Internet Development Shifted from “Quantitative Change” to “Qualitative Change” Mobile Phone Terminal Applications on the Rise

On January 16, 2014, China Internet Network Information Center (CNNIC) released the 33rd Statistical Report on Internet Development in China ("the Report") in Beijing. According to the Report, by the end of December 2013, the number of Internet users in China had reached 618 million and the Internet penetration rate was 45.8%, of which the number of mobile Internet users had reached 500 million and kept growing. The continuous growth of mobile Internet users facilitated the development of various applications of mobile phone terminal and was a highlight of China's Internet development in 2013.

The size of Chinese Internet users remained steady and the development theme shifted from “quantitative change” to “qualitative change”
According to the Report, by the end of December 2013, the number of China’s Internet users had reached 618 million, increasing by 53.58 million over the previous year and the Internet penetration rate was 45.8%, up 3.7% compared with that at the end of 2012. As it can be seen from the change of the size of Chinese Internet users in recent years and other relevant statistics, the Internet penetration rate in China improved gradually and the theme of Internet development shifted from “quantity” to “quality”, featuring the rising status of the Internet in the economic society, close link with the traditional economy as well as the increasing influence of various Internet applications on the lifestyle of Chinese Internet users.

The number of mobile Internet users kept growing and high-traffic mobile phone application became a highlight
By the end of December 2013, the number of Internet users in China had reached 500 million, with an annual growth rate of 19.1%, and China remains the country with the largest number of online terminals. Among the Chinese Internet users, the proportion of mobile Internet users rose from 74.5% at the end of 2012 to 81.0%, much higher than the proportion of the Internet users that access the Internet via other devices. It is indicated that mobile phone is still the major driving force for the growth of Chinese Internet users.

Under the backdrop of further popularity of the 3G network and constant development of smart mobile phones and wireless network, high-traffic mobile phone application such as video and music are attracting more and more users. By the end of December 2013, The number of China’s Internet users who watched videos online or downloaded videos on mobile phone had reached 247 million, increasing by 112 million over the end of 2012, up 83.8%, ranking the first in the statistics about the growth of mobile phone application users. The rocketing utilization ratio of high-traffic applications of mobile phone terminal is mainly due to the increasing population of mobile Internet users, improvement of the basic environment for Internet access and drop of Internet access cost.

Comprehensive social networking platforms attracted more attention and online game terminal competition intensified
According to the Report, in 2013, the utilization ratio of Internet applications such as microblog, social networking website and forum declined to some extent over the previous year. The platform applications based on social networking, such as instant messaging, developed steadily: In 2013, the total number of instant messaging users rose to 532 million driven by the sharp growth of mobile terminals, increasing by 64.4 million over the end of 2012, and the utilization ratio reached 86.2%. Compared with traditional instant messaging tools and social networking websites, comprehensive social networking platforms based on social networking not only has stronger communication function, but also are added with social networking applications including information sharing, etc., and provide the users with comprehensive services of payment and finance, etc., thereby maximizing the loyalty of the users and ensuring continuous growth of the user size.

However, the growth of Chinese online game users slowed down obviously in 2013. According to the Report, China’s utilization ratio of online games dropped from 59.5% in 2012 to 54.7%. The number of online game users stood at 338 million, increasing by merely 2.34 million. In sharp contrast with the sluggishness of the whole online game market, the number of mobile phone online games rose rapidly: By the end of December 2013, the number of the mobile phone online game users in China had reached 215 million, increasing by 75.94 million over the end of 2012, with an annual growth rate of 54.5%. However, the traditional PC online games witnessed weak growth and were challenged by the high-speed growth of mobile phone online games.

The size of online shoppers and group buyers increased significantly and enterprise e-commerce applications needed to be improved
According to the Report, in 2013, business applications covering mainly online shopping and group buying grew rapidly. In the year, the number of Chinese online shoppers reached 302 million and the utilization rate reached 48.9%, up 6.0% over the previous year. Amongst the business applications, group buying grew most rapidly: the size of group buyers reached 141 million, and the utilization ratio of group buying was 22.8%, up 8.0% over 2012, and the annual growth rate of the utilization ratio reached 54.3% and became the biggest highlight of business applications.

In contrast with the fast-growing business applications including online shopping and group buying, the e-commerce applications for enterprises still need to be improved. In 2013, the proportion of online procurement and online sales of Chinese enterprises were 23.5% and 26.8% respectively, and the proportion of the enterprises that launched Internet-based marketing promotion campaigns was 20.9%. The penetration rates of e-commerce applications varied greatly in different industries, of which the manufacturing industry and the wholesale & retail industry adopted more business applications. In terms of the scale of e-commerce applications in enterprises, compared with large and medium-sized enterprises, micro enterprises need to further strengthen their e-commerce applications.