China: 'In Cyberspace They Trust'

This interview with Shaun Rein of the China Market Research Group originally appeared in ZDNet Asia. The interview was conducted by Isabelle Chan.

A typical Chinese Internet user is below the age of 35, enjoys reading blogs, and trusts the online channel more than traditional media.

According to Shaun Rein, managing director of China Market Research Group [CMR], Chinese Internet users spend more time online than their U.S. counterparts. A Chinese Web surfer spends 18 hours on the Internet per week, compared to an American who spends about 12 hours.

For Chinese online surfers, 80 percent of whom are below the age of 35, the Internet is the window to the rest of the world.

Rein said the Chinese online population uses the Internet to stay abreast of what is happening in the world, and spends most of its time reading blogs and gathering international news.

"Chinese youth like to spend time on blogs and bulletin board systems [BBS] in order to get the latest news and to see what is going on in the lives of their friends, including friends made in the virtual world," said Rein.

"They also spend their time playing online games such as World of Warcraft, and gather information about products and happenings around the world."

The Chinese apparently trust information on the Internet, too. "People like to read blogs and BBS because they trust what is posted," said Rein.

Chinese youth, he added, have become bored by excess of traditional media and related forms of advertising. "So they prefer to get information online about products from people whom they can trust," Rein said, noting that their purchasing decisions are made based on information gathered from those deemed as trusted online sources.

Sharing his observations of China's online population in an e-mail interview, he highlighted the growing online opportunities for marketers.

Q. What are the top Internet activities in China?
People like to read blogs and BBS because they trust what is posted. According to our online surveys, most people read blogs for news and celebrity gossip. Bloggers also feel empowered to share their thoughts to literally millions of people in just seconds through RSS feeds.

How much time do Chinese surfers spend online today compared to a year ago?

The number of hours per week is about the same. The major difference is that consumers in the fourth- and fifth-tier cities are now getting more access to the Internet, and thus the average hour per user will grow in the coming years, especially as more Chinese are able to afford computers and broadband out of their homes.

China will overtake the United States within three years as the world's largest Internet user base. Since the Chinese spend more time online than Americans, marketers need to understand how to leverage the power of the Internet to sell products and build brand awareness.

What is the adoption rate of e-commerce in China? What are consumers buying online?

E-commerce is starting to boom in China, especially amongst Chinese youth who are comfortable online and who are buying items such as Q coins to buy virtual products for their avatars in online game communities.

To what extent is online fraud a concern among China's Internet population?

Fraud is a major concern. Alibaba's Alipay took this concern seriously when they incorporated escrow into their Alipay Services. [Escrow services help to safeguard transactions by withholding funds from a seller until the buyer receives and approves the goods.]

eBay's Paypall did not incorporate Escrow until much later. eBay's lack of understanding of consumers' concerns over fraud is one of the factors, if not the main reason, it failed here. The fear of fraud is one of the biggest constraints hampering e-commerce in China.

What is the most popular mode of payment among Chinese online shoppers?

Many online transactions continue to be completed by a cash-on-delivery system, because credit cards are not widely adopted yet in China. There are about 50 million credit cards in China, with about one billion debit cards that do not have the same protection measures in place here as compared to the United States.

Besides virtual currency, mobile payment is becoming hot. China's large banks like Bank of China are not consumer-centric at all. They care more about servicing the needs of state-run enterprises than retail customers.

Their lack of focus has caused the Chinese consumer to be unwilling to set up online banking accounts and other forms of online payment modes. On the other hand, China Mobile is extremely consumer focused and well-run, so many Chinese simply charge to their phone bill when they make a purchase.

For many Chinese, the mobile phone is the center of their 'electronic' lives, especially if they cannot afford computers.

What's the latest buzz in the Chinese blogosphere?

The buzz is the increased transparency of what is happening in China. People see an instance of someone wronged and rally together online to help the person out. Blogs are the greatest thing to happen to China in the last decade, for their power to rally people together to right wrongs and provide objective advice and analysis.

In terms of devices used to connect to the Internet, are more Chinese using the traditional PC compared to their mobile phones?

According to our surveys, when it comes to big-ticket items, the Chinese first want to buy a house, followed by a car. Mobile phones come in third. Since not all Chinese can afford a house or car, the mobile phone becomes their largest big-ticket purchase, and they use the mobile phone to connect to the Internet.

Many Chinese who make US$150 a month in salary tote US$300 phones for prestige reasons. They often change phones every nine months, too.

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[joshua.lipes]

Hot regulatory item: Government angry about QQ coins. Recent reports suggest that even prostitutes in China are accepting them as a form of payment. Chinese regulators do not like the idea of a currency operating outside of their sphere of influence.