Daily Digital Pulse of China
Taobao/Tmall in the Mobile Internet Age
In the era of big data and mobile devices, Taobao/Tmall’s strategy is changing. How so? With mobile e-commerce transactions expected to reach ¥202 billion this year, with 648 million users in Mainland China, the sites are redefining themselves to capitalise on the increasing number of online vendors in China’s mobile realm – the majority of whom are located in three-tier cities and below. In addition to attracting as many potential customers/merchants as possible via online campaigns, this means increasing the company’s distribution capacity in China’s lower-tier cities and inland regions. Without a distribution foothold in these areas, shipping costs are likely to spiral out of control, since goods will have to be dispatched to consumers from a great distance. Not only does this detract from the customer experience, because consumers will have to wait longer for their purchases to be delivered, given that global energy costs are likely to continue to rise in the medium term, distribution costs may begin to eat into net profit.
China Mobile Eyes Big Data
China Mobile has a problem. Although its Q2 revenue grew 10% year-on-year, net profit is stagnating – it grew by only 1.5%. What could be the reasons for this? China Mobile faces a two-pronged attack from its competitors – firstly, from China Unicom and China Telecom, secondly, from the rise of microblogging sites. Thus, China Mobile is struggling to keep its 740 million customers – they are being lured away by other mobile companies, as well as alternative, more cutting edge forms of communication. The result is that the company’s operating expenses, that is to say the amount China Mobile spends on marketing, amongst other things, have been steadily increasing – they now account for 75% of its total costs, negating any increase in revenue.
Source: Beijing Times
Has Home Internet Use Peaked?
The number of Internet connections in Chinese homes now stands at 470 million – an increase of only 3% on the previous quarter. The average daily home Internet browsing time also grew by the same, meagre amount. However, the time users spent checking their emails or on social media sites saw a much larger increase – 10% for both correspondence and SNS. How are we to explain this disparity? Although many digi-gurus are forecasting the death of home Internet use, that is to say using a PC or laptop to go online at home, it seems that China’s digital landscape is evolving. In the medium term, it’s likely that PCs won’t be the only device consumers have available to them, as was the case before the advent of smartphones and tablets, that doesn’t mean they are in danger of extinction. Surely, given that consumers prefer to browse different sites in different ways, larger versus smaller screens, mouses versus trackpads, the more devices the better? However, it is also likely that as PCs are replaced by smaller devices as the primary means of fulfilling a user’s online needs, they will reduced to a data storage device without Internet browsers. In other words, users will store their apps, photos and videos on PCs, but will access online content, app stores, photo/video sharing sites using mobile devices.