Home' A Plus Magazine : April 2013 Contents Success ingredient
34 April 2013
the future,” he says with certainty. “I think
I would like to see more opportunities [to
make money] on mobile Internet because
there’s a lot of traffic.”
One of the obstacles to that goal is the
physical size of handsets. “If you have a
feature phone with a screen [only that] big,
what can you do? It’s harder to monetize
than, say, a personal computer because you
have less [ser vice] inventory,” he explains.
Lo is hoping the handset makers and
network operators will find the answer
between them. “Due to the production of
smartphones with bigger screens – and
quicker bandwidth speeds – there are more
ser v ices that can be migrated to mobile.”
Lo says they have already been mon-
etizing activities on their social networking
For example, Tencent charges subscrib-
ers who want to enhance or tailor the ap-
pearance of their social networking sites.
The open platforms within Tencent induce
many applications developers – usually
related to games or online tools – to make
apps. “We share revenue with them,” ex-
One other v ital tool in monetizing social
media, says Lo is analytics used to identify
user behaviour and preferences. Having
better data about customers’ wants means
being able to better influence future spend-
Testing Internet speed
It’s that quick-footed thinking that has
turned Tencent into China’s largest publicly
listed Internet company by market capital-
WeChat is the most used social network
in the world. Users spent a total of 5 billion
hours on WeChat in October 2012, accord-
ing to a market snapshot by Data Centre of
China Internet, a Beijing market research
Tencent ’s fourth-quarter revenues, the
latest results available, stood at 12.15 bil-
lion yuan, up 53 percent year-on-year.
Its net profit attributable to shareholders
stood at 3.46 billion yuan, up 37 percent
Another of Tencent ’s major focuses is the
Mainland’s emerging online shopping sec-
tor. According to eMarketer, a U.S. industry
research company, about 220 million Chi-
nese bought at least one item online in 2012,
In 2008, China overtook the United States to become the world's biggest
online population more than doubled to stand at 538 million users in June
That represents a penetration rate of 39.9 percent, according to a report
released in September last year. That is significantly less than Brazil (about 45
percent), Russia (49 percent), Hong Kong (72 percent), the U.S . (74 percent),
the United Kingdom (78 percent) or Japan (80 percent).
However, robust growth is expected to continue in 2013, with the China
Internet Network Information Centre, author of the report, forecasting that the
country's Internet population will hit 718 million by the end of this year.
The Mainland will also become the second-largest Internet advertising
market, behind the U.S ., this year, according to a 2012 forecast by
PricewaterhouseCoopers. It is already expected to be the fastest-expanding
Asia-Pacific online ad market, set to grow 32 percent to US$31 billion by 2016,
That should augur well for major Mainland players, which, as well as
Tencent, include search engine Baidu, portal Sina Weibo, online video
website Youku Tudou and auction site Alibaba.
However, the maturing China market is creating problems for the Internet
giants, not unlike those faced previously by their Silicon Valley counterparts.
Baidu, for example, has about 85 percent of the search engine market but
is facing increasing competition from Qihoo 360. Sina’s Weibo micro-blogging
platform is adding users at a rapid clip but revenue isn’t offsetting losses at
the Sina news portal.
At Youku Tudou, fourth-quarter sales fell below estimates, spooking
shareholders. Alibaba, meanwhile, faces the challenges of succession:
Jonathan Lu took over as chief executive last month from founder Jack Ma.
Companies such as Tencent are now looking to boost e-commerce to
a receptive population. Nick Debnam, KPMG’s Asia-Pacific chairman for
consumer markets and a Hong Kong Institute of CPAs member, says research
shows a “surge in online shopping intentions.” Online retail generated US$121
billion in sales in China in 2011, up 66 percent from 2010.
On 11 November 2012, China’s “Singles' Day” shopping festival, online
retailers Tmall and Taobao Marketplace generated revenue of US$3.1
billion, more than the total sales of the two biggest shopping days in the U.S .
combined, Black Friday and Cyber Monday.
China’s Internet companies, like those in Silicon Valley, are trying to figure
out how to shift their revenue-generating services from a personal-computer-
based model to the mobile Internet.
Mobile Internet subscriptions are forecast to more than double to 2.9
billion worldwide by 2016. “Almost a billion of these new accounts will be
opened in China,” observes Cecilia Yau, an entertainment and media practice
partner at PwC in Hong Kong and an Institute member.
Changes are already occurring. Sina Weibo, for example, says more than
30 percent of its total advertising revenue will come from mobile in the first
quarter of 2013.
HOW THE MAINLAND
Links Archive March 2013 May 2013 Navigation Previous Page Next Page