CNNIC: Online transactions booming

The China Internet Network Information Center (CNNIC) has just released its latest report on Internet development in China (Report in Chinese). I am just here to share some key findings:

  • Internet users in China as of Jun 2010: 420 million (+32% from Dec 2009), broadband users: 364 million (+5%), mobile Internet users: 277 million (+19%)
  • Internet penetration rate: 31.8%, up 2.9% from Dec 2009
  • Instant messaging, search engine and online music are the top three applications among mobile Internet users
  • Entertainment remains the key purpose of Internet usage for Chinese users
  • Usage rate of social media grows by 19.6%
  • Business transactions become more common among Internet users. Online payment (+36.2%), online shopping (+31.4%) and online banking (+29.9%) have the highest growth rate compared to 6 months ago

Industry analysts expected the pilot plan for China’s telecommunication, Internet and television networks integration will further drive up the Internet usage rate among general households.

The report echoes the forecast by the  Chinese Academy of Social Sciences in May 2010, that Chinese consumer spend on online shopping will grow to 500 billion yuan by end of 2010, accounting for over three percent of all retail sales. In 2008, it was only one percent of total retail sales.

Online payment channels in ChinaTaobao, Alipay or Tenpay are the leading online shopping or payment sites in China. According to iResearch 2010 Q1 data, Alipay and Tenpay are the market leaders which handle more than 70% of all electronic payments in China.

Eighty percent of all online shopping in China is done on Taobao. Among all online shoppers, Shanghai users top the list with online spending of 17.62 billion yuan during 2009 to 2010, according to Taobao’s data. Following closely on the list Shenzhen, Hangzhou, Guangzhou, Nanjing, Suzhou, Tianjin, Wenzhou and Ningbo. Online shopping in midwest regions is also growing quick, 8 out of 10 cities with the fastest growth are from midwest region.

However, whether this growth can be continued will highly depend on the government measures. The recent implementation of “real name system” for shopping sites by the State Administration for Industry & Commerce (SAIC) will certainly have some impact on the future development of online transactions.


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