com became the largest retail platform in the world, and its annual sales are even higher than that of eBay and Amazon combined. $8.5 trillion worth of Mobile payments have been made. MIT Tech Review included three technologies from china in its annual list of 2017’s breakthrough. Altogether, this attracted global attention.

beijing-skyline

Questions like “What makes China’s internet market so dynamic and volatile?” or “What will be the impact of more Chinese Internet companies going global?” are coming up.

The reasons are here:

  • China has the biggest number of internet users in the world i.e. 710 million internet users (as in 2016), this is equivalent to the all Indian and US users added. The best part is that only 52% of the population uses the internet, so a lot of potential market is still left.
  • China’s online spending is of $967 billion, which is second to $1.1 trillion of US. The competition narrow downs to only China and US, as China’s online spending is thrice that of Germany (holds third place in online spending). Additionally, China’s growth rate of online spending is 32% annually.
  • Out of the Top 10 largest publicly traded internet companies, 5 are Chinese namely: Alibaba, Tencent, Baidu, JD.com, and NetEase. The rest of the five belongs to US alone.
  • The average age of Chinese internet users is 28 and one out of four users in China is a mobile native –users who use only mobile to access internet. Chinese users tend to use more new apps than American users.
  • It takes less time for an app to reach 50% penetration rate in China than US. Didi Chuxing, taxi booking app, took only three years to reach more than 50% of Internet users in China. Uber yet has not reached 50% benchmark.

The other and the more primary reasons are: the economic environment, high transparency, and sudden growth of undeveloped sectors that are enabled by internet.

The economic environment refers to factors like youth, highly skilled doctors and engineers available at low-cost, humongous amount of capital is available, and the infrastructure is expanding rapidly while enabling the internet speed to rise.

Transparency within the industry results in growth. Internet based products, services, and business models are usually available online resulting in rapid sharing of information and new advancements. Usage of open-source software expedites learning.

Internet based solution have allowed those industries, which were lagging previously to, address their efficiency gaps and other problematic areas effectively. That is rapid growth of undeveloped sectors.

The bigger question for now is whether China would be able to maintain the momentum? Looking at the low internet penetration rate, huge supply of capital, low-cost pool of science and engineering grads, and current investments made by the Chinese government in areas like broadband, mobile internet and cloud computing. All these factors indicates that the growth is going to go on.

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