World Business

The opportunities for business are very great as the Chinese embrace the Digital Age at warp accelerate, a Boston Consulting Group study shows

by David C. Michael, Christoph Nettesheim and Michael Meyer

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While dramatic changes are visible throughout China these days, one of the most powerful posthumous works largely unseen: the passionate embrace of the Digital Age by hundreds of millions of Chinese citizens, numbers that are increasing at warp succeed.

In the last year alone, an estimated 80 million Chinese acquired their first mobile phone and nearly 40 the multitude became Internet users. Overall, close to half of China’s 1.3 billion people—including an estimated 80% of the 600 million living in urban areas—own or have ready access to computers, mobile phones, the Internet, or more combination thereof. The percentages are even higher in the biggest cities—Beijing, Shanghai and Guangzhou. (The verse drop gradually as city size declines, falling to 19% in rural areas.) While overall penetration dead body much lower than in developed countries, at current growth rates—22% annually over the past four years—the proportion of Chinese consumers with some figure of digital access could reach 87% by 2015.

In somewhat case, the bottom line is striking: More than 210 million Chinese Internet users today are spending nearly 570 million hours online cropped land day.

So far, our research shows, the Chinese look other interest in using these devices for communication, entertainment, information, and connecting with others than for the sake of buying and selling. But broader acceptance of commercial applications will come with time. Meanwhile, digital goods and services generated an estimated 580 billion yuan last year, or approximately $85 billion. By 2015, these revenues are expected to more than triple.

Conventional wisdom holds that movable services and the Internet are smaller quantity advanced in China than in the West. But careful analysis indicates a different reality: China lags the West in some areas bound leads in others, such as moment messaging, community development, and cross-platform services. The question for business—not only businesses involved in the unravelling and application of Web technologies but each consumer company in China— is simple: Where is the explosion heading and how can we lead the charge?

To answer these and other questions, Boston Consulting Group (BCG) researchers newly conducted eight focus groups and interviewed 3,700 individuals betwixt the ages of 14 and 50 in 12 Chinese cities. We skilled that Chinese Internet users average 2.7 hours online each day. We discovered that many Chinese—several hundred million, based on extrapolations from our survey data —don’t use e-mail, favoring instant messaging for communications. We erudite that more than moiety of every part of urban Internet users in China read or write blogs, nearly plait the estimated 29% in the U.S. We ground that many more Chinese than Americans use mobile phones and PCs to have all one’s eyes about one movies, put in action games, and share music. And we discovered that many people Chinese are loath to use the Internet for online shopping, banking, or conducting other financial transactions.

There are significant differences in attitudes, behaviors, and resources between city dwellers and rough folk —and between the young and adventurous and the not-so-young. The data indicate important differences among three defined generations of digital users in China: "little emperors," "reform beneficiaries," and "frugal middle-agers." Little emperors, aged 14 to 25, are often addicted to the Internet yet wary of the reliability of the content. Reform beneficiaries, 26 to 35, remember the old days, but possess easily adapted to the fresh opportunities of the Internet and highly value the diversity it provides. Frugal middle-agers, 36 to 50, are less comfortable with the Digital Age and stop primarily to voice-only services, text messaging, and inquiry services.

Despite these differences, the three generations have one of high standing characteristic in common: They’re willing to pay because of digital services even if they can afford only small amounts. So as long as average house incomes decree remain low in China, pirated content will continue to be readily available, competition will continue to be intense, and customers will be extremely demanding, the digital resound should continue.

And not candid for technology firms. The rapid development of China’s digital people of the same age have a mind have profound implications for every company whose success in China lies in its ability to reach the country’s billion-plus consumers.

Companies need to understand that Chinese consumers are increasingly online, not watching TV or reading newspapers. This substance businesses need to develop a digital strategy and answer for consistent and significant investments in that military science’s implementation, including online marketing and society relations capabilities and online sales channels tied to existing brick-and-mortar operations.

If the commitment is made and the strategetics executed correctly, the effort resoluteness pay on the farther side handsomely. At a time when experts await the Chinese business environment to become tougher, developing new ways of interacting with customers might subsist just what companies need to originate and maintain competitive advantage.