×
You will be redirected back to your article in seconds

Rise: Why China’s Internet is Bigger…And Different

Abundant capital, rapid change, and growing sophistication are the key characteristics of China’s Internet landscape. So, too, is the guiding hand of the central government.

Published Tuesday at the Rise tech conference in Hong Kong, the China Internet Report shows that the Middle Kingdom already counts 772 million Internet users and 753 million mobile Internet users. While larger than the entire population of the U.S., those numbers represent just over 50% of China’s 1.4 billion population and are expected to grow further.

The report – published by the South China Morning Post, Abacus News and 500 Startups – shows even greater disparity in the numbers using mobile payments. China counts 527 million, representing 37% penetration, while the U.S. has 48 million users, or just 15% of its potential market.

The report points to four key trends of the Chinese Internet. The three largest players, Baidu, Alibaba and Tencent, have diversified across 10 or more sectors – ranging from e-commerce and content to autonomous vehicles, gaming and education – and become platform companies. (Baidu trails the others in its diversity, being absent from the e-sports and social media sectors.)

Internet penetration of 35% outside urban areas is empowering, informing and including China’s rural population. Some 50% of the rural population is expected to have e-commerce facilities by 2020, while 55 million students are reachable for online distance learning.

In contrast to U.S. and European markets, social media is the pillar for e-commerce, education and streaming in China. The report points to 46 million daily average users for Paopao, the social media unit of video streaming service iQIYI.

And, while some Rise participants praised the Chinese government’s support for development of key online sectors, the report described the role of regulators as a “visible hand.” The government has outlawed cryptocurrencies and driven thousands of smaller players out of the peer-to-peer lending businesses.

The government is notably interventionist in terms of content. The report cited examples of quiz apps and news aggregators being ordered to scrub their sites of certain content and commentary. It also told online stores what apps would not be tolerated.

Such government intervention has not stopped a massive increase in audiences for short-form video, and for online to become a dominant form of news delivery. The number of users of short-form video apps doubled in 2017 from 203 million to 414 million. Kuaishou and the trio of services from Toutiao were China’s top four short-video services last year. Tencent News is the country’s dominant news app with 259 million users, ahead of Toutiao, though Toutiao and NetEase News claimed longer daily usage times by subscribers. That has put a large proportion of the news industry outside the operation of state-controlled media, and so attracted regulatory interest.

The report shows Toutiao to be the best-funded news and content startup company in China. It has attracted $3.1 billion of capital from investors including SIG, DST, General Atlantic and Sina Weibo, several multiples more than second-place Ximalaya. Among financiers, the report finds Tencent to be the biggest investor in the news and content sector, ahead of IDG Capital, Zhen Fund, Matrix Partners and Sequoia Capital.

A similar cluster of tech investors has strengthened China’s online and mobile gaming sectors, which now account for 28% of gaming software revenues worldwide. (The U.S. stood at 22% in 2017, according to the report.) Tencent and NetEase dominate the sector.

More Digital

  • splice

    Splice Raises $57.5 Million in Latest Funding Round

    Splice, a favorite of music creators that allows access to a library of three million rights-cleared sounds, announced today that the company closed a Series C funding round at $57.5 million. That brings Splice’s total amount raised to roughly $102 million since its launch in 2013. It raised a Series B in November of 2017. [...]

  • Facebook's 'Red Table Talk' Garners Daytime

    Facebook's 'Red Table Talk' Garners Daytime Emmy Nomination

    Facebook is now in the awards hunt: Its popular original series “Red Table Talk” hosted by Jada Pinkett Smith was nominated for a 2019 Daytime Emmy. It appears to be the first-ever Daytime Emmy Awards nomination for a Facebook-funded show, although a company rep was unable to confirm that. “Red Table Talk” is nominated in [...]

  • MLB-TV

    MLB.TV Joins Lineup on Amazon's Prime Video Channels

    Amazon has launched MLB.TV on Prime Video Channels for Prime members in the U.S., just in time for the start of Major League Baseball’s 2019 regular season start next week. The MLB.TV package provides regular-season out-of-market baseball games, both live and on-demand. Prime members in the U.S. can subscribe to MLB.TV for $24.99 per month, [...]

  • Tencent Music Shares Drop Despite Solid

    Tencent Music Shares Drop Despite Solid First Earnings Report

    Proving that good is not always good enough, Tencent Music Entertainment shares fell 9 percent after the Chinese company released its 2018 earnings, wiping out $2.7 billion in market capitalization of what is arguably the biggest audio music service in the world. Chalk it up to big expectations and a short track record: Wednesday’s earnings [...]

  • PewDiePie - YouTube

    PewDiePie vs. T-Series: YouTube Channels Keep Battling for No. 1 Spot

    UPDATED: T-Series pulled ahead of YouTube’s PewDiePie as the No. 1 most-subscribed channel on the platform — before PewDiePie’s fans rallied once again to put him on top. In a months-long symbolic running battle for the title, PewDiePie and his fans have waged a concerted campaign to fend off the steady encroachment by T-Series, India’s top [...]

  • Netflix to Test Special Video Previews

    Netflix Will Test Character-Driven Video Previews for Its Kids Content

    Netflix is getting ready to try a new thing to help younger viewers discover new shows: The video service will start testing character-driven video previews of some of its shows later this year, executives revealed during a press event in Los Angeles Tuesday. The test, which will be rolled out on some members’ TV devices [...]

  • Epic Games Unveils $100 Million 'MegaGrants'

    Epic Games Unveils $100 Million 'MegaGrants' for Film, Game, Other Creators

    Epic Games founder and CEO Tim Sweeney kicked off the company’s annual Game Developers Conference keynote with some big news for creators: a commitment to hand out $100 million to game makers, film and TV creators, students, educators, tool developers, essentially anyone working to enhance 3D graphics and inspire creativity. The Epic MegaGrants is an [...]

More From Our Brands

Access exclusive content