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China’s Internet MarketThe Most Up-To-Date Insights ToHelp Understand The World’s MostImportant MarketExtended Version    ...
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China Internet Market 2012 - Extended Version

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The Most Up-To-Date Insights To Help Understand The World’s Most Important Market

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for our Executive Version please click here:
http://de.slideshare.net/LangeManes/chinas-internet-market-exec-summary-2012

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Transcript of "China Internet Market 2012 - Extended Version"

  1. 1. China’s Internet MarketThe Most Up-To-Date Insights ToHelp Understand The World’s MostImportant MarketExtended Version #cim12 #internetLange & Manes #growth #china2012
  2. 2. Lange / Manes #cim12 #internet #growth 2 11/29/2012 Intro Page 3 Demographics Page 11 User Behavior Page 22 Online Advertising Page 29 E-Commerce Page 37 Mobile Page 43 Social Page 51
  3. 3. Lange / Manes #cim12 #internet #growth 3 11/29/2012 Sources 1.  Asia Digital Marketing Yearbook 2012 2.  CNNIC: China Internet Report No. 30 (July 2012) 3. Individual Research by the authors
  4. 4. Lange / Manes #cim12 #internet #growth 4 11/29/2012 China Is An Unbelievably Large And Dynamic Internet Market •  537 million Internet users in June 2012, representing an increase of 53 million from June 2011 •  Internet penetration rate of only 38.3% ▫  Huge upside potential in the future •  China’s Internet population is expected to exceed 700 million by 2016 •  356 million mobile Internet users in 2011, marking a mobile Internet penetration rate of 36.5% •  The Chinese e-commerce market grew to USD 1.113 trillion in 2011 ▫  46% y-o-y increase •  Total revenues from online shopping reached USD 123 billion in 2011 ▫  68% y-o-y increase
  5. 5. Lange / Manes #cim12 #internet #growth 5 11/29/2012 Example? Alibaba just became the world’s biggest e- commerce company with USD 157 billion1 in sales2 Taobao Marketplace and Tmall.com Gross Merchandise Volume In billion RMB 1.200,0 1000,70 1.000,0 2,225% 800,0 growth within 5 632,00 600,0 years! 400,00 400,0 208,30 200,0 100,00 43,30 0,02 1,00 8,00 16,90 0,0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1: Ca. 1 trillion RMB 2: Source: venturebeat.com (Dec. 3. 2012)
  6. 6. Lange / Manes #cim12 #internet #growth 6 11/29/2012 Sadly Enough, Most Internet Companies Fail In China •  They lose against Chinese competitors, because they know less about… ...why Chinese customers go online …what Chinese customers expect from their products …where Chinese customers buy online …how Chinese customers make buying decisions …what determines Chinese customers’ buying decisions …what advertising channels are most effective for reaching their target groups …how Chinese customers perceive online advertisements
  7. 7. Lange / Manes #cim12 #internet #growth 7 11/29/2012 Example #1 Example #2 •  Opened ‘google.com’ to Mainland •  Entered China in 1999 China in 1999 and ‘google.cn’ in •  China operations were mostly 2006 steered from Taiwan and Hong Kong offices •  Google’s market share in search •  Despite customer expectations, declined from around 25% in 2002 to 17% in 2011 Yahoo mostly neglected wireless services •  Market share in online advertising •  After the emergence of local fell to approximately 7% in 2011 competitors like Sina and Sohu, Yahoo lost most of its market •  Today, Baidu controls the search share market with an elusive 78% share •  In 2005 Yahoo sold its China business to Alibaba Group
  8. 8. Lange / Manes #cim12 #internet #growth 8 11/29/2012 Example #3 Example #4 •  Entered China in 2003 •  Entered China in early 2011 •  Shut down its China offices in •  In December 2011, Groupon 2006 with a remaining share of China had a market share of 2.8% 20% in the online auction market and went into a minority joint •  In June 2012 it announced to venture with Tom Online merge with larger rival Ftuan (funded by Tencent, Groupon’s JV •  Chinese competitor Taobao partner) captures more than 60% market share within two years after entrance
  9. 9. Lange / Manes #cim12 #internet #growth 9 11/29/2012 To Avoid The Same Fate, Companies Need To Begin Understanding The Market We have put together the most up-to-date insights for the Chinese Internet market in… Demographics User Behavior Online Advertising E-Commerce Mobile Social …to help companies better understand China’s unique market characteristics and increase the likelihood of success.
  10. 10. Lange / Manes #cim12 #internet #growth 10 11/29/2012 Intro Page 3 Demographics Page 11 User Behavior Page 22 Online Advertising Page 29 E-Commerce Page 37 Mobile Page 43 Social Page 51
  11. 11. Lange / Manes #cim12 #internet #growth 11 11/29/2012 Demographical Key Facts •  Low purchasing power: more than 90% of all Chinese Internet Users earn less than RMB 5.000 (USD 790) per month •  Almost as much Internet users access the Internet via mobile devices (69.3%), compared to PCs (73.4%) •  China’s Internet users are young: almost one third are students (30.2%) •  Only 36% of all Internet users shop or have at least shopped once online (estimated to increase to 47% in 2015)1 •  Only 20.8% of the total e-commerce transaction volume has been generated through e-payment solutions in 20102 (cash-on-delivery still the most popular paying method in China) 1.  Boston Consulting Group (2012) 2.  iResearch (2012)
  12. 12. Lange / Manes #cim12 #internet #growth 12 11/29/2012 China Has Almost Doubled Its Internet Users Since 2008 Development of Internet Penetration in million Users 800 50% 45% 700 39,9% 38,3% 36,2% 40% 600 34,3% 31,8% 537,0 513,0 35% 28,9% 485,0 500 457,0 25,5% 420,0 30% 22,6% 384,0 400 338,0 25% 298,0 20% 300 15% 200 10% 100 5% 0 0% 2008/12 2009/06 2009/12 2010/06 2010/12 2011/6 2011/12 2012/06 Internet User Penetration Rate
  13. 13. Lange / Manes #cim12 #internet #growth 13 11/29/2012 The Mobile Penetration Among Internet Users Has Increased More Than Sevenfold Since 2007 Development of Mobile Penetration in million Users 500 80% 72,2% 69,3% 450 65,9% 66,2% 65,5% 70% 60,8% 388,3 400 355,6 60% 350 317,7 46,0% 302,7 276,8 50% 300 39,5% 250 233,4 40% 28,9% 200 24,0% 155,5 30% 150 117,6 20% 100 73,1 50,4 10% 50 0 0% 2007/12 2008/06 2008/12 2009/06 2009/12 2010/06 2010/12 2011/6 2011/12 2012/06 Mobile User Penetration Rate
  14. 14. Lange / Manes #cim12 #internet #growth 14 11/29/2012 Mobile Phones Have Surpassed Desktop Computers As The No. 1 Internet Access Device Distribution of Internet Access by Devices 100% 90% 80% 73,4% 70,7% 72,2% 69,3% 70% 60% 50% 46,8% 45,1% 40% 30% 20% 10% 0% Desktops Mobile Phones Notebook 2011/12 2012/06
  15. 15. Lange / Manes #cim12 #internet #growth 15 11/29/2012 A Solid Ground For This Development Is The Increasing Popularity Of Mobile Phones In Rural Areas Rural/Urban Distribution of Access Devices 100% 90% 80% 70% 60,4% 60% 50,6% 50% 45,7% 47,2% 40% 30% 22,3% 20% 8,7% 10% 0% Desktops Mobile Phones Notebook Urban Rural
  16. 16. Lange / Manes #cim12 #internet #growth 16 11/29/2012 Internet Cafés Still Play An Important Role In China, Although Tendency Is Declining Places for Accessing The Internet 100% 88,8% 90,3% 90% 80% 70% 60% 50% 40% 33,2% 30,9% 27,9% 25,8% 30% 18,7% 16,8% 20% 13,6% 13,6% 10% 0% Home Internet Café Office School/Uni Public Places 2011/12 2012/06
  17. 17. Lange / Manes #cim12 #internet #growth 17 11/29/2012 Internet Usage Is Split Evenly Between Male And Female Gender Distribution 60% 55,9% 55,0% 50% 44,1% 45,0% 40% 30% 20% 10% 0% Male Female 2011 2012
  18. 18. Lange / Manes #cim12 #internet #growth 18 11/29/2012 Chinese Internet Users Are Young, But Demographic Aging And Growing Familiarity With The Internet Lead To A Shift Age Distribution 35% 29,8% 30,2% 30% 26,7% 25,4% 25,7% 25,5% 25% 20% 15% 12,0% 11,4% 10% 4,1% 4,3% 5% 1,7% 1,2% 0,7%1,4% 0% Below 10 10-19 20-29 30-39 40-49 50-59 60+ 2011/12 2012/06
  19. 19. Lange / Manes #cim12 #internet #growth 19 11/29/2012 Income Levels Do Increase But Are Still Very Low: 90% Of China’s Internet Users Make Less Than USD 750 per month Income Distribution (RMB¹ per Month) 21% 17,9% 17,8% 16,9% 17,5% 18% 16,1% 15% 13,5% 12,5% 11,9% 12% 11,0% 9,8% 10,1% 9,3% 9,2% 9% 7,9% 6% 5,0% 5,4% 4,5% 3,8% 3% 0% Above 8000 5001-8000 3001-5000 2001-3000 1501-2000 1001-1500 501-1000 500 or No Income 2011/12 2012/06 below 1.  1000 RMB equal appr. USD 150
  20. 20. Lange / Manes #cim12 #internet #growth 20 11/29/2012 Lower Income Level + Young Internet Users = Low Proportion Of Online Shoppers Proportion of Online Shoppers to total Internet Population 90% 80% 77,0% 72,0% 70% 66,0% 61,0% 60% 50% 37,8% 40% 30% 20% 10% 0% China South Korea USA UK Japan
  21. 21. Lange / Manes #cim12 #internet #growth 21 11/29/2012 Intro Page 3 Demographics Page 11 User Behavior Page 22 Online Advertising Page 29 E-Commerce Page 37 Mobile Page 43 Social Page 51
  22. 22. Lange / Manes #cim12 #internet #growth 22 11/29/2012 User Behavior Key Facts •  As of June 2012, an average Chinese Internet user spends 19.9 hours per week online (USA: ca. 9 hours) •  415 million Chinese Internet users go online to chat, 325 million to watch videos •  41.3% of all online video viewers in China watched 4 hours or more of online videos per day (on the weekend) •  In 2011, 324 million Internet users went online to play games •  More than 50% of China’s Internet users have played games via their mobile devices •  Only 21% find consumer product reviews on company websites trustworthy •  People between the ages of 18 and 27 represent the heaviest user group in China, averaging on 5 hours or more daily for surfing the Internet
  23. 23. Lange / Manes #cim12 #internet #growth 23 11/29/2012 Chinese Spend More And More Time Online Avg. Time Spending Online (In Hours, Per Week) 21 20 19.9 20 19 18.7 19 18.3 18 18 2010 2011 2012/06
  24. 24. Lange / Manes #cim12 #internet #growth 24 11/29/2012 This Is Why Chinese People Go Online Motivation for Accessing the Internet 70% 64,9% 61,5% 60% 52,9% 52,3% 50% 46,9% 42,3% 42,1% 42,4% 40,5% 40,7% 40,9% 40% 37,2% 31,9% 32,0% 29,9% 30% 27,4% 27,6% 21,5% 20,7% 20% 16,9% 10% 0%
  25. 25. Lange / Manes #cim12 #internet #growth 25 11/29/2012 And This Is What They Do Online Distribution by Online Activity 80% 74,1% 74,6% 71,6% 71,3% 70,8% 70% 67,2% 60,5% 59,6% 60% 54,0% 55,6% 52,0% 53,4% 49,0% 49,6% 50% 38,8% 38,7% 40% 35,0% 30,4% 30% 21,3% 22,7% 20% 16,2% 15,4% 10% 0%
  26. 26. Lange / Manes #cim12 #internet #growth 26 11/29/2012 Within Two Years, Online Payment Acceptance Has Increased By 11,7 % Popularity Distributed by Online Service 400 374,5 362,2 353,0 95% 352,6 350 81,9% 304,1 75% 77,1% 79,2% 294,5 300 77,2% 284,0 64,4% 66,5% 54,6% 51,4% 250 62,1% 55% 249,7 42,6% 235,1 35,1% 200 30,0% 30,5% 32,4% 194,8 35% 150 160,5 137,2 139,5 148,2 15,5% 15% 100 11,7% 70,9 9,2% 7,9% 7,6% 7,8% 5,4% 6,1% 3,1% 2,6% 2,4% 0,8% 0,1% -5% 50 -2,2% -2,8% -20,6% 0 -25% Number of Users Proportion of Total Internet User % Change from 2010/06
  27. 27. Lange / Manes #cim12 #internet #growth 27 11/29/2012 Chinese Customers Don’t Really Care About Reviews From People They Don’t Know Rate of Users With Complete Trust In Respective Sources 70% 61% 60% 50% 40% 30% 21% 20% 19% 20% 17% 16% 14% 14% 13% 12% 11% 9% 8% 8% 8% 8% 8% 8% 10% 7% 6% 6% 5% 5% 5% 4% 0%
  28. 28. Lange / Manes #cim12 #internet #growth 28 11/29/2012 Intro Page 3 Demographics Page 11 User Behavior Page 22 Online Advertising Page 29 E-Commerce Page 37 Mobile Page 43 Social Page 51
  29. 29. Lange / Manes #cim12 #internet #growth 29 11/29/2012 Online Advertising Key Facts •  China’s online advertising spend reached USD 8.11 billion in 2011 ▫  57.3% y-o-y increase •  In 2011, online for the first time exceeded print in terms of advertising spend generated •  Online video advertising has generated more than USD 260 million in Q4 2011 alone •  China counts 465 million online video viewers in total •  Youku and Tudou, the two biggest online video portals, together account for 35.5% of the total market share •  The search market was worth USD 3 billion in 2011 ▫  70% y.o.y growth •  By 2015, China’s online advertising market is expected to be worth USD 11.3 billion
  30. 30. Lange / Manes #cim12 #internet #growth 30 11/29/2012 Online Advertising Spend Has Surpassed Print For The First Time in 2011 Online Advertising Spend (RMB billion) 16 15,00 14 12 10 8,11 8 7,00 6 5,16 4 2 0 2010 2011 2015 (estimated) Online Print
  31. 31. Lange / Manes #cim12 #internet #growth 31 11/29/2012 Mobile Advertising Revenue Is Expected To Quadruple By 2015 Mobile Advertising Revenues (RMB billion) 4,5 4,00 4,0 3,5 3,0 2,5 2,0 1,5 1,00 1,0 0,38 0,5 0,0 2011 2012 (estimated) 2015 (estimated)
  32. 32. Lange / Manes #cim12 #internet #growth 32 11/29/2012 Baidu And Alibaba Together Branch Out The Online Advertising Market Market Share Baidu Alibaba 26% 31% Google China Sohu Sina Tencent 1% Sofun 2% Qihoo360 2% 2% Youku 3% Netease 4% Other 18% 4% 7%
  33. 33. Lange / Manes #cim12 #internet #growth 33 11/29/2012 These Are The 20 Most Active Digital Advertisers Rate of Users Who Have Seen Ads By Respective Brands Via Digital Media 90% 78% 77% 80% 75% 73% 73% 70% 69% 68% 68% 67% 67% 67% 67% 70% 66% 66% 65% 65% 65% 64% 64% 60% 50% 40% 30% 20% 10% 0%
  34. 34. Lange / Manes #cim12 #internet #growth 34 11/29/2012 And These Are The 20 Most Successful Advertisers Rate of Users Who Said Ads Significantly Increased Interest in Using The Brand 60% 56% 50% 46% 43% 40% 40% 39% 39% 39% 40% 36% 35% 35% 35% 34% 33% 33% 33% 33% 33% 32% 32% 30% 20% 10% 0%
  35. 35. Lange / Manes #cim12 #internet #growth 35 11/29/2012 In China, Popup Ads Are More Common Than Regular Banner Ads Rate of Users Who Have Seen Brands Use Respective Ad Forms on The Internet 60% 51% 49% 48% 50% 40% 38% 30% 23% 21% 20% 10% 10% 5% 3% 0% Sponsored Dedicated Popup Ads Banner Ads Email Mobile Ads Ads in Video Ads in Others Content Websites Games Virtual Worlds
  36. 36. Lange / Manes #cim12 #internet #growth 36 11/29/2012 Intro Page 3 Demographics Page 11 User Behavior Page 22 Online Advertising Page 29 E-Commerce Page 37 Mobile Page 43 Social Page 51
  37. 37. Lange / Manes #cim12 #internet #growth 37 11/29/2012 E-Commerce Key Facts •  Today the average Chinese online shopper spends about USD 500 annually; it is expected that this number doubles within 5 years to USD 1.000, which equals the number of US spend •  At the end of 2011, online retail accounted for 3.3% of the total retail market (2015: 7.4%) •  The number of online shoppers is expected to increase to 329 million by 2015 •  B2C transactions generated USD 38.03 billion in 2011 ▫  130% y-o-y increase •  The online gaming market was worth more than USD 1.5 billion in Q4 2011 alone •  E-commerce sales are expected to generate a transaction volume of USD 2.86 trillion by 2015
  38. 38. Lange / Manes #cim12 #internet #growth 38 11/29/2012 In 1H2012, 16 Million Internet Users Turned Into Buying Customers Number of Online Shoppers (in Million) in million 400 50% 47% 45% 350 329 38% 39% 40% 300 35% 250 30% 210 194 200 25% 20% 150 15% 100 10% 50 5% 0 0% 2011/12 2012/06 2015 (estimated) Online Shopper Proportion Of Total Internet Users
  39. 39. Lange / Manes #cim12 #internet #growth 39 11/29/2012 On A Percentage Basis, Chinese Purchase Beer More Often Than They Purchase Films Rate of Users Who Have Shopped in This Category 60% 51,7% 50% 41,0% 40% 33,0% 30% 23,2% 22,0% 21,7% 21,4% 18,3% 20% 16,2% 13,9% 13,6% 12,7% 12,7% 12,5% 9,3% 10% 7,5% 5,9% 5,7% 5,5% 0%
  40. 40. Lange / Manes #cim12 #internet #growth 40 11/29/2012 For General Information About A Product Or Service, Chinese Customers Prefer Search Engines Rate of Users Who Use This Channel For Collecting General Product Information 100% 90% 90% 80% 70% 63% 60% 53% 50% 42% 38% 40% 28% 28% 30% 22% 20% 10% 5% 5% 0% * Even though FB and Twitter are blocked in China, users find their ways to the sites (e.g. via VPN clients)
  41. 41. Lange / Manes #cim12 #internet #growth 41 11/29/2012 When It Comes To Purchasing A Product, Customers Increasingly Use A Product’s Website For Collecting Information Rate of Users Who Use This Channel For Collecting Information Immediately Prior To Purchase 90% 77% 80% 70% 66% 65% 57% 55% 60% 49% 50% 40% 30% 30% 20% 16% 10% 0%
  42. 42. Lange / Manes #cim12 #internet #growth 42 11/29/2012 Intro Page 3 Demographics Page 11 User Behavior Page 22 Online Advertising Page 29 E-Commerce Page 37 Mobile Page 43 Social Page 51
  43. 43. Lange / Manes #cim12 #internet #growth 43 11/29/2012 Mobile Key Facts •  1.013 billion mobile subscribers at the end of March 2012 •  356 million mobile Internet users in 2011, marking a mobile Internet penetration rate of 36.5% •  90% of mobile Internet users access the Internet only via mobile devices •  At the end of November 2011, the number of 3G subscribers reached 118 million •  Taobao, the #1 e-commerce company in China, generated USD 1.9 billion in turnover through mobile in 2011 •  The number of mobile Internet users is expected to reach 712 million in 2015
  44. 44. Lange / Manes #cim12 #internet #growth 44 11/29/2012 The Upside In Mobile Commerce Is Enormous Total Turnover Generated (In USD billion) 80 70 67,50 60 50 40 30 20 10 6,20 3,00 0 2010 2011 2015 (estimated)
  45. 45. Lange / Manes #cim12 #internet #growth 45 11/29/2012 Around 90% Of All Mobile Users Are Between 10 And 39 Years „Young“ Age Distribution 40% 36,0% 35% 29,8% 30% 25% 23,7% 20% 15% 10% 7,9% 5% 1,5% 0,2% 0% 10-19 20-29 30-39 40-49 50-59 60+
  46. 46. Lange / Manes #cim12 #internet #growth 46 11/29/2012 More Than 75% of Mobile Users Have High School Degrees Or Less Education Level 40% 35,0% 34,3% 35% 30% 25% 20% 15% 13,0% 10,9% 10% 6,9% 5% 0% Primary School Junior Middle High School Junior College University and above
  47. 47. Lange / Manes #cim12 #internet #growth 47 11/29/2012 In China, Mobile Users Don’t Earn More Than The Average Internet User Income Distribution (RMB¹ per month) 20% 17,6% 17,3% 18% 16% 14,3% 14% 12,9% 11,6% 12% 9,8% 10% 8% 7,2% 6% 5,4% 3,9% 4% 2% 0% Above 8000 5001-8000 3001-5000 2001-3000 1501-2000 1001-1500 501-1000 500 or No Income below 1.  Remember: 1000 RMB equal approximately USD 150
  48. 48. Lange / Manes #cim12 #internet #growth 48 11/29/2012 Search, Microblogging, Music, Video, Payment And Shopping Are Benefiting The Most From The Mobile Boom In China Rate of Utilization For Different Mobile Activities 100% 90% 83,1% 80% 83,0% 70% 66,7% 62,1% 60,9% 58,3% 60% 49,2% 50% 45,7% 42,3% 43,8% 40,0% 38,5% 40% 29,7% 30,2% 25,9% 26,8% 27,7% 30% 24,1% 24,1% 20% 11,4% 8,6% 9,9% 9,7% 10% 8,2% 6,6% 4,8% 3,9% 4,0% 2,9% 0% 2011/12 2012/06
  49. 49. Lange / Manes #cim12 #internet #growth 49 11/29/2012 User Numbers For Mobile Shopping Have Increased By 59.7%; For Mobile Payment By 45.2% Number of Mobile Payment and Mobile Commerce Users In Million 50 44,4 45 40 37,5 35 30,6 30 25 23,5 20 15 10 5 0 Mobile Payment Mobile Shopping 2011/12 2012/06
  50. 50. Lange / Manes #cim12 #internet #growth 50 11/29/2012 Intro Page 3 Demographics Page 11 User Behavior Page 22 Online Advertising Page 29 E-Commerce Page 37 Mobile Page 43 Social Page 51
  51. 51. Lange / Manes #cim12 #internet #growth 51 11/29/2012 Social Media Key Facts •  Social network services in China are highly diversified, several platforms serve different customer segments (e.g. Kaixini001 à white collars; Renren à students; 51.com à rural; Qzone à teenagers) •  The online video market is also very fragmented, but about to consolidate (started with the merger of Tudou and Youku) •  Chinese Internet users mostly watch longer form content, such as news reports and TV series •  The average Chinese spends about 1 hour on online video platforms (USA: 15mins) •  70% of online video content in China is professionally produced
  52. 52. Lange / Manes #cim12 #internet #growth 52 11/29/2012 Tencent‘s Qzone Outperforms The Market Social Media Sites Distributed by Unique Visitors and Page Views in million in billion 220 210 25 200 22,0 180 20 160 160 140 15 120 100 81 82 10 80 54 50 60 40 31 5 26 4,0 3,6 2,7 20 2,5 1,0 0,7 0,3 0 0 Sina Weibo Qzone PengyouTencent Renren Kaixin001 Douban Youku Weibo Monthly Unique Visitors (In Million) Daily Page Views (In Billion)
  53. 53. Lange / Manes #cim12 #internet #growth 53 11/29/2012 This Is How Long Chinese Spend On Different Social Networks in minutes 50 47,4 100% 45 90% 70,0% 70,1% 40 80% 35 31,9 70% 51,0% 28,9 30 60% 25 22,9 50% 42,0% 20 40% 15,3 25,0% 15,2 15 30% 27,0% 15,5% 9,2 8,5 17,0% 10 15,2% 20% 6,2% 6,8% 10,0% 5 4,0% 7,0% 10% 0,9% 0,5% 0 0% Qzone Sina Weibo Baidu Tencent Tencent Sohu Weibo Sohu Bai Others Postbar Pengyou Weibo Society Time Per Day Market Share (by Time) Penetration Rate
  54. 54. Lange / Manes #cim12 #internet #growth 54 11/29/2012 And This Is Why Chinese Internet Users Engage In Social Media 21% 18% 16,9% 15% 13,1% 12% 9% 7,9% 6% 4,7% 4,5% 4,0% 4,0% 3,8% 3,3% 3,2% 3,0% 2,3% 2,8% 2,8% 2,8% 3% 2,2% 2,1% 1,8% 2,2% 2,3% 1,7% 1,8% 0,8% 1,9% 1,3% 1,7% 0,7% 1,4% 0,6% 0,7% 0,7% 0,5% 0,7% 0,5% 0,2% 0,5% 0,2% 0% % Of SNS Users % Of SNS Users Who Joined SN Groups
  55. 55. Lange / Manes #cim12 #internet #growth 55 11/29/2012 Relative To Overall Internet Growth, The Trend For Social Networks Is Negative in million 350 46,6% 50% 47,6% 45% 300 40% 244,2 250,5 250 35% 30% 200 25% 150 20% 100 15% 10% 50 5% 0 0% 2011/12 2012/06 Total Number of SNS User Proportion of Total Internet Users
  56. 56. Lange / Manes #cim12 #internet #growth 56 11/29/2012 So Is The Trend For Group Buying in million 100 14,0% 12,6% 90 12,0% 11,5% 80 70 64,6 10,0% 61,8 60 8,0% 50 6,0% 40 30 4,0% 20 2,0% 10 0 0,0% 2011/12 2012/06 Total Number of Group Buyers Proportion Of Total Internet Users
  57. 57. Lange / Manes #cim12 #internet #growth 57 11/29/2012 China‘s Social Network Users Are Highly Educated Distribution of Social Networkers by Education 50% 44,1% 40% 35,7% 30% 20% 10,7% 10% 7,8% 1,6% 0% Schooling until 16 Schoolung until 18 Trade/Technical University Post Graduate School Or College
  58. 58. Lange / Manes #cim12 #internet #growth 58 11/29/2012 The Vast Majority Of Social Networkers Is Employed Full-Time Distribution of Social Networkers by Employment Status 90% 75% 71,6% 60% 45% 30% 13,8% 15% 7,0% 2,0% 0,9% 1,1% 0,6% 0% Full-Time Part-Time Freelancer Self-Employed Full-Time In Education Unemployed Worker Worker Parent
  59. 59. Lange / Manes #cim12 #internet #growth 59 11/29/2012 Every Third Social Network User Works In Manufacturing/Engineering Or IT, Internet And Software Distribution of Social Networkers by Work Sector 21% 18,8% 18% 14,4% 15% 13,7% 12% 9% 5,2% 5,3% 4,9% 6% 4,2% 3,3% 3,6% 3,6% 3% 1,7% 1,3% 1,1% 0,4% 0%
  60. 60. Lange / Manes #cim12 #internet #growth 60 11/29/2012 About One Third Of Social Network Users Are Ordinary Staff Member, Indicating Low To None Decision Power Distribution of Social Networkers by Job Level/Responsibility at Work 35% 29,6% 30% 25% 20% 16,0% 15,7% 15% 10% 5,9% 6,6% 5,3% 5% 2,5% 0% Company Senior Manager Mid-Level Entry-Level Team Member Support Level Other Owner Manager Manager
  61. 61. Lange / Manes #cim12 #internet #growth 61 11/29/2012 If You Sell To Corporations, Your Followers Are Extremely Valuable: 45.6% Of Them Deal With Purchasing Within Their Company Distribution of Social Networkers by Work Scope 60% 50% 47,9% 45,6% 40% 30% 23,9% 20% 16,8% 17,5% 9,2% 10% 2,2% 0,6% 0% General Direct Recruiting Purchasing Managing Advertising, Company Others Management Report/Team Budgets Marketing Strategy
  62. 62. Lange / Manes #cim12 #internet #growth 62 11/29/2012 Today, Every Second Internet User In China Is A Microblogger in million 500 60% 450 50,9% 48,7% 50% 400 350 40% 300 273,7 250,0 250 30% 200 20% 150 100 10% 50 0 0% 2011/12 2012/06 Total Number of Microblogger Proportion of Total Internet Users
  63. 63. Lange / Manes #cim12 #internet #growth 63 Blogging In China Is Mainly For The Top-Educated Distribution of Bloggers by Education 60% 49,5% 50% 40% 32,6% 30% 20% 10,8% 10% 6,2% 0,9% 0% Schooling until 16 Schoolung until 18 Trade/Technical University Post Graduate School Or College
  64. 64. Lange / Manes #cim12 #internet #growth 64 11/29/2012 Only 1.2% Of Bloggers Are Self-Employed/ Freelancers Distribution of Social Bloggers by Employment Status 80% 73,4% 70% 60% 50% 40% 30% 20% 11,9% 10% 7,8% 1,9% 1,2% 2,6% 0,8% 0% Full-Time Part-Time Freelancer Self-Employed Full-Time In Education Unemployed Worker Worker Parent
  65. 65. Lange / Manes #cim12 #internet #growth 65 11/29/2012 Decision Power At Work Is Very Similar To Those For Social Network Users; Nevertheless There Are Slightly More Company Owners And Mid-Level Managers In Blogging Distribution of Bloggers by Job Level/Responsibilty at Work 35% 29,4% 30% 25% 19,1% 20% 16,9% 15% 10% 6,4% 4,9% 4,6% 5% 3,1% 0% Company Senior Manager Mid-Level Entry-Level Team Member Support Level Other Owner Manager Manager
  66. 66. Lange / Manes #cim12 #internet #growth 66 11/29/2012 At A Chance Of 60.2%, A Blogger’s Work Scope Relates To Purchasing Distribution of Bloggers by Work Scope 70% 60,2% 60% 52,7% 50% 40% 28,5% 30% 23,5% 21,6% 20% 9,8% 10% 2,1% 0,6% 0% General Direct Recruiting Purchasing Managing Advertising, Company Others Management Report/Team Budgets Marketing Strategy
  67. 67. Lange / Manes #cim12 #internet #growth 67 11/29/2012 This Is Why Chinese Internet Users Blog In Million 8% 7,4% 7,1% 6,9% 7% 6% 5,6% 5% 4,5% 4% 2,9% 3% 1,7% 1,7% 1,9% 2% 1,6% 1,6% 1,2% 1,0% 0,8% 0,7% 0,6% 0,4% 1% 0,5% 0,5% 0%
  68. 68. Lange / Manes #cim12 #internet #growth 68 11/29/2012 Microblogging Is Extremely Popular In China, In Some Work Sectors Even More Popular Than Social Network Services Active Social Media Users Distributed by Work Sector 21% 19,0% 19,0% 18% 17,2% 15,7% 14,8% 15,5% 15,0% 15% 13,4% 12,6% 12% 9% 5,3% 5,1% 5,3% 5,0% 5,4% 6% 4,1% 4,0% 4,8% 4,7% 4,6% 3,4% 4,0% 3,8% 3,5% 3,6% 1,3% 3,7% 2,7% 3,0% 2,2% 3% 2,4% 1,0% 1,6% 0,5% 0,8% 1,8% 1,3% 1,5% 0,4% 0% Manage SNS Profiles Use Microblogging Services Are SNS Group Members
  69. 69. Lange / Manes #cim12 #internet #growth 69 11/29/2012 Every Second Active Social Media User In China Comes From University Active Social Media Users Distributed by Education 60% 55,4% 49,6% 50% 47,6% 40% 34,3% 32,2% 28,9% 30% 20% 11,0% 11,4% 10,7% 10% 6,8% 5,9% 4,6% 0,5% 0,8% 0,5% 0% Schooling until 16 Schooling until 18 Trade/Technical University Post Graduate School Or College Manage SNS Profiles Use Microblogging Are SNS Group Members
  70. 70. Lange / Manes #cim12 #internet #growth 70 11/29/2012 Only 0,3% Of All Active Users Are Unemployed Active Social Media Users by Employment Status 80% 72,8% 71,0% 72,2% 70% 60% 50% 40% 30% 20% 15,6% 13,3% 14,7% 10% 6,8% 7,2% 6,7% 4,0% 2,0% 2,5% 2,1% 0,9% 1,1% 0,5% 0,8% 1,1% 0,3% 0,4% 0,3% 0% Full-Time Part-Time Freelancer Self- Full-Time In Education Unemployed Other Worker Worker Employed Parent Manage SNS Profile Use Microblogging Services Are SNS Group Members
  71. 71. Lange / Manes #cim12 #internet #growth 71 11/29/2012 The Lower The Job Level, The More Active The User; Nevertheless Mid-Level And Entry-Level Managers Remain On Par Active Social Media Users by Job Level 35% 29,6% 30% 28,9% 25,7% 25% 19,8% 17,5% 20% 18,2% 17,9% 17,7% 16,1% 15% 10% 6,2% 5,3% 5,2% 5,5% 5,3% 5,1% 5,1% 4,6% 4,3% 5% 2,6% 3,0% 2,4% 0% Company Senior Manager Mid-Level Entry-Level Team Member Support Level Other Owner Manager Manager Manage SNS Profile Use Microblogging Services Are SNS Group Members
  72. 72. Lange / Manes #cim12 #internet #growth 72 11/29/2012 More Than Half Of China’s General Management & Purchasing Workforce Actively Engages In SNS Active Social Media Users by Responsibility at Work 70% 63,1% 55,9% 60% 54,9% 50,9% 51,1% 52,1% 50% 40% 28,3% 29,2% 30% 27,1% 22,5% 22,2% 21,2% 19,5% 20,0% 18,8% 20% 10,2% 10,8% 10,7% 10% 2,6% 2,3% 2,1% 1,0% 1,1% 0% General Direct Report/ Recruiting Purchasing Managing Advertising, Company Others Management Team Budgets Marketing Strategy Manage SNS Profiles Use Microblogging Services Are SNS Group Members
  73. 73. Lange / Manes #cim12 #internet #growth 73 11/29/2012 Lessons Learned •  Chinese customers are young, educated and mobile •  Mobile is especially popular in rural areas, where smartphones substitute laptops and PC’s •  Mobile shopping and mobile payment have increased heavily during the last six months •  Online shopping acceptance is still low but steadily rising •  Because Chinese customers don’t trust unfamiliar online shops, referral from friends and existing customers is even more important than in Western markets •  Chinese Internet users consume more online video content than in Western markets; mostly because they see such content as another, more reliable, information source compared to state-owned media
  74. 74. Lange / Manes #cim12 #internet #growth 74 11/29/2012 What Does This Mean For Your China Business? •  Make referral marketing your top priority ▫  Chinese customers are extremely cautious when buying online; make use of happy existing customers to show you are trustworthy •  Understand how and where Chinese customers perceive your ads ▫  Internet firms reach their customers in China through different channels than in the West; this includes for example a higher focus on mobile and portals •  Offer the right payment methods ▫  Although online shopping rates are lower in China, the right payment methods help to increase sales on your platform; researching the e-payment market is essential in China •  Employ local staff - also in top-level management ▫  It is a mistake to believe that Western management expertise can offset lesser local market knowledge; there are enough Chinese young professionals with diplomas from the US or UK by now anyway
  75. 75. Lange / Manes #cim12 #internet #growth 75 11/29/2012 About Us David Lange davidlange85 [at] gmail.com •  B.A. in Chinese Studies, M.A. in Corporate Management & Economics •  1.5 years of academic and professional experience in China •  Advises e-commerce start ups on expanding to China Steffen Manes steffen.manes [at] gmail.com •  Fund Manager @cfpff - venturecapital.de •  2-times Entrepreneur, worked extensively with Chinese Corporations •  Specialized in business development for start ups •  http://about.me/manes
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