Five insights about China from Internet Trends 2017

I finally had a chance to review KPCB’s Internet Trends 2017, presented last week by Mary Meeker. The presentation was teeming with insights, but I will focus on my five biggest take-aways about China. I am astounded by what has been happening in China over the past several years.

1. China’s mobile Internet users have grown nearly 7X in 8 years, and are larger than the G7 combined.

Source: Kleiner Perkins Internet Trends 2017

There are now almost 700M mobile Internet users in China, up from 100M in 2008. To put that in perspective, there are only 280M Internet users overall in the US. China has more mobile Internet users than the entire Internet populations of the G7 countries (US, UK, Germany, Japan, Italy, France, Canada) put together. China has 700M, the G7 countries combined have 656M.

2. China is now the world’s biggest interactive gaming market.

Source: Kleiner Perkins Internet Trends 2017

Gaming is one of the killer apps on mobile. Last year, China surpassed the US as the biggest interactive gaming market by revenue.

Two of the biggest gaming players in China are Tencent and Netease. Almost all of their growth is coming from mobile.

Source: Kleiner Perkins Internet Trends 2017

3. Livestreaming video is taking off in China, and offers direct-to-consumer monetization potential.

Source: Kleiner Perkins Internet Trends 2017

While still smaller than interactive gaming in China, livestreaming is growing significantly and is the #2 vertical within online entertainment.

There are many different categories of livestreaming: singing, dancing, local, chats. And consumers can buy virtual gifts to show support to performers.

Source: Kleiner Perkins Internet Trends 2017

Livestreaming, although still relatively nascent, appears to monetize better than other forms of entertainment in China.

Source: Kleiner Perkins Internet Trends 2017

4. On-demand transportation is a big opportunity in China — especially bike sharing, which is growing rapidly.

Source: Kleiner Perkins Internet Trends 2017

Bike sharing, which was just introduced last year, appears to be taking off in a big way. Bike sharing went from 0 to 20M MAUs in just 9 months. The MAUs doubled between Feb 2017 and Mar 2017.

Source: Kleiner Perkins Internet Trends 2017

Part of the rapid growth of bike sharing is due to mobile innovation. The bikes contain a GPS unit so that prospective riders can easily locate an available bike nearby on a map. Once the rider locates a bike, you just need to scan the bike’s QR code with the mobile app to begin the rental.

Source: Kleiner Perkins Internet Trends 2017

5. Mobile commerce is exploding in China. Mobile payment went from $0 to $5 trillion in 5 years.

Source: Kleiner Perkins Internet Trends 2017

At 15% of retail sales, e-commerce penetration in China has matched or surpassed the UK, US, Germany, France, and Japan. What’s more, China’s penetration growth is ramping much faster than its peers. It will be interesting to see how this chart changes over the coming years.

All of the growth in e-commerce penetration is coming from mobile commerce. Unlike in the US, where in Q4 2016 mobile commerce was only 20% share of the total, in China, mobile commerce was the vast majority of e-commerce.

Source: Kleiner Perkins Internet Trends 2017

Just over the past 5 years, there has been an explosion in mobile payment volume. Transaction volume has grown from $0 to $5 trillion between 2012 and 2016.

Source: Kleiner Perkins Internet Trends 2017

The mobile payment market is split between AliPay and WeChat Pay. These companies are innovating to enable both online and offline commerce with mobile devices.

Source: Kleiner Perkins Internet Trends 2017

Being in Silicon Valley, many of us naturally think about the US market first when we consider new business and product opportunities. We may also make the mistaken assumption that the US is on the cutting edge of technology trends, like on-demand transportation, livestreaming, and mobile commerce. What I learned from the Internet Trends 2017 presentation turns that assumption on its head.

China’s Internet base has massive scale (700M users, more than the G7 combined). They are the largest interactive gaming market. China is leading the way in livestreaming, on-demand transportation, mobile commerce and mobile payments. There is much to be learned from observing what is happening in China with the Internet. I have become inspired to follow these technology trends coming out of China much more closely moving forward.