The Internet population of China continues to grow and now totals nearly 80 million people, according to a new report released this week. According to the report, there were only 620,000 Chinese Internet users in 1997.
With a total population of more than 1.2 billion people, China represents the largest potential Internet market in the world. The U.S. online population — estimated at 126 million last August by the Pew Internet and American Life Project — is currently the largest Internet market. According to Pew, China — now estimated to have 79.5 million Internet users by the China Internet Network Information Center — has been closing the gap with Japan, which occupies the number two position with an estimated 100 million users.
Frost & Sullivan senior analyst Mukul Krishna told TechNewsWorld that the Chinese market has the potential to displace both Japan and the United States, which are reaching their limits in terms of possible new users.
“If you are looking at a 10- to 15-year time frame, I would say China and India are probably going to account for half of all Internet usage in the world,” Krishna said. “Just the sheer number of people who can be connected, it’s mind-boggling.”
Huge Market
When it reported the 79.5 million-user figure, the China Internet Network Information Center claimed the nation was now second only to the United States in terms of Internet users. However, the organization’s figures have been questioned and refuted in the past.
Nevertheless, Frost & Sullivan’s Krishna said the 79.5 million figure is believable and not surprising given China’s population.
“Any figure around the 50 to 80 million mark sounds reasonable,” Krishna said. “You’re looking at 1.2 billion people. It is a huge market. Even if there were only 10 to 15 percent of people connected, that’s a huge amount of people.”
In the United States, Pew estimated in its August report, 63 percent of adults use the Internet. The number of American adults going online grew by 47 percent between surveys conducted in March 2000 and August 2003, the research firm said.
Building Opportunities
China represents a ripe technology market for U.S. and other companies, as evidenced by a telecom deal this week in which China Unicom, China Mobile, China Telecom and other companies signed contracts to purchase equipment worth approximately US$2.32 billion in total. Motorola, Lucent and Cisco were among the U.S. companies that benefited from the deal.
However, the China Internet Network Information Center reported that online shopping and other e-commerce activities accounted for less than 1 percent of China’s overall Internet use. Instead, users went online primarily to obtain information, such as news and e-books.
Krishna said that despite the desire to get into the Chinese market, there is still discomfort and skepticism as to the nation’s “wireability.”
Slowed by Censorship
Still, he added, the latest China usage figures are still impressive.
“The fact that Yahoo and everyone else has special content for China speaks a lot for the market and how big e-commerce companies and Web sites are viewing that market,” Krishna said. “There’s a lot of potential.”
The biggest challenge in serving the Chinese market remains censorship, he noted.
“There still are a lot of censorship issues and the amount of control [the Chinese government has] over what people see and don’t see,” he said. “It’s a huge Big Brother issue.”
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