According to the International Monetary Fund, more than 70 percent of the world's economic growth is now taking place in developing countries, with almost a third of it in China.
My last article on India touched upon the connection between online growth in India and China. India joined the internet before China, but since 1998, the Chinese internet quickly caught up and/or surpassed India. This is due to a variety of conditions such as economic growth, government involvement and telecommunications infrastructure.
As China and India were the dominant powers before the age of European colonization, it is interesting to note the effect these emerging market powerhouses have had on online growth and usage.
These two statistics alone are an indication of this growth:
China is the world's most populous nation, with 1.3 billion people; India is the second with 1.1 billion people
Two-way trade between China and India, the world's two fastest growing major economies, reached $17 billion in 2005, more than doubling $7.6 billion in trade in 2003 (San Francisco Chronicle)
China's gross domestic product grew by 10 percent in 2005; India's GDP grew by 8 percent
China is a major global economic force and will grow dramatically in the foreseeable future. With China's economy growing at 9 percent each year, it will most likely be the world's second largest by 2025 -- right behind the United States. Not only does the number of internet users in China increase by 800,000 per week, but a report issued by PricewaterhouseCoopers projected that China's media sector would achieve a 25 percent growth in revenue through 2008 due to an increase in online advertising.
The China Internet Network Information Center (CNNIC) estimates that China's internet population grew 18 percent over the last two years to 111 million (since 12/05), while the use of broadband in that country is soaring.
It is no surprise that global internet giants -- including eBay, Yahoo! and Amazon -- have all taken the China plunge in the last three years, setting up domestic alliances in China (Yahoo-Alibaba, eBay and Paradise Electronics Retail Ltd., and Amazon and Joyo.com).
Two prominent contributors to China's online growth are in the online gaming vertical as well as the financial services arena.
Online gaming soars
As reported by Sina, the online games industry in China is seeing a 74 percent yearly growth -- recording massive growth in 2006, with revenue up 73.5 percent over 2005 to a total of 6.54 billion yuan ($839 million), 65 percent of which came from domestically developed games.
Pearl Research forecast that the online games market in China will exceed $1.3 billion in 2008, also considering Chinese outsourcing opportunities for Western firms.
Additionally, market research firm IDC has estimated that revenue from the Chinese online game market, which hosts an estimated 31 million players, will grow 30 percent annually to 25 billion yuan ($3.2 billion) by 2011, according to the China Daily.
This represents a huge opportunity for online advertisers wishing to target the Chinese market: Advergaming.
Advergames respond to the needs of younger, tech-savvy consumers who demand more interactivity and fun when introduced to online advertising campaigns. Look at China's digital market for an example. In a national survey conducted by the Chinese Academy of Social Sciences, more than 60 percent of Chinese teenagers with access to the internet spend more than thirty minutes per day playing online games and visiting chat rooms.
New research from the Asia Pacific Research Group provides a detailed understanding of the consumer behavior among China's 18- to 34-year-old demographic for internet and wireless gaming platforms.
The study shows that China's online gaming industry will continue to provide significant sales opportunities for advertisers -- estimating that 49 million gamers will be actively online by 2007. The research also suggests that by 2020, China will have about 30 million unmarried males ages 15-34 34 -- a solid opportunity for digital media and gaming to occupy their evenings.
Men 18-34 are doing more than just watching TV, they're going online, watching DVDs, playing video games, which leads to the rise in IPTV growth -- internet through television.
The TV audience in China is 1.1 billion people out of 1.3 billion. This is a huge opportunity for video-on-demand, electronic gaming and ecommerce via television. The bottom line is: ad dollars will follow the consumer.