Kassey Lee examines data from a recent CNNIC report.
If you invest in the Chinese domain market, you need to know CNNIC (China Internet Network Information Center) because it publishes a national survey report twice a year on China’s internet landscape. The latest report — the 40th — was published in July. You can download it in Chinese here.
According to the report, China has 751 million internet users. This represents only 54% of the Chinese population so there is a lot of room for growth. Compare this number with the 323 million population of the entire USA and you can appreciate the sheer size and potential of the Chinese market. This number, coupled with the continued increase in internet-related products and services, means there will be an ever expanding internet economy, which in turn will create more companies and therefore more demand for domain names.Only 54% of China's population is online. This means 700 million more potential growth.Click To Tweet
There are now 5 million websites, growing mostly at double digits over the last 6 years. This number is dwarfed by the estimated 77 million companies in China. This large gap may be due to companies not being online or running their business from ecommerce sites such as JD.com, etc. Eventually, these companies will want to move to their own address (domain name) to gain complete control of their business. Therefore, high demand for domain names can be expected to continue.
The report shows that 96% of the internet users go online via their mobile phone. This has significance for domain investors. Whatever you do for the Chinese market, think mobile. Make sure, for example, that the landing page of your domain name for sale is mobile ready. Also, 92% of the internet users use a messaging app as their communication tool, with Wechat and QQ being mentioned as the top ones. If you want to communicate with Chinese buyers, a Chinese messaging app may be your best choice rather than email which is popular in western countries.
The report highlighted several areas with good growth: ecommerce (online shopping, online food ordering and delivery, travel booking), personal finance, online entertainment (music, video, games etc.), online education, and ridesharing. If you have domain names applicable in these areas, you may want to further explore such selling opportunities in China.
Unfortunately, data on domain names is missing in this latest report for some unknown reason, so I’ll use the one published 6 months ago. As of December 2016, the number of domain names registered in China was 42 million. Growth has been double digits over the last 5 years. Here’s the detailed breakdown: .cn (48.7%), .com (33.9%), .net (3.9%), .中国 (China, 1.1%), .org (0.8%), .biz (0.5%), and .info (0.5%). New extensions were grouped under “Others” so no insight can be obtained.
These numbers tell us that the Chinese market is growing fast, and you want to focus on .cn or .com if you want a large pool of domain buyers. If you invest in .cn domain names, however, understand that you are investing in a country extension which comes with country risks. For example, in 2009 the Chinese government announced a new rule which required registrants to submit personal information and photo identification. This rule especially hurt investors outside China as many simply let their domain names drop.
Finally, I’d like to mention two areas worth watching in China: credit and speculation. When credit becomes widely available and speculation goes mainstream, the domain market will likely explode. So, overall, I see a high-growth market for domain investors.