China prezo

Internet in China…
Misiek Piskorski
with Aaron Smith
中国
美国 Pretty Kingdom
Central Kingdom  China
USA 

2© 2013 Mikolaj Jan Piskorski
There are a lot of people in China…

And it’s catching up fast…
In 2010 there were 150 cities with 1m+ inhabitants
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
Shanghai
Tianjin
Shenzhen
Dongguan
Chongqing
HongKong
Hangzhou
Suzhou
Harbin
Zhengzhou
Kunming
Xiamen
Ningbo
Taiyuan
Changzhou
Changsha
Wenzhou
Ürümqi
Fuzhou
Huai'an
Lanzhou
Nanchang
Nantong
Zaozhuang
Haikou
Hohhot
Putian
Taizhou
Jiangmen
Lu'an
Huainan
Datong
Daqing
Zhanjiang
Jiangyin
Datong
Weifang
Guigang
Dengzhou
Changde
Baoji
Liuzhou
Yichang
Wuhu
Wenling
Fushun
Shantou
Chifeng
Yinchuan
Neijiang
Yixing
Yueyang
Liaocheng
Panzhihua
Haicheng
Xining
Taixing
Dingzhou
Baoding
Anyang
Shouguang
Yuzhou
Zoucheng
Huaibei
Zhucheng
Zhangqiu
Lianyungang
Xinxiang
Qinhuangdao
Wuwei
Hezhou
Xiangcheng

State-owned enterprises account for 30% of sales…
… but the state continues to invest in infrastructure

Internet in China
 Users
– many more of them
– more engaged
– and smart about censorship
 Competition on the Internet
– protected from the rest of the world
– insane… and insanely creative
 Monetization
– e-commerce is huge
– advertising is catching up fast

There are this many Internet users…
2,405,518,376

… and almost a quarter of them are in China …
Europe
North America
Latin America
Middle East
Africa
Rest of Asia
China

… or viewed differently

Only 44% penetration rate in China  lots of room to grow
Mainly Shandong, Henan, Anhui, Hunan and Sichuan
0
100
200
300
400
500
600
700
800
900
1000
2009 2013 2017e
USA
China

Growth in internet coverage in many densely populated provinces

Mobile access > PC access

People spend a lot of time on the (mobile) Internet in China!
0
0.5
1
1.5
2
2.5
3
3.5
4
Internet
TV
Radio
Print
Hoursperday
25 or younger
40+

They love to connect with celebrities, both foreign…
Sina Weibo
~250 million users
How many followers
does Tom Cruise
have in China?

… and local, such as Yao Chen with 55 million fans…

YY.com
… but they are very active contributors, too.
• 91% of online population in China has account on social media sites vs. 67% in USA
• 56% of online population in China are on one of China’s “Twitters” vs. 15% in USA
• And 75% of those online on “Twitters” actually say something!

Why does this happen?
Internet
is fun!
Official news are
“unreliable”
TV is boring. No
really.
330,000 products
introduced every
year, but brands
are scarce
Massive move to
cities breaks social
bonds
One child policy =
lots of nuclear
families
Massive changes in
wealth = people
seek new others
Numerous platform
choices:
* three ‘Twitters’
* four ‘Facebooks’
* four “meetups”

Censorship in China
 Can’t criticize the central government
– But it is ok to criticize the provincial government
– And people do it… and the central government loves it
 Chinese internet users are very smart
– State buzzword: Harmonize = 和谐 = HéXié
– But you can’t use it on the internet
– So users use a homophone: River crab = 河蟹 = HéXiè

Internet in China
 Users
– more engaged
 Monetization

Structure of the U.S. Internet

Structure of the Chinese Internet
(protected from foreign internet)

Renren
Qzone.qq.com
Kaixin001.com
Pengyou
Huge number of choices…

And the world is moving very quickly there…
Used to be the case that Renren was 20-24 vs. Kaixin for 30-34 year olds
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-19 20-24 25-29 30-34 35-39 40-49 50+
Qzone Renren Kaixin

And now we are on WeChat…

A few firms, e.g. Tencent, valued at $100bn+, have incredible distribution…
Tencent
Weixin
(WeChat)
500 million
users
Qzone
Social network
for QQ
QQ.Com
Webportal
PengYou
Social
Network
Tencent Weibo
TenPay

But there are always challengers...

Internet in China
 Users
– more engaged
 Monetization

Retail is very scattered and inefficient, so people also love to shop on-line
• 310 million online shoppers by the end of the year
• About 1.3 trillion RMB = $211 billion = 7% of retail in China
• versus $260 billion in the U.S.
• Extensive home-delivery and in 150+ cities same-day delivery services available
• Proliferation of on-line only brands (aka Tao-brands, from Taobao by Alibaba)

Social + commerce seems to be a little bit of a no-brainer:
Reckitt Benckiser in China

Advertising dollars are shifting

On-line advertising expenditure in China
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 2010 2011 2012 2013 2014 2015
Percentageofonlineadspending
Search Integrated
portals
Online video Ad network Social network

Internet in China
 Users
– Many more of them
– And more engaged
– Protected from the rest of the world
– Insane… and insanely creative
 Monetization
– E-commerce is huge
– Advertising is catch up fast

China prezo

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