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Global Online Marketing Profile: China
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Global Online Marketing Profile: China

By: Wyliena Guan

Market Opportunity
The Chinese renminibi, or yuan, is increasingly growing in strength against the weakening US dollar, creating increased demand for US goods. With the world’s largest population of 1.3 billion and the third largest economy (behind the United States and the European Union), China is one of the most lucrative and promising markets in the world with the third-largest purchasing power of $6.991 trillion. According to the National Bureau of Statistics, in 2005, the per capita disposable income in China is about $1525 in urban households and $473 in rural households. Although the Chinese amount of disposable income is lower than the US’s $28,000 real disposable income per capita, this amount is steadily increasing; in 2005, the People’s Daily Online reported that the amount of per capita disposable income increased by 12.9%, or 11%, if price factors are deducted. Also, with growing population in the middle-class group, the Chinese consumption rate is expected to increase from 58 percent in 2002 to 65 percent by 2010 and to 71 percent by 2020, very close to the rate in developed countries, said Chen Xingdong, chief China economist with BNP Paribas Peregrine in Beijing, adding that China has a potential enormous consumer market.

China’s middle class is constantly growing. According to the People’s Daily Online, a French investment bank’s definition on the Chinese mid-class group covers the well-educated professionals and white-collar employees (brain workers) with per capital annual income of 25,000-30,000 yuan (about $3,600-$4,300), household annual income of 75,000-100,000 yuan (or around $11,000-$14,500) and participants in the decision-making and management of companies. In June 2004, this group includes around 13.5 percent of the total Chinese population (about 175,500,000 people). In 2002, 50 million Chinese families were qualified for the standard, with per household having annual income of 75,000 yuan (around $11,000) and owning 310,000 yuan (around $45,000) of assets on average. By 2010, the figures will double, with up to 100 million families qualified for the standard, per household having annual income of 150,000 yuan (around $22,000) and owning assets of 620,000 yuan (around $90,000), according to the BNP Paribas Peregrine.
Figure 1: Graph of the US Dollar to Chinese Renmibi (or Yuan) Exchange Rate

Best Industry Segments
Based on the details released by the USA government and Sinomania! Research, the best export opportunities for USA businesses in non-agricultural products are in (1) information technology, (2) telecommunications equipment, (3) computer software, (4) oil and gas, (5) medical equipment, (6) pharmaceuticals, (7) pollution control equipment, (8) airport and ground support equipment, (9) building and decoration materials, (10) auto parts, and (11) agricultural chemicals. With the fall of the dollar and the steady and unfaltering rise of the Chinese economy, the Chinese consumers and businesses are inevitably gaining more buying power in the world.

Regulatory and Tariff Landscape
In March 2008, the average overall tariff rate is at 9.4% and 7.4% for USA priority products. In 2002, China began cutting tariffs to meet its obligations to the World Trade Organization. Then, in 2005, most products saw their final tariff cuts in 2005. Since then, few products have had their rates cut. Furthermore, in its 2007 annual report to Congress, the US Trade Representative said that China’s reduced tariffs contributed to another significant increase in overall US exports, which rose about 17% from January to September 2007 when compared to the same period in 2006.

Online Marketing Opportunities
Even though, says China Internet Network Information Center, China’s level of online penetration is low (15.9%) when compared to the United States’, Japan’s, and Korea’s percent of penetration (all of which are above 65%), China holds an abundant amount of promise. In fact, in 2007, the number of Internet users in China surpassed the number of Internet users in the United States, which formerly had the largest population of Internet users. This number of Internet users will continue to grow. According to news site of the year Timeonline.com, experts say that the number will swell rapidly in the next few years as hundreds of millions of Chinese still toiling as low-paid farmers or labourers experience a rise in their incomes that will enable them to go online. BDA China, a Beijing technology company, estimates that China’s web population will grow by about 18 per cent a year, putting the total at 490 million by 2012 – more than the population of the United States.

Online Language Preferences
Even though more than 300 million Chinese people, or nearly a quarter of the country’s population, have studied English according to Xinhua, most (mainland) Chinese people prefer to read content in their simplified Chinese characters. This is the case for the most part, but in the southernmost provinces in China and especially in Hong Kong, the usage of English has a moderate to strong presence. Since nearly a quarter of the country’s population has studied in English, it is recommended that a business has some of its content in Chinese so that the Chinese consumers could click through that Chinese webpage to reach and use the English version of the website.

Search Engine Profile
Unlike most countries in the world, the Google search engine has not dominated this market. The search engine here of predominance is Baidu (baidu.com), which is the local search engine that has the biggest market share in China (about 60%). In second, Google claims 20%, and in third, Yahoo claims 10%.

Summary
With the largest number of online users in the world, an increasing rate of online penetration, an expanding middle class, a continually fast-growing economy, and much room for growth, China provides excellent opportunities for global online marketing. For the above reasons, Global e-Marketer would rank China as a tier 1 country for developing an online market presence.

Article Source: http://articlenexus.com

Wyliena Guan is a Global Markets Research Analyst at Global e-Marketer. Global e-Marketer is an international business development and marketing consulting firm that helps business expand globally from preparation to implementation, through global online campaign management. For more information contact information[at]globalemarketer[dot]com, or visit their website at www.globalemarketer.com.

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