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Digging Deeper About China’s Internet Usage Data

Jeremiah Owyang has published a good report for beginners who know nothing about China’s internet market. I questioned the wisdom of going to Hong Kong to cover the Chinese Internet; to me it seemed like visiting Toronto to understand the UK market. However, he does have some good takeaways for people just starting out in China and who do not read,write or speak Chinese.

I am going to dig a little deeper. Christine Lu of the China Business Network has mentioned to me that her audience is mainly for new people just starting out with China; I’m going to dig deeper and point out some real issues behind the current numbers tossed about re China. Tangos Chen has an excellent follow-up posting which is well worth a read.

All the reports which have so far covered China have been based on impressing non-Chinese with the huge numbers of China’s online population. This provides a very incomplete picture of China’s Internet users, especially those who go to Internet cafes. Most of these people go to play games and communicate with each other using QQ.

An awful lot is posted about China’s large online gaming population accessing the games from China’s Internet cafes. I suspect that a lot of the people who write these articles have never even been inside one in China. I would like to tell you about my first-hand experiences.

I am now in Beijing, and I have been to several Internet cafes here. Several months ago I also went to several in Shanghai.

Let me tell you something about these Internet cafes and their users. For the most part, these Internet cafes are shitholes and firetraps. And the people who go there are young, single, low-income males. They do not bring their dates there. The places are smoky, dingy and poorly lit. They sell some basic food and beverages in the front, and also charge people a fee to sleep overnight on the dirty, bug-infested, stained futons which pass for couches. If you want a truly terrible experience, visit their bathrooms.

These are dirty decrepit places in every way; they are just filthy. If fire safety laws were actually enforced, they would be shut down. And the people who spend their day playing games are, in my opinion, China’s new urban permanent underclass. Why do they go to Internet cafes? Because most of them are from outside Beijing and Shanghai, and the Internet cafe is the cheapest place to go to. They can get by spending 20-30 yuan (US$5-6) a day, including food, drink, games and a place to sleep.

The characters are sad characters; if they were living in England 150 years ago, Charles Dickens would be writing about them. From the Chinese perspective, although games and the Internet are highly addictive, Internet cafes serve a useful purpose. Otherwise these people would be on the street, unemployed. The Internet cafe today in China is what gin and beer was to England’s working class in the mid-19th century when Karl Marx was writing Das Kapital about the evils of class exploitation.

Now, if you were an advertiser, would you want to reach this audience? It all depends.

If these people were working their way up the social ladder, got better jobs, made more money and spent less time playing games and socializing at the Internet cafes, then yes, there would be some value in reaching this audience. On the other hand, if these people are a permanent underclass who have very little money to spend, then the answer would have to be no.

I have made an interesting observation from a personal experience. Earlier this year I visited Chongqing for the first time, and went to an Internet cafe downtown. It was on the ground floor of a an office building (unlike in Beijing and Shanghai, which are in upper floors or basements). It had windows you could actually see in and out of. It was clean, had fresh air, and carried fresh food and drinks. Unlike Beijing and Shanghai, it was divided into smoking and non-smoking areas. The highest fee for a booth was 4 yuan an hour, and there were several people paying that amount at 11AM in the morning, when I visited. I could tell that it was cleaned and maintained on a daily basis. I would not have been ashamed of going into this Internet cafe, unlike in Beijing or Shanghai.

For this reason, I am much more impressed with Internet cafe users in Chongqing than I am with Internet cafe users in Beijing and Shanghai, which are basically awful.

The trouble with the reports about China’s market is that they don’t go deep enough; they just present very basic number information, enough to make the marketing and bizdev types get excited about China, but not enough to ask hard questions which provide insights into user behavior, so that advertisers can really take a deeper look at Chinese audiences, because there is not one; there are many.

Here are some questions I would ask and like to see answered in a report, and advertisers contemplating targeting China’s Internet cafe users should also ask:

  • Please explain your methodology for data gathering.
  • What cities and provinces do you gather data from?
  • How do you scrub your data to make sure that it is as close to factually correct as possible?
  • What is their average income divided by city/region/provinces?
  • What kind of jobs do they have divided by city/region/provinces?
  • How many hours do they spend online per day divided by city/region/provinces?
  • Can you show me the amount of churn of Internet users over time? (This is one of those rare situations where high churn is a good thing; you want these people to make their way up the social ladder.)
  • What games and activities do they spend their time on?
  • Define the difference between hardcore and casual gamers over time.
  • How much money do they spend every month divided by city/region/province?
  • What do they spend their money on, divided by city/region/province?

I always find this kind of information much more useful than the “Wow, China has a lot of people!” level of coverage; I find this information, for example, very helpful in understanding the Chinese mobile market and its users better.

I’d like it if the publishers of Ogilvy China Digital Watch
or CiC or some other agency could commission a report like this, and make it widely available on the Internet.

I suspect that the hard-core gamers are basically a bunch of losers, but the casual gaming market has good potential for advertisers.

It is time for advertising departments to start slicing and dicing the Chinese audience on demographic and psychographic profiles, and finding out the education/economic profiles of different audiences. Forget the big numbers about China; let’s get our hands dirty and start looking for insightful information which will really help advertisers, consultants and everyone else.

Enough China hype already; it’s time to dig deeper and get down to business and start making money for our clients.




46 Responses to “Digging Deeper About China’s Internet Usage Data”

  1. [...] You can read the rest of this blog post by going to the original source, here [...]

  2. [...] wrote an interesting post today on Digging Deeper About Chinaâs Internet Usage DataHere’s a quick [...]

  3. You are right by challenging all those big numbers, Paul. And of course we need more figures. But even if you compare the basic figures by CNNIC you see that your internet cafe populations (earning less than 1,000 rmb per month) is still substantial, but dropping very fast., now less than half of the internet users.
    Those are useful figures, especially when they would be split up by regions.

  4. [...] Digging Deeper About China s Internet Usage DataJeremiah Owyang has published a good report for beginners who know nothing about China s internet market. I questioned the wisdom of going to Hong Kong to cover the Chinese Internet; to me it seemed like visiting Toronto to understand … [...]

  5. [...] he has observed, as Beijing has a number of them in hutong areas that are hideous. Read his entire post for more insights into measuring China’s Internet [...]

  6. Alex says:

    An excellent write-up. Headline stats don’t do it for me either, the more they are challenged rather than lauded over, hopefully, the sooner they will improve.

  7. [...] discussion about the new potentials of ubiquitous, ambient, searchable, geolocative products. Digging Deeper About China s Internet Usage DataJeremiah Owyang has published a good report for beginners who know nothing about China s internet [...]

  8. [...] my previous post, I talked about the dark side of China’s Internet cafes. I was surprised at how quickly I got responses to the posting; there were more than six comments [...]

  9. [...] Kattullus wrote an interesting post today!.Here’s a quick excerptJeremiah Owyang has published a good report for beginners who know nothing about China’s internet market. I questioned the wisdom of going to Hong Kong to cover the Chinese Internet; to me it seemed like visiting Toronto to understand … [...]

  10. I was covering HK AND China, not China alone.

    Many of whom I met were from mainland, or had clients in mainland, it was a mixture of both.

  11. Tangos Chan says:

    You are absolutely right that we can not just be excited by the big numbers, the economic and social development of different regions in China are so unbalanced. A same number will have totally different meaning in China and in US.

  12. Just as looking at the numbers from any of the major reports about the internet and intertnet usage in China can be very misleading, stopping into a bunch of internet cafes is equally as misleading. I can assure you that there are very nice internet cafes in both shanghai and beijing just as there are dirty rap trap internet cafes in Chongqing. The spectrum of people visiting internet cafes is equally wide and varied.

    The real problem is that the number of internet users has become so large in China that it is becoming more and more difficult to generalize about the population of users. This problem is only likely to get worse over time.

  13. [...] admin wrote a fantastic post today on “Digging Deeper About Chinaâs Internet Usage Data”Here’s ONLY a quick extractThey sell some basic food and beverages in the front, and also charge people a fee to sleep overnight on the dirty, bug-infested, stained futons which pass for couches. If you want a truly terrible experience, visit their bathrooms. … [...]

  14. [...] post info By chinanow Categories: Uncategorized Let me tell you something about these Internet cafes and their users. For the most part, these Inter… [...]

  15. [...] Digging Deeper About China’s Internet Usage DataChristine Lu of the China Business Network has mentioned to me that her audience is mainly for new people just starting out with China; I’m going to dig deeper and point out some real issues behind the current numbers tossed about re … [...]

  16. Terzam says:

    Been waiting for such article since Jeremy’s came out!!! I, for one, am sick and tired of comments made by secondary observations about China, or those who ‘visit’ China once a year. Heck, I’ve seen trade bodies coming to investigate / explore China and never get the true picture. Want to comment about China, LIVE in China! Into my 2nd year, and none the wiser!

  17. [...] 深入挖掘中国互联网使用数据:China Vortex blog的作者Paul Denlinger上周发布了一篇文章深入讲解了以北京、上海、重庆为基础的中国网吧文化。对前两个城市,他并没有特别的感受而对在重庆的所见印象深刻。为什么呢?我猜测因为二线城市宽带入户率相对较低,所以重庆人的最佳选择是去网吧。所以网吧经营者会让用户有最佳的体验,从而可以收取更多的费用。在北京和上海,宽带的入户率相当高。没有家庭宽带的用户一般是收入很低的一群人,比如民工,家境困难的学生以及不允许在家玩游戏的学生。所以北京和上海的网吧一般都价格低廉,环境及其恶劣,用Paul Denlinger的话说是“充满烟雾的恶心房间”。 [...]

  18. [...] delivered, filtered, and exchanged by networks of common interest, and eventually trust. I really enjoyed Paul’s additional commentary, although he questions why I would visit HK to cover mainland. Most of the people I talked to were [...]

  19. [...] a previous article, I talked at some length about Jeremiah Owyang’s review of the current Internet situation in [...]

  20. Liz Henry says:

    But aren’t there always going to be cheap and possibly dirty flophouses? While there are poor people, there will be. Why shouldn’t they have internet access? I understand that you are trying to say something about what you’d like in an internet cafe. But if you turn your statement around, it’s like you’re saying that places which aren’t respectable by your standards, in some way shouldn’t have computers in them. I don’t really see why being clean is a requirement here. The net and the people who use it are more than advertising market. Instead, maybe be glad that computers and some portion of the net are reaching some of the poorest segment of people.

    >>>Reply by Paul Denlinger

    To: Liz Henry

    Congratulations! You have made the “Most Stupid and Irrelevant Comment” on this thread!

    I am just stating the situation as it is; I’m not passing any moral judgment. And yes, I do believe that it is good for everyone to have access to the Internet, regardless of how rich or poor they are. Since when does reporting on something constitute moral judgment one way or another? Does that mean everyone should just stop reporting anything because people like you are going to try to read stuff which is not there into the message? And no, I am not saying I’d like something in an Internet cafe; I’m just calling it as it is.

    But then, maybe I’m asking a little too much of you if I expect you to understand that.

  21. [...] Read the rest of this great post here [...]

  22. [...] Denlinger’s post about the country’s decrepit internet cafes (which he calls “shitholes and firetraps“) has been making the rounds among the China blogging elite lately. Beijing-based Wikipedia [...]

  23. I concur. I spoke with a guy whose company was targeting those who hang out at internet cafes and then at a lunch in Shanghai with Sam Flemming (of CIC and a guy who knows as much about China’s internet as anyone) and Steve Dickinson (my co-blogger at China Law Blog) who has lived in China off and on (mostly on) for the last 30 years) about this sort of marketing and both of them were adament that there is no real money to be made in the cafes. They, like you, said that the people who hang out in these cafes are just not making it and if they were, they would not be there. Interesting though (and your reasoning makes real sense) that things may be different in the second tier cities where internet has not penetrated into the home as much.

  24. Promising China Blogs: The China Game And The China Vortex…

    Two good new China blogs out there by two already pretty well known China hands. Paul Midler (who I believe coined the phrase China fade, referring to the diminishing quality of China products) has started a blog called The China Game. Paul has been in…

  25. [...] De plus, tous ces internautes n’appartiennent pas a la même catégorie socio professionnelle. Les chiffres officiels cachent parfois d’autres réalités. [...]

  26. [...] ever you read in the guide books. Here is a a sobering post for anyone who anticipates using an Internet cafe in Beijing [...]

  27. [...] posts on how China’s internet cafes are pretty worthless as marketing opportunities: “Digging Deeper About China’s Internet Usage,” “Biz Opportunities, Rolling Up and Franchising China’s Internet Cafes,” [...]

  28. [...] South Korea) in the Chinese market. This idea caught fire with many younger Chinese and spawned the Internet cafe industry, where many younger Chinese choose to spend/waste their time and has also popularized QQ, the [...]

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  32. [...] part to the Heart of Darkness itself: the Chinese Internet Café. Paul Denlinger wrote an excellent blog post on the unsavory environment of the Internet Café. I could only concur, based on my own experience [...]

  33. Quite a grim portrayal of China’s Internet cafe culture you’ve painted there. Interesting article.

  34. Franchising My Business…

    I should be thankful to you to share this post. It really sounds interesting, but i am not sure all people would certainly agree with some of your points here. It is just not make sense for me in certain perspective. Anyway, thank your for the post & i…

  35. [...] believe me? Go to your nearest Chinese Internet cafe and watch what people are [...]

  36. [...] we’ve blogged about Gaming in a Strange Land and China Vortex has some great posts about the sordid reality (and some more choice words here in part 2) of the Chinese internet cafe and by extension the [...]

  37. James G says:

    Again:

    Why the caustic and smarmy reply to Liz Henry? Do you expect people to take you seriously as a professional or a blogger when you reply to anyone who doesn’t lavish praise over you?
    Not that her post was critical of you, she simply posited a question.

    You did make a moral judgement in your post, you make them in most of your posts, as does nearly every blogger.

    Your blog: lots of opinionated and judgemental posts, lots of positioning of yourselves as an expert – mainly by downgrading others – and constantly telling others what China is and isn’t in a smug tone. That reply to Liz backed up what your rep as an informed but smugly caustic blogger.

  38. [...] we’ve blogged about Gaming in a Strange Land and China Vortex has some great posts about the sordid reality (and some more choice words here in part 2) of the Chinese internet cafe and by extension the [...]

  39. elena says:

    i’m thankful to you to share this post. It really interesting, but i don’t agree with some of your points here. It is just not make sense for me in certain perspective. Anyway, thank your for the post

  40. [...] American service providers do not measure audiences from Internet cafes, which as I have pointed out, are a major source of traffic from China. Since American software [...]

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