china internet
TRANSCRIPT
China’s Changing Internet DemographicsFrom Games to GaragesFrank YuCEO Kwestr
Bio /Disclosure/Disclaimer
Entrepreneur1st iPad Game from ChinaInternet Startup
Ex-MSIE7, Windows MobileLaunched Xbox in Asia 2003First Game Team for MS in China
Ex-PIMCO1999 Analyst in #1 Internatiional Fund MorningstarTrading Desk Fixed Inxome/Equities Natwest
All opinions are my own
The Internet World in 2011
China
• China is the largest by population
• Still has room to grow• Much larger and more
penetrated than India• Korea – a model for the
Chinese Internet• Where is Africa?
AUGUST 2012 CHINA INTERNET
Looking at China’s real population collapse
Why Real Demographics impacts Internet Demographics
• China’s Internet is driven by users under 40
• After 40, users tend to spend less and save more. Newer tech may not be adopted
• Even with a large population and moderate Internet penetration, usage of the internet by users under 30 is already high
China 2010 vs. 2030
China’s population slowdown
The Sweet Spot is slowing
• China going from Christmas Tree to Palm Tree
• Peak Manpower projected at 2016
• The Census Bureau, for example, believes that China‘s current TFR (total fertility rate) is about 1.5—over 30% below the level required for long-term population replacement (2.1)
• Women aged 25-29 already in decline
China 2030 will look like Japan 2013except much more males
Global Gender imbalances
Reversing the decline is hard• Even if China were to abolish
population control, the pool of child bearing women is already in decline for 20-24 and in 2015 for 25-29
• On a plus, age of child birth is increasing so 30-35 may be a source
• But as China becomes more affluent, DINCs and Yuppies will choose to have less or no kids
China’s Internet Demographics linked to China’s real demographics
Aging PopulationHealth CareFinancial PlanningChild CareEducationLifestyle
The two most powerful trends in the internet is driven by the young
Social
Mobile
Weibo Users are young
From We Are Social
Mobile Internet users are young (2012)
China Internet in 2012
From Go Globe
What users do online in 2012
From Go Globe
From Games to Garages• Entertainment Driven
Tech towards Lifestyle Tech
• Entertainment > Lifestyle> Life Planning
• Old: Games, Video, Chatting, Entertainment
• New: Commerce, Personal and Career Development, Quality of Life
• Acquisition of Property, Cars and Family
• Tend to kids and elderly
Gaming still important• Gamers are going from
Hardcore to Casual• PC and Web Gamers are
turning into mobile gamers• The old Gaming companies
have a terrible time converting to mobile and casual
• The new Gaming companies are smaller and app driven. New Players are Qihoo and Baidu
• Baidu acquires 91.com for USD 2 Billion
• Alibaba introduces mobile gaming platform
Lifetime Value of a user• As customer base
shrinks or slows, the strategy for companies is to take their users and monetize them through the lifetime of the user and their family
• User affinity towards Chinese technology brands is high or higher than legacy offline brands.
Biggest New Field
Education (most corrupt and broken) NetDragon Estate Planning and InvestmentTravel and TourismMinor Luxuries (Govt Austerity and Reform)Environmental Safety (food and pollution)Wellness and lifestyle (LOHAS and Quality)
The Game Changer• Mobile has caused a reset• A whole new eco-system• Older educated gamers
turn to mobile and tablets from PCs and MMORPGs
• Legacy game companies challenged / lost their internet café channels
• Smart Phone price point means 2nd and 3rd tier users can now participate and transact. Internet users flattening out to the hinterlands
The Big 4 to leverage online credibility and brands to go offline and in traditional product lines
• Retail• Finance• Healthcare• Housing• Local Listings• Automobiles
Conclusion• China’s Net generation
maturing• Net generation has 2
concerns (children/Parents)
• The population crunch will impact companies
• China’s Internet giants will use traffic and brands to go offline
• WeChat Wechat WeChat• Tencent Health /
Aliababa University / Baidu Motors / Qihoo Pharmaceuticals
Light In the Box
• Take factory goods from China and sell to consumers in the US
• A little bit of Alibaba and Amazon• Past Margins are being eroded away (wedding
dresses)• Export related story slowing down (like
Alibaba)• Acquisition of Ador and new Content strategy
VIP Shop
• Flash Buying of old season brand stocks to 2nd or 3rd tier markets
• Sold on Concession, no inventory risk• Brands needs to dump inventory, 2nd tier
customers want quality brand products, VIP shop acts as a platform to connect
• Part Groupon, part Last Minute, part Marshalls. Taobao and Tmall are fine but everyone loves an event and a sale
Tencent
• Games, Communication and soon M-Commerce
• Great Mobile and Game Product Teams and knows how to monetize customer base
• The Tencent Tentacle in 2014 will soon include finance, video and lifestyle needs like Taxis and Purchases…looking to cut into the Tmall, Weibo Pie
• One Word : WeChat
The 4
• Tencent• Alibaba• Baidu• Qihoo
The Rest
• Youku• Sohu• Sina (Weibo)• The Gaming Companies– Shanda– Netease– Giant– Perfect World
58.Com
• Known as a Craig’s List but really more like a Yellow Pages
• Aggressive Sales force sells space• Online discovery for Offline transactions• Local Search and Listings• Top 5 for Real Estate, Cars and Electronics• Free listing for Consumer to Consumer
classified, with fee for rank bumping
The Ones to Watch
• YY• Dianping• VIP Shop• Xiaomi
The Walking Dead
• RenRen• Kaixin• The9
