China’s internet population (of 649 million) and mobile market are growing fast, according to a 2014 report by China Internet Network Information Center
(CNNIC). Most notably, the growth of mobile internet users by 57
million was faster than that of the entire internet population (31
million), as the world’s biggest internet market continues its shift to
mobile.
China also has the biggest smartphone population, with 557 million
people using their handsets to go online. CNNIC reported that the number
of people in China who surf the internet via mobile devices had, for
the first time, exceeded the number of people doing so via their
computers. This means the mobile phone has become China’s primary
internet device.
CNNIC found that 90.6% of mobile owners use a messaging app to manage their money, order taxis and even invest money.
Altogether, this smartphone ecosystem has driven a rapid rise in
innovation that interlinks e-commerce, instant messaging and
entertainment applications.
For instance, recent innovations in mobile payment and mobile banking
have challenged China’s traditional banking and money management
models. In 2014, use of mobile payment apps grew 73.2%, while mobile
banking apps grew 69.2%. The new financing activities of internet
companies may see further breakthroughs, making China’s financial system
more efficient.
There has been an unprecedentedly large flow of capital into start-up
projects. According to Dow Jones VentureSource, investors poured $15.5
billion into deals in 2014 – more than twice the previous record of $7.3
billion set in 2011, and the largest amount since VentureSource began
collecting data on China in 2006.
As would be expected, businesses focused on mobile consumers have
dominated capital-raising in 2014. Among the top few was Xiaomi, the
fast-rising Chinese smartphone-maker, which received a new $1.1 billion
investment in its latest round of fundraising. Xiaomi’s business model
is inherently mobile, and its success largely due to marketing through
social network fans and mobile messaging, selling online, and avoiding
traditional marketing and advertising expenditures.
The latest round of fundraising valued Xiaomi at $45 billion, making
it the most highly valued start-up in the world, even ahead of $41
billion achieved by car-sharing service Uberin the United States.
For sure, this mobile transformation is also disrupting traditional
industries in China. Online retail poses a threat to traditional retail,
despite the large number of shopping malls built during China’s recent
urbanization drive. While shopping outlets could possibly differentiate
themselves by offering special services, creating grand design or,
better yet, joining the mobile market by integrating into online-to-offline (O2O) plays, there is every sign that the shift to mobile is accelerating and irreversible.
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