2018 China’s Internet Industry Report

现在财经

Large Market Capacity is Needed to Make Achievements

Every Surge is Used to Solve Economic Problems in China

Closing Index of Shanghai Stock Market 1990–2017

In 1992, the capital market in China desperately needed development. The OTC era had ended and digital transaction began. This round of surge means the emergence of capital market in China.

From 1995 to 2000, China’s capital market surged. During this period of time, there were a series of system reforms in China, such as employee stock and the merge of legal shares, etc.

The largest A-share bull market was from 2004 to 2006, solving the full circulation issue of listed companies in China.

2014 was a critical year for the contest between the old world and mass entrepreneurship and innovation. It was the time to find out which one was more important, the SME and second board or the blue chips that maintain China’s economic stability.

The CAGR of Internet Industry is Several Times Higher Than Those of The Traditional Industries

Mobile Shopping Remains The Main Part of The Mobile Internet Economy. The Growth Rate of Mobile Advertising Will be The Highest in The Future.

According to iResearch’s prediction, judging from the mobile Internet economy structure in 2011–2019, the proportion of mobile shopping will decline after years of rapid growth. The proportion of mobile advertising and mobile payment will keep increasing. In addition, with the mobile gaming market becomes increasingly mature, the proportion of mobile gaming will tend to be stable. Judging from CAGR of the segment markets of mobile Internet economy in 2016–2019, the online advertising market and mobile payment market have been growing rapidly, and their CAGRs are both over 30%. It is expected that the scales of the mobile advertising market and the mobile payment market will increase significantly in the next three years.

The Thriving Internet Economy is Benefited From Internet Users

Demographic Dividend is Almost Exhausted at The Macro Level

In 2016, the numbers of internet users and mobile internet users reached 730 million and 700 million respectively, and their growth rates decreased. Mobile internet users accounted for 95.1% of all internet users. Due to many factors such as the internet skills and education background of the users, after years of rapid growth, the demographic dividend in the process of internet popularization has been exhausted. The numbers of internet users and mobile internet users tend to be stable. Affected by the universal two-child policy, the numbers of internet users and mobile Internet users will peak in the future with the growth of a new generation.

A New Stage For Online Marketing

Key Words of Online Marketing in 2017: Intelligent And Native

In 2017, revenue of online advertising in China is expected to approximate 400 billion Yuan, with a share larger than 50% in China’s advertising market. Pushed by the growth of internet users, digital media using time and online video & audio business, revenue of online advertising is expected to keep growing rapidly in the following years while the that of traditional media such as newspapers, magazines and TV advertising will keep decreasing.

Keys of online advertising in 2017 were “Intelligent” and “Native”. Advertisers are increasingly familiar with new forms of online advertising, which are evolving along with the development of native advertising. The division between content and advertisement is increasingly vague as well. And with the improvement of online environment, videos will become a content carrier that are more widely accepted and welcomed by the public, boosting the development of video-based advertising. At the same time, the rapid iteration of artificial intelligence (AI) will felicitate its application in the field online marketing. Now, intelligent marketing has become the most popular topic and is believed to create new chances to the industry.

New Business Models Cultivated by Online/offline Retail Integration

Emergence of New Retail Forms Led by Fresh Food

With the online/offline retail integration, fresh food has its own features and is the test field of innovation of channel integration. As a category of frequently purchased products with rigid demand, fresh food has the following features: perishable products with a short shelf life, high requirements on storage conditions, and usually non-standard products. Though with a high gross profit, the fresh food sector is constrained by the backward cold-chain logistics in China, the high storage and transportation costs and poor controllability. In addition, affected by the late start and high pricing of fresh food e-commerce in China, the offline channel is not very competitive. While the demand for fresh food provides vast potential for consumption upgrading in the future. According to overseas data, when per capita GDP is USD 9,000, demand for fresh food will increase obviously as a whole. Data from the World Bank show that in 2016, the per capita GDP in China was USD 8,123. Therefore, iResearch believes that in the next three years, retail of fresh food (both online and offline) will boom in China. With the integration of online/offline retail, the new business model of “store + food & beverage + delivery” led by fresh food retail will usher in an era of rapid development.

Rapid Growth of The Eye-catching Segment

Online Vacation Is Eye-catching But There Are Both Opportunities And Challenges.

Since 2009, the share of online vacation in the GMV of online travel has been growing at a rate faster than that of the online travel market as a whole. This is because: first, with the consumption upgrading in China, besides sightseeing, the travel users have developed high-level demands in terms of travel experience and vacations, therefore, the growth rate of the GMV of online vacation has been higher than that of the online travel sector as a whole. Second, with the expansion of the online travel market and the intensifying competition in the industry, the gross profits of traditional flight ticket and hotel booking products is decreasing, so OTAs and other online travel enterprises need to find new profit growth points. As a result, the online travel enterprises are attracted by the high gross profits and the diversity of the online vacation products. However, the GMV of flight tickets and hotels is still higher than that of online vacation, so how to develop the online vacation market remain to be explored by the entire industry.

Revenue of Online Education in China

The Sector Is Gradually Maturing And The Market Is Returning to Essence of Education.

Data from iResearch show that in 2017, the revenue of China’s online education market was 200.26 billion Yuan, up 27.9% YoY. In the next few years, though slowing down, the revenue of China’s online education will continue to grow robustly and is expected to reach 543.35 billion Yuan in 2022. The growth of the online education revenue is mainly driven by acceptance among users, rise of the awareness of payment and rich materials for online learning.

iResearch believes that after the two years of barbaric growth and market tests, the online education market is gradually maturing with mature business models in some important segments, rational capital market and prudent entrepreneurs. At this stage, the market favors the enterprises with strong teaching and research capacity, strong technical development capacity and better operation services. And the enterprises need to improve user loyalty and increase profitability by helping users improve learning efficiency, offering complete services and better learning experiences.

You can contact the mail address below for getting the full verison of the report.

ning@caijing.io

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