• Andrew Collins

750 million Chinese users by 2015

SHANGHAI – Internet users in China, which currently has the largest population globally, is projected to exceed 750 million by 2015 as more urban and rural Chinese gain access to computers, said McKinsey & Company in a recent report.It is estimated that six million new users log on to the virtual world each month, the consulting firm said, adding that if this trend continues, China will be on track to have 750 million netizens by 2015.

Driving these numbers is urban computer penetration, which will reach 66 percent by 2015, and rural PC penetration is expected to double to 30 percent.

The report said that such a trend provides a great platform for e-commerce. China’s Internet users have reached 420 million as of June 10, 2010, exceeding the population of the United States.

The report, based on McKinsey’s annual survey of 15,000 Chinese households, as well as a separate study of the digital device usage and online behavior of 5,000 consumers, highlights several startling aspects of how consumers use the Internet to source for information, entertainment and shopping.

“For a growing number of Chinese consumers, spending time on the Internet has become an important, even routine, part of making a purchase,” said Yuval Atsmon, an associate principal at McKinsey & Company’s Shanghai office.

“Marketers that can craft a compelling online experience for their customers, on their own websites as well as other sites that offer video sharing, social networking, online forums and industry reviews, can acquire a competitive edge in this influential and rapidly growing market.”

While online shopping has exploded in China over the past few years, there is significant room for further growth of e-commerce in China, said the research.

According to market research firm iResearch, online retail sales jumped by 117 percent, from $19 billion to $39 billion in 2009. However, only one third of the respondents in the McKinsey survey said they had shopped online, compared to two-thirds of US Internet users.

Chinese consumers shop online primarily for convenience and products as online shoppers are younger, more educated and wealthier than other online users, said Atsmon.

Although the Internet is rapidly gaining importance and credibility among Chinese people, television continues to be a far more important tool for building mass awareness, with an average reach of 85 percent versus 24 percent for the Internet, said the survey.

Online information has gone up three places to become the fourth most credible source of information within one year, and many Chinese consumers will not purchase a product without first checking online opinions and reviews, said Atsmon. In fact, consumers’ perceived credibility of the information they obtain from the Internet has more than doubled over the past two years, rising from 26 percent to 55 percent.

“This is especially true for big-ticket items such as cars. About 45 percent of consumers in the McKinsey survey said they will conduct online research before purchasing a new automobile,” said Vinay Dixit, senior director of Mckinsey’s Asia consumer centers.

“Keeping up with – and indeed, staying ahead of – the rapid changes in online behavior requires speed, flexibility, as well as new skills on the part of today’s marketers in China,” said Dixit. “Successful marketers rapidly collect and synthesize consumer intelligence, coordinate their online and offline presence, and engage consumers as activists for the brand.”

This article was featured in China Daily

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