Trends of the Chinese Internet of Tomorrow

David Feng (Bio, All Articles)

Just earlier this month, CNNIC (the China Network Information Centre) came out with its 35th report about the Chinese Internet. Done twice every year, it reported that China has (still!) yet to reach the point at which over half the population was online. It also reported a few others ups and downs, although even here with the slower-than-expected growth, the Chinese Internet of tomorrow still remains an interesting place to keep one’s eye out for.

Even a mere skim of the report reveals fascinating insights about how the Internet of China might develop. Here are some of the more interesting findings:

• By December 2014, China had an online population of 649 million. Whilst this was 31.17 million more than last year, the percentage of those online in comparison to the wider population still remained just short of the 50% mark: it was at 47.9%. (However, in late 2013, this figure was lower: 45.8%.)
• Also by late December 2014, the Chinese Internet was increasingly more and more mobile-centred. Of the 649 million Internet users, 557 million of them access the Web via their mobile devices. This was an increase of 56.72 million — a more sizeable increase than the general growth on a nationwide scale.
• Much of the online population in late 2014 remained in the cities — users in the countryside accounted for a mere 27.5% of the entire e-population, at a “mere” 178 million. It still was able to register an increase, however, this time adding 1.88 million new users from the period after late 2013.
• New in the late 2014 report (over the late 2013 report) was the addition of Internet-ready TV as a new connection device. Where this figure was in essence “zero” for late 2013, this grew to 15.6% for late 2014.
• More users started using both school and public Internet (including probably at wifi cafés that were not regarded as “traditional” Internet cafés). In particular for the latter, where 14.6% connected via a “public location” in late 2013, this had gone up to 18% by late 2014.
• The Internet, once the domain of students and the jobless, is now increasingly that of the self-employed and the freelancers. The largest increase from late 2013 to late 2014 in terms of users by profession was that of the self-employed and freelancers (18.6% in late 2013, 22.3% in 2014). The population of students and the jobless sank the most. Only second in terms of growth were that of “regular employees” at the average workplace (11.4% by late 2013, 14.2% by late 2014).
• More and more of Internet users also had incomes. The most visible increases in the monthly income bracket groups were that between ¥3,001–¥5,000 (roughly £300–¥500), registering an increase of 4.4%. In the meantime, those with no income drastically shrank from 9.7% in late 2013 to a mere 2.2% by late 2014; what was the 6th most populated group in late 2013 became the least populous by late 2014.
• Probably due to the increased censorship on Weibo (as well much more strict legislation), Weibo saw probably the most significant loss of users; where as 45.5% of Internet users were using the service in late 2013, this registered a 11.4% loss so that by late 2014, a mere 38.4% were using the service. The user base loss was even greater on the mobile version of Weibo, where a 13% loss was seen (39.3% by late 2013, a mere 30.7% by late 2014).

Both via reports and through general observations, one is able to forecast the following, going into 2015:

• The Internet is slowly reaching a saturation point in China — whereas some were more upbeat and predicted the country breaking the 50% barrier in terms of “e-proliferation” by late 2014, this was somewhat unexpectedly not met. The result, however, also defies more recent trends: whereas in late 2012, the number of users not online who indicated an intention of “definitely remaining offline” or “probably remaining offline” reached a recent peak of 77.3%, in 2013 and 2014, this figure was lower. What can be seen, however, is the simultaneous reduction in the number of offline users committed to going online — as in those who stated in the research that they were “definitely” or “likely” going online (down to 11.1% in late 2014 from a recent peak in 2011 of 16.3%).
• E-commerce on mobile has seen probably one of the largest increases in the past year (2014). The report mentioned growths of 63.5%, 73.2%, and 69.2%, respectively for mobile shopping, mobile purchases, and mobile banking, over figures for the year before (2013). Probably the largest increase was seen in mobile e-commerce when it came to booking travel online — the 194.6% increase is probably attributable to Chinese national railways rolling out (at long last!) its own official mobile booking app.
• A new development in 2014 was the rolling out of O2O services. 39.2% of those in Tier 1 cities, mostly Beijing, Shanghai, and Guangzhou (Canton), were using O2O services; one expects more growth in Tier 2 cities (such as Wuhan in central China) and Tier 3 (“lesser”) cities.
• The rise of WeChat will continue as Weibo continues tanking; however, interestingly enough, the report did not make specific mention of WeChat as a different kind of application (it was most likely “generalised” as an instant messaging application, a little unusual given its Swiss Army Knife-like uses).
• The era when the Internet was mostly the domain of the young, jobless, and students, has come and gone. More Internet users are ageing, and there is a visible increase in those users who actually earn income. With these people settling into the workplace, general discourse online could be expected to turn from the irrational to more rational issues.
• China is increasingly moving away from the “traditional” Internet when it comes to modes of access (as in what devices were used to surf the Web). Increasingly, tablets and even Web-ready TV sets are being used to connect. What is also of note, however, is that less than half of laptops (44.1% in late 2013, 43.2% in late 2014) are used to connect. This might seem to negate the primary reason for owning such a machine! It can also be hypothesised, however, that the relatively lightweight and more easily accessible mobile phone has a visible advantage over a comparatively more “clunky” laptop, even in this day and age of super-lightweight machines such as Apple’s MacBook Pro.

Here are trends we might wish to watch as we head further into 2015:

• Urbanisation is still in progress and is likely to continue making an impact. As a result, one would expect a continued increase in the number of users connecting from cities.
• In much the same vein, city-wide wifi may become much more the norm than a novelty (as was the case back in 2007). This will see an increase of those connecting “from public places”.
• In terms of general growth, one’s attitude, in terms of the recent deceleration in Internet proliferation, will probably be more of a “wait and see” attitude when it comes to when Internet proliferation in China will break the 50% barrier.
• The ageing of China might mean one would see more users who are retired, although at 2.4% for late 2013 figures, and 2.8% for late 2014 statistics, this might still as yet be a minority.
• The explosions in popularising mobile Internet travel bookings is likely to see a visible decrease, as the user base is only so large (as long as the general user base does not see explosive growth). Mobile payments and other such types of transactions, however, will likely to see sustained increases; after the recent shaking on WeChat over Chinese New Year, reasons for such growth are made much more obvious.
• Finally, one cannot, when it comes to technology, rule out the emergence of a newer-still form of Internet communication in this day and age. In 2009 and 2010, Weibo was the “big newcomer”; by around 2012 and 2013, this was WeChat’s turn. Now in 2015 and going into 2016, one might be forgiven for imaging a yet newer arrival, although given WeChat’s strong foothold at present, the hypothesised “new bigcomer” would have to have more “oomph” and impetus to convince users to use such a service for it to growth at the rates that Weibo and WeChat have done in the past.