Friday, 24 November 2017 Sydney
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THE INTERNET IN CHINA AND AUSTRALIA: WHAT THE WEB HOLDS FOR OUR FUTURES::

Internet usage has expanded more quickly in China than anywhere else in the world, creating endless possibility for the Chinese economy. Meanwhile, Australia updates its network. Sophie Weisz reports.

In China, social media has a greater influence on purchasing decisions for consumers than for those anywhere else in the world. Chinese consumers are more likely to consider buying a product if they see it mentioned on a social media site and more likely to purchase a product or service if a friend or acquaintance recommends it on a social media site. 

The popularity of these social media websites in China is critically important for businesses looking to engage the vast and increasingly affluent online audience that uses social media as a vital source of information for brand and product decisions.

Consequently, China’s e-commerce market is constantly growing. The market generated RMB 1.3 trillion (USD $190 billion) worth of transactions in 2012, according to a report by the China Internet Network Information Centre, which is a 66.5 per cent increase over 2011’s total.

“E-commerce is very big in China – but e-commerce with the West is hindered by the Great Firewall of China, with Google dropping out of mainland China,” said Professor David Powers from Flinders University.

In December 2011, China had 513 million internet users, compared with 67 million in Germany, 121 million in India, and 245 million in the United States.

China has the world’s most active social-media population. According to a recent McKinsey study, 91 per cent of Chinese users had visited a social media site during the last six months, compared with 30 per cent in Japan, 67 per cent in the United States and 70 per cent in South Korea.

China is creating new platforms for users to blog and network. Due to the strict internet censorship rules, it is hard for bloggers to freely communicate with one another. A Chinese microblogging website called, Sina Weibo, similar to that of Twitter and Facebook, allows users to blog freely in China. The site is currently one of the most popular websites in China and is used by well over 30 per cent of internet users.

The social media website was launched by SINA Corporation in August 2003 and has 368 million registered users as of mid-2012. Around 100 million messages are posted each day on Sina Weibo. This new platform for internet users in China creates new possibilities for the future, as there is less control over the site. 

Although Sina sets strict controls over the posts on its services, weibo services are considered more open than other Chinese media formats. Criticism against the Chinese government is more widespread on Sina Weibo and other weibo services. For example, after the Wenzhou train collision in July 2011, in which 40 people were killed, many dissatisfied posts concerning governmental corruption were posted throughout the Sina Weibo. This emphasises new possibilities for the future in China, as it creates more opportunities for Chinese bloggers. 

"China’s e-commerce market is constantly growing. The market generated RMB 1.3 trillion (USD$190 billion) worth of transactions in 2012."

interchn1Last year, 242 million internet users purchased goods online in China, and e-commerce transactions accounted for 6 per cent of total retail sales of consumer goods.

The growth was driven largely by mobile users. During the last half of 2012, 40.7 per cent of online shoppers used a mobile device to browse e-commerce merchandise. More than half of these consumers browsed a merchandiser’s mobile application instead of accessing its main website through their device’s internet browser.  

In addition to mobile usage, social media platforms also drove e-commerce sales. 41.8 per cent of shoppers had first seen information or promotions for a product on a social media site before deciding to purchase it.  

Through the internet, China is on its way to becoming the world’s largest economy. Its e-commerce market is overtaking America’s and one giant firm, Alibaba, dominates the market and by some measures is already the world’s largest e-commerce company. 

“Alibaba.com has grown into the leading global e-commerce platform for small businesses. As of December 31, 2012, Alibaba.com had around 36.7 million registered users from more than 240 countries and regions and showcased more than 2.8 million supplier storefronts,” said International Corporate Affairs of the Alibaba Group, Florence Shih.

Last year two of Alibaba’s portals together, handled 1.1 trillion yuan ($170 billion) in sales, which is more than eBay and Amazon combined. 

Alibaba is an example of how the Chinese internet is creating growth and opportunity for the country. 

As Alibaba expands and moves into new markets, it has the capacity to change China.

The company was started in 1999 with Alibaba.com, 
a business-to-business portal connecting small Chinese manufacturers with buyers overseas. 
Its next invention, Taobao, a consumer-to-consumer portal, similar to eBay, features nearly a billion products and is one of the 20 most visited websites globally. Tmall, a new business-to-consumer portal, was then introduced. It is similar to Amazon and helps global brands reach China’s middle classes.

“Australia is one of Alibaba.com’s top markets in the APAC region, accounting for 3 per cent of all registered users on Alibaba.com as of December 31, 2012. With a solid base of more than 1 million members (as of December 31, 2013), adding an average of 22,000 per month in 2012, we already have a strong group of followers in Australia. This shows that a large and growing number of Australian businesses are already leveraging the e-commerce tools offered by Alibaba.com to reach beyond their own borders and find new business partners,” said Mr Shih. 

“By cutting out middlemen and enabling everyday people in small companies to reach out to overseas markets, Alibaba.com has been promoting global trade at the grassroots level, hence generating more opportunities for small businesses in Australia and beyond to conduct trade with other parts of the world through the internet.

“Over the past decade or so, Alibaba.com has also been promoting awareness of e-commerce in Australia as a channel through which small businesses can go to find new sources of goods and services at lower prices, and newly minted entrepreneurs can go to find goods to resell in e-tail or retail elsewhere in Australia. In addition, we have been encouraging inventors to turn their business ideas into real products through looking for suppliers by means of e-commerce. We believe these efforts have help change the perception of online trade by Australian businesses and encouraged more widespread adoption of e-commerce among them.”

By 2020 China’s e-commerce market is forecast to be bigger than the existing markets in America, Britain, Japan, Germany and France combined. Alibaba is expanding globally by capturing the spending of Chinese overseas and by moving into emerging economies.

With this, the firm is helped by Alipay, its novel online-payments system that relies on escrow, which is releasing money to sellers only once their buyers are happy with the goods received. This builds trust in societies where the rule of law is weak.

This contributes economic growth through the internet as this e-commerce website is boosting productivity in China’s retail and logistics sectors. Furthermore, it is speeding up the country’s shift away from an investment-heavy model of growth, towards one that is driven by consumption.

Companies like ChinaVasion.com that sell Chinese product (from Shenzhen largely through the Hong Kong nexus) are a strong competitor to Aussie e-commerce,” said Professor Powers.

Although China is at its height in Internet population, their internet speed is behind Australia’s. In China, the broadband speed — the rate at which devices can access data from the Internet — appears to be significantly behind the country’s rapid growth in online population. The global average broadband speed is 2.6 megabits per second (Mbps), whilst Australia’s is 4.3 Mbps. However, China’s Internet speed is changing, as the country had a 32 per cent increase in its broadband speed during the six months leading up to May 2012. 

interchn2The National Broadband Network (NBN) is Australia’s first national wholesale-only, open access communications network, which is being built to bring high speed broadband and telephone services within the reach of all Australian premises. 

The NBN will utilise three technologies; fibre, fixed wireless and satellite, expected to make possible improved ways for Australian businesses and consumers to connect with one another. Within the next decade, every home, school and workplace in the country is planned to have access to the NBN.

The NBN aims to improve the way Australian businesses can operate and communicate.

The high speeds available over the NBN can change and improve businesses, improving productivity, creating better access to new markets and cutting costs on business phone, internet and inter-office communications.

Australia’s growing dependence on the internet offers numerous channels in which it can further Australian businesses.

According to the Australian Communications and Media Authority’s (ACMA) Communications Report, in 2012, Australians downloaded 421,147 terabytes of data, which is an increase of 52 per cent, whilst the total internet subscribers increased to 28.23 million.

Nearly half of the population (10.8 million) are going online at least once a day and the average Australian spends 82 hours a month on the internet.

The ACMA found that the huge increase in data downloaded was due to the growth in online streaming of digital media. 

The report said that Australians are becoming increasingly dependent on the internet for a wide range of activities including information, communication, and banking and financial transactions.

“For many, these activities have become essential to daily life and have proven increasingly attractive to Australians looking for flexibility, convenience, choice and cost and time savings,” the ACMA report said.

Clearly, the internet holds high hopes for the future of Australian businesses. With the increase of Australians using the web, businesses can utilise the internet in their day-to-day practices. 

There are more opportunities for Australian businesses by going online. These include advertising, online shopping and online networking. Online payments can also benefit businesses as, they create easier transactions with online payments to other businesses. 

Consequently, the internet holds high prospects for our future. Both in China and Australia, the internet is constantly upgrading and improving. These improvements can benefit and create opportunity for Australian and Chinese businesses. 


 Snapshots by industry of China’s top e-commerce platforms with Cost Per Click (CPC) on Baidu:

• Clothing
VANCL.cn | Business Name: VANCL | Estimated traffic: 2.32M monthly | Estimated sales: US$1.05B in 2012 | Baidu CPC for: ‘WOMEN’S CLOTHES’: RMB4.0/$AU0.61
• Electronics 
cnsuning.com | Business Name: SUNING Estimated traffic: 107K monthly | Estimated sales: US$2.9B in 2012 | Members: 80M in 2012 | March 20 Baidu CPC for ‘MOBILE PHONE’: RMB4.0/$AU0.87
• Luxury goods
omegawatches.cn | Business Name: OMEGA Estimated traffic: 28,320 monthly | Estimated sales: EU$500M in 2011 | Baidu CPC for: ‘SWISS WATCH’: RMB12.6/AU$2.54
• Travel
uzai.com | Business name: Uzai (travel) | Estimated traffic: 565,350 monthly | Estimated sales: US$560M in 2012 | Baidu CPC for: “FLIGHT TICKET: RMB 4.0/$AU0.47
• Wines
yesmywine.com | Business Name: “Yes My Wines” | Estimated traffic: 798,870 monthly | Estimated Sales: 3000-4000 orders daily | Members as of March 1 this year: 5.2 million | Baidu CPC for “RED WINE”: RMB4.0/$AU0.61

 

copyright Australia China Trade & Investment