This is the first article in an ongoing series by Kassey Lee about the market for domain names in China.
Backed by a massive population of digital consumers, China is positioned to become the largest domain market in the world. In a series of articles, I plan to analyze the Chinese domain market and try to identify opportunities for domain investment. Let’s start by looking at the big picture first.
Consider these numbers: 829 million internet users, 59.6% penetration rate, 610 million internet shoppers, 583 million mobile payment customers. They point to an enormous digital economy which will expand tremendously when 5G is fully deployed to provide an even more enjoyable shopping experience for consumers.
Source: CNNIC
A growing economy drives the formation of more companies. In 2017, there were 92 million companies in China, according to the National Development and Reform Commission (国家发改委). On the other hand, last year Sisy’s World News reported 140 million entrepreneurs in China. With a vibrant VC community and also strong backing from the national government, the number of Chinese companies will rise significantly over the long term.
Every company needs a website, which in turn needs a domain – eventually. However, there are currently only 5.2 million websites in China according to the 43rd Statistical Report on the Internet Development in China published by CNNIC in February this year. Compare the 92 million companies (or the 140 million entrepreneurs) with the 5.2 million websites and you can see there is a massive potential demand for domains in China.
Source: CNNIC
The report also indicates 38 million domains currently registered in China. The market experienced double-digit growth in the early years, but shrunk drastically in 2010 and 2011 when many .cn domains were discarded. (I’ll cover this issue when analyzing the .cn extension.) The market has also shrunk in the last two years, which may be due to a weaker economy and also the China-USA trade dispute.
Source: CNNIC
Again, compare the 92 million companies (or the 140 million entrepreneurs) with the 38 million domains and you’ll arrive at the same conclusion about the tremendous opportunity in domains for China. This also suggests that a lot of domains are likely still in the hands of investors waiting to be passed on to end users.
When I look at the big picture by following the line of thinking of digital economy -> companies -> websites -> domains, I must conclude that there are tremendous opportunities in selling domains to China.
RaTHeaD says
No Comment.
andrew senowe says
idn domains?
Kassey Lee says
Coming…
MoGreen says
“Every company needs a website, which in turn needs a domain – eventually.” – the whole article relies on this and why do we still believe this , especially in China , where WeChat and other apps dominate for commerce and discovery
Kassey Lee says
When companies realize the cost of living under someone’s roof and depending on the kindness of strangers, the’ll want to build their own home.
Steve B says
Common sense breakdown and I agree. I see nothing but potential and growth. And add to that an annual 0.6% population growth and numbers should only grow over time.
snoopy1267 says
Let’s not forget that this is a communist country that closely monitors/spies on it people and heavily restricts capital flow. Those cn’s weren’t discarded, the government changed at the rues to keep closer tabs on registrants and block foreign investment.
Kassey Lee says
You are right. A lot of domains were discarded due to the sudden introduction of the rule. I’ll cover this issue in my upcoming article on .cn.
Mark Thorpe says
I’ve lost faith in the China domain market. Too much of a gap between end-users and Investors.
Kassey Lee says
MLS services such as Afternic may help you reach end users in China.
Mark Thorpe says
I’ve been using Afternic for years.
Mayrie says
We agree because we have domain and received many offers from China zohp.com
Kassey Lee says
Good on you, then.
Jon Schultz says
Nice article and looking forward to seeing more. I think there will be a merging of the Eastern and Western domain markets, Kassey, in the sense that Chinese end-users and investors will increasingly see value in generic domains like [City]RealEstate.com and [City]Hotels.com, which have sold pretty well in the West over the last 25 years. Do you agree?
Kassey Lee says
I have so much confidence in the future of English-based .com domains in China and around the world that I coined it the EnglishDotCom domain strategy. I have talked about it for several years. This is the global trend I have observed, which is also reflected in my own domain investment.
Brad Arthur says
Thanks Kassey, excellent insight and valuable research information.
In short its a numbers game, however like here in our country its also about educating business owners the significance of budgeting and spending money on a distinguishing brandable Internet identity!!
Kassey Lee says
Business owners need to see domains as assets not expense.