Monday, February 26, 2007
China’s very different online world
By Dan Ilett
Published: February 12 2007
The Boxing day earthquake, centred on Taiwan, sent shockwaves through Asia’s telecoms networks. Even now, businesses in China report a loss in productivity because of slow downloading and poor access to applications such as internet phone calls (VoIP) and e-mail.
Underground and undersea cables were damaged in the quake, which measured 6.7 on the Richter scale, and telecoms providers have said it could be weeks before full service is restored.
“Communications has been a real nightmare for the past few weeks,” says Sage Brennan, a market analyst for Shanghai-based Pacific Epoch. “It’s really screwed everything up. Trying to figure out how to shift files around has been difficult.
“I know companies that have been losing 20 or 25 per cent productivity because of this. The problem is that it may be working now, but you can’t rely on it.”
Despite these recent problems, China has come to rely on the internet over the past few years, perhaps more quickly than any other country.
Five years ago, barely anyone there was connected to the internet. But last year alone China’s internet population increased by 24 per cent to 137m people online, according to the China Internet Network Information Center. Yet while that number is high, it barely accounts for one tenth of China’s population of 1.3bn – 200m of whom live on less than a dollar a day.
Although most of the growth has come from cities such as Beijing and Shanghai in the east, second and third-tier cities such as Nanjing, Dalian and Guangzhou, are coming online, and not far behind are some rural regions.
Cheng Peng, a PhD technology student at Tsinghua University, arrived in Beijing 11 years ago – just after his family bought the first telephone in his village. “Ten years ago, students didn’t know what the internet was,” he says. “We couldn’t even get internet access five years ago, but now, even farmers know the word.”
As you would expect, China’s internet looks different from that of America and Europe. According to iResearch, 80 per cent of Chinese surfers use the search engine Baidu, while just 36 per cent use Google and 26 per cent Yahoo.
Taobao.com, the consumer-to-consumer e-commerce version of the Alibaba business trade site, now accounts for about 80 per cent of individual online user transactions. Part of the reason is that Taobao, and sites such as Baidu, have been tailored to Chinese cultural requirements.
For example, unlike eBay, Taobao prices start high and buyers haggle to get them down; it offers an escrow service to ensure the buyer is happy with the goods before payment goes through; and people can buy in groups.
“On Taobao, friends get together and negotiate with a seller,” says Porter Erisman, VP of international marketing for Alibaba. “Sellers love it because they shift in volume and buyers like it because they get a discount.”
Mr Erisman believes that e-commerce is helping rural parts of China to skip high street shopping and move straight online.
“Right now in China, retail is limited by physical expansion,” adds Mr Erisman. “And retail was inhibited by regulation for a long time. Now, you have a growing middle class with high levels of disposable income and they can buy something when it comes out, instead of waiting for it to come to a shop near them.
“I was talking to a woman the other day who showed me all the jewellery she’d bought on Taobao, but said her favourite item she’d bought on it was her dog.”
Further iResearch data says that internet users in China spent $35.5bn on “online services” in 2006. Spending on online advertising rose more than 50 per cent to $638m in 2006, from $423m in 2005.
Because of the low cost of labour, marketing organisations have started to employ people to post information and adverts on public forum websites and blogs.
Instant messaging, blogging and posting messages on website forums have become extremely popular online activities, as has online gaming.
Tencent QQ, for example, is widely used by younger communities, with some people building groups of up to 1,000 people. “It’s just like Chinese MSN but faster,” says Xu Shan, an English student at the University of Foreign Languages of Peking. “It’s very popular because you can personalise your online character with shoes, hairstyles or accessories.”
Personalisation of applications is also an important selling point online. Free online games, such as the Korean import, Kart Rider, have also become popular with internet café communities. The online driving game gives players a free character, which you can pay to alter, or upgrade the vehicle.
But what about censorship? While internet companies such as Microsoft and Yahoo have been criticised for adhering to censorship policies, is it really possible for the Chinese government to monitor the amount of content being published?
“The perception in the west is more extensive than the reality,” adds Mr Brennan. “There’s plenty of content and opinion, more than one entity could censor. China’s filtering mechanisms are pretty easy to get around, but people don’t necessarily want to, as they have a lot here already.”
But not everyone is happy about the new methods of expression. Mr Cheng believes that the explosive growth of the internet has led to people forming hasty opinions.
“Everyone can speak out and give their opinions now,” he says. “For most Chinese people, behaviour has changed.
“We are used to thinking as one person but now everyone can have an opinion and express their views. I’m not very happy about that because everyone is so eager to put their view across, it’s often too simplistic – with either just yes or no. I think that’s very dangerous for us.”
Copyright The Financial Times Limited 2007 ¶ 1:53 AM
Published: February 12 2007
The Boxing day earthquake, centred on Taiwan, sent shockwaves through Asia’s telecoms networks. Even now, businesses in China report a loss in productivity because of slow downloading and poor access to applications such as internet phone calls (VoIP) and e-mail.
Underground and undersea cables were damaged in the quake, which measured 6.7 on the Richter scale, and telecoms providers have said it could be weeks before full service is restored.
“Communications has been a real nightmare for the past few weeks,” says Sage Brennan, a market analyst for Shanghai-based Pacific Epoch. “It’s really screwed everything up. Trying to figure out how to shift files around has been difficult.
“I know companies that have been losing 20 or 25 per cent productivity because of this. The problem is that it may be working now, but you can’t rely on it.”
Despite these recent problems, China has come to rely on the internet over the past few years, perhaps more quickly than any other country.
Five years ago, barely anyone there was connected to the internet. But last year alone China’s internet population increased by 24 per cent to 137m people online, according to the China Internet Network Information Center. Yet while that number is high, it barely accounts for one tenth of China’s population of 1.3bn – 200m of whom live on less than a dollar a day.
Although most of the growth has come from cities such as Beijing and Shanghai in the east, second and third-tier cities such as Nanjing, Dalian and Guangzhou, are coming online, and not far behind are some rural regions.
Cheng Peng, a PhD technology student at Tsinghua University, arrived in Beijing 11 years ago – just after his family bought the first telephone in his village. “Ten years ago, students didn’t know what the internet was,” he says. “We couldn’t even get internet access five years ago, but now, even farmers know the word.”
As you would expect, China’s internet looks different from that of America and Europe. According to iResearch, 80 per cent of Chinese surfers use the search engine Baidu, while just 36 per cent use Google and 26 per cent Yahoo.
Taobao.com, the consumer-to-consumer e-commerce version of the Alibaba business trade site, now accounts for about 80 per cent of individual online user transactions. Part of the reason is that Taobao, and sites such as Baidu, have been tailored to Chinese cultural requirements.
For example, unlike eBay, Taobao prices start high and buyers haggle to get them down; it offers an escrow service to ensure the buyer is happy with the goods before payment goes through; and people can buy in groups.
“On Taobao, friends get together and negotiate with a seller,” says Porter Erisman, VP of international marketing for Alibaba. “Sellers love it because they shift in volume and buyers like it because they get a discount.”
Mr Erisman believes that e-commerce is helping rural parts of China to skip high street shopping and move straight online.
“Right now in China, retail is limited by physical expansion,” adds Mr Erisman. “And retail was inhibited by regulation for a long time. Now, you have a growing middle class with high levels of disposable income and they can buy something when it comes out, instead of waiting for it to come to a shop near them.
“I was talking to a woman the other day who showed me all the jewellery she’d bought on Taobao, but said her favourite item she’d bought on it was her dog.”
Further iResearch data says that internet users in China spent $35.5bn on “online services” in 2006. Spending on online advertising rose more than 50 per cent to $638m in 2006, from $423m in 2005.
Because of the low cost of labour, marketing organisations have started to employ people to post information and adverts on public forum websites and blogs.
Instant messaging, blogging and posting messages on website forums have become extremely popular online activities, as has online gaming.
Tencent QQ, for example, is widely used by younger communities, with some people building groups of up to 1,000 people. “It’s just like Chinese MSN but faster,” says Xu Shan, an English student at the University of Foreign Languages of Peking. “It’s very popular because you can personalise your online character with shoes, hairstyles or accessories.”
Personalisation of applications is also an important selling point online. Free online games, such as the Korean import, Kart Rider, have also become popular with internet café communities. The online driving game gives players a free character, which you can pay to alter, or upgrade the vehicle.
But what about censorship? While internet companies such as Microsoft and Yahoo have been criticised for adhering to censorship policies, is it really possible for the Chinese government to monitor the amount of content being published?
“The perception in the west is more extensive than the reality,” adds Mr Brennan. “There’s plenty of content and opinion, more than one entity could censor. China’s filtering mechanisms are pretty easy to get around, but people don’t necessarily want to, as they have a lot here already.”
But not everyone is happy about the new methods of expression. Mr Cheng believes that the explosive growth of the internet has led to people forming hasty opinions.
“Everyone can speak out and give their opinions now,” he says. “For most Chinese people, behaviour has changed.
“We are used to thinking as one person but now everyone can have an opinion and express their views. I’m not very happy about that because everyone is so eager to put their view across, it’s often too simplistic – with either just yes or no. I think that’s very dangerous for us.”
Copyright The Financial Times Limited 2007 ¶ 1:53 AM
