The In­ter­net sea change

China’s In­ter­net land­scape is chang­ing as users move from per­sonal-com­puter based to mo­bile de­vices, with four sec­tors ex­pe­ri­enc­ing the most changes, re­ports MENG JING in Beijing.

China Daily (Canada) - - FRONT PAGE -

The na­tion is mi­grat­ing away from per­sonal com­puter-based In­ter­net ac­cess to mo­bile de­vice-based In­ter­net us­age much quicker than any­where else in the world. Last year, for the first time, more Chi­nese ac­cessed the In­ter­net via smart­phones than PCs.

The In­ter­net land­scape in China is rapidly shift­ing to mo­bile with mo­bile In­ter­net con­tribut­ing 23.7 per­cent to China’s In­ter­net econ­omy, the value of which soared to 224 bil­lion yuan ($35.98 bil­lion) in the third quar­ter of 2014, ac­cord­ing to iRe­search.

Ex­perts say big changes have been made by the In­ter­net to peo­ple’s every­day life in 2014, with apps now be­ing de­vel­oped for almost ev­ery need.

They say there are four main sec­tors that are ex­pe­ri­enc­ing the most changes en­abled by In­ter­net in 2014 and where mo­bile In­ter­net will fur­ther change in 2015. Search

Search func­tions may not be cru­cial in at­tract­ing users in the era of the mo­bile In­ter­net, be­cause smart­phone users can find the in­for­ma­tion they want via apps with­out us­ing a search en­gine first.

So it was a mile­stone for Baidu Inc when it said that its mo­bile search traf­fic had for the first time ex­ceeded its PC-based search traf­fic dur­ing the third quar­ter of 2014.

“What we are see­ing is that the likes of Baidu are ac­tu­ally de­vel­op­ing two dif­fer­ent ser­vices that suit the needs of both PC and mo­bile users. For ex­am­ple, mo­bile search caters for users who are on the go, who want an an­swer quickly, typ­i­cally about find­ing a lo­cal restau­rant or view­ing cin­ema timeta­bles.

Th­ese search re­sults aren’t clut­tered with dif­fer­ent sources. They’re very sim­ple and straight­for­ward,” said Neil Flynn, head eq­uity an­a­lyst at Chi­nese In­vestors, which cov­ers United States-listed Chi­nese com­pa­nies.

Flynn said that search un­der­went a key shift last year, with all search en­gine com­pa­nies ac­tively fo­cus­ing on their mo­bile search business.

UCWeb Inc, a lead­ing Chi­nese browser maker and app distrib­u­tor, teamed up with Alibaba Group Hold­ing Ltd in April to launch a mo­bile search ser­vice called shenma to join in the com­pe­ti­tion of mo­bile search. Fi­nance and pay­ment

On­line and off­line busi­nesses quickly con­verged in 2014, es­pe­cially in the pay­ment and fi­nance sec­tor.

What im­pressed Adam Xu, a part­ner with man­age­ment con­sult­ing firm Strat­egy&, most in 2014 was the Dec 12 pro­mo­tion by Alibaba.

Rather than lur­ing peo­ple to buy goods on­line, the event got brick-and-mor­tar gro­ceries and su­per­mar­kets to ac­cept Ali­pay, an e-pay­ment arm of Alibaba, as a pay­ment method for prod­ucts.

Alibaba’s com­peti­tors such as Ten­cent Hold­ings Ltd and Baidu also launched mo­bile pay­ment func­tions last year to al­low peo­ple to pay on­line for ser­vices such as taxis, cin­e­mas and restau­rants.

More tra­di­tional sec­tors are ex­pected to ac­cept on­line pay­ments this year. Xu said fi­nance is the sec­tor that was most trans­formed by In­ter­net in 2014.

Whether it is on­line wealth man­age­ment such as Yu’ebao or peer-to-peer fi­nanc­ing, the in­no­va­tion of tech­nol­ogy has com­bined the con­ve­nience and high ef­fi­ciency of the In­ter­net with so­phis­ti­ca­tion of fi­nance.

“Tech­nol­ogy en­ables new ar­bi­trage be­tween de­pos­i­tors and lenders. That will ac­cel­er­ate the lib­er­al­iza­tion of in­ter­est rates. We will see a boom­ing fund­ing chan­nel for small and medium-sized en­ter­prises where tra­di­tional bank­ing can­not serve well. This will also trig­ger more changes among en­trenched fi­nan­cial in­sti­tu­tions,” said Xu. Shop­ping

De­spite their small screens, mo­bile de­vices have demon­strated a strong power to at­tract on­line buy­ers.

Ac­cord­ing to tech­nol­ogy con­sul­tancy Analysys In­ter­na­tional, the ranks of China’s mo­bile-based on­line shop­pers grew more than 35 per­cent to more than 300 mil­lion in 2014, com­pared with a growth of 25 per­cent in the num­ber of PC-based shop­pers.

Dur­ing the Nov 11 Sin­gles’ Day sale event, Alibaba set a record in to­tal trans­ac­tions — and it also wit­nessed a record-break­ing 42.6 per­cent of its trans­ac­tions com­ing via mo­bile de­vices.

Apart from the in­creas­ing pop­u­lar­ity of mo­bile apps of on­line plat­forms such as mo­bile Taobao, a sig­nif­i­cant num­ber of ven­dors and e-com­merce com­pa­nies started to set up on­line busi­nesses with the help of mo­bile so­cial net­work­ing sys­tems.

The team­ing-up of JD.com, China’s largest di­rect-sales on­line plat­form, and Ten­cent’s WeChat was one such ex­am­ple.

Burghardt Groe­ber, an e-com­merce ex­pert and vice-pres­i­dent of greater China for en­ter­prise soft­ware provider hy­bris AG, a di­vi­sion of Ger­many-based SAP AG, said in a re­cent e-com­merce re­port that the value of China’s mo­bile shop­ping mar­ket would top 1 tril­lion yuan by the end of 2017.

“Mo­bile e-com­merce can help com­pa­nies find more busi­nesses in China’s un­der­de­vel­oped ru­ral ar­eas, where mo­bile pen­e­tra­tion far out­paces fixed-line In­ter­net pen­e­tra­tion,” he said. Health and ed­u­ca­tion

The mo­bile In­ter­net mar­ket is dom­i­nated by Baidu, Alibaba and Ten­cent.

With its strong power in so­cial net­work­ing, Ten­cent’s apps such as WeChat and mo­bile QQ had 423 mil­lion users by the end of 2014, fol­lowed by Baidu’s 218 mil­lion and Alibaba’s 180 mil­lion.

“The apps owned or in­vested in by the three gi­ants are al­ready dom­i­nant play­ers in the ar­eas of so­cial net­work­ing, tools and en­ter­tain­ment and con­sump­tion-re­lated sec­tors,” said Li Zhi, head of the re­search cen­ter at Analysys In­ter­na­tional.

“But it doesn’t mean that new­com­ers have no op­por­tu­ni­ties. As long as you choose the right sec­tor, you will be­come the next tech gi­ant in China,” she said, adding that ed­u­ca­tion and health are the sec­tors that are ex­pected to be changed most by the In­ter­net in 2015.

Some In­ter­net com­pa­nies have made for­ays into th­ese sec­tors, in­clud­ing Baidu and Alibaba, but there is no dom­i­nant player at this stage. Con­tact the writer at mengjing@chi­nadaily. com.cn

SHI JIANXUE / FOR CHINA DAILY

Cus­tomers scan two-di­men­sion codes for dis­counts at a shop in Hangzhou, cap­i­tal city of Zhe­jiang prov­ince. China is mi­grat­ing away from per­sonal com­puter-based In­ter­net ac­cess to mo­bile de­vice-based In­ter­net us­age much quicker than any­where else in the world. Last year more Chi­nese ac­cessed the In­ter­net via smart­phones than PCs.

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