Media platform Abacus, in conjunction with the South China Morning Post (SCMP), has released the 2018 China Internet Report. The 100-page report was released during the RISE International Tech Conference exclusively on the Abacus News site and explores the trends and changes that China's 772 million internet users have experienced over the last 12 months, across 12 industries.
China has the largest population of internet users in the world and is a highly dynamic and unique landscape. Internet penetration in the nation is 89%, which, for comparison, dwarfs the US's 55% internet penetration. Commenting at the event, partner and head of China at 500 Startups, said, "The China Internet Report provoked a massive response last year among the international business and technology communities. This year, I am excited to partner with the Abacus and the SCMP Tech team in our mission to help the world better understand China's internet landscape."
The report covered "12 sectors of importance" which included e-commerce, content and media, smart devices and fintech. It also has a side-by-side comparison with US internet users and a list of China's unicorns.
Here is a breakdown of some of the interesting topics covered:
Beijing is currently China's unicorn capital, clocking in at 31 unicorn startups. One notable thing about China's biggest companies is they are all very diversified. Baidu, Alibaba and Tencent, collectively known as "BAT", are the three most influential data companies in China, have all managed to enter every key sector of the Chinese commerce. The companies are not only making moves domestically, the three companies have invested in more than 150 companies outside of China.
WeChat is also doing well and cementing itself as China's virtual mobile operating system, as its "mini-app" – apps 10 megabyte and below which run within the WeChat platform – continues to gain ground with daily users expected to hit 400 million this year.
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Consumer and retail
China is fast becoming a cashless society and currently dominates the world in mobile transactions – which hit $15 trillion in 2017 – with the Alibaba—Tencent duopoly accounting for 92% of that market. However, despite this concentration of corporate power, these companies are empowering average citizens to enter the entrepreneurial arena, as the nation enters its next wave of e-commerce development. Approximately 490,000 e-commerce sites are run by rural households and 55 million students in rural areas are accessing live-streaming classes.
The BAT companies have also intensified China's digital grocery market which is currently set to hit $30bn in revenue. Many of China's biggest retail players, including BAT, have begun making substantial investments in online-to-offline (O2O) grocery stores. These are e-commerce tools and services used to entice users back into brick-and-mortar stores.
China still boasts the largest gaming market in the world and it is still growing, generating $30.8bn in revenue in 2017. This means China alone is home to more than a quarter of the world's gamers. eSports has more mainstream appeal in China than anywhere else, with Chinese sites outperforming western counterparts such as Twitch in terms of active users, while 200 million people are tuning in to watch gamers battle it out yearly in eSports championships.
The figures also show that China really loves its short videos, as close to 600 million people in the country actively use short form apps daily, which is close to 80% of the country's internet users and more than three times what it was in in 2016. Kuaishou, the country's most widely used short form video app, has 230 million active users. The second most popular short form video platform, Douyin, was 1Q18's most downloaded iOs app beating WhatsApp, YouTube or Facebook in downloads.
Despite a countrywide ban on the technology, cryptocurrencies reached more than $1bn in market cap in 2017. The interesting thing to note is the Chinese government still wants the country to be a big player in the technology, despite the country's biggest bank (run by the state) issuing a "comprehensive ban" on the buying and selling of any cryptocurrencies in China and announced plans to shut down all bitcoin exchanges in the country.
Another innovation being encouraged by the Chinese government are smart speakers and there are now more than 100 smart speaker developers across China, including the BAT collective. However, only 350,000 devices were sold in 2017, showing a significant disconnect between supply and demand. For comparison, in the US, 25 million smart speakers were sold in 2017.
AI is also a big part of China's future plan and the government hopes to make China the world leader in the technology by 2030. The applications of AI-powered technologies have uses in autonomous cars, computer voice, and image search, as well as in the assistance of the government initiatives to develop a facial recognition national database.