Friday, March 7th, 2008
Media08: China’s emerging digital culture
Kaiser Kuo, Group Director, Digital Strategy Ogilvy China (also a rock star)
China’s digital culture shares a lot of features with anglo cultures but also eastern neighbours - mobile culture of Japan and Korea. He is going to take some time to “bust some persistent myths”.
I was born in the States. He has lived in China continuously for 12 years. He is most famous for starting China’s first heavy metal band, Tang Dynasty. He plays guitar in Chunqiu. They think of CDs as name cards. You can’t possibly make money on the sales of physical units. He worked for tech mags including Red Herring. He was bureau chief for China. He is director of digital strategy for China for Ogilvy. He writes the Ogilvy China Digital Watch.
China’s wild, wild web. There are lots of caveats for foreign companies entering the Chinese markets. It is ferociously competitive. Any day now, China will pass the US as the country in terms of internet users. There 210 million internet users, and growth is accelerating. Growth has accelerated to more than 50% on an annualised basis. About half of those people are using broadband. Overall, internet penetration is extremely low: 15% as opposed to 60% in the US. It will not approach the level of the US for another decade.
- The average age is 32. In the US, that average age is 42. Roughly half are 24 years or younger. 40% of internet use amongst that age group.
- Predominantly urban, though growth is faster in rural China
- Relative neophytes: Half of current users not even online two years ago
- Focused on entertainment, not information
- Used to be overwhelmingly male, now relatively gender balanced
Instant messaging culture is massively important. Only 14% of internet users do not use IM. In the US, 61% of internet users do not use IM. QQ users send 40 messages a day, as opposed to 15 messages a day for AIM, one of the most popular IM clients in the US.
Chinese use IM as a primary internal and external business communications tool. Do not assume that Chinese staff on IM are not doing their jobs. The IM client QQ is so popular that they named a car after it. You must understand QQ to understand the market. It captures the zeitgeist. QQ facts
- 86.19% market share in IM
- 715 m registered accounts
- 288 m active users
- 36.2 m peak concurrent users
Internet cafes are extremely important, second only to home use. People go to cafes to play online games. The larger chains have 120 machines per cafe. High end gaming rigs.
Not a lot of UGC use. Newbies on the web are not jumping on many YouTube clones or blogging. It’s undeniable where trend is going.
Chinese BBS culture. There are 3 billion registered BBS users.
Number of mobile subscribers in China: 550 million. That’s 2.5 times the number of internet usres. It is growing at a rate of 7.5 m mobile subscribers per month.
More than Europe or the US, about 35% of mobile users are listening to mobile music.
Problems with mobile marketing:
- SMS spam has turned off consumers.
- WAP use rates remain low.
- Lack of meaningful competition for China Mobile provides little incentive to push WAP adoption.
- New subscribers are overwhelmingly prepaid with limited use.
- Fast 3G is slow in coming
- Mobile ads dominated by content with little brand advertising.
- There are few cases of compelling ad projects
Without a viable advertising market, development of the mobile internet will be badly hobbled.
Will China’s digital culture look more like Japan or Korea’s or America’s? Probably more like the US.
People say that China copies but doesn’t innovate. He joked about C2C not being consumer to consumer but copy to China. He says that China will become a net IP exporter. Blame the VCs? Venture capitalists are not an adventurous lot. If you are a Chinese entrepreneur, and you want to grab some of the billions.
He highlighted the Maxthon browser. First tabbed broswer. Only Chinese internet company with global footprint. He also pointed to high level of P2P users. Software and digital magazines are being distributed . ZCom, Poco, Vika. 60m users.
He was going to challenge some of the myths about the ‘Great Firewall’ and talk about western media’s obsession with net censorship there, but he ran out of time.
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