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China Pulls Ahead of Japan

China has surpassed the more technologically developed Japan with the second largest global at-home Internet population, according to a Nielsen//NetRatings telephone survey of 1,000 randomly selected households across mainland China. Considerably trailing the United States' 166 million Internet users, China's 56.6 million represents a dramatic leap from the 22.5 million users the country found online at the end of January 2001.

"Our enumeration survey found 56.6 million people living in households with Internet connections, amounting to just over 5 percent of homes in China. Consider the Internet market potential when Internet household penetration rates in China start to more closely resemble those in other markets such as the U.S., South Korea, Singapore and Hong Kong, where penetration currently sits above 50 percent," said Hugh Bloch, managing director, Nielsen//NetRatings North Asia.

Although China's number of home users is impressive in raw form, it represents just a small proportion of the country's 1.3 billion population, or roughly 5.5 percent. Comparatively, Canada is the world leader in percentage terms with more than 60 percent of households with Internet access.

The Nielsen//NetRatings survey, conducted in the first quarter of 2002, also found Chinese men aged 16 to 34 dominate Internet access and usage at home, and more than 80 percent of those users 16 and over used it twice a week or more. Among those with home Internet connections who also surf elsewhere, home was found to be the preferred venue for Internet surfing, accounting for 53 percent, followed by Internet Cafes (27 percent) and work (24 percent).

But until more Chinese households have telephone lines and can see more online content they like, penetration rates could remain low, according to the research firm. Hans Yu, executive director of Nielsen/NetRatings' China operations, indicated that only 35.6 percent of homes in China have telephones and few Internet sites have developed good Chinese content.

"Content in English or in Japanese is much more common. If you surf the Net (in Chinese), you see a lot of the same stuff over and over again," Yu said. "There's a feeling that there's nothing fresh out there. I think the key to the Internet's development in China is content...cuter games, search engines turning up more sites that were more connected to each other."

The survey also revealed:

  • Most of China's Internet users rely on narrowband, dial-up access, with 56.8 percent of respondents saying they had modem speeds of 56k or lower.
  • Only 14 percent had broadband access and the remainder said they did not know what kind of connection they had.
  • Reading newspapers or magazines was the most popular online activity, with e-mail coming in a close second.
  • Less than 10 percent of respondents said they had traded stocks or bought anything over the Internet. Yu said the slow development of online banking in China and low rates of credit card use were the likely reasons.

The lack of broadband access in China may be temporary, according to recent findings from an RHK Inc. report that indicates that nearly half of the world's DSL subscribers are from Asia Pacific nations. According to the report, the region had more than 7.5 million DSL subscribers at the end of 2001 and the trend is expected to continue, as China, Japan, South Korea and other countries in the region modernize their telecom infrastructures.

"Just three years ago, Asian service providers were visiting North America to learn how to deploy DSL and what services to offer. Times have changed; this region now accounts for approximately 44 percent of the world's DSL subscribers. Previously established North American and European DSL equipment vendors have had little problem penetrating emerging DSL markets in the Asia Pacific region. However, as these businesses mature and become commodity markets, low prices and local vendor support will be deciding factors for company success," remarks Ken Twist, Director of Broadband Access Networks: Global at RHK.

Global Internet Population - Q1 2002
Rank Country Total Internet
Population (millions)
1 USA 166.0
2 China 56.6
3 Japan 51.3
4 Germany 32.2
5 UK 29.0
Source: Nielsen//NetRatings
Asia Pacific Internet Population - Q1 2002
Rank Country Total Internet
Population (millions)
1 China 56.6
2 Japan 51.3
3 South Korea 27.8
4 Taiwan 11.6
5 Australia 10.6
6 Hongkong 4.4
7 Singapore 2.3
8 New Zealand 2.0
Source: Nielsen//NetRatings