Man exchanges with Chinese social media users

The ultimate guide to China’s digital landscape

Stefan Kingham

Introduction to China’s digital landscape

As a westerner living in China, you quickly realize that the Google-dominated digital landscape you were used to is much less universal than you first thought. Sure, websites such as Facebook and Amazon have managed to forge themselves a global presence and are pretty much unavoidable in most markets, but China was never going to let its online space be dominated by American corporations now was it?

As most people know, many global dot-com companies operating in the fields of internet search, e-commerce, news and social media have been blocked by the Great Firewall of China. Some examples of these websites are Google, Youtube, Facebook, The New York Times and Japanese online-shopping powerhouse Rakuten to name but a few.

But although they have been restricted, you can often find government-approved (or “censored” depending on how you want to look at it) versions of these popular sites that allow Chinese users to access similar services without encountering “politically sensitive” information. These doppelgangers, or copycats as they’re commonly referred to, are actually much more than copy pastes of successful websites. Not only are they adapted to the Chinese ecosystem and therefore less globally-friendly than their Western counterparts, they also have different features and functionalities that set them apart from the competition.

Unless you live or travel in Asia, you might never actually come into contact with any local Chinese websites. As a result, it’s easy to underestimate the immensity of China’s digital economy. As an indication, half of China’s population was online in 2015 and the local internet economy generates about US$100 billion annually. If that wasn’t enough, it’s predicted to reach US$277 billion by 2017.

The Chinese digital landscape isn’t to be taken lightly and many western internet companies have been unsuccessful in their attempts to conquer the Chinese market.
The manner in which the Chinese have embraced mobile commerce as well as the positive effects of competition on innovation have created an environment which has accelerated the development of China’s digital landscape to such point that it can no longer be ignored by Western society.

In order to get an overall understanding of the digital landscape in China, we will take a look at 3 key categories that define it: Search Engines, Social Media and E-Commerce.
 
 

Search Engines – China vs Google

If being added to the Oxford English Dictionary in 2006 doesn’t underline the worldwide dominance of Google, nothing will. We’re so used to seeing Google lead the online search market while Bing, Yahoo and others fight for second place that it’s hard to imagine a world in which Google is dominated by a competitor.
Google clearly wanted to become a household name in China and their first attempt to conquer the market took place in 2000 when they offered their first search engine in Chinese. Unfortunately for Google, this attempt coincided with the launch of Baidu, a Chinese search engine founded several months earlier.

Thanks to the government’s preferential treatment of local companies, Baidu quickly gained the upper hand and despite Google’s numerous attempts to reverse the tendency (buying a stake in Baidu, rolling out Google.cn, etc.), they have never managed to equal Baidu’s success in China. As a matter of fact, from April 2015 to March 2016, Baidu accounted for 78.95% of all searches made in China while Google represented a mere 1.95%.

It is worth noting that due to their refusal to comply with the censorship demands of the Chinese government, Google never really got a fair shot. To summarize a troublesome decade in a sentence, Google wanted to comply as much as possible without sacrificing their principles while the Chinese government wanted full control over visible search results. As if their relationship wasn’t already tense enough, the Chinese government even reportedly launched a cyber attack on Google in 2009. And while all this was going on, Baidu simply took over.

Don’t be fooled into thinking that Baidu is the only Chinese search engine out there though! There are other players in the market, the most prominent being Haosou and Sogou.

Percentage shares for main search engines in China

% of searches made per search engine in China from April 2015 to March 2016

 

Social Media – 650M Active Users

Not only does China boast the world’s biggest internet user base, it also has the world’s most active social media environment. It’s estimated that there are currently 650 million active social networking users in China, that’s twice the population of the USA!
Like the rest of the world, Chinese netizens use social media platforms to chat to friends & family, share pics, discuss a variety of topics with strangers and generally fill up spare time.

Many westerners like to think these platforms are simply Chinese versions of our own social networking websites but that’s only half of the story. Granted, Renren’s interface bears a striking resemblance to that of Facebook and until recently, Sina Weibo had the same 140 character limit as Twitter. But if you look beyond the obvious similarities, you’ll find that in many cases Chinese social media platforms are actually setting the trend that their Western counterparts are following.

In actual fact, Sina Weibo rolled out multimedia capabilities such as native video integration and full sized images 18 months before Twitter.

Social Media Usage China January

Social Media Usage in January 2016

Although there’s no shortage of popular social media platforms in China, there are 3 in particular that definitely deserve a mention.

The first one that comes to mind is Chinese microblogging giant Sina Weibo. As you’ve probably understood by now, Sina is a Twitter/Facebook-hybrid that boasts a massive user base.
Sina Weibo was created in 2009 and had 1 million registered users within three months of launch. Just like on Twitter, key opinion leaders on the platform include celebrities, brands, influencers and industry experts.

Another platform that merits a shout out is Tencent-owned WeChat, a mobile messaging app boasting countless social features and a built-in payments system. WeChat’s app-within-an-app model allows users to interact with over ten million third-party apps in order to achieve pretty much anything.
WeChat is HUGE in China. There were more than 600 million monthly active users on Wechat back in August 2015 and that number is ever-growing. Whether you want to contact a local company’s customer service, catch a cab or manage your bank account, you’ll need WeChat.
Not only does WeChat allow you to participate in private and group chats, it also lets you share “moments”, meet people nearby and use a digital walkie talkie!

Last but not least, there’s Tencent QQ. As a messaging platform similar to MSN or Skype, QQ allows users to access a variety of web communication functions such as text messaging, voice chat and video chat. On top of that, users can send files online or offline, play social games, listen to music and shop.
QQ is considered to be the granddaddy of Chinese social media and continually adds new features in order to stay relevant. Most recently, the Tencent QQ team released their very own instant messaging app called QQ Mobile.

QQ Statistics China

Tencent QQ – More users than Linkedin, Twitter and Instagram

The Chinese social media landscape is already extremely competitive but with the emergence of mobile applications and internet startups, the competition shows no signs of easing off.
Based on the fact that 58% of all Chinese internet users use social networks, we can confidently assume that social media will remain at the core of the Chinese digital landscape for years to come.

 

E-Commerce – “In China it is a lifestyle”

E-commerce is a fundamental component of the Chinese digital landscape and has quickly transformed from a trend to a mainstay. It’s well known that China is the largest e-commerce market in the world but that fact doesn’t reflect just how ingrained e-commerce is in their everyday lives.

Jack Ma, the founder of Alibaba, once said that “in other countries eCommerce is a way to shop, in China it is a lifestyle”. Whether that’s because the Chinese trust online stores more than the rest of the world or because it’s more practical for those living in rural areas is another question entirely. All we know for sure is that the numbers back up Jack Ma’s remarks.

Taobao, China’s answer to eBay, is the largest e-commerce site in the world with approximately 600 million unique users per month. To put that into perspective, eBay accounts for around 267 million monthly unique users while Rakuten has only 65 million. What’s more, Alibaba brings in over 106 million unique users per month and is the world’s 5th largest e-commerce site.

Taobao and Alibaba both belong to the Alibaba group but serve different purposes. While Taobao specializes in C2C transactions, Alibaba is purely a B2B platform. The Alibaba Group also possess Tmall, a B2C e-commerce platform that was the 18th most visited website globally as of July 2014.

E-Commerce in China

Consumer E-Commerce in China

eBay and Amazon both tried to enter the Chinese e-commerce space in the early 2000s but despite initially grabbing an important share of the market, neither company could deal with the local competition that ensued. Their incapacity to adapt to the Chinese business environment cost them greatly and Alibaba took advantage of their fall.

While the USA celebrated an 11,8% increase in E-commerce sales in 2014, China’s sales increased by 63,8% over the same period. China may already be the largest e-commerce market in the world but specialists predict that by 2020, Chinese e-commerce could actually be worth more than that of Japan, Germany, France, the UK and the US combined!

 

What does the future hold?

The first Chinese internet entrepreneurs were undoubtedly inspired by the global digital landscape and the business models that were successful in foreign markets.
There’s a fine line between inspiration and imitation but as illustrated by Google or eBay’s attempts to enter the market, a business model that works in the US or Europe won’t necessarily be successful in China. These Chinese entrepreneurs were therefore obliged to adapt these models to ensure that they accommodated the wants and needs of Chinese internet users.

Nearly two decades have passed since the initial emergence of internet companies in China and during that time, the Chinese digital market has evolved significantly. China’s local internet players have invested greatly in innovation and have become more than capable of developing new features and functionalities before their Western counterparts.

However, although the Great Firewall of China has protected these companies from international competition, it has also limited their global efforts. Alibaba took a shot at entering the US e-commerce market with the release of 11main.com in 2014 but after only one year of business, the company admitted defeat and sold 11 Main to rival online marketplace OpenSky.
According to industry experts, they misjudged the market and didn’t understand American consumers’ expectations.

Western internet players haven’t yet managed to adapt to the Chinese market and based on Alibaba’s first attempt, it seems Chinese websites will encounter the same issue.
Will these companies dominate China’s digital landscape for years to come without ever threating their Western competitors?  And if Chinese companies continue to innovate at this rate, how long until we see Western clones of Chinese websites?

At Sekkei Studio, we believe that our in-depth knowledge of China’s digital ecosystem gives us the means to successfully guide and promote your company within the Chinese market. Our multichannel marketing services have been trusted by many influential brands such as Ubisoft, Dreamworks and Pepsico. Discover our range of services.

Data sources:
http://www.emeraldgrouppublishing.com/learning/ami/vol2_iss_2/chinas_digital_landscape.pdf http://gs.statcounter.com/ http://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/understanding-social-media-in-china http://www.lexiophiles.com/english/baidu-renren-youku-weibo-what-are-they http://makeawebsitehub.com/chinese-social-media-statistics/ http://ecommerce-platforms.com/ecommerce-news/10-largest-ecommerce-sites-globally-located-mainly-china-u-s https://en.wikipedia.org/wiki/Tmall http://intheblack.com/articles/2015/10/01/alibaba-and-jdcom-battle-it-out-for-chinas-ecommerce-business

Image sources:
https://www.flickr.com/photos/adonmetcalfe/19830395250/in/album-72157655314614152/
http://gs.statcounter.com/
https://www.techinasia.com/china-internet-social-media-ecommerce-stats-2015
http://makeawebsitehub.com/chinese-social-media-statistics/
http://media02.hongkiat.com/e-commerce-in-china/alibaba-taobao-tmall.jpg

Stefan Kingham
Stefan Kingham

Stefan is originally from the UK and holds a degree in international business. He's been working in digital marketing for almost 3 years and loves to motivate, create, innovate (and any other word ending in "ate"). Before joining Sekkei Studio, Stefan worked at a medical startup in Berlin, several record labels in London and Reykjavik and a social media agency in Beijing. When he's not reaching out for backlinks, Stefan likes to code, sing in the shower, and support his beloved AFC.

Tmall Global Shopping Festival 2015 achieved $11 billion!
Baidu logo - As found on http://www.scmp.com/tech/china-tech/article/1941001/baidu-leaps-where-google-opts-not-tread

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