Market Report

CNNIC Internet report: the Internet getting personal?

(August 22, 2006)

The latest Chinese Internet user survey published by the country's Internet watchdog, the CNNIC, reports that China's Internet users now number 123 million, up 10.8 percent over the last six months. Compared to the last report in January this year, CNNIC offers a more candid acknowledgement of China's growing digital divide. The Internet watchdog is also keen to stress the normalisation of Internet use with higher proportions of married and older users going online. What is more, for the first time in recent years there is some evidence to support this, even if China's average Internet user still belongs to a fairly specific and narrowly defined social category. The survey also contains new details on online gaming and points to the increasing personalisation of Internet use. In this Market Report, China Media Intelligence offers an independent analysis of the CNNIC report and identifies the latest trends in the development of China's Internet landscape.

Sections:

Introduction

At the end of last month, the China Internet Network Information Centre (CNNIC) released the latest of its regular six monthly reports on the development of the Chinese Internet. Even though reports vary slightly each time in terms of specific content and questions, they nonetheless have a certain familiarity and predictability to them. However, despite their familiarity and the fact that each report invariably confirms a number of well-established trends, they still offer valuable updates and insights into the current state of the Internet in China and invariably have some or other intriguing or significant data to report.

The latest report is no exception. The general growth figures show a slight spurt compared to six months ago, they reveal the extent of expansion of international bandwidth, the continuing conversion to broadband, the rise and rise of the Internet cafe as a gaming venue and also the steady increase in home Internet use. The user behaviour figures confirm some already emerging trends including the gradual rise of the Internet as a source of entertainment and a slight increase in e-commerce while the average Chinese Internet user is still likely to be a male student under the age of 30 with an income of less than Rmb1,000.

That does not mean, however, that there is nothing new in the survey. Reading across different sections of the report there are several indications of how Internet users are looking for more personalised and individual services from blogs to personal web pages. This also relates to the fact that for many young people the Internet is also an arena of communication and for socialising. The report also includes some new questions on attitudes towards information media comparing netizens' and non-netizens' use of other media such as television, newspapers and magazines, as their primary sources of information. These questions give some insight into a possible major shift in the balance of future media consumption. Questions about Internet user satisfaction also point to some slight negative shift in the degree of contentment with online content and services.

The report contains some new questions and information on online gaming including game preferences related to educational level and some indication of gaming habits. For instance it becomes clear that a large proportion of online gamers have been playing for more than five years.

In our last report on the January CNNIC figures (see China Media Intelligence, Volume 6, Issue 2 (27/2/05)) we devoted some attention to the issue of China's growing digital divides. In January, the CNNIC devoted some attention to the issue for the first time. However, as we reported at the time (see China Media Intelligence, Volume 6, Issue 2 (27/2/05)) the CNNIC offered no realistic vision as to how the divide might eventually be narrowed. The simplistic argument presented was that since penetration levels are high in the East of the country and in cities, user numbers must eventually level off while the West and the countryside start to catch up, however gradually. In this CNNIC report, there is still now suggestion of the solution to the problem, but there is a more realistic, if brief, assessment of the issue acknowledging that the key urban-rural and East-West digital divides within the country are actually widening rather than narrowing in terms both of user numbers and websites or domain names.

The CNNIC has for years been keen to stress the 'normalisation' of Internet use, suggesting that gradually the ratios of male to female, single to married and younger to older users are all lowering. This was true some years ago as the Internet moved from being a relatively specialist arena dominated by IT enthusiasts and professionals to the more broadly used information and entertainment platform that it is today. However, the ratios in question have for years remained fairly steady. In this report CNNIC once again declares that normalisation is afoot, and this time, there is slightly more substantive evidence to support the claim. However, a look across the range of Internet user characteristics also leaves itself open to the interpretation that the Chinese Internet-using public is still a relatively narrowly defined group.

We will visit these various issues below as well as an overview of the key general growth figures, user characteristics and behaviour.

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Key changes, figures and characteristics

General growth
The number of Internet users rose by 12 million over the six months to the end of June this year, bringing the total to 123 million. This consitutes growth of 10.8 percent over the half year, compared to 7.76 percent over the second half and 9.57 percent over the first half of 2005. The overall trend in usern number growth rates has been downwards since July 2002. Consequently, even if this slight increase in the growth rate is the largest of its kind since 2002, it is nonetheless too small and too early to see it as anything out of the ordinary (see Figure 1).

Broadband access is now by far the most common way of connecting to the Internet. Of these 123 million Internet users 77 million now say they use broadband access compared to a declining 47.5 million dial-up users and 28.6 million dedicated line users (see Table 1). The scale of this trend is clearly seen in Figure 2 where the sharp rise in broadband use is matched by the levelling off and downturn in the other two principal modes of access. The chart and the statistics also suggests that even though there are clearly many people using more than one form of Internet connection, more and more users are starting to use only broadband.

Total
(millions)
Dedicated line users
(millions)
Dial-up users including ISDN (millions)
Broadband users (millions)
123 (111)
28.6 (29.1)
47.5 (51)
77 (64.3)

Table 1: Number of Internet users (multiple access mode users counted in each category). (January 2006 figures in brackets) (Source: CNNIC, July 2006)

The figures for the number of computers online tell the same basic story with dial-up and dedicated line connected computers declining slightly while 'other' connections, which essentially means broadband, rose by 25.7 percent to 28.15 million (see Table 2 and Figure 3) over the first six months of the year. This also outstrips the overall growth rate of 10 percent more computers online in the same period (also slightly up from 8.55 percent in January this year).

Total
(millions)
Dedicated line
(millions)
Dial-up
(millions)
Other
(millions)
54.5 (49.50)
6.25 (6.5)
20.10 (20.60)
28.15 (22.40)

Table 2: Number of computers online (multiple access mode users counted in each category). (January 2006 figures in brackets) (Source: CNNIC, July 2006)

The almost exponential expansion of China's International export bandwidth also continued over the last six months, rising by 57.36 percent over the period to 214,175M (see Figure 4 and Table 3) compared with 136,106M reported in January this year. The growth rate is down slightly from 65 percent over the second half of 2005, but this is nonetheless rapid expansion keeping up with the greater demands being put on the networks. The largest expansion was in the CHINANET network with a 73.6 percent increase to 122,587M from 70,622M six months ago. CHINANET also now accounts for 57.24 percent of overall international bandwidth, up from 51.89 percent by December 31 last year (see Table 4 ).

Figure 4: Total international bandwidth July 1998 - July 2006 (Source: CNNIC, July 2006)


Domain names and websites
The total number of domain names was up 13.8 percent to 2,950,500 since January this year, with .com domain names accounting for 48.7 percent of the total and .cn domain names a further 40.3 percent (see Table 5).

Domain name type
Number
Proportion of all domain names (%)
CN
1,190,617 (1,096,924)
40.3 (42.3)
COM
1,435,768 (1,202,497)
48.7 (46.4)
NET
249,555 (216,533)
8.5 (8.4)
ORG
74,560 (76,456)
2.5 (2.9)
TOTAL
2,950,500 (2,592,410)
100

Table 5: Numbers and relative proportions of domain name registrations by type (Source: CNNIC, July 2006)

CNNIC gives the usual breakdown of .cn domain names with grade two (erji yuming) .cn domain names again showing the largest growth from 588,748 to 665,680, accounting for 55.9 percent of all .cn domain names compared to 53.7 percent in January (see Table 6). There has therefore been a sharp increase in Chinese domain names over the last year. In July 2005 there were just 622,534 .cn domain names in total and only 293,592 erji yuming. This gives annual growth in these two categories of 91.25 percent and 127 percent respectively. The only category of domain names in decline are local government domain names down from 37,167 to 28,175 over the last six months.

The total number of websites increased over the last six months by 13.57 percent compared to a relatively modest 2.46 percent over the previous six months. CNNIC counted 788,400 Chinese websites compared to 694,200 at the end of December last year. The largest growth was in .cn and .com websites, but the overall proportional distribution is little changed from the last report (see Table 7). Of the .cn websites, the most common were once again either just .cn sites or .com.cn sites which together account for 88.5 percent of the total (see Table 8).

Website type
Number
Proportion of all websites (%)
CN
342,419 (299,530)
43.4 (43.2)
COM
352,301 (315,917)
44.7 (45.5)
NET
74,304 (60,523)
9.4 (8.7)
ORG
19.376 (18,230)
2.5 (2.6)
TOTAL
788,400 (694,200)
100

Table 7: Numbers and relative proportions of websites by type (January 2006 figures in brackets) (Source: CNNIC, July 2006)

In terms of the regional distribution of domain names and websites, Guangdong once again showed solid expansion now claiming slightly higher proportions of the total number of domain names and websites compared to six months ago, even if there was a marginal drop in the proportion of Chinese domain names. Meanwhile there was little change in the overall rankings of the different provinces either for domain names or websites (see Table 9 and Table 10 respectively). Beijing, Guangdong, Shanghai, Zhejiang and Fujian all hold onto their top positions for both domain names and websites, while the remoter western autonomous regions of Qinghai, Ningxia and Tibet continue to prop up the tables, with if anything falling overall proportions of the market. With websites for instance, the bottom six regions saw their total share drop by 0.3 percentage points, with none increasing, while the top six saw a collective gain of 1.4 percentage points of the overall market.

In short, the heavy concentration of the Internet in the large cities and eastern coastal provinces shows little sign of change.

User characteristics: the digitial divide and normalisation

This latter point goes illustrates that China's digital divide shows little sign of narrowing, something acknowledged for the first time in the latest CNNIC survey even if CNNIC still tries to put a familiar emphasis on the normalisation of China's Internet use. This is not an entirely coherent position to maintain, although it can be fudged to some degree.

The acknowledgement of the digital divide comes in a new section to the report called 'Analysis of China's Internet Development Differences.' In this section, CNNIC reports that urban Internet penetration rates are six times those of the countryside and the difference between towns or cities and rural areas has grown over the last six months. At the end of December 2005, rural penetration rates were 2.6 percent compared to 16.9 percent urban penetration and 8.5 percent national penetration rates. By the end of June, rural penetration was up to 3.0 percent but urban and national levels up to 18.0 percent and 9.4 percent respectively (see Figure 5).

Figure 5: Rural-urban Internet penetration rates December 2005 - July 2006 (Source: CNNIC, July 2006)

CNNIC also furnish a number of other statistics, including rural-urban school penetration rates, all showing the extent of the rural-urban digital divide. CNNIC figures for regional penetration rates are just slightly more encouraging than the rural-urban figures, in that there was a relatively even approximately one percentage point increase in penetration rates across the East, West and Central regions of the country, even if the Eastern region was up at 14 percent by the end of June compared to 6.5 percent and 6.9 percent in Central and Western China respectively.

It is clearly important that the CNNIC should take the rural-urban divide seriously. However, this does not square with the Centre's continuing claims that the Internet is undergoing a process of normalisation, that it is increasingly the realm of a wider range of people spanning the full range of sociological categories more evenly than in the past.

There is a small amount of evidence in the latest survey that can be used to support the CNNIC claim. Probably most notably, the ratio of unmarried to married users is down to its lowest level since the CNNIC started publishing its reports. The proportion of married Internet users was up by a relatively solid 2.8 percentage points over the last six months and 3.9 percentage points over the last year (see Table 11 and Figure 6). There may, therefore be some grounds for seeing this longstanding disparity between married and unmarried users narrowing.

Married
Single
44.9 (42.1)
55.1 (57.9)

Table 11: Marital status of Internet users (percentage). (January 2006 figures in brackets) (Source: CNNIC, July 2006)

The evidence from non-Internet users, which is always a useful indication of possible future trends, suggests, however, that we may just be seeing a wave of married interest rolling over the Chinese Internet landscape. The proportion of interviewed non-Internet users saying that they expected to go online within the next half year and who were married was down from 62.4 percent in January's report to 54.1 percent in this latest report. Last July the same figure was 53.6 percent. It therefore seems reasonable to assume that the current peak in married users reflects the large proportion of married people saying in January that they would go online in the next six months. It appears that many of them did. However, the 54.1 percent figure in this survey suggests the level will not be maintained in the next survey.

The figures for the proportions of male and female Internet users offer little suggestion of change. The ratio of male to female users to the end of June this year was 58.8 to 41.2, almost exactly the same as six months ago (see Table 12 and Figure 7 ).

Male
Female
58.8 (58.7)
41.2 (41.3)

Table 12: Gender of Internet users (percentage). (January 2006 figures in brackets) (Source: CNNIC, July 2006)

However, the information from non-users, like that for married/unmarried non-users does not suggest any narrowing of this gap in the future. Indeed, it would suggest that if anything the number of male users will rise faster than the number of female users. The number of non-users expecting to go online within the next six months that were women was 46.5 percent with 53.5 percent of expected new users being men. This constitues an improvement on six months ago when the ration was 41 to 59, but the majority is still with the prospective male users. This is unlike the situation with married and single non-users where the majority among users is the minority among prospective users. Consequently there is little evidence to support the idea of gender normalisation, even bearing in mind that there is an exaggerated gender imbalance in China weighted towards males.

It is also, however, important to consider the other characteristics of Internet users when assessing the degree of normalisation. Primarily these include occupation, age and income. In terms of occupation, the average Internet user is more likely than ever to be a student with 36.2 percent of Internet users being students up from 33.2 percent this time last year and 35.1 percent in January's report (see Table 13).

Occupation
%
Students
36.2 (35.1)
Enterprise workers
28.9 (29.7)
Unemployed
8.5 (6.9)
School/College teachers and administrators
7.4 (7.3)
Civil Servants
6.2 (6.6)
Public business workers
5.6 (6.5)
Free profession (ziyou zhiye)
5.3 (4.1)
Peasants/farmers
1.6 (1.4)
Other (including military)
0.3 (0.6)

Table 13: Occupation of Internet users (January 2006 figures in brackets) (Source: CNNIC, July 2006)

NB: The 'retired' category which accounted for 1.8 percent of Internet users in January does not appear in this survey

Something that is very striking in the occupation figures is that only 47.6 percent of Internet users are regular employees of one kind or another outside of the education sector, only 1.6 percent of Internet users are farmers, only 6.2 percent are civil servants and only 5.6 percent work in public businesses. We have become accustomed to the rise and rise of student users, who now account for well over one in three netizens, but it is also revealing to think about how few of China's Internet users are in major sectors of China's employment spectrum. In a country where more than 60 percent of the population - more than 800 million people - are farmers, it is difficult to think about the normalisation of the Internet when only 1.6 percent of Internet users are farmers.

The overall age distribution of Internet users is little changed in the latest survey. There is a slight further concentration of users in the 18-24 age bracket, largely at the expense of the proportions of other under-35 groupings. There is some increase in the proportion of 36 to 50 year olds online, but overall the proporation of under 35's remains at 82.3 percent compared with 82.6 percent in January. The proportion of under 24's and under 30's also continue to edge upwards, now at 53.8 percent and 72.2 percent respectively, up from 51.7 percent and 71 percent in January and 53.5 percent and 70.9 percent at this time last year (see Table 14).

Age
Under 18
18-24
25-30
31-35
36-40
41-50
51-60
Over 60
%
14.9 (16.6)
38.9 (35.1)
18.4 (19.3)
10.1 (11.6)
7.5 (7.1)
7.0 (6.8)
2.4 (2.7)
0.8 (0.8)
Aggregate
%
14.9 (16.6)
53.8 (51.7)
72.2 (71.0)
82.3 (82.6)
89.8 (89.7)
96.8 (96.5)
99.2 (99.2)
100 (100)

Table 14: Age of Internet users (January 2006 figures in brackets) (Source: CNNIC, July 2006)

Compared to the overall population, China's Interent users are also relatively highly educated. According to the latest figures, although 17.8 percent have less than an upper middle school (gao zhong) certificate, more than 31 percent do. A further 23 percent have a college level diploma (dazhuan) and 24.7 percent the equivalent of a BA (benke) (see Table 15). Masters and Doctorate level graduates are much fewer, but that is also true of the general population.

Educational level
Lower than Upper Middle School (zhongzhuan)
Upper Middle School (zhongzhuan)
College Diploma (dazhuan)
BA (benke)
MA (suoshi)
PhD
%
17.8 (16.2)
31.6 (30.2)
23.0 (24.4)
24.7 (26.3)
2.3 (2.4)
0.6 (0.5)
Aggregate
%
17.8 (16.2)
49.4 (46.4)
72.4 (70.8)
97.1 (97.1)
99.4 (99.5)
100 (100)

Table 15: Educational level of Internet users (January 2006 figures in brackets) (Source: CNNIC, July 2006)

In terms of Internet users' income, the latest survey shows clear growth in the proportions of users coming from the lower income brackets (up to Rmb3,000) (see Table 16). This runs counter to the apparent trend emerging in the last survey that showed proportional growth among wealthier users (see China Media Intelligence, Volume 6, Issue 2 (27/2/05)).

Whereas January's survey showed the proportions of users earning under Rmb500 per month, between Rmb501 and Rmb1,000, Rmb1,001 and Rmb1,500 or without income all down slightly compared to this time last year, in this survey all but one of those categories shows growth, some of it strong. At the same time, the overall proportion of users from all of the higher earning income ranges, from Rmb2,000 upwards, dropped and in some cases quite significantly. The proportion overall of users earning less than Rmb1,500 (excluding those with no income) also rose to 58.6 percent from 50.9 percent in January, in effect cancelling out the drop shown in January's report and returning to a similar level as in July last year.

Amount
<Rmb500
Rmb501-1,000
Rmb1,001-1,500
Rmb1,501-2,000
Rmb2,001-2,500
Rmb2,501-3,000
%
26.9 (21.8)
15.9 (15.7)
15.8 (13.4)
12.0 (11.8)
5.3 (6.9)
5.0 (5.9)
Amount
Rmb3,001-4,000
Rmb4,001-5,000
Rmb5,001-6,000
Rmb6,001-10,000
>Rmb10,001
No income
%
4.8 (5.4)
2.6 (4.5)
1.3 (1.8)
1.1 (2.3)
1.9 (2.3)
7.4 (8.2)

Table 16: Income of Internet users (January 2006 figures in brackets) (Source: CNNIC, July 2006)

In terms of normalisation, the income figures are not particularly informative. They do suggest that the bulk of Internet users earn an average or low income but that is no real surprise. For the first time in the latest report, however, the CNNIC have included figures for current higher education student Internet user income. These showed that 48 percent of Internet users still in higher education had a monthly income of less than Rmb500, 44.6 percent between Rmb501 and Rmb1000, 4.3 percent between Rmb1,001 and Rmb1,500 and no more than 1.4 percent for any higher income category.

Overall it is therefore difficult to see any substantial signs of 'normalisation'. To be fair CNNIC does not push the point very hard, but it does run through the brief analysis offered in the report as a subtle underlying theme and interestingly CNNIC chooses to use statistics from one year ago, rather than those from January's report, for comparison, figures which tend to show greater growth in married and female users for example. Nonetheless, in the end one cannot but conclude that China's Internet users still come from a relatively narrow category of urban, low income, relatively highly educated students, business employees and unemployed with a high likelihood of being male, unmarried and under 35, if not under 30.

User behaviour and attitudes: personalising the Internet

By far the most common place for Chinese people to access the Internet is at home. By the end of June this year more than 72 percent of China's Internet users were logging on at home compared to just over 35 percent at work and 29.5 percent in netbars or Internet cafes (see Table 17). These figures reflect continuing growth in both home and netbar users, while work users continue their gentle decline. Although 96.9 percent of Internet users logon with a desktop computer, 17.9 percent now also use a laptop, indicating the diversification of Internet access modes.

Location
Home
Work Unit
School/college
Internet cafe/netbar
Public places
Other
%
72.2
(70.5)
35.1
(37.6)
18.9
(19.0)
29.5
(27.0)
0.5
(0.8)
0.5
(0.1)

Table 17: Main location for accessing the Internet (January 2006 figures in brackets) (Source: CNNIC, July 2006)

The fact that more people are using the Internet at home reflects the continuing growth in PC-equipped homes, the expansion of China's broadband infrastructure, particularly in the cities, and warming attitudes towards the Internet and other new technologies among parents and heads of families. In this latest survey, however, it is also interesting to see how netbar use is closing the gap on work Internet use. Of course the trend is unpredictable, but if it does carry on at the present rate of change then by this time next year there could be more people using the Internet in netbars than at work. This reflects the growing tendency to use the Internet less for straightforward information-seeking than for other entertainment and communication services of one kind or another (see Table 18).

Regularly used online services
Response (%)
Surfing news
66.3 (67.9)
Search engines
66.3 (65.7)
Email
64.2 (64.7)
BBS, discussion groups etc.
43.2 (41.6)
Instant messaging
42.7 (41.9)
Gathering information (e.g. on products/services, medical, work or government-related etc.)
39.5 (39.8)
Online TV and film (including downloads)
37.3 (37.1)
Online music (including downloads)
35.1 (38.3)
Online document up/downloads (excluding music, TV, film)
33.9 (33.8)
Online gaming
31.8 (33.2)
Online alumnus records
26.0 (28.6)
Online shopping
26.0 (24.5)
Personal webpage
24.3 (14.2)
Blogging
23.7 (14.2)
Online jobsearch
20.6 (18.9)
Chat rooms
19.9 (23.1)
Online finance
16.5 (14.1)
Electronic magazines
16.5 (16.7)
Online education
12.4 (14.1)
Online selling
11.3 (9.9)
SMS/MMS short messaging
9.7 (9.5)
Internet telephony
7.9 (6.5)
Online reservations (restaurants, tickets etc.)
5.4 (4.6)
E-government
5.4 (5.1)
Dating, friendship and marriage agencies
4.6 (3.8)
Other
4.3 (4.0)

Table 18: Regularly used online services [communications services highlighted in red] (January 2006 figures in brackets) (Source: CNNIC, July 2006)

Certainly the top two cited Internet services in the survey are information gathering services - surfing news and using search engines. However, search engines can be used to search for entertainment as well as information and the proportion of respondents in this survey saying they used the Internet for news was actually down slightly. Nonetheless, there is also little sign of entertainment use expanding greatly, especially if judged by the top entertainment-related services such as video and music downloads or online gaming. The proportion of video download service users was up very slightly, but those of both music downloaders and online gamers were down.

In fact, that points to one of the striking features of the latest survey. There appears to be a shift afoot in the use of the Internet increasingly for communication rather than information gathering or entertainment purposes. This is undoubtedly related to the increasing popularity of web 2.0 type interactive protagonist sites and services such as blogs. In fact, the latest survey figures show a prominent increase in the proportions of netizens using the Internet for BBS, discussion groups, instant messaging, personal webpage services and blogging. The only communication services that showed a downturn were email and chatrooms, both of which, it might be argued, are being superceded by new technologies in China - email by text-messaging and chatrooms by enhanced instant messaging, BBS, blogging and MySpace-like services.

The increasing popularity of the range of Internet tools for online socialising and communication points to an ever greater personalisation of the Internet in China, as in many other parts of the world. Internet use in China has evolved through the technology phase, when it was the realm of IT enthusiasts and professionals in the late 1990s, through the information superhighway phase, when non-specialist users started to see it as an alternative source of information to the other media, through to the combined information and entertainment phase to the diversifying multifaceted information, entertainment, communication and lifestyle phase in which it is currently developing.

The strongest growth in popular services revealed in Table 18 above was for personal webpages and blogging. These in themselves reflect the personalisation of the Internet with it becoming used more and more as a vehicle of self-expression, a space for personal presentation and online social interaction. However, this is not the only aspect of personalisation occuring with China's Internet, it is simply the latest manifestation of it. The shift from information towards entertainment that has occured over the last few years has itself emphasised the personal with services such as one-to-one gaming, video-on-demand and music and film downloads taking the lead. All this came after the now 'old' SMS boom which saw the Internet offer personalised news and information services for the first time. The steady growth of e-shopping, with 26 percent of Chinese Internet users saying they now regularly shop online, also reflects the Internet being put to use for more practical personalised purposes.

There are however, some interesting new figures included in the latest report relating to sources of information. Asked what their main source of information was, 82.6 percent of netizens said it was the Internet, followed by 64.5 percent who said the television and 57.9 percent newspapers. The same question asked of non-Internet users yielded responses of 88.3 percent for television and 35.9 percent for newspapers (see Table 19 and Figure 8).

Figure 8: Sources of information for Internet users and non-users (Source: CNNIC, July 2006).

It is therefore interesting to note not just how many Internet users cite the Internet as a primary source of information. This is after all not entirely surprising. What is striking about Figure 7 is that leaving the Internet aside, non-Internet users are far more heavily dependent on the television. Netizens are more likely than non-users to look for information in newspapers, magazines, books or by listening to the radio, in fact any other medium apart from television. This points to some quite significant changes in media consumption and use that will largely map onto generational and rural-urban divides. Indeed, market reports have recently revealed the trend among young people away from the television compared to older generations.

Chinese netizens continue to spend more time online although the amount of money people spend on their Internet access was virtually unchanged at Rmb102 per month as opposed to Rmb103.6 per month in January. January's report found that on average Internet users spent 15.9 hours online per week. A year ago this was 14 hours and now the figure has risen to 16.5 hours per week. This is a new record high for Chinese Internet use and CNNIC is keen to point out that this also exceeds the level of weekly use in many relatively Internet-developed countries and reflects the increasing importance of the technology in people's everyday lives. Increasing use is also reflected in the chart of the most popular times to go online (see Table 20 and Figure 9).

Figure 9: Times using the Internet January 2003 to July 2006 (Source: CNNIC, July 2006).

The chart shows some clear trends towards a levelling out of day time Internet use. There are still the traditional three peaks of morning, afternoon and late evening use, with around 74 million people on line during the latter of these. However, the graph shows that the clear distinction between the morning and afternoon peaks is disappearing to some degree. There is now a slight dip at midday, but three years ago this was a clear three hour trough. The afternoon peak has also now swollen with more than 40 percent of China's netizens likely to be online. The morning peak is only fraction higher than in January and the evening peak is virtually unchanged, if anything slightly lower than six months ago. All this suggests that there is increasing use of the Internet during the day, peaking in the afternoon. There is then a distinct downturn at evening meal time and a peak in Internet use before most netizens head for bed towards midnight. This creates a high intensity evening peak with a greater proportion of users online at one time, even if there are around 30 percent more actual users betwen 10.00 and 18.00 than between 19.00 and midnight.

If the latest survey is an indication, the more time Chinese people spend online, however, the less they seem to be satisfied with online services. Overall satisfaction was down with fewer users saying they were very satisfied and slightly more saying they were very unsatisfied. However, there was at least a slight decrease in satisfaction for all the features of the Internet listed (speed, cost, security, content verity and healthiness and personal privacy). The greatest concerns were surrounding cost, security and personal privacy protection (see Table 21).

This was also reflected in responses to the question of what aspects of the Internet are most objectionable when 29.2 percent up from 19.9 percent in January and higher than any other category (see Table 22). What is more, 70.1 percent of Internet users said that their computers had been attacked by either viruses or hackers in the last six months. Consequently, 87.7 percent use some kind of anti-virus software and 71.8 percent a firewall. Only 2.8 percent said they did not take any security measures at all.

What is the most objectionable aspect of the Internet?
Response (%)
Viruses
29.2 (19.9)
Pop-up adverts and windows
20.9 (22.1)
Network intrusions and crashes
12.5 (11.7)
Online payment traps
9.3 (12.8)
False information
8.6 (9.3)
Junk emails
5.9 (8.7)
Online frauds, phishing etc.
5.3 (6.1)
Distasteful content
4.5 (5.1)
Revelation of private details
3.1 (3.7)
Other
0.7 (0.6)

Table 22: What is the most objectionable aspect of the Internet? (January 2006 figures in brackets) (Source: CNNIC, July 2006)

Online shopping and paying online is also now becoming an increasingly normal part of Chinese Internet practice. E-shopping took some time to take off, but with 26.0 percent of Internet users now ranking it as a regular online activity. Furthermore, 39.9 percent of all Internet users saw it as a possibility that they would make an online purchase in the next six months. Of those who have already bought online, 73.8 percent said they prefered online payment by credit or debit card (see Table 23). The popularity of all other forms of payment was considerably down on just six months ago.

Methods of online payment preferred
Response (%)
Online payment (credit/payment cards)
73.8 (61.5)
Payment on delivery
28.1 (36.1)
Bank transfer
15.2 (25.8)
Postal order
12.4 (18.2)
Cellphone payment
2.4 (3.5)
Other
2.0 (0.9)

Table 23: Methods of online payment preferred (January 2006 figures in brackets) (Source: CNNIC, July 2006)


Online gaming

Nearly 32 percent of China's Internet users play online games regularly. This reflects to some degree the youthful character of China's netizens most of whom either still are or were until relatively recently students. Nonetheless, this is a high proportion of gamers. The latest CNNIC survey included extra questions on online gaming that offer a few new insights into China's world of online gamers.

One new question probed how long China's gamers have been playing online games and found that 48 percent have been playing since 2000 or before while only 16.6 percent started in the last three years (see Table 24). This reveals a fairly high degree of dedication and commitment - although some Chinese might argue addiction - to gaming, but it does not suggest that there is particularly strong growth in the sector at present. At this rate one can expect a fairly static level of interest in online gaming.

The survey also shows that a large proportion of games attract the attention of users for only a few months before they move onto something different (see Table 25). Basically the majority of gamers (62.3 percent) say that they will stop playing any particular game within six months of starting yo play it, if not before. 46.8 percent said that it would be within three months. This is clearly a contributory factor to the high level of competition in the online gaming sector and demonstrates the pressure on gaming providers to develop new products.

The survey also found that gamers spent on average 11 hours per week playing games. This is little changed from the 10.9 hours both a year ago and eighteen months ago. Hence, eleven hours a week appears to be a fairly constant average, even if there has been strong growth in the number of gamers over the last year and a half. At the beginning of 2005, less than 16 percent of China's netizens were gaming regularly (about 15 million people) compared to today's 32 percent (nearly 40 million people).

Gamers' motivations also offer some food for thought. Unsurprisingly, 85.8 percent of gamers said one of their main motivations for gaming was for entertainment. In fact one might be more surprised by the fac that more than 14 percent of gamers are therefore not gaming for entertainment. Presumably a good number of these gamers are among the 35 percent who said they played online games to fill in or pass the time. This points to a relatively high level of bored youth. Another 15.5 percent listed making and meeting friends among their main motivations, which points to the social practice of gaming and Internet cafe attendance.

The amount of money spent on gaming appears to have risen considerably over the last year. In last July's report, 37 percent of gamers said that their average monthly spending was zero, 24.8 percent said it was up to Rmb20 and 14.9 percent from Rmb21 to Rmb40. Only 23.3 percent spent more than Rmb40 per month even if 0.4 percent were spending more than Rmb500 per month. Without precise figures the exact average cannot be calculated, but it would be in the region of Rmb30 to Rm32 per month. In this July's report the only the average is given, but it is up at Rmb40.7 per month.

More than 63 percent of online gamers are now also playing at home (including student dormitories) compared to 38.8 percent in Internet cafes. To some degree this confounds the common perception of netbars as the prime location for online gaming. Clearly a large proportion - the majority - of netbar users are gamers and netbars have a central place in gaming culture and social interaction. However, it is interesting to note such a high level of home gaming as well. A shocking statistic for employers is that 30 percent of gamers are playing games at work (see Table 26).

Gaming location
Response (%)
Home (including student dormitories)
63.6
Netbars
38.8
Workplace
30.0
School/college
8.3
Public places
1.9
Other
0.3

Table 26: Online gaming locations (Source: CNNIC, July 2006)

CNNIC has changed the categories of kinds of games since last summer when similar online gaming questions were asked. It is therefore difficult to evaluate trends. However, role playing games maintain a similar level of popularity (46.7 percent compared to 44.1 percent and 48.2 percent in July 2005 and July 2004 respectively) (see Table 27). Interestingly, CNNIC point out, though they do not furnish the statistics, that there is a divide among students (who constitute the majority of gamers) in their taste for online games. We are told that the higher the student level, i.e. college level upwards, the more likely students are to play different kinds of chess games (which recorded 39.6 percent overall popularity). Meanwhile lower level students (below college level) are more likely to play role-playing games and different types of leisure games (both 46.7 percent overall popularity).

Kind of game
Popularity (%)
Role-playing (e.g. Chuanqi, Qiji etc.)
46.7
Leisure games(e.g. Paopaotang, Fengkuang Tanke etc.)
46.7
Chess-style leisure games (e.g. Chess, intelligence games etc.)
39.6
Instant strategy (e.g. Diguo shidai, Xingji Zhengba etc.)
22.4
Business simulation (e.g. Jushang etc.)
7.3
Other
2.9

Table 27: Popularity of onine games (Source: CNNIC, July 2006)

Finally, there are interesting insights into the kinds of criteria that gamers use to make their gaming decisions. The large majority of gamers considered qualitative technical features - such as speed, image or sound quality - of games to be of importance in choosing which games to play. The criteria of story or content setting of the game came only sixth in the list (see Table 28). This suggests that game quality, difficulty and cost all come before issues of game content.

Criterion
Response (%)
Game connection and operating speed
65.0
Game picture quality and sound effects
62.1
Game operating difficulty
38.2
Free trial available
35.5
Game balance and fairness
30.8
Story situation
30.7
Characters
24.3
Good customer service attitude
15.6
Support (e.g. chat, shopping, user groups etc.)
14.6
Business activities
7.8
Other
1.2

Table 28: Important criteria for online gamers (Source: CNNIC, July 2006)

Overall there are few new major insights in this gaming data. However, one does get a strong sense of a maturing and increasingly sophisticated sector. This partly comes from the more nuanced questions asked by CNNIC, but also reflects the more competitive nature of the market, the increasing number of gamers and the considerable experience and expectations of gamers.

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Conclusion

The latest CNNIC Chinese Internet use and development report shows the extent of the maturation of the sector. With 123 million users, the Internet is becoming an ever more important feature of people's everyday lives. This accounts to some extent for why the Chinese authorities are becoming increasingly concerned about what they consider undesirable content and are increasingly cracking down on bulletin board type forum websites.

However, one of the clear indications in the latest CNNIC survey is that it is these kinds of personalisable, individual online social interactive type websites and services that are increasingly popular with China's netizens. As we have seen above, there is a trend towards increasing use of the interpersonal communications possibilities of the Internet in China. The Internet in China is no longer simply a source of information and entertainment, but is also an arena for social interaction and communication. It will be interesting to see how the Chinese authorities react to and deal with this trend, given that this is the least controllable and potentially most threatening aspect of the Internet for them.

Otherwise the latest report confirms the established understanding of the average Chinese Internet user as young, more likely male than female, more likely a student than anything else and more likely unmarried than married. CNNIC would like to be able to argue that there is a normalisation of Chinese Internet use, particularly given the maturing market and the increasingly significant numbers of Internet users. However, clearly this is not happening. The size of the Internet-using population continues to grow, but so does the digital divide between urban and rural areas and between the more and less economically developed parts of the country. The concentration of Internet users among young students persists and, if anything, is intensifying.

The steady growth in e-commerce continues and there are increasing signs that the Internet is now seen as a convenient and reliable vehicle for at least some kinds of purchase. That said, the latest report does reflect considerable security concerns among Internet users and fairly high levels of virus and hacking problems despite high levels of anti-virus software installation. However, Chinese Internet users clearly see the advantages of the Internet and the increasing number and kinds of opportunities that it offers as outweighing the potential inconvenience of viruses and other security issues.

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Index of Tables and figures

Table 1: Number of Internet users
Table 2: Number of computers online
Table 3: Total international bandwidth October 1997 - July 2006
Table 4: International bandwidth July 2006
Table 5: Numbers and relative proportions of domain name registrations by type
Table 6: Domain names registered under .cn.
Table 7: Numbers and relative proportions of websites by type
Table 8 : .cn websites
Table 9: Geographical distribution of domain names (excluding .edu.cn)
Table 10: Geographical distribution of websites (excluding .edu.cn)
Table 11: Marital status of Internet users
Table 12: Gender of Internet users
Table 13: Occupation of Internet users
Table 14: Age of Internet users
Table 15: Educational level of Internet users
Table 16: Income of Internet users
Table 17: Main location for accessing the Internet
Table 18: Regularly used online services
Table 19: Main sources of information for Internet users and non-Internet users
Table 20: Most likely times to access the Internet
Table 21: Satisfaction with features of the Internet
Table 22: What is the most objectionable aspect of the Internet
Table 23: Methods of online payment preferred
Table 24: Year of starting to play online games
Table 25: Longest time continuing to play one online game regularly
Table 26: Online gaming locations
Table 27: Popularity of online games
Table 28: Important criteria for online gamers
 
 
 
Figure 1: Internet User Growth Rates July 1998 - July 2006
Figure 2: Internet Users by access mode October 1997- July 2006
Figure 3: Internet computer growth October 1997 - July 2006
Figure 4: Total international bandwidth July 1998 - July 2006
Figure 5: Rural-urban Internet penetration rates December 2005 - July 2006
Figure 6: Percentage of Married to Unmarried Internet Users January 1999 -January 2006
Figure 7: Percentage of Male to Female Internet Users July 1998 - July 2006
Figure 8: Sources of information for Internet users and non-users
Figure 9: Times using the Internet

Appendices:

Appendix A: Domain names and websites
Appendix B: User Behaviour and Characteristics
Appendix C: Internet users and computers online
Appendix D: International bandwidth

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CMI

 

 

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