China. #DTTT Market Reports

#DTTT Insights - China - thinkdigital.travel �2

Contents

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4

12

16

21

26

30

34

Country Overview

Consumer Behaviour

Connectivity

Mobile Devices

Social Networking and UGC

eCommerce

Summary

Read more

COUNTRY OVERVIEW

Population size: 1,350,695,000

GDP (nominal): $ 13.374 trillion

Average salary: $ 730 / month

Capital city: Beijing

Currency: Renminbi (yuan) (¥)

• China has the biggest population in the world.

• China is the fourth largest country in the world.

• There are 160 cities with a population of over 1 million.

• The biggest city in China is Shanghai with 20 million urban population.

• China is expected to become the world’s largest economy by 2017.

Key Links

https://www.facebook.com/pages/China/107769809246142

https://twitter.com/china

http://english.gov.cn/

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Country OverviewKey Facts

CONSUMER BEHAVIOUR

Consumer TrendsUndoubtedly, the sheer size of the Asian-Pacific region positions it as one of the key markets that have to be considered globally. Tourism in Asia Pacific is growing and becoming increasingly available to the wider public. The fast adoption of new technologies drives a dynamic and constantly changing landscape when it comes to consumer trends.

Overall, China has one of the biggest online audiences in the world.  China’s Internet Network Information Centre (CNNIC) estimated that there were 591 million Internet users in China in 2012 (CNNIC, 2013). This number indicates that Internet penetration was still low (44.1%), compared to other more developed countries. However, the penetration rate is growing rapidly. The first half of 2012 witnessed an increase with a total of 24.5 million Internet users. Within that period, Internet users on desktop computers accounted for 70.7% of the total, 2.7% less than that in the second half of 2011, while the percentage of mobile Internet users increased with 72.2%, surpassing that of desktop users (CNNIC, 2013). Such annual growth rates are significant, compared to other countries, like the US, where growth rate reaches approximately 0.6% (comScore, 2013).

In 2014, CNNIC released its 33rd report on Internet Development in the country indicating that the number of Internet users reached 618 million in 2013 (CNNIC, 2014).

The sheer number of users positions China not only as the biggest Internet audience in the Asia-Pacific region, but also as the main online consumption market in the world.

With more than 500 million Internet users there has been a rapid growth in recent years in the domestic demand for Information and Communication Technologies (ICTs) (Open Society Foundations, 2012).

Recently, the Chinese government made substantial plans for investments in ICT infrastructure. According to a report by the Information office of the State Council, China has invested $680 billion in Internet infrastructure over the past 13 years (Open Society Foundations, 2012). Part of the investment is directed at significant improvements of Internet services offered in the country, which means large investments in fibre optics. By 2015, the Chinese government has promised to improve the Internet speed of fixed broadband connections. According to the third phase of the project, running between 2016 and 2020, the State Council plans to further improve the infrastructure, narrowing the gap between developed Western countries and the national market. In order for this to happen, broadband connection speeds have to reach 50Mbps by 2020 (Forbes, 2013).

Currently, the Internet consumption market has not realised its full potential and there are still many challenges for marketers who want to target Chinese consumers. With many markets in the region restricted by broadband infrastructure limitations and low access to computers, the ubiquitous mobile phone and 3G/4G services are predicted to be a game changer for the national market.

Future technology consumption

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Consumer Trends, Media Time and Consumption

The three biggest Internet audiences in the world (unique visitors)

137 millions

245 millions

618 millions

China USA IndiaSource: InternetWorldStats, 2012 and CNNIC, 2014

Current and expected Internet speed by 2020 (Mbps)

0

12.5

25

37.5

50

2012 2015 Radio

50

20

4

Source: Forbes, 2013

Engagement in Asia-Pacific Countries (Hours / Week)

Thailand

Vietnam

Taiwan

Hong Kong

Japan

China

India 11.9

16.2

21.5

23.7

26.1

26.2

27.2

Numbers of hours spent online for video consumption in China and India (Hours/Month)

0

45

90

135

180

China India

164173

121126108108

TV Video Mobile

Source: comScore, 2013

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Currently, television is still the preferred information and entertainment channel in the country with a penetration rate of 98% (Open Society Foundations, 2012). Nielsen (2013) reported that in 2012 TV consumers reached 1230 million, while the estimated number of online consumers was less than half, or approximately 457 million.

In comparison to other countries, radio has never enjoyed much popularity and has approximately 30% penetration rate in the country. On the other hand, the popularity of the Internet as a media consumption channel is growing, especially in urban regions, where Internet consumption is 10 times higher than in rural regions (Open Society Foundations, 2012).

On average, the weekly time spent online by Chinese internet users increased to 16.2 hours in 2012. The corresponding averages for Taiwan (26.1) and Hong Kong (23.7) are even higher (comScore, 2013).

Nielsen’s global media consumption index (Nielsen, 2012) shows that Asia (excluding Japan) and BRIC nations surpass Europe and western markets on television viewing and video consumption via desktop internet or mobile devices. According to Nielsen’s report on the Asian media landscape, consumers in China spend 108 hours monthly for watching TV. General online video usage is even higher, with 126 hours per month, where China leads the chart. In terms of mobile video usage, consumers spend 173 hours on average per month.

Media time and consumptionConsumption of social media through the mobile medium is expected to grow. This is important, as it seems that social media has a huge potential to drive online and physical sales. Research by Nielsen (2013) illustrates the huge influence of social media on purchase decisions, with 77% of purchases influenced by reviews and ratings on one or more social media channels.

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As a result of the implemented one-child policy, the share of younger people is decreasing. In terms of age groups, 17.2% belongs to the 0-14 age group, 73.4% to the 15-64 age group, and 9.4% to the 65+ age group (IndexMundi, 2013).

Looking at online engagement per age group, surprisingly the biggest share of online consumption belongs to the 55+ age group with 19% of males and 15.7% of female representatives. Among males, the 35-44 age group has the lowest share of Internet audience. Among females, the 45-54 age group seems the least engaged with online consumption (14.4% of the total share of Internet audience) (comScore, 2013).

Males between the ages of 15 and 24 are the heaviest Internet users in Taiwan and Hong Kong (comScore, 2013).

Age profilesChina has the biggest population in the world with over 1344 million people in 2013. The population reached the billion mark in 1982, but the current annual growth rate (0.4%) has been slower due to the implemented one-child policy.

Among Internet users, the middle class is expanding very fast. The disposable income levels per household have significantly increased in comparison to previous years. Another very interesting factor that makes this new middle class very special is that these consumers are younger in comparison to other developed markets.  This is quite unique, as China’s wealthiest consumers are normally aged between 25-44  as they actually have a very high level of education and training required for well-paid jobs. Older Chinese consumers very often do not have that level of education, making it harder for them to get well-paid positions. However, with the growing income they have available, the demands and expectations towards brands, shopping experiences and products also increases. This new and young generation is very digitally savvy and will lead and drive change within Asia (Euromonitor 2011).

Gender differences in terms of online media consumption in China are small. The average hours per visitor for men (16.5) do not differ significantly from the average amount of time spent online by women (15.7) on a monthly basis (comScore, 2013).

The differences are, however, bigger when we look at the situation on a regional level. On average, men spend 4 hours more online in Taiwan than women. The audience in Hong Kong shows a similar trend, with averages for men (25) higher than the corresponding average for women (22.6) (comScore, 2013).

Demographics

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Age Profiles and Web Languages

16.6

14.8

14.4

15.7

16.2

17.0

15.7

15.8

19.0

23.6

29.8

22.4

19.7

20.8

27.3

27.8

23.8

22.8

21.4

29.2

18.6

23.5

21.9

27.1

23.2

22.5

16.4

Average time spent online (Hours per users)

Source: comScore, 2013

33.6 35.9

15-24 25-34 35-44 45-54 55+

Top Internet languages and yearly growth (Millions / %)

English

Chinese

Spanish

Japanese

Portugese

German

Arabic 65

75

83

99

153

445

537 301

1479807

111990

1742501

China

Macao

Singapore Taiwan

Hong Kong

Chinese-speaking consumer markets

16.0

CHINA TAIWAN HONG KONG

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Web languages

As in other regions, search engines are very important in Asia Pacific. Consumers are spending an increasing amount of their time online and the starting point for a lot of things consumers are looking for is a search. 

China has the largest audience of searchers in the world. According to comScore (2013), the number of searchers is growing fast, with an 8% increase between 2012 and 2013. In comparison, the same period saw an increase of 6% in searchers on a global scale. ComScore (2013) estimated that there were 320.4 million unique searchers in China in 2013. The country that comes the closest to this number is the USA. Nonetheless, the number of unique searchers in America still lags behind with approximately 80 million unique visitors. In 2013, the number of unique searchers in Taiwan was 12.3 million, while searchers in Hong Kong were 4.2 million.

Currently, the vast majority of searches are still carried out from desktop computers (98%). Despite the large number of mobile device owners, only 1% of searches were carried out from a mobile phone, and less than 1% from tablets. It seems that mobile search is more popular in Hong Kong, where 4% of searches were carried out from mobile phones, while 4% were made from tablets.

However, the numbers are different when we look at search referral rates. In mainland China, 16% of referrals came from searches on desktop PCs, 15% from tablet, and only 6% from mobile phones. The numbers are higher for Hong Kong, as 20% of referrals come from desktop search, 16% from mobile phones, and 20% from tablets (eMarketer, 2012).

Search engines

For the tourism industry, languages are always a key factor, as content is the one thing that sells a tourism destination, product or service. In the digital era, content is gradually moving towards multimedia. Videos, interactive maps and virtual reality are often used to represent the same information in more engaging ways.

Within the Asia-Pacific region, the Chinese language is the preferred language for communication and viewing online content.

Looking globally, Chinese is the second most popular Internet language, with more than 509.9 million people (25% of all Internet users) who use it as a main language on the Internet (Internet World Stats, 2010). Together with Arabic and Russian, the Chinese has been the fastest growing Internet language in popularity in recent years.

Apart from China, there are several other Chinese speaking markets, including Taiwan, Singapore, Hong Kong and Macao. This huge market means that  tourism businesses should consider to have websites and content translated into Chinese in order to address the market more efficiently.

By the end of June 2012, China had 8.73 million domain names, among which those with “.cn” number 3.98 million. In 2014, 3.3% of all websites are in Chinese (W3Techs, 2014).

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Globally, email marketing is often ranked second as a direct digital communication channel. Number show that it is still a very essential part of consumers’ daily lives in Asia Pacific. 

For instance, China Internet Watch (2013) reports the results from a study carried out by Experian, investigating 321 Chinese enterprises in a variety of industries. According to the survey results, email marketing is seen as the most important channel to reach consumers. From all surveyed enterprises, 66% indicated that they have already adopted email marketing within their multi-channel marketing strategy.

The demographics of email usage is another very interesting factor to consider in terms of email marketing within the region. Over the last years, there has been a shift as young consumers are decreasing their overall engagement with emails.

Having in mind the significant mobile penetration rates, mobile marketing in China is predicted to increase, but has not reached its full potential. Experian study results showed that enterprises in China are quickly adopting mobile marketing, however, less than half have developed a mobile marketing strategy. In comparison, 65% of Hong Kong enterprises tried mobile marketing, while only 36% of Chinese enterprises tried. Merely 16% enterprises integrated mobile marketing into its strategies (China Internet Watch, 2013). 

E-mail MarketingChina is one of the few countries in the world where a home-grown search engine dominates the market. The most popular search engine in China is Baidu, with 78.6% market share in 2012 (China Internet Watch, 2012). The company owns the Chinese language-search engine for websites, audio files, and images and has its headquarters in Beijing.  

Most popular search engines in China

75%

14%

2%Source: China Internet Watch, 2012

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CONNECTIVITY

Connectivity

Looking with more detail at the big players within Asia when it comes to broadband access, it becomes clear that China is still the top internet country within the region, followed by two other countries: India and Japan.  Broadband  makes up the majority of Internet connections in China, with 363.81 million users at this service tier (Internet World Stats, 2012). Considering the sheer size of the population, however, in 2013, a mere 40% of households had Internet access.

In 2013, the average fixed broadband download speed in China was 3 mega bits per second (Mbps). In parallel to an increasing number of broadband subscriptions, Internet speeds are also expected to improve, as the country launches a major project for fibre optics. Forbes (2013) reported that the goal is to reach 20Mbps for urban households, while rural Internet speeds are expected to reach up to 4Mbps.

The improvement of speed of Internet connections will drive a higher Internet penetration rate and the number is expected to rise up with 50% by 2015. By this target year, China is expected to have 270 million residential and 850 million commercial users (Forbes, 2013).

Broadband Access

Internet Use

Without doubt, China is the country with the biggest Internet audience in the world. On January 16, 2014, China’s Internet Network Information Centre (CNNIC) released its 33rd annual report on Internet Development in the country (CNNIC, 2014). According to the report, the number of Internet users reached 618 million in 2013. This comprises of 45.8% penetration rate, up by 3.7% in comparison to the previous year. This growth is quite interesting, and shows that in years to come China will be most likely a driving factor of growth in the region.

The proportion of mobile Internet users is 74.5%, which is much higher than Internet users who access the Web from other devices (CNNIC, 2014). 

Internet usage in China may be divided into four general categories: the acquisition of information and educa t i on , va r i ous bus i ness t r ansac t i ons , communication, and entertainment. Of these, “the acquisition of information” is reported by users to be the second most common reason for web usage (after “communication”) (Open Society Foundations, 2012).

In 2012, the most popular online activities in China were music streaming (83%), news (78.5%), instant messaging (75.3%) and video consumption (67.7%) (Open Society Foundations, 2013). More recently, a report by comScore (2013) indicates that the most popular web categories in China are social networking (86%), multimedia (74%) and games (59%).

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Internet Usage Patterns

Reach of key web categories in China / World (%)

0

22.5

45

67.5

90

Social Networking Retail Search/Navigation E-mailChina World

Source: comScore, 2013

86% 75% 67%

Music Streaming

Instant Messaging

Video

75%

News

Most popular online activities

China has the number 2 audience in the world in terms of video consumption. A study by comScore (2013) reports that the number of videos watched online reached 30.9 billion, with 101 monthly average videos per viewer. Such numbers are higher than the reported equivalents in countries such as the UK.

Youku leads the online video segment in China with 280,975 million unique visitors in 2012 (comScore, 2013). Tencent and Tudou sites follow in the chart with 265 million and 220 million unique visitors.

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In 2013, more than 18,000 websites have been blocked in

mainland China

Internet usage patterns in China are heavily influenced by the “Internet Censorship” imposed by the government. The censorship is implemented through a wide variety of laws and administrative regulations. In accordance with these laws, more than 60 regulations have been introduced and approved by the government of the People’s Republic of China.

The regulations of censorship are normally implemented through provincial branches of state-owned Internet Service Providers (ISPs), companies and various organisations.

In practice, the censorship has been implemented through intricate and complex protocols and techniques. One part of the block is to prevent users from accessing specific websites. According to a study from Harvard (King et al., 2013), more than 18,000 websites have been blocked within mainland China. Out of the top 100 global websites, 12 are currently featured in the list of banned domains in the country.

Another part of the block includes filtering out the results for specific terms and words. Searches for these specific keywords will yield few to no results (Council on Foreign Relations, 2014).

Apart from Internet websites, online censorship is also imposed on personal pages, blogs and social media. Blocked content and censorship is mainly directed at government-sensitive issues and critics. The government, as well as the media often use microblogging service Sina Weibo  to spread ideas and monitor corruption. Interestingly, the website is also supervised and self-censored by 700 Sina censors.

Internet Censorship

BLOCKED

Sina Weibo employs more than 700 censors who go meticulously

through the content on the website

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MOBILE DEVICES

�17

Mobile Devices

The penetration rate of mobile is higher than other Asian-Pacific countries (except South Korea). According to the report by Nielsen, “The Mobile Consumer” (2013), 89% of consumers have a mobile device. Two-thirds of Chinese mobile subscribers surveyed own a smartphone, compared to only 10 percent in India where the majority of consumers have feature phones (80 percent penetration).

Within the BRIC countries, China is leading in ownership of smartphones. The share of smartphone devices (66%) is significantly higher than that of feature phones (25%) and multimedia phones (9%) (Nielsen, 2013).

There are differences in the device penetration rates between men and women among all countries, however, China and Brazil show the largest gender divide among smartphone owners (17 and 16 percentage points, respectively, skewing male).

Approximately one-third of consumers (36%) own more than one mobile device (Nielsen, 2013). China is predicted to be one of the 10 largest countries that will contribute the most to sales of mobile devices, followed by India and the US.

Mobile devices

According to The Guardian (2014), the predicted number of sales of new mobile devices for 2014 is 283 million. This means that China will be the country where smartphone penetration will grow the fastest in 2014. In terms of ownership, the Guardian predicts that 76% of sales will be made to first-time users.

Internet access modes present a new pattern in China. In 2014, the mobile phone is the Internet access terminal with the greatest number of Internet users in the country (CNNIC, 2014). According to a report by Pew Research (2014), approximately 79% of China’s 618 million Internet users accessed the Web through a mobile device.

This means that more and more people prefer the mobile medium to consume information online and this is why many companies want to ensure that they tap into this growing mobile market.

An excellent example for this is the search giant, Baidu. In 2014, the company announced that it will focus on four major areas of growth. Two of them are directly connected to mobile: 1) mobile and cloud, 2) location-based services, 3) consumer products, including gaming, and 4) international operations (Mitra, 2014).

The mobile initiatives of the company are already highly successful, bringing in 20% revenue in 2013. The giant ended the year with a total of 14 different mobile applications on the market. It is expected that the revenue from mobile will increase up to 30% in 2014 (Mitra, 2014).

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Mobile DevicesC

hina 77%

Braz

il

Rus

sia

Indi

a

43%

43%

57%

Ownership of annual data plan Factors when buying a mobile device (%)

Stylish design

Operating system

Value for money

Easy to use

Choice of apps 2113

2521

17

Use of mobile devices

84% SMS / Text messaging

58% Email

39% Video

42% Banking

67% Instant message

59% Online music

Source: Nielsen, 2013

China is predicted to be one of the 10

largest countries that will contribute to sales

of mobile devices

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Mobile ready webIn 2013, a huge number of consumers in the Asia-Pacific region reported that they own a mobile device which allows Wi-Fi access (Webintravel, 2013). The huge increase of ease of connectivity has caused a considerable surge and expansion of traffic from mobile devices.

In terms of mobile device usage patterns, text messaging and SMS are still the predominant and most popular activities among consumers. However, when it comes to using the mobile ready Web, China differs from other countries in several aspects. First, mobile web browsing is very popular among consumers (75%). In comparison to other countries, such as the US and Brazil, mobile banking (42%) and mobile shopping (43%) also take up a lot of mobile use time. Social networking, location-based services and streaming online music are other two major mobile activities that are predicted to grow in popularity in the future (Nielsen, 2013).

Tablets

Apart from smartphones, China is quickly becoming one of the largest markets for tablet devices. In 2011, the US computer company Dell announced that it will team up with China’s biggest search engine, Baidu, to create a new line of smartphone and tablet devices (Reuters, 2011). While plans fell through, there a number of other players that are willing to take a leading position on the tablet market in the country because of the major expansion and huge potential outreach.

China’s tablet market grew at 62.5% in the third quarter of 2013 (Reuters, 2013). Apple device sales in 2012 were 1.6 million and reached 2.6 million in 2013. The dominant device on the market is Apple’s iPad with two-thirds of all sales. Apple has the largest share of the market (71.4%), followed by Lenovo Group (10.5%). The Chinese company Ereneben and Samsung Electronics still remain in third and fourth place respectively.

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Mobile appsThe wide choice of applications is the main driver for purchases of a specific mobile device in China. In fact, 21% of consumers find this the most important factor when buying a mobile device. This number is larger in comparison to other countries, according to Nielsen (2013). For instance, mobile apps availability is considered important only by 8% of consumers in India.

Good value for money and operating system come next as factors that influence purchases of mobile devices for Chinese consumers.

Apart from Americans, Chinese are the heaviest app users. Games are the most popular types of apps in China, with 70% of apps that consumers use on their mobile devices. Maps and navigation apps come second (63%), followed by weather apps (62%). However, other types of apps, such as productivity related apps, video, music, news, and finance related applications, are also used more regularly than the global average (Nielsen, 2013).

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SOCIAL MEDIA & UGC

Social Networking & UGC McKinsey’s survey (2012) reveals a few other interesting observations. First, Chinese social-media sites are already nearly as important as portals are as an entry point to obtain content, with approximately 40% of users opting for social-media sites when starting to explore content. Of course, search is still by far the largest source of content, with 80 percent of users taking advantage of that tool.

Mobile messaging applications are also gaining popularity and could begin to threaten the dominance of Weibo. Currently, WeChat is the most popular mobile messaging application in China, surging in popularity since its relatively recent launch in 2011.

The number of desktop and mobile microblog users is growing rapidly. By the end of June 2012, the penetration rate of microblogs has exceeded 50% while the growth rate of microblog users has decreased to below 10%. However, the growth of mobile microblog users is still remarkable, from 137 million at the end of 2011 to 170 million, up 24.2% (CNNIC, 2012).

Scale, of course, is also important. During the 2012 Olympic Games opening ceremony,  Twitter recorded almost 10 million related mentions, while Sina Weibo recorded 119 million ((Sina Weibo, 2012). 

China has managed to achieve 86% social media penetration rates, despite ongoing internet restrictions in the country (comScore, 2013). eMarketer (2013) estimated that the number of social media users will reach 414 million by 2014 and a staggering 517 million by 2017. The report predicts that China will be a leader and contribute to the highest increase in social media users.

A study by McKinsey (2012) surveys 5,700 consumers in the country and indicates that 95% of those living in Tier 1, Tier 2 and Tier 3 cities (higher population, provincial capitals and higher income) are registered on a social media site.

In many Asia-Pacific countries, the dominant social network is Facebook. But some major markets have developed their own social networks, which have become dominant over the international contenders. China is of particular interest here, because Facebook and Twitter have been inaccessible to users in the country since 2009, therefore the main social networks vying for top spot are all homegrown Chinese language versions. Qzone is the most popular at present, with approximately 40% of the social media population using it (McKinsey, 2012). The platform boasts an impressive user base of 531 million.

Social Networking

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Social media usage

Social Networking Penetration (%)

77

UK 79

USA

86

China

53

Japan

Social Networking reach is above global average, but usage is still low and has a huge potential to

grow

QZONE TENCENT SINA WECHAT PENGYOU712 million 507 million 500 million 300 million 259 million

Social Media Demographics

57% 43%

19%

30%21%

12%

18%

19-2

5

26-30 31-35 36-40

40+

Social Media Users by Age

Source: Techniasia, 2013

Source: eMarketer, 2013

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Social Networking Patterns

Beginning with the rise of WeChat in mainland China, mobile chat is the latest social networking phenomenon to sweep across Asia-Pacific. Mobile chat networks Line (Japan) and KakaoTalk (South Korea) are the two leading contenders, while Chinese giant Qzone continues to dominate the entire Asia-Pacific region in terms of number of active users. However, with the on-going growth of WeChat throughout the region, far beyond its home market China, this situation is expected to change during the remainder of 2013. WeChat currently has over 300 million registered users, making it 15% bigger than Facebook in the region (We Are Social, 2013).

Chinese consume online content mainly through desktop computers. However, they are moving quickly to mobile devices. About 50% of mobile phone users in McKinsey’s survey said they were planning to buy a smartphone in the next six months, 35 percent said they have used a tablet computer, and one-fourth of consumers who do not own a tablet computer said they plan to buy one in the next year (McKinsey, 2012).

All marketers are aware that social media is changing the way people interact, in particular the way they plan, book and manage travel. The Asia-Pacific region has some of the world’s most socially connected travellers, with over 70% of travellers from this region reporting that they used social media channels to gather inspiration for aspects of their future trips. This compares favourably with the global average of 51%, according to research from Text 100′s Digital Travel and Tourism Index 2012 (Text100, 2012).

Travellers search social networks to gather information about their destination before they make a purchase, and also use information from social networks to influence the way in which they make bookings and transact with travel providers. In 2011, only about one-third of consumers in China considered online word-of-mouth as an important and reliable source for travel information. However, trust levels are increasing, and this share is expected to reach 50% in 2030 (Amadeus, 2013).

In parallel, apart from growing engagement on social media channels, consumers are changing their attitude towards sharing their travel experiences online. In fact, according to the report by NH Hotels “The Social Traveller in 2013” (2013), consumers in Asian countries (including China, Indonesia and the Philippines) are the most eager to share their travel experiences online.

Travellers and Social Media

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China has the world’s biggest population and is a highly connected region, with a social media penetration rate of 41% according to latest data. But the world’s biggest market also presents a unique set of challenges. Now that Orkut has finally succumbed to the might of Facebook in Brazil, China remains the only significant global market where the social networking giant has not achieved dominance (and is not likely to in the foreseeable future). There is good reason for this: access to Facebook (and Twitter) have been restricted by Chinese authorities since 2009. Access is now only possible by means of a virtual private network, which some, but not many, Chinese have. Instead, China has developed its own social media landscape, consisting of homegrown networks with unique usage patterns.

Language is another key factor to consider, as the majority of Chinese social networking is conducted in Mandarin or Cantonese. Producing content and marketing messages in these languages is an absolute necessity for accessing the Chinese market. As for social networks, Sina Weibo is a key player to consider, as are Qzone and WeChat. Marketers considering travel marketing campaigns targeting the Chinese market need to become au fait with these networks and perhaps consider hiring a local agency for assistance.

Insights for Marketers

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eCOMMERCESale!

eCommerce

E-commerce in China is flourishing. According to eMarketer (2012), China is the largest e-commerce market in the world. While in the rest of the world online shopping is usually driven by convenience, online sales in China are dictated mainly by the much wider availability of online products otherwise not accessible beyond Tier 2 cities (eMarketer, 2012).

As consumers become more comfortable with online shopping, eMarketer estimated that their number will rise up to 220 million in 2013. This number shows that China will be the leading country in eCommerce, as it will surpass countries such as the USA (eMarketer, 2012)

China is also quickly growing the online portion of its ad spending, which is set to reach $7.36 billion this year. Rapid growth in China will help push Asia-Pacific past Western Europe to become the No. 2 region in the world for online ad spending in 2013. In 2014, this growth will make China the second-largest online ad market in the world, as it surpasses the UK and remains only behind the US.

E-commerce InsightsA report by eMarketer (2013) indicates that travel sales have and will continue to play a major role in the country’s e-commerce landscape. In January 2013, digital travel sales brought a $6.5 billion revenue, which represents a 20% increase compared to the previous year, according to a report by eMarketer (2013). The same study predicts that 2014 will see a 34.2% increase with a total of $8.72 billion revenue from digital travel sales. In the coming years, the total percentage annual revenue will decrease, reaching 6% by 2016, with a total of $10 billion revenue.

The online travel site Ctrip (2014) reports the results of a survey of 3,000 respondents from more than 30 Chinese cities. The study investigated Chinese travellers’ travel plans for 2014, including where they are going, how much they are spending, and how they are booking. More than half of the respondents stated that they plan to take three or more trips this year, with 11% answering that the total will be five or more. According to Ctrip, the average number of planned trips has gone up from last year’s survey.

A growing number of Chinese tourists prefer individual travel. The survey found that 39% are planning to have a self-organised trip. Mobile bookings through a travel website went up dramatically: according to the survey, 39 percent said they would use a mobile app for booking, which was 10 times higher than last year’s survey. In addition, 93 percent said they would use online booking, a number which may need to be taken with a grain of salt considering the fact that Ctrip administered the survey. 45% of consumers said they would book by phone, and 17% said they would go through an agency.

Travel Planning and Booking

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eCommerce in China

Top 5 countries, ranked by B2C e-commerce sales (2011-2013, billions)

0

100

200

300

400

USA China UK Japan Germany

53

140.35141.53181.62

384.8

47

127.82124.76110.04

343.43

38.08

112.78109.03

56.69

301.69

2011 2012 2013 Source: eMarketer, 2013

Online buyers in China (211-216, millions / % change)

0

125

250

375

500

0

7.5

15

22.5

30

2011 2012 2013 2014 2015 2016% change Online buyers

On average, each social media user follows at least 8 brands on social

networks

of China’s netizens are interested in

products shared by friends on social networking sites

43%

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According to further research by Accenture, consumers in the Asia-Pacific region are keen to experiment with new forms of m-commerce technology. For example, 70.3% of the respondents who are aware of  mobile NFC payments have expressed interest in adopting use of this technology. About the same amount have expressed interest in digital wallets (71.5%) and SMS/MMS-based payments (72.5%). 70.7% of the respondents across Asia-Pacific are ready to try out social-networking-based shopping apps (Cellular News, 2011).

Furthermore, 69% of respondents in Asia-Pacific preferred using mobile phones for most payments. Chinese consumers led this total (76%) followed closely by Indians (75%), followed by Koreans (56%) and Japanese (47%). This contrasts strongly with the US and Europe where, even combined, only 26% of respondents favoured using mobile phones for most payments.

When survey participants were asked if they had used a mobile phone to make purchases in the past six months, nearly half (47%) of Chinese consumers indicated they had. In Asia Pacific, consumers surveyed had scanned a product’s barcode while shopping to get additional information; 36% had used a digital ticket to gain admission to an event or to board a flight; while 31% had bought an item or received a coupon from a ‘smart poster’ containing an electronic barcode (Cellular News, 2011).

Mobile Commerce When it comes to mobile advertising, consumers are more likely to accept ads if they are delivered through a simple text. According to the results from “The Mobile Consumer” report by Nielsen (2013), Chinese are more willing to accept mobile advertising than consumers in other more saturated markets. Their survey identified that 47% of consumers do not mind ads, if they provide them access to free content.

The Mobile Consumer report (Nielsen, 2013) also identifies the state of current mobile commerce. According to the survey, the most popular type of mobile advertising in China is through mobile apps (38%), mobile websites (35%) and games (32%). Text message ads, video advertising and location-based services are less regular. In terms of frequency, 65% of consumers reported that they receive ads at least once a day.

Chinese consumers seem to have very positive attitude towards mobile advertising. According to Deloitte (2013), about half of mobile consumers researched for more information after their received a mobile ad. There seems to be a large opportunity for mobile marketing in the country, as the same study shows that a large number of consumers clicked on the provided link from a mobile ad. As a result of a mobile marketing campaign, almost one-third of consumers bought the advertised product.

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Social Commerce Insights for Marketers

Asia-Pacific presents huge opportunity for European marketers to expand their brands, if approached in the right way for each individual market. But there is still much room for improvement. According to research from SP e-commerce, while Western retailers are fast pursuing the Asia-Pacific online shopping audience, they are not achieving optimal customer satisfaction. For example, more than 50% of online foreign brands still do not offer their online products in local currency. 97% do not have free returns and 91% do not have a facility to exchange currencies (SP ecommerce, 2013).

One aspect of social-media usage in China makes the country significantly different than other regions: social media has a bigger influence on purchasing decisions for consumers in China than for those anywhere else in the world. Chinese consumers say they are more likely to consider buying a product if they see it discussed positively on a social media site, and more likely to actually purchase a product or service if a friend or acquaintance recommends it on a social media site. This can be explained at least in part by a cultural difference: Chinese consumers disproportionately value peer-to-peer recommendations, as the Chinese are more skeptical of formal institutions (McKinsey, 2012).

To encourage more people to buy online, providing a positive customer experience is key. Companies should focus on improving customer relationship management and rewarding customer loyalty. When customers are happy with a brand, they often become ambassadors for it by recommending to their friends and making positive comments on social media. Therefore, the customer should be the centre of every move the company makes and should be satisfied in many different ways to create an all-round positive experience. Retaining existing customers is easier than trying to win new ones.

Travel brands that wish to tap into this growing market will need a sound knowledge of the peculiarities of the Chinese legislative environment as well as the country’s consumers, if they are to operate successfully. The social media scene in China stands out in that it has a greater influence on purchasing decisions than in other markets. This is attributable to the fact that most shoppers in China are sceptical of formal authority. Thus they tend to over-value the advice of opinion leaders on social networks.

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SUMMARY

Key Take Away Messages

If you have little time to go through the report in more detail, here the key take away messages that you need to have in mind if you want to understand the local digital dynamics:

• China has the largest online population in the world.

• Baidu is the biggest search engine in the country.

• The most popular social networking site is Qzone with 712 million users in 2013.

• Mobile is getting more and more popular with 79% of users accessing the Web through a mobile device.

• Chinese are very active on social networks and influenced by recommendations and reviews before purchasing products online.

More Country Reports

It is always a good idea to stay informed and now you can obtain our regional reports, which provide an overview of the current and future digital trends in selected countries.

If you liked this country report, you can also have a look at:

• United States #DTTT Market Report

• Brazil #DTTT Market Report

• Russia #DTTT Market Report

• India #DTTT Market Report

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Read moreAmadeus, 2013. Asia Pacific poised to leapfrog the world in travel technology and infrastructure. See: http://www.amadeus.com/blog/13/06/asia-pacific-poised-to-leapfrog-the-world-in-travel-technology-and-infrastructure/

Cellular News, 2011. Interest in Mobile Phone Payments Strong Despite Security and Privacy Concerns. See: http://www.cellular-news.com/story/47912.php

China Internet Watch, 2012. Chinese Search Engine Marketer: Stats, Trends, and Insights. See: http://www.chinainternetwatch.com/category/search-engine/

China Internet Watch, 2013. China Mobile Marketing Insights. See: http://www.chinainternetwatch.com/category/search-engine/

CNNIC, 2013. CNNIC 32nd Annual Statistical Report. See: www1.cnnic.cn/AU/MediaC/rdxw/hotnews/201307/t20130722_40723.htm

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Council of Foreign Relations, 2014. Media Censorship in China. See: http://www.cfr.org/china/media-censorship-china/p11515

Ctrip, 2014. Chinese Travel Willingness Survey (in Chinese). See: http://www.199it.com/archives/186710.html

Deloitte, 2013. Global Mobile Survey. See: https://www2.deloitte.com/content/www/global/en/pages/technology-media-and-telecommunications/articles/2013_GlobalMobileSurvey.html

eMarketer, 2012. China’s Ecommerce Market Joins the Majors. See: http://www.emarketer.com/Article/Chinas-Ecommerce-Market-Joins-Majors/1009466

eMarketer, 2012. Mobile Search Flexes its Muscles in Asia-Pacific. See: http://www.emarketer.com/Article/Mobile-Search-Flexes-Its-Muscle-Asia-Pacific/1009300

eMarketer, 2013. Ecommerce Sales Topped $1 Trillion for the First Time in 2012. See: http://www.emarketer.com/Article/Ecommerce-Sales-Topped-1-Trillion-First-Time-2012/1009649

eMarketer, 2013. Social Networking Reaches Nearly One in Four Around the World. See: http://www.emarketer.com/Article/Social-Networking-Reaches-Nearly-One-Four-Around-World/1009976

Euromonitor, 2010. Socioeconomic impact of growing Internet usage. See: http://blog.euromonitor.com/2010/05/qa-socioeconomic-impact-of-growing-internet-usage.html%22%20%5Ct%20%22_blank

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Index Mundi, 2013. China Demographics Profile 2013. See: http://www.indexmundi.com/china/demographics_profile.html

Internet World Statistics, 2010. Top 10 Internet Languages. See: http://www.internetworldstats.com/stats7.htm

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InternetWorldStats, 2012. Top 10 Internet Countries by users. See: http://www.internetworldstats.com/top20.htm

King, Gary, Jennifer Pan, and Margaret E Roberts. 2013. How Censorship in China Allows Government Criticism but Silences Collective Expression. American Political Science Review 107, no. 2 (May): 1-18. Copy at http://j.mp/LdVXqN

McKinsey, 2012. China’s social media boom. See: http://www.mckinsey.com/insights/marketing_sales/chinas_social-media_boom

Mitra, Sramana, 2014. Baidu and Alibaba Delivering on China’s Mobile Explosion, One Million by One Million Blog. See: http://www.sramanamitra.com/2014/03/11/baidu-and-alibaba-delivering-on-chinas-mobile-explosion/

NH Hotels, 2013. The Social Traveller in 2013. Download report: http://territoriocreativo.es/Social_Traveler_2013.pdf

Nielsen, 2012. The Asian media landscape is turning digital. Download report: http://www.nielsen.com/content/dam/corporate/au/en/reports/2012/changing-asian-media-landscape-feb2012.pdf

Nielsen, 2013. The Mobile Consumer. Download report: http://www.nielsen.com/content/dam/corporate/us/en/reports-downloads/2013%20Reports/Mobile-Consumer-Report-2013.pdf

Open Society Foundations, 2013. Mapping Digital Media: China. Download report: http://www.opensocietyfoundations.org/reports/mapping-digital-media-china

Pew Research, 2014. Emerging Nations Embrace Internet, Mobile Technology. See: http://www.pewglobal.org/2014/02/13/emerging-nations-embrace-internet-mobile-technology/

Reuters, 2011. Dell and Baidu team up for tablets, mobiles. See: http://www.reuters.com/article/2011/09/06/us-dell-baidu-idUSTRE7850C820110906

Reuters, 2013. China’s tablet market grows 63 pct in Q3; Apple is king. See: http://cn.reuters.com/article/companyNewsEng/idCNL4N09814A20121128

Sina Weibo, 2012. Microblogging and the Olympics (in Chinese). See: http://e.weibo.com/1642909335/yuy8CfU6I?ref=http://www.techinasia.com/sina-weibo-olympics-opening-ceremony/%22%20%5Ct%20%22_blank

SP ecommerce, 2013. The rise of the new ecommerce powerhouse. See: http://bambooinnovator.files.wordpress.com/2013/06/fashion-ecommerce-asia-infographic.png

Techniasia, 2013. China’s Top 10 Social Media Sites (Infographic). See: http://www.techinasia.com/2013-china-top-10-social-sites-infographic/

Text100, 2012. Digital Index Travel and Tourism. See: http://info.text100.com/travel-tourism-digital-index-2012/info.text100.com/travel-tourism-digital-index-2012.html

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www.etc-digital.org

We Are Social, 2013. Internet Consumption Around the World. See: http://wearesocial.sg/tag/sdmw/

We Are Social, 2013. Social, Digital and Mobile in China. See: http://wearesocial.net/blog/2013/01/social-digital-mobile-china-2/

Webintravel, 2013. Travellers in Asia lead surge to online bookings. See: http://www.webintravel.com/news/travellers-in-asia-lead-surge-to-online-bookings_3736

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www.etc-digital.org#DTTT Insights - China - thinkdigital.travel �37

The Digital Tourism Think Tank is an international knowledge hub that aims to provide thought leadership to the tourism industry in digital marketing best practice. This project was created by Nick Hall, Managing Director at SE1 Media, who has more than 10 years experience working in digital tourism marketing, both in the marketing sector and in the tourism industry.

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