Examining Fact And (Gov't Crafted) Fiction On The Number Of Chinese Web Surfers

from the it-ain't-that-many dept

Statistics lauding the growth of the Internet in China have become so commonplace as to inspire yawns, despite breathless press reports of hundreds of millions of Chinese going online and signing up for the 'net. With the Chinese Government declaring that their internet population surpassed the US last year, it would seem that the real opportunity for expansion and growth online is not in the West, but somewhere behind the Great Firewall of China. Cue the ads for Chinese Web Hosting, Chinese Industry Liaisons, and the omnipresent legions of Chinese business agents.

Many Western technology companies have heeded that call, but have found themselves cast onto the rocks of Chinese shores including companies like Microsoft, Google, Cisco, eBay, and Yahoo! The massive markets just never seem to have materialized in the Orient for these giants, or when success has loomed on the horizon the murky Chinese bureaucracy has stepped in to snatch defeat from the jaws of victory. Partnerships have vaporized overnight, and (particularly in the case of Cisco) core Intellectual Property has been outright stolen, reverse-engineered, or redistributed. Perilous waters, indeed.

So it was with this skepticism that my friend Gersham viewed the latest piece of propaganda emerging from our friends in China that we have now reached the new height of 338 million Chinese Internet users; a 13 percent increase since the end of 2008, and just about exactly one quarter of the country's population. All of this, of course, seems to have been tabulated and distributed by the slightly inaccurately-acronymed Chinese Internet Network Information Centre (CNNIC) which, by its own admission,takes orders from the Ministry of Information Industry (MII) to conduct daily business. In fact, google Chinese Internet Traffic and you'd be hard-pressed to find data that did NOT originate from the CNNIC. Hmm. Call me a cynic.

gdp-per-capita-east-asia

It is likely difficult for most (any) of us to corroborate or even conceptualize these high numbers, but it seems suspicious nonetheless, particularly from a country whose median income is around $3400 and whose Per-Capita GDP is ranked 104th, right behind Armenia. In trying to substantiate this, once can point to Alexa's site rankings which currently reveal that 3 Chinese-language web sites rank in the Top 20: Search Engine Baidu (#9), IM chat and portal QQ (#14), and portal Sina.com.cn (#18). Sounds good, right? But look closely at the rankings. Baidu, an undisputed leader in Search for China, reaches 5.73% of the internet populace, whereas Google.DE (#13) reaches roughly 3% of global internet users while servicing German, Swiss and Austrian users exclusively. Combine the populations of these three countries and they don't even add up to 100 million people.

Gersham pointed me toward the Firefox Download Stats, where, as of this writing, Germans have made 4,948,666 downloads of various Firefox versions compared to only 672,972 for China. Again, Germany has a population of 82Million vs. 1.3Billion in China. As a control, Americans have downloaded Firefox 7,959,727 times as of this writing. Do the Chinese really just prefer Internet Explorer?

In January 2009, Comscore measured the Chinese internet audience at closer to 180 Million users, still an impressive 18% of the Internet population. This site quotes murky Nielsen Online data pegging Chinese Internet Users at roughly 300 Million. Beyond these hearsay reports, empirical measurements are difficult to come by.

So, let’s throw up our hands and try to reverse-engineer the data using published stats. According to June 2009 data from Comscore, Google has captured 65% or so of US Search Traffic. This made it the #1 web site in the world, with 157 Million US Visitors in June, according to Comscore. In the Chinese Market, Baidu has captured 73% of Chinese search, with Google in the Number Two spot. Yet Baidu.com barely moves the needle by comparison, according to compete.com, alexa.com, and others, hitting roughly 600,000 unique visitors per month globally. High-side estimates of the Internet's penetration in the US peg it at 72.5% of the populace, or about 220 million. This makes the data on Google's penetration vs the addressable market reasonably accurate (71% if you do the math). Following this logic, if Baidu in fact has 73% of China's purported 338 Million users, it should be ranking as the #1 web site by far, with 246 Million unique visitors per month. In fact if any of this data were true, then Chinese sites should occupy at least 4 of the Top Ten global web sites.

Whatever your opinion of Compete's and Alexa's relative methodologies, it's impossible to reconcile anything even close to the numbers coming from the Chinese Government. If that isn't good enough for you, let's turn to profits. While serving what was allegedly the world's largest internet audience, Baidu appears to be tracking to earn about $500 Million in revenue this year. Google's revenue appears to be tracking to about $23 Billion for 2009 with its pithy 157 Million unique visitors. Any way you slice it, if China's internet userbase is as large as Beijing says it is, and if Baidu's market share of that audience is what it's widely purported to be, then both the number of uniques reported by external traffic sites and the revenues reported by the public company that owns Baidu should be exponentially greater.

These stats seem to either indicate that Chinese do not use search very often, or that there just aren't too many of them heading out into the wilds of the Internet. Either way, statistics emanating exclusively from bureaucratic sources within Beijing, particularly those which seem to fly in the face of all other external metrics, are not to be believed. The thesis of this post is not to suggest that China is NOT a massive opportunity for online properties and other technology purveyors, it is simply an attempt to point out that, like in a lot of cases in dealing with the People's Republic of China, things are not what they may seem. Pay no attention to the man behind the curtain.

Cross-posted from IanBell.com.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Dark Helmet (profile), Jul 27th, 2009 @ 5:32pm

    Help from Dark Helmet

    "Germans have made 4,948,666 downloads of various Firefox versions compared to only 672,972 for China"

    Ah, but you are forgetting that the Chinese, not unlike Frankenstein, are deathly afraid of fire, nor are they particularly fond of foxes. In fact, it is a little known fact that Frankenstein actually translates from German to mean Fire-hating Easterner.

     

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  2.  
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    Anonymous Coward, Jul 27th, 2009 @ 5:39pm

    What is being measured

    The way people in the richer parts of the world use computers differs significantly from the way people in poorer regions use computers.

    I would guess that the ratio of users to computers in the US (or Germany) would be close to 1:1, in fact given the number of people who have a computer at home, one at work, and a mobile phone, perhaps it will even drop below 1:1.

    In poorer parts of the world (I have no experience in China, only in Peru) most computers are accessed in internet cafes and the one IP address is used to host a dozen computers each of which will be used by dozens of people in a day.

    If you just measure unique IP hits against a website, you would severely underestimate the number of unique people using the internet in poorer regions.

     

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  3.  
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    Anonymous Coward, Jul 27th, 2009 @ 6:24pm

    i must say, these serious articles are much less amusing than mike bitching about shit totally out of his control.

     

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  4.  
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    Anonymous Coward, Jul 27th, 2009 @ 6:26pm

    "Partnerships have vaporized overnight, and (particularly in the case of Cisco) core Intellectual Property has been outright stolen, reverse-engineered, or redistributed. Perilous waters, indeed."

    Don't tell that to Mike!

    Seriously, Chinese people are still as the previous coward mentioned, ona multiple person per computer ratio that is much higher than the west. Computer use in cafes is extremely high, and internet cafes are often huge, row after row of computers in a large open room.

     

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  5.  
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    Gordon, Jul 27th, 2009 @ 7:42pm

    Re:

    Anonymous Coward #2 "If you just measure unique IP hits against a website, you would severely underestimate the number of unique people using the internet in poorer regions."

    Anonymous Coward #4 "Seriously, Chinese people are still as the previous coward mentioned, ona multiple person per computer ratio that is much higher than the west. Computer use in cafes is extremely high, and internet cafes are often huge, row after row of computers in a large open room."


    OK guys I'll give you that one. You are correct. The problem with your theory is this:
    If you can't count multiple ppl using the same pc's at cafe's then how in the world can China come up with the numbers they've come up with in the first place.
    In theory that could mean that even more ppl are using it than what they know about. That could also be said about the interweb users here in the States or elsewhere.

    I guess my point is this....YES, China is a huge opportunity for tech development, but as a country (read Govt.), they just don't quite give all the facts and often the right ones at all.
    They seem IMHO to want the world to think that they're giving the people of the country more freedoms than what they actually are. And of course that they're more advanced and up to date as the rest of the world.

    ty all for letting me rant a bit.....been a long day out here in the Gulf.

     

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  6.  
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    Anonymous Coward, Jul 27th, 2009 @ 9:08pm

    "OK guys I'll give you that one. You are correct. The problem with your theory is this:"

    It's not a theory. It is the reality. Developing nations are on a multiple person-PC ratio.

    "If you can't count multiple ppl using the same pc's at cafe's then how in the world can China come up with the numbers they've come up with in the first place."

    Why are you assuming one can't count multiple people using the same PCs? Cybercafes are likely regulated in China, with every user required to provide some sort of personal detail. You can't wipe your ass in China without the govt knowing about it. Do you think they'd let anyone access the Net without them knowing about it?

    If there are 100,000 cyber cafes in China that see 3000 unique visitors a year, you have straightaway got 300 million unique Internet users. Ka-ching!

     

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  7.  
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    Alex Porteous (profile), Jul 28th, 2009 @ 4:35am

    "Why are you assuming one can't count multiple people using the same PCs? Cybercafes are likely regulated in China, with every user required to provide some sort of personal detail. You can't wipe your ass in China without the govt knowing about it. Do you think they'd let anyone access the Net without them knowing about it?

    If there are 100,000 cyber cafes in China that see 3000 unique visitors a year, you have straightaway got 300 million unique Internet users. Ka-ching!"

    I travelled around a lot of China a couple of years ago and spent a lot of time in internet cafes. I have to say that what they required from me varies enormously. Some (often the largest ones) just didn't care as long as I had the money. Many of the middling sized ones though even wanted to see my passport although did not take a copy. To assume that the government knows these kinds of numbers is pretty daft.

    Some of these cafes were huge and regularly full to capacity (mostly with Counterstrike and WoW), however these were all young people in the cities. A huge amount of the population of China is rural and I would be very surprised if they have any kind of net access at all.

     

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  8.  
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    Anonymous Coward, Jul 28th, 2009 @ 5:57am

    More than anything, this article is proof that if you don't understand a market, you can draw incorrect conclusions.

    When you think of a society that mostly uses cyber cafes to access the internet, you start to understand why the download numbers for browsers are off so much. First you have a higher ratio of users per download, as they share computers. Second, China has a massive CD distribution network of pirated software. For only a few cents, you can avoid what might be a very long download, many people do it that way. Third, you have shared copies, local downloads, etc.

    As for search, you just have to look at the shared nature of chinese computers to see the answer. Their time online is generally shorter. If your ratio of users to computers is 100 to 1, each user can only be online at most maybe 30 minutes every other day. Further, alexa toolbar isn't available in a chinese version (or wasn't in the past) and Alexa is unlikely to have a large penetration in the chinese marketplace. So the stats that would be generated would be way off the map.

    So at the end of the day, the numbers don't tell the story, and without understanding the marketplace, you cannot draw these sorts of conclusions. Sorry Mr Bell, but I think this one is a 失败

     

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  9.  
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    Hephaestus (profile), Jul 28th, 2009 @ 6:30am

    Re:

    "Cybercafes are likely regulated in China"

    show me the proof .... likely doesnt cut it

     

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  10.  
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    Hephaestus (profile), Jul 28th, 2009 @ 6:31am

    Re:

    "If there are 100,000 cyber cafes in China that see 3000 unique visitors a year, you have straightaway got 300 million unique Internet users. Ka-ching!"


    Again "IF" doesnt cut it

     

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  11.  
    identicon
    Anonymous Coward, Jul 28th, 2009 @ 7:59am

    Re: Re:

    You have to show your ID to enter a cybercafe now, and your ID is recorded (and likely so is all your internet activity as a result).

    Again, if you haven't been there, you wouldn't know.

     

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  12.  
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    jjmsan (profile), Jul 28th, 2009 @ 8:48am

    Re: Re: Re:

    Except the person who has been there said that is not always true. So I guess you haven't been there?

     

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  13.  
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    Anonymous Coward, Jul 28th, 2009 @ 9:22am

    Re: Re: Re: Re:

    It may not apply to foreigners. The Chinese govt is more paranoid about what its citizens are up to than what visiting tourists do online.

    I'll admit I haven't been there and was merely thinking aloud. Wish someone based there can provide better insight.

     

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  14.  
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    Anonymous Coward, Jul 28th, 2009 @ 1:35pm

    Re: Re: Re: Re: Re:

    I have been declined service in a chinese internet cafe because I didn't have a valid chinese ID card to work with (just my passport and visa). They told me I should use the internet at my "western" hotel, as it would be a better connection and less likely to have things blocked.

     

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  15.  
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    Anonymous Coward, Jul 28th, 2009 @ 6:15pm

    I do want to add this: For an "Insight Expert", this entire post is certainly appears to be lacking in a depth of understanding of the subject material and market area, which leads to some very, very suspect conclusions.

    This isn't the best piece of insight, IMHO.

     

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  16.  
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    Anonymous Coward, Jul 28th, 2009 @ 10:11pm

    Many Chinese access the internet primarily on their mobile phones. The government's numbers may count all the people who access no more than weather, news, and social networking sites on their phones, which does not fit into the data brought up in the article.

     

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  17.  
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    maths, Jul 29th, 2009 @ 5:30am

    Ian, in order to build up your conspiracy theory, you have made some incorrect assumptions and conclusions
    1) Firefox - YES, Chinese overwhelmingly prefer Internet Explorer and IE offshoots like Maxthon

    2) Baidu's revenue vs Google - did you take into account the low CPMs, and other factors like comparatively less efficient sales teams, less internet savvy clients, the shadow of click fraud etc etc

    If you want to build a case, stick to facts that you are more familiar with instead of trying lump everything in there. And do not underestimate use of mobile - 46% of users accessed the internet via mobile.

     

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  18.  
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    Neverhood, Jul 29th, 2009 @ 5:38am

    Firefox vs IE

    "Gersham pointed me toward the Firefox Download Stats, where, as of this writing, Germans have made 4,948,666 downloads of various Firefox versions compared to only 672,972 for China. Again, Germany has a population of 82Million vs. 1.3Billion in China. As a control, Americans have downloaded Firefox 7,959,727 times as of this writing. Do the Chinese really just prefer Internet Explorer?"

    I my experience Chinese dont like either FF or IE very much. I recently came back from a 1.5 year stay in China, and what I saw was mostly browsers I had never heard about.

     

    reply to this | link to this | view in thread ]


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