China’s Internet Market The Most Up-To-Date Insights To Help Understand The World’s Most Important Market Extended Version
#cim12 #internet #growth #china2012
Lange & Manes
#cim12 #internet #growth Lange / Manes
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
2
#cim12 #internet #growth Lange / Manes
Sources
1. Asia Digital Marketing Yearbook 2012
2. CNNIC: China Internet Report No. 30 (July 2012) 3. Individual Research by the authors
3
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#cim12 #internet #growth Lange / Manes
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
4
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#cim12 #internet #growth Lange / Manes
Example? Alibaba just became the world’s biggest e-commerce company with USD 157 billion1 in sales2
5
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1: Ca. 1 trillion RMB 2: Source: venturebeat.com (Dec. 3. 2012)
0,02 1,00 8,00 16,90 43,30 100,00
208,30
400,00
632,00
1000,70
0,0
200,0
400,0
600,0
800,0
1.000,0
1.200,0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
In billion RMB
Taobao Marketplace and Tmall.com Gross Merchandise Volume
2,225% growth
within 5 years!
#cim12 #internet #growth Lange / Manes
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
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#cim12 #internet #growth Lange / Manes
Example #1 Example #2
• Opened ‘google.com’ to Mainland China in 1999 and ‘google.cn’ in 2006
• Google’s market share in search declined from around 25% in 2002 to 17% in 2011
• Market share in online advertising fell to approximately 7% in 2011
• Today, Baidu controls the search market with an elusive 78% share
• Entered China in 1999 • China operations were mostly
steered from Taiwan and Hong Kong offices
• Despite customer expectations, Yahoo mostly neglected wireless services
• After the emergence of local competitors like Sina and Sohu, Yahoo lost most of its market share
• In 2005 Yahoo sold its China business to Alibaba Group
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#cim12 #internet #growth Lange / Manes
Example #3 Example #4
• Entered China in 2003
• Shut down its China offices in 2006 with a remaining share of 20% in the online auction market and went into a minority joint venture with Tom Online
• Chinese competitor Taobao captures more than 60% market share within two years after entrance
• Entered China in early 2011
• In December 2011, Groupon China had a market share of 2.8%
• In June 2012 it announced to merge with larger rival Ftuan (funded by Tencent, Groupon’s JV partner)
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#cim12 #internet #growth Lange / Manes
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…
…to help companies better understand China’s unique market characteristics and increase the likelihood of success.
9
Demographics User Behavior
Online Advertising E-Commerce
Mobile
Social
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#cim12 #internet #growth Lange / Manes
Intro Page 3 Demographics Page 11 User Behavior Page 22 Online Advertising Page 29 E-Commerce Page 37 Mobile Page 43 Social Page 51
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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)
11
1. Boston Consulting Group (2012) 2. iResearch (2012)
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#cim12 #internet #growth Lange / Manes
China Has Almost Doubled Its Internet Users Since 2008
298,0 338,0
384,0 420,0
457,0 485,0
513,0 537,0
22,6% 25,5%
28,9% 31,8%
34,3% 36,2%
38,3% 39,9%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
100
200
300
400
500
600
700
800
2008/12 2009/06 2009/12 2010/06 2010/12 2011/6 2011/12 2012/06
Development of Internet Penetration
Internet User Penetration Rate
in million Users
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#cim12 #internet #growth Lange / Manes
The Mobile Penetration Among Internet Users Has Increased More Than Sevenfold Since 2007
50,4 73,1
117,6 155,5
233,4
276,8 302,7 317,7
355,6 388,3
24,0% 28,9%
39,5%
46,0%
60,8% 65,9% 66,2% 65,5%
69,3% 72,2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
50
100
150
200
250
300
350
400
450
500
2007/12 2008/06 2008/12 2009/06 2009/12 2010/06 2010/12 2011/6 2011/12 2012/06
Development of Mobile Penetration
Mobile User Penetration Rate
in million Users
13
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#cim12 #internet #growth Lange / Manes
Mobile Phones Have Surpassed Desktop Computers As The No. 1 Internet Access Device
73,4% 69,3%
46,8%
70,7% 72,2%
45,1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Desktops Mobile Phones Notebook
Distribution of Internet Access by Devices
2011/12 2012/06
14
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#cim12 #internet #growth Lange / Manes
A Solid Ground For This Development Is The Increasing Popularity Of Mobile Phones In Rural Areas
50,6% 47,2%
22,3%
45,7%
60,4%
8,7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Desktops Mobile Phones Notebook
Rural/Urban Distribution of Access Devices
Urban Rural
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Internet Cafés Still Play An Important Role In China, Although Tendency Is Declining
88,8%
27,9% 33,2%
18,7% 13,6%
90,3%
25,8% 30,9%
16,8% 13,6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Home Internet Café Office School/Uni Public Places
Places for Accessing The Internet
2011/12 2012/06
16
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#cim12 #internet #growth Lange / Manes
Internet Usage Is Split Evenly Between Male And Female
55,9%
44,1%
55,0%
45,0%
0%
10%
20%
30%
40%
50%
60%
Male Female
Gender Distribution
2011 2012
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#cim12 #internet #growth Lange / Manes
Chinese Internet Users Are Young, But Demographic Aging And Growing Familiarity With The Internet Lead To A Shift
1,7%
26,7%
29,8%
25,7%
11,4%
4,1%
0,7% 1,2%
25,4%
30,2%
25,5%
12,0%
4,3%
1,4%
0%
5%
10%
15%
20%
25%
30%
35%
Below 10 10-19 20-29 30-39 40-49 50-59 60+
Age Distribution
2011/12 2012/06
18
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#cim12 #internet #growth Lange / Manes
Income Levels Do Increase But Are Still Very Low: 90% Of China’s Internet Users Make Less Than USD 750 per month
3,8% 5,0%
13,5%
17,9%
11,9%
10,1%
12,5%
17,5%
7,9%
4,5% 5,4%
16,1% 16,9%
9,8% 9,3%
11,0%
17,8%
9,2%
0%
3%
6%
9%
12%
15%
18%
21%
Above 8000 5001-8000 3001-5000 2001-3000 1501-2000 1001-1500 501-1000 500 or below
No Income
Income Distribution (RMB¹ per Month)
2011/12 2012/06
1. 1000 RMB equal appr. USD 150
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Lower Income Level + Young Internet Users = Low Proportion Of Online Shoppers
37,8%
77,0% 72,0%
66,0% 61,0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
China South Korea USA UK Japan
Proportion of Online Shoppers to total Internet Population
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Intro Page 3 Demographics Page 11 User Behavior Page 22 Online Advertising Page 29 E-Commerce Page 37 Mobile Page 43 Social Page 51
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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
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Chinese Spend More And More Time Online
18.3
18.7
19.9
18
18
19
19
20
20
21
2010 2011 2012/06
Avg. Time Spending Online (In Hours, Per Week)
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This Is Why Chinese People Go Online
52,9%
46,9% 42,3%
64,9%
31,9% 27,4%
21,5%
42,1%
52,3%
29,9% 32,0%
40,5% 42,4%
61,5%
27,6%
37,2%
20,7%
40,7% 40,9%
16,9%
0%
10%
20%
30%
40%
50%
60%
70%
Motivation for Accessing the Internet
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#cim12 #internet #growth Lange / Manes
And This Is What They Do Online
60,5%
71,6%
35,0%
54,0%
49,0% 52,0%
16,2% 15,4%
67,2%
21,3%
74,1%
59,6%
38,8%
71,3%
53,4%
30,4%
55,6%
70,8% 74,6%
22,7%
38,7%
49,6%
0%
10%
20%
30%
40%
50%
60%
70%
80% Distribution by Online Activity
25
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#cim12 #internet #growth Lange / Manes
Within Two Years, Online Payment Acceptance Has Increased By 11,7 %
374,5 352,6 362,2 353,0
294,5 304,1 284,0
249,7 235,1
194,8
160,5 137,2 139,5 148,2
70,9
81,9% 77,1% 79,2% 77,2%
64,4% 66,5% 62,1%
54,6% 51,4% 42,6%
35,1% 30,0% 30,5% 32,4%
15,5%
3,1% 9,2%
5,4% 2,6% 7,9%
2,4% 6,1%
0,8% -2,2% 0,1% 7,6%
11,7% 7,8%
-2,8% -20,6%
-25%
-5%
15%
35%
55%
75%
95%
0
50
100
150
200
250
300
350
400 Popularity Distributed by Online Service
Number of Users Proportion of Total Internet User % Change from 2010/06
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#cim12 #internet #growth Lange / Manes
Chinese Customers Don’t Really Care About Reviews From People They Don’t Know
61%
21% 20% 19% 17% 16% 14% 14% 13% 12% 11% 9% 8% 8% 8% 8% 8% 8% 7% 6% 6% 5% 5% 5% 4%
0%
10%
20%
30%
40%
50%
60%
70%
Rate of Users With Complete Trust In Respective Sources
27
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Intro Page 3 Demographics Page 11 User Behavior Page 22 Online Advertising Page 29 E-Commerce Page 37 Mobile Page 43 Social Page 51
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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
29
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Online Advertising Spend Has Surpassed Print For The First Time in 2011
5,16
8,11
15,00
7,00
0
2
4
6
8
10
12
14
16
2010 2011 2015 (estimated)
Online Advertising Spend (RMB billion)
Online Print
30
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#cim12 #internet #growth Lange / Manes
Mobile Advertising Revenue Is Expected To Quadruple By 2015
0,38
1,00
4,00
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
2011 2012 (estimated) 2015 (estimated)
Mobile Advertising Revenues (RMB billion)
31
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#cim12 #internet #growth Lange / Manes
Baidu And Alibaba Together Branch Out The Online Advertising Market
31%
18%
7% 4%
4%
3%
2%
2%
2% 1%
26%
Market Share
Baidu
Alibaba
Google China
Sohu
Sina
Tencent
Sofun
Qihoo360
Youku
Netease
Other
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#cim12 #internet #growth Lange / Manes
These Are The 20 Most Active Digital Advertisers
78% 77% 75% 73% 73% 70% 69% 68% 68% 67% 67% 67% 67% 66% 66% 65% 65% 65% 64% 64%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Rate of Users Who Have Seen Ads By Respective Brands Via Digital Media
33
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#cim12 #internet #growth Lange / Manes
And These Are The 20 Most Successful Advertisers
56%
46% 43%
40% 40% 39% 39% 39% 36% 35% 35% 35% 34% 33% 33% 33% 33% 33% 32% 32%
0%
10%
20%
30%
40%
50%
60%
Rate of Users Who Said Ads Significantly Increased Interest in Using The Brand
34
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#cim12 #internet #growth Lange / Manes
In China, Popup Ads Are More Common Than Regular Banner Ads
51% 49% 48%
38%
23% 21%
5% 3%
10%
0%
10%
20%
30%
40%
50%
60%
Sponsored Content
Dedicated Websites
Popup Ads Banner Ads Email Mobile Ads Ads in Video Games
Ads in Virtual Worlds
Others
Rate of Users Who Have Seen Brands Use Respective Ad Forms on The Internet
35
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Intro Page 3 Demographics Page 11 User Behavior Page 22 Online Advertising Page 29 E-Commerce Page 37 Mobile Page 43 Social Page 51
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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
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#cim12 #internet #growth Lange / Manes
In 1H2012, 16 Million Internet Users Turned Into Buying Customers
194 210
329 38% 39%
47%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
50
100
150
200
250
300
350
400
2011/12 2012/06 2015 (estimated)
Number of Online Shoppers (in Million)
Online Shopper Proportion Of Total Internet Users
in million
38
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#cim12 #internet #growth Lange / Manes
On A Percentage Basis, Chinese Purchase Beer More Often Than They Purchase Films
51,7%
41,0%
33,0%
23,2% 22,0% 21,7% 21,4%
18,3% 16,2% 13,9% 13,6% 12,7% 12,7% 12,5%
9,3% 7,5% 5,9% 5,7% 5,5%
0%
10%
20%
30%
40%
50%
60%
Rate of Users Who Have Shopped in This Category
39
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#cim12 #internet #growth Lange / Manes
For General Information About A Product Or Service, Chinese Customers Prefer Search Engines
90%
63% 53%
42% 38% 28% 28%
22%
5% 5%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
100%
Rate of Users Who Use This Channel For Collecting General Product Information
40
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* Even though FB and Twitter are blocked in China, users find their ways to the sites (e.g. via VPN clients)
#cim12 #internet #growth Lange / Manes
When It Comes To Purchasing A Product, Customers Increasingly Use A Product’s Website For Collecting Information
77%
66% 65% 57% 55%
49%
30%
16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Rate of Users Who Use This Channel For Collecting Information Immediately Prior To Purchase
41
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Intro Page 3 Demographics Page 11 User Behavior Page 22 Online Advertising Page 29 E-Commerce Page 37 Mobile Page 43 Social Page 51
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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
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The Upside In Mobile Commerce Is Enormous
3,00 6,20
67,50
0
10
20
30
40
50
60
70
80
2010 2011 2015 (estimated)
Total Turnover Generated (In USD billion)
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Around 90% Of All Mobile Users Are Between 10 And 39 Years „Young“
29,8%
36,0%
23,7%
7,9%
1,5% 0,2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
10-19 20-29 30-39 40-49 50-59 60+
Age Distribution
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#cim12 #internet #growth Lange / Manes
More Than 75% of Mobile Users Have High School Degrees Or Less
6,9%
35,0% 34,3%
10,9% 13,0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Primary School Junior Middle High School Junior College University and above
Education Level
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#cim12 #internet #growth Lange / Manes
In China, Mobile Users Don’t Earn More Than The Average Internet User
3,9%
5,4%
14,3%
17,6%
11,6%
9,8%
12,9%
17,3%
7,2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Above 8000 5001-8000 3001-5000 2001-3000 1501-2000 1001-1500 501-1000 500 or below
No Income
Income Distribution (RMB¹ per month)
47
1. Remember: 1000 RMB equal approximately USD 150
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#cim12 #internet #growth Lange / Manes
Search, Microblogging, Music, Video, Payment And Shopping Are Benefiting The Most From The Mobile Boom In China
83,1%
62,1% 60,9%
45,7% 42,3%
38,5%
30,2% 29,7%
24,1% 24,1%
8,6% 8,2% 6,6% 4,0% 2,9%
83,0%
66,7%
58,3%
49,2%
43,8% 40,0%
26,8% 25,9% 27,7%
11,4% 9,9% 9,7%
4,8% 3,9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Rate of Utilization For Different Mobile Activities
2011/12 2012/06
48
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User Numbers For Mobile Shopping Have Increased By 59.7%; For Mobile Payment By 45.2%
30,6
23,5
44,4
37,5
0
5
10
15
20
25
30
35
40
45
50
Mobile Payment Mobile Shopping
In Million
Number of Mobile Payment and Mobile Commerce Users
2011/12 2012/06
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Intro Page 3 Demographics Page 11 User Behavior Page 22 Online Advertising Page 29 E-Commerce Page 37 Mobile Page 43 Social Page 51
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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
51
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Tencent‘s Qzone Outperforms The Market
54
210
81 82
50
31 26
160
2,5
22,0
3,6
1,0
2,7
0,7 0,3
4,0
0
5
10
15
20
25
0
20
40
60
80
100
120
140
160
180
200
220
Sina Weibo Qzone Pengyou Tencent Weibo
Renren Kaixin001 Douban Youku
Social Media Sites Distributed by Unique Visitors and Page Views
Monthly Unique Visitors (In Million) Daily Page Views (In Billion)
in million in billion
52
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This Is How Long Chinese Spend On Different Social Networks
22,9
31,9
15,3
28,9
15,2
9,2 8,5
47,4
15,2% 15,5%
6,2% 6,8% 4,0%
0,9% 0,5%
17,0%
70,0%
51,0%
42,0%
25,0%
27,0%
10,0% 7,0%
70,1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
5
10
15
20
25
30
35
40
45
50
Qzone Sina Weibo Baidu Postbar
Tencent Pengyou
Tencent Weibo
Sohu Weibo Sohu Bai Society
Others
Time Per Day Market Share (by Time) Penetration Rate
in minutes
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#cim12 #internet #growth Lange / Manes
And This Is Why Chinese Internet Users Engage In Social Media
1,7% 1,8% 0,6%
16,9%
4,0%
7,9%
0,2%
3,3%
0,7% 1,8%
4,0% 2,8%
0,7%
2,8%
0,5%
2,3%
0,5% 0,2%
2,2% 2,3% 0,8%
4,7%
1,9%
13,1%
0,7%
2,8% 2,1%
3,2%
4,5%
0,5%
2,2% 1,3%
3,0%
1,7%
3,8%
0,7% 1,4%
0%
3%
6%
9%
12%
15%
18%
21%
% Of SNS Users % Of SNS Users Who Joined SN Groups
54
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Relative To Overall Internet Growth, The Trend For Social Networks Is Negative
244,2 250,5
47,6%
46,6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
50
100
150
200
250
300
350
2011/12 2012/06
Total Number of SNS User Proportion of Total Internet Users
in million
55
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So Is The Trend For Group Buying
64,6 61,8
12,6%
11,5%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
0
10
20
30
40
50
60
70
80
90
100
2011/12 2012/06 Total Number of Group Buyers Proportion Of Total Internet Users
in million
56
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China‘s Social Network Users Are Highly Educated
1,6%
7,8%
35,7%
44,1%
10,7%
0%
10%
20%
30%
40%
50%
Schooling until 16 Schoolung until 18 Trade/Technical School Or College
University Post Graduate
Distribution of Social Networkers by Education
57
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The Vast Majority Of Social Networkers Is Employed Full-Time
71,6%
2,0% 7,0%
0,9% 1,1%
13,8%
0,6% 0%
15%
30%
45%
60%
75%
90%
Full-Time Worker
Part-Time Worker
Freelancer Self-Employed Full-Time Parent
In Education Unemployed
Distribution of Social Networkers by Employment Status
58
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Every Third Social Network User Works In Manufacturing/Engineering Or IT, Internet And Software
4,2% 5,2% 5,3%
3,3%
18,8%
3,6% 3,6%
0,4% 1,1%
13,7%
4,9%
1,7% 1,3%
14,4%
0%
3%
6%
9%
12%
15%
18%
21%
Distribution of Social Networkers by Work Sector
59
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About One Third Of Social Network Users Are Ordinary Staff Member, Indicating Low To None Decision Power
2,5%
5,3%
16,0% 15,7%
29,6%
5,9% 6,6%
0%
5%
10%
15%
20%
25%
30%
35%
Company Owner
Senior Manager Mid-Level Manager
Entry-Level Manager
Team Member Support Level Other
Distribution of Social Networkers by Job Level/Responsibility at Work
60
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If You Sell To Corporations, Your Followers Are Extremely Valuable: 45.6% Of Them Deal With Purchasing Within Their Company
47,9%
23,9%
16,8%
45,6%
17,5%
0,6%
9,2%
2,2%
0%
10%
20%
30%
40%
50%
60%
General Management
Direct Report/Team
Recruiting Purchasing Managing Budgets
Advertising, Marketing
Company Strategy
Others
Distribution of Social Networkers by Work Scope
61
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Today, Every Second Internet User In China Is A Microblogger
250,0 273,7
48,7% 50,9%
0%
10%
20%
30%
40%
50%
60%
0
50
100
150
200
250
300
350
400
450
500
2011/12 2012/06 Total Number of Microblogger Proportion of Total Internet Users
in million
62
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Blogging In China Is Mainly For The Top-Educated
0,9%
6,2%
32,6%
49,5%
10,8%
0%
10%
20%
30%
40%
50%
60%
Schooling until 16 Schoolung until 18 Trade/Technical School Or College
University Post Graduate
Distribution of Bloggers by Education
63
#cim12 #internet #growth Lange / Manes
Only 1.2% Of Bloggers Are Self-Employed/Freelancers
73,4%
1,9%
7,8%
1,2% 0,8%
11,9%
2,6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Full-Time Worker
Part-Time Worker
Freelancer Self-Employed Full-Time Parent
In Education Unemployed
Distribution of Social Bloggers by Employment Status
64
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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
3,1%
6,4%
19,1% 16,9%
29,4%
4,9% 4,6%
0%
5%
10%
15%
20%
25%
30%
35%
Company Owner
Senior Manager Mid-Level Manager
Entry-Level Manager
Team Member Support Level Other
Distribution of Bloggers by Job Level/Responsibilty at Work
65
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At A Chance Of 60.2%, A Blogger’s Work Scope Relates To Purchasing
52,7%
28,5%
21,6%
60,2%
23,5%
0,6%
9,8%
2,1%
0%
10%
20%
30%
40%
50%
60%
70%
General Management
Direct Report/Team
Recruiting Purchasing Managing Budgets
Advertising, Marketing
Company Strategy
Others
Distribution of Bloggers by Work Scope
66
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This Is Why Chinese Internet Users Blog
2,9%
1,6% 1,2%
7,1% 7,4%
1,7%
0,5%
1,6%
0,8%
4,5%
5,6%
0,7%
1,7% 1,0%
6,9%
0,5%
1,9%
0,6% 0,4%
0%
1%
2%
3%
4%
5%
6%
7%
8% In Million
67
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Microblogging Is Extremely Popular In China, In Some Work Sectors Even More Popular Than Social Network Services
3,8%
5,0%
3,0%
19,0%
4,0% 3,6%
0,8%
14,8%
5,4%
1,8% 1,5%
12,6%
4,1% 5,3%
5,3%
3,4%
17,2%
0,4% 1,0%
15,7%
4,7%
2,2% 1,6%
15,0%
5,1%
4,6% 4,0%
2,4%
19,0%
3,5%
4,8%
0,5%
1,3%
15,5%
3,7%
1,3%
2,7%
13,4%
0%
3%
6%
9%
12%
15%
18%
21%
Active Social Media Users Distributed by Work Sector
Manage SNS Profiles Use Microblogging Services Are SNS Group Members
68
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Every Second Active Social Media User In China Comes From University
0,5%
6,8%
32,2%
49,6%
11,0%
0,8%
5,9%
34,3%
47,6%
11,4%
0,5%
4,6%
28,9%
55,4%
10,7%
0%
10%
20%
30%
40%
50%
60%
Schooling until 16 Schooling until 18 Trade/Technical School Or College
University Post Graduate
Active Social Media Users Distributed by Education
Manage SNS Profiles Use Microblogging Are SNS Group Members
69
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Only 0,3% Of All Active Users Are Unemployed
71,0%
6,8%
0,9%
15,6%
0,3%
72,8%
2,0%
7,2%
1,1% 0,8%
13,3%
0,4% 2,5%
72,2%
4,0% 6,7% 0,5% 1,1%
14,7%
0,3% 2,1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Full-Time Worker
Part-Time Worker
Freelancer Self-Employed
Full-Time Parent
In Education Unemployed Other
Active Social Media Users by Employment Status
Manage SNS Profile Use Microblogging Services Are SNS Group Members
70
11/29/2012
#cim12 #internet #growth Lange / Manes
The Lower The Job Level, The More Active The User; Nevertheless Mid-Level And Entry-Level Managers Remain On Par
2,6%
5,3%
16,1% 17,9%
28,9%
5,5% 4,6%
3,0%
5,2%
18,2% 17,5%
29,6%
5,3% 4,3%
2,4% 5,1%
19,8% 17,7%
25,7%
5,1% 6,2%
0%
5%
10%
15%
20%
25%
30%
35%
Company Owner
Senior Manager Mid-Level Manager
Entry-Level Manager
Team Member Support Level Other
Active Social Media Users by Job Level
Manage SNS Profile Use Microblogging Services Are SNS Group Members
71
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More Than Half Of China’s General Management & Purchasing Workforce Actively Engages In SNS
51,1%
27,1%
18,8%
54,9%
20,0%
10,2%
2,6%
50,9%
28,3%
19,5%
55,9%
21,2%
1,0%
10,8%
2,3%
52,1%
29,2%
22,5%
63,1%
22,2%
1,1%
10,7%
2,1%
0%
10%
20%
30%
40%
50%
60%
70%
General Management
Direct Report/Team
Recruiting Purchasing Managing Budgets
Advertising, Marketing
Company Strategy
Others
Active Social Media Users by Responsibility at Work
Manage SNS Profiles Use Microblogging Services Are SNS Group Members
72
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#cim12 #internet #growth Lange / Manes
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
73
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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
74
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About Us
75
• 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
David Lange
Steffen Manes
• Fund Manager @cfpff - venturecapital.de • 2-times Entrepreneur, worked extensively with Chinese Corporations • Specialized in business development for start ups • http://about.me/manes
11/29/2012
davidlange85 [at] gmail.com
steffen.manes [at] gmail.com