China Internet Market 2012 - Extended Version

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

Extended Version
#cim12
#internet
Lange & Manes
#growth
#china2012

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


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


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


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)


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


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


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


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.


11/29/2012

Intro Page 3
E-Commerce Page 37
Mobile Page 43
Social Page 51


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)


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


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


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


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


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


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


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


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


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


11/29/2012

Intro Page 3
E-Commerce Page 37
Mobile Page 43
Social Page 51


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


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


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%


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%


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


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%


11/29/2012

Intro Page 3
E-Commerce Page 37
Mobile Page 43
Social Page 51


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


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


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)


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%


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%


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%


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


11/29/2012

Intro Page 3
E-Commerce Page 37
Mobile Page 43
Social Page 51


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

•  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


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


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%


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)


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%


11/29/2012

Intro Page 3
E-Commerce Page 37
Mobile Page 43
Social Page 51


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


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)


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+


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


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


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


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


11/29/2012

Intro Page 3
E-Commerce Page 37
Mobile Page 43
Social Page 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


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)


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


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


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


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


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


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


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%


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


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


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


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


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


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%


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


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%


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


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


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


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%
Manage SNS Profile Use Microblogging Services Are SNS Group Members


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


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


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


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.de

•  Fund Manager @cfpff - venturecapital.de
•  2-times Entrepreneur, worked extensively with Chinese Corporations
•  Specialized in business development for start ups
•  http://about.me/manes

China Internet Market 2012 - Extended Version

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