Enter the Dragon
Travelling to China has been a career and personal ambition for longer than I can remember. As an avid explorer, 207 cities in 39 countries and counting, it’s not often you feel such trepidation and excitement. Having admired from a far, the time is finally here, and in the year of the dragon no less!
I first wrote about China’s search engine Baidu in 2008, wondering if it could be the Google-leveller many hoped would bring the market more competition. If only Baidu could export its product outside China, as it had begun to do at the time in Japan. This hasn’t happened. Instead Baidu saw the benefits of a one player position once Google exited China in 2010. However, I have learned Baidu is finally thinking of going global, with roll out plans to 50% of the global market within the next two years.
Visiting China for the first time, I finally understand why Chinese companies don’t worry about external markets. You can’t quite grasp the size of the Chinese digital population until you realise every discussion is in millions, not thousands. A significant mental shift to get your head around. With 513 million online and growing, that is more than the digital populations of the USA, India, Brazil, Russia and Canada combined.
The Chinese know how to replicate like no one else and with limited copyright restrictions this has led to a lot of cookie cutter players reminiscent of big western players. One technology company told me SinaWeibo, the local Twitter equivalent, has such a perfect replica of Twitter’s API, that they can easily take their analytics tool global. Another recent example is the growth of GroupOn and similar special offer/ voucher sites globally in the past 12 months, which has resulted in 40+ replicas popping up in China, including one called GroupOn.cn, which isn’t the global brand’s Chinese operation. This meant that by the time GroupOn wanted to enter the market they had to do so as a new brand, Gaopeng. com. China gets digital in a big way, but it’s not just copying, there is innovation too.Key China Stats:
- China has 513m internet users (CNNIC)
- At just 38% internet penetration so far, with low cost broadband rates, this is advancing at 5m+ new users per month
- Known as Netizens, in major cities they now spend more time online than TV, (36 hours per week) and even in smaller tier 3 cities they still spend more time online than their USA peers (CTR 1H 2011)
- 57% of users are under 30, educated, and wealthier compared to the China average (CNNIC, National Bureau of Statistics, GroupM)
- China’s online ad market grew at 57% to reach RMB 51bn in 2011 and online ad spending surpassed print advertising (iResearch, GroupM)
So who is who in the China digital media market? The old business adage - stick to one thing and make sure you do it better than anyone else - is one rule that China’s internet giants don’t seem to follow. In fact, they do the opposite. They have multiple routes to market. Many of the top ten players are portals, often with one dominant product - not dissimilar to Google’s approach, leading with search, but with multiple secondary products to ensure a diverse portfolio.
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