BEIJING: Online retail and advertising revenues are set to surge in China, as consumers in the country begin to participate in an increasingly diverse range of digital activities.
According to the Boston Consulting Group, the internet population in China currently devotes a combined one billion hours to surfing the net each day, a figure that is set to double by 2015.
The company's study combined a range of quantitative data with a survey of almost 2,000 people drawn from 12 cities across China.
It reported that the average individual committed 2.7 hours a day to the web in 2009, compared with 2.4 hours a day in 2006.
More than 80% of this segment regularly used instant messaging services, read online news and downloaded music and video content, while around half played games.
However, most respondents had "leapfrogged" over e-mail, a tool was only utilised by a small majority of 53% of people with internet access.
Social networks have been the main beneficiary of this tendency, having "gained hold" of students and young professionals in 2008 and then spread to "users of all backgrounds and age groups."
The under-35 year old demographic accounts for 73% of the Chinese online audience and more than 80% of the overall time spent on the web at present.
Among young professionals – or 6% of all netizens – the penetration rate stands at 99%, with members of this cohort utilising the web for four hours a day.
Uptake is also rising in rural areas, and marketers were thus advised to ensure they gained a nuanced understanding of the varying motivations in cities and the countryside.
The Boston Consulting Group estimated that the Chinese e-commerce sector was worth $37bn (€29.0bn; £25.2bn) in 2009, and will expand in size to $100bn in the next three years.
Some 8% of all Chinese consumers bought goods and services on the internet last year, an improvement from 3% in 2006, and a total that is due to reach 19% by 2012.
Only 20% of these shoppers proved willing to use electronic payment systems to when making purchases, but this habit is likely to change.
"We're at a tipping point in China in which consumers are crossing the threshold of trust and convenience, and each incremental transaction further entrenches the e-commerce impulse," David Michael, a BCG senior partner, said.
"As disposable incomes increase, the potential for growth will rise dramatically."
The companies which are best placed to benefit from this maturing of the market include Alibaba, Tencent, Ctrip and Taobao, all home-grown operators.
"Many conventional retailers are starting to discover the plethora of Taobao sellers looking to compete with lower price points, or reaching out to different geographic regions … that conventional retailers have difficulty serving today," said Michael.
As a result of these trends, the internet is expected to steal a share of advertising revenues from magazines, newspapers and TV, taking 20% of expenditure by 2012 measured against 8% in 2008.
Data sourced from Boston Consulting Group; additional content by Warc staff