China Internet

China’s Internet industry has attracted significant amount of attention from investors abroad. By talking to people there and reading what the industry experts say, I observed some interesting characteristics of the China Internet market:

1. China’s Internet users reached 100 million this year, according to China Internet Network Information Center (CNNIC). Although a small percentage of Chinese population, it ranked No. 2 in the world behind the United States. With its GDP growth at 9% for the past ten years, it’s not difficult to see that China will become the No.1 Internet player in the world in the foreseeable future.
2. More than 70% of Chinese Internet users are under the age of 30 (see Morgan Stanley report on China Internet Trends). That’s why most Internet portals such as Sina, Sohu, and Netease have large amount of ring-tones, downloads, and other fun-seeking content. The flip side of it is that there is less content for knowledge-seeking and business information than in the US.
3. With more than 350 million mobile phone users and low PC installation, China Internet is mobile-centric rather than PC-centric. Morgan Stanley analysts estimate mobile value-added ervices (MVAS) contributed $770 million in revenue to the Internet industry in 2004.
4. Finally, China Internet space seems to be a combination of online and off-line model, so called “click plus brick.” This has to do with Chinese strong sense of relationships and love for face-to-face connections. This aspect of social fabric is deeply rooted in the culture and is not going away any time soon.

I do think China Internet is a very exciting play ground with the brightest people. While the US is leading the innovation in this field, the smart entrepreneurs know how to leverage it and adapt to local taste. The fact that most first-movers die and fast-followers succeed may let China leapfrog. No wonder so much money is going to China Internet industry!

China business, emerging markets, Internet, VC, China