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August 2016

This report was provided to

Macquarie University (2126041529)
by IBISWorld on 11 May 2017 in accordance with their licence agreement with IBISWorld

IBISWorld Industry Report

Internet Services in China

Internet Services in China

August 2016

About This Industry..................................... 2 Barriers to Entry ............................................ 19

Industry Definition ......................................... 2 Industry Globalization .................................... 20
Main Activities ............................................... 2 Major Companies ......................................... 21
Similar Industries .......................................... 2 Alibaba Group................................................ 21
Additional Resources ................................... 3 Tencent Holdings Limited.............................. 22
Industry Performance ................................. 4 Baidu.com, Inc. .............................................. 23
Executive Summary ..................................... 4 Netease.com, Inc. ......................................... 24
Key External Drivers ..................................... 4 Qi Hu 360 Technology Co. Ltd...................... 25
Current Performance .................................... 5 Sohu.com Inc................................................. 25
Industry Outlook ............................................ 6 SINA Corporation .......................................... 26
Industry Life Cycle ........................................ 8 Other Players ................................................ 27
Products & Markets ..................................... 9 Operating Conditions .................................. 28
Supply Chain................................................. 9 Capital Intensity ............................................. 28
Products & Services ..................................... 10 Technology & Systems ................................. 28
Demand Determinants ................................. 12 Revenue Volatility .......................................... 28
Major Markets ............................................... 12 Regulation & Policy ....................................... 29
International Trade........................................ 13 Industry Assistance ....................................... 30
Business Locations....................................... 14 Key Statistics ................................................. 32
Competitive Landscape ............................. 16 Industry Data ................................................. 32
Market Share Concentration......................... 16 Annual Change.............................................. 33
Key Success Factors ................................... 16 Key Ratios ..................................................... 33
Cost Structure Benchmarks ......................... 17 Jargon ............................................................ 34
Basis of Competition ..................................... 18

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About This Industry

Industry Definition
The Internet Services industry in China provides internet services, including basic internet access (i.e.
internet service providers or ISPs) and application services, such as online advertising, web portals, search
engines, instant messaging, internet games, blogs, etc. E-commerce business is not included in this

Main Activities
The primary activities of this industry are:
Providing application services, such as web portals, search engines, and internet content
Providing basic internet access services (internet service providers, or ISPs)

The major products and services in this industry are:

Basic internet access services
Web portals
Other internet application services
Online advertising
Instant messaging
Online games
Search engines
Blog services

Similar Industries
6012 - Mobile Telecommunications in China
Businesses in this industry provide mobile internet communication services.

6220 - Online Shopping in China

This industry comprises retail businesses for which the internet is the primary selling platform.

6221 - Online Games in China

Online games are played over the internet using consoles such as personal computers (PCs) and mobile

6222 - Social Networking in China

Enterprises within this industry create online communities with groups of people who share similar

4014a - Smart Phone Manufacturing in China

This industry manufactures mobile phones with advanced PC-like capabilities and that connect to wireless
internet networks, usually via mobile communication networks.

4041a - Computer Tablet Manufacturing in China

This industry manufactures one-piece mobile computers that typically offer touchscreens.

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Additional Resources

For additional information on this industry:

Ministry of Industry and Information Technology

Internet Society of China

China Internet Network Information Center

National Bureau of Statistics China

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Industry Performance
Executive Summary
In 2016, the Internet Services industry in China maintained relatively rapid growth of about 58.1% to reach
$293.2 billion. Over the past five years, industry revenue has been growing at an average annualized rate of
50.3%, driven by booming domestic demand. Over the period, the number of internet users in China
increased at an annualized rate of 6.0%.

Over the next five years, industry revenue is forecast to increase at an average annual rate of 39.3% to
$1537.6 billion in 2021, mainly due to the substantial expansion of internet coverage in rural and remote
areas in China, and thriving advertising services boosted by e-commerce.

The application services segment has become more important to this industry over the past five years.
Although revenue from interface services makes up about half of the application service segment in recent
years, other services such as, search engines, online games and instant messaging services developed at a
faster rate. New application services such as blogs and wikis have become increasingly popular, along with
the growth in internet users.

According to the China Internet Network Information Center (CNNIC), the number of internet users in
China totaled 685 million in June 2016, ranking the country first in the world. The internet penetration
rate has reached 50.3%. With the entry of more well-known international enterprises, competition will be
further intensified in this industry, resulting in better services for consumers.

At the end of 2015, the number of mobile internet users totaled 620 million, accounting for 90.5% of
China's internet users. With the development of third- and fourth-generation (3G and 4G) technologies,
the fusion between wireless networks and wired networks will speed up, which will be a major driver of
future industry growth.

Key External Drivers

The key sensitivities affecting the performance of the Internet Services industry include:

Internet/Catalogue Shopping
As the popularity of internet shopping increases, industry revenue will also increase.

Key Attitudinal Changes - Information Age

Online services have become a very important part in people's life and work. More Chinese people are
using the internet for work, business, and leisure activities. Attitudinal change will increase internet usage.

Pervasive Technology - Internet Connections

Increases in the number of internet users lead to revenue growth for this industry.

Service Prices - Internet Prices

Price competition is important in this industry, such as for internet access and online games. Price
fluctuations will affect the number of users, while broadband service prices will affect the number of
household users of the internet.

Systems and Technology - by Industry Sector

New technology will bring more new services, which will attract more users and increase revenue for this

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Current Performance
The Internet Services industry in China was estimated to earn $293.2 billion in 2016, up 58.1% from 2015.
The domestic market has continued to expand rapidly as various internet services have become quite
popular. Since 2010, micro-blogging and wechat have been sweeping the country, trends that have brought
lots of new opportunities for industry development. Mobile apps have also been developing strongly and
contributing to industry growth.

According to the China Internet Network Information Center (CNNIC), internet users reached 668 million
by the end of 2015 and the internet penetration reached 50.3% - above the average global level, but still
lower than that of developed countries. By the end of 2015, mobile phone internet users increased to 620
million, accounting for 90.5% of China's internet users.

The internet has become a major medium for people in China to communicate and network, to seek
entertainment and information and to conduct transactions. Internet usage is becoming more common
and average time spent online per user has been growing substantially in recent years.

Industry trends
According to a 2015 survey conducted by CNNIC, the most commonly used internet services were instant
messaging (90.7%), online news (82.0%), search engines (82.3%), online music (72.8%), online videos
(73.2%), online games (56.9%), net literature (43.1%), e-mail (37.6%) and micro blogs (33.5%).

According to the survey, the proportion of traditional internet activities (such as online music and games)
has been decreasing, while new activities like wechat have increased.

Mobile internet services

Since 2002, mobile value-added services have been developing in China and have been a growth point for
the industry. Many websites established partnerships with telecommunications carriers and provided
mobile value-added services to individual mobile phone users and corporate users.

Between 2002 and 2004, the development of mobile value-added services was a major driver for the
industry. It also encouraged more enterprises in this industry to develop new services, such as online
games, search engines, instant messaging and music. Cell phone internet application services grew due to
increasingly well-designed intelligent cell phones and an expanding 3G network. In 2005 and 2006, new
services based on Web 2.0, such as blogs and wikis, increased income for some companies.

By the end of 2015, mainly due to decreasing network traffic costs, growing penetration rates of mobile
network terminals and the release of 3G and 4G licenses, total mobile internet users increased to 620
million, accounting for 90.5% of China's internet users.

Competition and enterprises

Competition has been intense in this industry over the past five years. Many websites were developed over
this period and a large number of mergers and acquisitions took place. Large-scale enterprises were listed
on the United States and Hong Kong stock markets to raise capital for expansions and acquisitions.

Web portals such as Sina, Sohu and NetEase play important roles in the industry. In certain market
segments some websites took the leading positions, such as QQ and MSN in instant messaging, Baidu and
Google in the search engine market. In the search engine segment, Google's exit from the Chinese market
in March 2010 allowed Baidu to increase its market share.

There are about 30,590 enterprises operating in this industry in 2016, representing average annual growth
of 4.1% over the past five years. These enterprises operate a total of 43,341 establishments and employ 3.4
million workers. Most enterprises in this industry are domestic and small in size. Foreign-funded
enterprises are expected to account for only 1.8% of total enterprise num bers in 2016.

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Industry Outlook
ACMR-IBISWorld forecasts that in the next five years, total industry revenue will continue to grow at a
steady rate of 39.3% per year to total $1.54 billion in 2021.

Although the number of internet users is expected to increase significantly, pricing competition is forecast
to result in slower revenue growth than in the previous five years. Industry concentration is expected to
increase slightly in the five years through 2021 and web portals will still play an important role in the
industry. Large-scale firms will expand, and thus maintain their leading positions in many fields. It will
become increasingly difficult for new enterprises to gain significant levels of market share.

Web 3.0 and 4G

Web 3.0 technologies and sites will become more mature. Since 2010, the services based on Web 3.0 have
developed rapidly and brought higher incomes to the Internet Services industry in China. In the next five
years, Web 3.0 sites will continue to develop steadily, which will strengthen partnerships with traditional
websites. Search engines are also forecast to account for a larger part of online services, while traditional
forms of web portals will lose some popularity.

Internet technology and applications will improve steadily with the development of fourth-generation (4G)
mobile internet technology. The upcoming 4G period will speed up the fusion of wireless and wired
internet. The 4G technology is expected to become a major driver for the development of the internet,
while the integration of 2.0 applications and 3.0 technologies will give rise to new business models.

The value of internet services will be improved with the development of internet applications in traditional
industries. The enterprises in this industry will continue to research and develop new internet applications
in various market segments. They will also strengthen their partnerships with the companies in traditional

Demand and investment

The development of new rural information services will become an important driver for the Internet
Services industry in China. The government attaches great importance to the construction of new rural
information services by making significant investments, which will stimulate consumption of and demand
for hardware, software and internet services in these less developed regions in China.

Internet security will become the most important concern for this industry. Some factors such as viruses
and junk e-mail present threats to the internet's security, which will affect the normal demand of internet
users, and enterprises' data safety.

Foreign investment is expected to increase in this industry in the future, as international companies seek to
diversify geographically due to the difficult operating environment caused by the global financial crisis.
Foreign firms are expected to acquire well-managed and profitable Chinese internet service providers in
the next several years.

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Industry Life Cycle

This industry is in the growth stage of its life cycle.

Life Cycle Stage

Technology change in this industry is high
Internet usage rates have increased and will continue to grow
Industry revenue and value added have grown strongly

From 1994 to 2016, the industry's development went through various stages. The industry achieved modest
growth from 1994 to 2001. Many companies were merged or acquired between 2001 and 2003. Since
2004, many enterprises in this industry were listed on the NASDAQ, where capital from initial public
offerings (IPOs) was invested in the further development of Chinese websites.

A basic market landscape formed in the industry during the merger and acquisition period. For example,
Sina, Sohu and NetEase are leaders in the web portal segment, while Tencent and MSN are the main
websites in the instant messaging segment. In the decade to 2021, industry value added is expected to
increase by 12.1% annually, much faster than overall economy during the same period.

There are various drivers that have boosted industry growth. The number of internet users in China totaled
668 million by the end ofe 2015 (up from 564 million in 2012). However, the internet penetration rate is
still lower than that in developed countries, implying further growth potential.

The development of internet technologies will support more new services for both corporate and individual
users. In 2006, web users began to be significantly more interactive with the web, as the proliferation of
blog and wiki services was more apparent. In 2010, the vertical websites shifted to Web 3.0. The Web 2.0
and Web 3.0 shift has provided more advertising opportunities for websites.

Consumption habits for both corporate and individual users have changed in China. Online advertisements
have become an important means for publicity and promotion. The internet is also providing more services
for individuals and has become an important part of people's lives.

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Products & Markets

Supply Chain
Key Buying Industries

6820 - Commercial Banks in China

Banks are major users of internet services.

7432 - Market Research in China

Market research companies use the internet to research information and conduct online surveys.

Z9901 - Households in China

Individuals and households are major users of internet services.

Key Selling Industries

4041 - Computer Manufacturing in China

Computers are basic equipment items for the Internet Services Industry in China.

4042 - Computer Network Equipment Manufacturing in China

Routers and servers are basic equipment supplied to the Internet Services Industry in China.

6211 - Software Development in China

Operators in this industry provide application software services to internet service firms.

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Products & Services

Basic internet access services 51.0%

Blog services 3.1%
Instant messaging 6.0%
Online advertising 9.6%
Online games 5.7%
Other internet application services 9.8%
Search engines 3.9%
Web portals 10.9%

Basic internet access services

Basic internet access services account for 51.0% of total industry revenue. Major basic services include
domain name applications, virtual host services and online storage services. Application services include
more than 50 varieties of services in China, including internet advertising, web portals, search engines,
instant messaging, online games, blogs, etc.

High user numbers provides a good base for the development of this segment. However, competition has
become very intense since 2001, as the number of internet users increased sharply. The main service
providers, including China Netcom, China Telecom and Great Wall Broadband Network, continue to
reduce their pricing levels to attract more users. The development of broadband access services reduced
the dial-up access service sub-segment, which is now majorly concentrated in rural markets and small

Online advertising

Internet advertising is one of the most important services and the main revenue channel for most players
in this industry, accounting for about 9.6% of total industry revenue. Advertising revenue will continue to
rise in the future, as enterprises in various industries will increase investment in internet advertising to
gain an advantage in the market, especially small and medium-sized firms. In China, the largest internet
advertisers seek such services through e-mail, web portal and news websites.

Web portals

Web portal refers to application system that provides a certain kind of integrated network for learning
information and resources and many other services like news, chatting room, free mail, online games and
so on. Revenue from web portals is expected to account for about 10.9% of total industry revenue in 2015.
However, the revenue growth rate of web portals was slower than that of the total industry because many
new services appeared and increased at a faster rate. In 2016, Tencent, Sina, Sohu and 163 (NetEase) are
among the most popular web portals.

Search engines

Revenue from search engine services is expected to be about 3.9% of industry revenue in 2016. In terms of
user numbers, the top three search engine enterprises in China are Baidu, 360 and Sogou.

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Instant messaging

Revenue from instant messaging is about 6.0% of industry revenue. This service is widely used in China
and has quickly increased in popularity. This segment is expected to grow at a rapid rate in future years. In
2016, the most popular instant messaging applications among Chinese are WeChat and QQ, with monthly
active users of 843 million and 600 million, respectively.


Blog services developed rapidly in the past three years in China, with revenue accounting for 3.1% of total
industry revenue in 2016. There were about 4.7 million blog users in China by 2015.

Online games

Online games account for 5.7% of total industry revenue. The top three carriers for online games are
Tencent, NetEase and Shanda Interactive. There are expected to be more mergers and acquisitions among
the online game suppliers, which will integrate capital and force some uncompetitive enterprises out of the

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Demand Determinants

Growth in internet users

The number of internet users in China has continued to increase rapidly in recent years. China now has the
largest population of web users in the world. These greater numbers of web users have driven the rapid
development of the industry, especially for application services.

Growth in broadband subscriptions

Broadband subscriber numbers have increased rapidly in the past five years. Demand for e-mail services,
online games, search engines and other internet services and applications will continue to rise in the

Technological advances
Network, hardware and software development have created new services that can be provided via the
internet. In recent years, the development of Web 3.0 affected the industry greatly, and many traditional
web portals implemented Web 3.0 services such as microblogs and SNS.

Development of related industries

The development of related industries in the telecommunication sector and financial sector will increase
demand for value-added services and specialized services. Meanwhile, more new services will be
introduced to attract more users.

Digital age
With the popularization of the internet in people's lives, business and consumption habits of households
and companies have changed. Internet advertising has become an important means to promote products
and brands. There is also a rising trend for web users to seek services such as online shopping and games.

Within the national economy, the market has made the internet indispensable for the operation of many
industries. The internet will be widely used in more regions and more fields of the economy, and the
demand for better internet services will grow accordingly.

Major Markets

Internet users aged 20 to 29 years 29.9%

Internet users aged under 19 years 24.0%
Internet users aged 30 to 39 years 23.8%
Internet users aged 40 to 49 years 13.1%
Internet users aged over 50 years 9.2%

The number of internet users has continued to increase strongly in recent years and was estimated at 685
million at the end of 2016. The major means to access internet is via mobile phones with mobile internet
users account for 90.5% of total internet users in China.

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Based on different categorizations, the major internet user groups are: male users (an estimated 53.6%);
users under 39 years (75.1%); users without bachelor degrees (88.8%); and users with monthly income
under $490 (60.1%).

Students are expected to account for a stable 25.2% of total internet users in 2016. Workers in enterprises
are estimated to account for 12.4% of internet users, while employees in public institutions and
professional people are expected to account for 5.3% and 5.5%, respectively, of total internet users in 2016.

Most internet users prefer to go online at home; this group is estimated to account for 90.3% of users in
2016. The main services used by internet users are receiving, writing and sending e-mails; reading news;
search engines; online films; online TV series; data downloading; and instant messaging.

International Trade

Exports in this industry are low and steady.

Imports in this industry are low and steady.

International trade is not applicable for this industry.

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Business Locations

Region Percentage
East China 2 8.4

North China 2 6.3

Middle South China 2 3 .4

South West China 9.8

North East China 7 .0

North West China 5.1

Region Percentage
East China 3 3 .1
North China 1 9.0

Middle South China 2 4 .0

South West China 1 2 .3

North East China 5.3

North West China 6.3

Region Percentage
East China 3 2 .2

North China 3 7 .8
Middle South China 1 5.3

South West China 4 .8

North East China 6.3

North West China 3 .6

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With a rapidly developing economy and China's ongoing informatization process, people and enterprises in
various industries in China have changed their consumption patterns and started using the internet for a
wider range of domestic and work functions. Demand for information and internet services in China has
continued to increase steadily in recent years.

Industry operations are mainly located in the North, East and Middle South China regions, where internet
service providers are concentrated and people's consumption power is greatest. Beijing, Shanghai and
Guangdong and Zhejiang provinces are estimated to account for 52.5% of industry revenue. In 2016,
proportions of major cities fell as network coverage expanded to smaller towns and more rural areas.

Beijing has the first national high-tech industrial development zone in China, Zhongguan Village, which
was established by the government in May 1988 to develop internet technology in the country. Most IT
companies in Beijing are concentrated in this area. Beijing also has a relatively higher economic
development level and greater consumption power, which provides a large market for companies in this

About 12.1% of the industry's establishments are located in Beijing. These companies are expected to
generate 34.5% of total industry revenue, with 21.4% of industry employment.

Guangdong province
Guangdong province is the manufacturing center of China and has large demand for internet services due
to its high consumption power and developed economy. About 13.0% of establishments in the industry are
located in Guangdong province, with 12.4% of industry employment. Revenue generated from this region is
estimated to account for 9.2% of the total.

Shanghai is the largest business center in China, and has the highest personal average GDP of all provinces
in the country. In 2016, revenue generated from Shanghai accounted for 8.8% of the total. About 5.2% of
establishments in the industry are located in Shanghai, with 6.3% of industry employment.

Zhejiang province
The industry has also developed rapidly in Zhejiang province in recent years, due to the relatively high level
of economic development in this region. In 2016, Zhejiang province made up 8.4% of total industry
revenue. About 4.5% of total establishments in the industry are located in Zhejiang province, and these
companies employ 5.1% of the industry's workers.

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Competitive Landscape
Market Share Concentration
The level of industry concentration is medium.

The concentration level in the Internet Services industry is low but is expected to increase rapidly. There
were about 30,590 enterprises in this industry in 2016, with revenue of the top four companies - Alibaba,
Tencent, Baidu and NetEas - accounting for about 20.2% of total industry revenue in the year.

There are several large enterprises with high user reach rates in most market segments in this industry.
These firms are expected to continue to expand their businesses and acquire smaller players to increase
their market shares and gain new customers.

Key Success Factors

The key success factors in the Internet Services industry are:

Development of new products

Innovation has become one of the most important bases of competition in this industry.

Ready access to investment funding

Most leading enterprises in this industry have listed publicly and utilized the funds for expansion.

Having a clear market position

There are many market segments in this industry. A clear market position is very important for the
development of enterprises to target specific user groups.

Establishment of brand names

Well established brand names will attract more users.

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Cost Structure Benchmarks

Purchases 3 5.8%

Publicity and promotional events 7 .7%

R&D 6.5%

Depreciation 5.2 %

Wages 3 .0%

Rent 1 .5%

Utilities 1 .1%

Other 8.7%

Profit 3 0.5%


Although profit margins of listed companies are high, they have been on a declining trend as competition
has intensified and prices declined. In 2015, profit was estimated at 30.5% of revenue due to substantial
investments in research and development (R&D) and much higher wage costs.

Purchases and depreciation

Purchase costs make up a large segment of industry revenue, with a share of 35.5%. Companies in this
industry invest significant amounts of capital in buying servers, network equipment and data storage
equipment, which all need to be upgraded frequently. Therefore, depreciation costs are also large,
accounting for 5.2% of total industry revenue.


Wages accounted for 3.0% of total industry revenue in 2016. Many employees have high-level academic
degrees and are highly skilled. The average age of workers in this industry is also relatively young. With the
industry becoming mature, wage levels are forecast to keep increasing.

R&D costs accounted for an additional 6.5% of total industry revenue in 2016. Innovation competition has
become an important dimension in this industry. Companies increased investment in R&D to develop new
services and new products to attract more users.


Publicity and promotional events are very important for some firms in this industry. Every year, companies
spend large sums to increase their popularity and promote their products and services. These costs account
for 7.7% of total revenue and are expected to continue to increase in the future.

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Basis of Competition
Competition is high and steady
Attractive content will bring higher click-through rates (CTRs) for internet service providers, which will
lead to higher advertisement income and user reach rates. The essence of content competition is to create
consumption patterns for users and to establish customer loyalty.

Innovation ability
It is very important for the industry's enterprises to create new services and update old ones. Web 2.0 sites
have affected the industry greatly. One example is the uptake of commenting features by various websites.

Website and search engine popularity is also a very important competitive factor. A high popularity level
indicates that the enterprises are closely monitored by users and they have high CTR. According to the
China Internet Network Information Center, in terms of search engine popularity, Baidu is the most
popular search engine in China.

Higher popularity levels with search engines means that clients in many industries may spend more to buy
the keywords, which are expected to bring more click-throughs and income to the enterprises in this

Accurate market positioning

There are three major sources of revenue in this industry. The first is advertisers that pay advertisement
fees for high page views; the second is value-added services, such as interactive entertainment and short
message services; the third is when the platform connects service providers with users for a commission.

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Barriers to Entry
Barriers to entry are high and increasing.

Barriers to Entry checklist Level/Impact

Industry Competition High

Industry Concentration Medium
Life Cycle Stage Growing
Capital Intensity Medium
Technology Change High
Regulation and Policy Heavy
Industry Assistance Medium


High administrative licensing barrier

In 2000, the State Council issued internet service business certificate (ICP business certificate), requiring
that all internet service enterprises must provide ICP business certificate. Besides, the internet service
enterprise should possess series of strict technology conditions.

Established players

It is difficult for new entrants to gain market share when competing with large-scale firms. The market
landscape is relatively steady and in most niche markets there are several large dominating enterprises,
such as Sohu, Sina and Netease in web portals; QQ and MSN in the instant messaging market; and Baidu
and Google in the search engine market.

Updating of equipment

Growing costs for updating equipment and gaining content results in increased expenses. Enterprises in
this industry keep developing new services in line with the growing number of users. Therefore, they need
to invest large amounts of money to buy new servers, net equipment and data storage equipment, and to
upgrade existing equipment. Companies need to invest in the development of content to meet increasing
demand from users.

Investment in R&D

Growing investment in R&D increases barriers to entry. Innovation capacity has become one of the most
important factors in the competitive environment. Enterprises in this industry make significant
investments in research and development of new products and services in order to gain a competitive edge.
In recent years, the development of new services such as blogs and wikis brought higher income for the
industry's enterprises and increased entry barriers as firms gained market share.

Government supervision

Government supervision concerning internet security issues and intellectual property protection are much
tighter than they have been in the past. In 2010, the number of websites declined by 41% due to
government regulations. On the other hand, internet resources are safer and have improved in quality.

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Industry Globalization
The level of globalization is medium and increasing.

The Chinese government reduced regulations and controls over this industry after China's accession to the
World Trade Organization in December 2001. The share of foreign capital invested in an internet service
enterprise was permitted to be more than 50.0% in 2003. Foreign capital entered the industry at
significant levels as most domestic enterprises were small or medium-sized firms, resulting in a low level of
industry concentration.

Foreign capital investment was mainly concentrated within a small number of major players, while most
companies in this industry are small and medium-sized domestic enterprises. The entry of foreign
enterprises brought adequate capital, advanced technologies and diversified services, all of which drove
industry growth in recent years. In 2016, foreign companies accounted for 1.8% of industry enterprise
numbers but made up 24.1% to industry revenue.

The market will continue to expand rapidly in the future and more foreign enterprises will enter the
industry. Therefore, the level of globalization is expected to continue increasing strongly over the next five

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Major Companies

Major Player
Alibaba Group 7 .1% (2016)

Tencent Holdings Limited 7 .0% (2 016)

Baidu.com, Inc. 4 .6% (2016)

Netease.com, Inc. 1 .5% (2016)

Qi Hu 3 6 0 Technology Co. Ltd. 0.8% (2 016)

Sohu.com Inc. 0.7 % (2 016)

SINA Corporation 0.3 % (2016)

Other 7 8.0% (2016)

Alibaba Group

Market Share: 7.1%

Alibaba Group, founded in 1999, is headquartered in Hangzhou and provides services for internet users of
more than 240 countries and regions. In 2012, the group employed 24,000 workers in over 70 cities
worldwide. Alibaba Group is engaged in creating convenient internet transaction channels for consumers.
The group went public on the Hong Kong Stock Exchange in 2007, but then exited the Hong Kong Stock
Exchange in June 2012.

On September 19, 2014, Alibaba Group successfully listed its shares on the US NASDAQ, recording the
largest initial public offering by a Chinese company in the United States with raised capital of $2.5 billion.

There are 12 subsidiaries under Alibaba, including Alibaba B2B, Taobao (C2C), Tmall (B2C), Alipay,
Koubei Website, Alibaba Cloud Computing, YAHOO!, Etao, Zhicheng Technology Ltd, CNZZ, and
Juhuasuan. Among these companies, Taobao.com has the largest market penetration rate and accounts for
the largest market share in the Online Shopping industry.

Alibaba is the most profitable network company according to current condition. Profit of Alibaba during
2014 was $3.8 billion, which was more than two times of that during 2013. In addition, profitability of
Alibaba was at 44.6% during 2014.

In the first quarters of 2014, popular online shopping platforms under Alibaba (i.e. Taobao) and Tmall
generated $90.0 billion from 307.0 million active buyers. Trading volume through mobile terminals
accounted for 35.8% of the total.

In June 2013, Alibaba partnered with Tian Hong Fund to set up Y u'EBao, an online money market fund.
Customers gain relatively higher earnings through Yu'EBao than traditional banks, and these earnings can
be used to pay for goods purchased through Alibaba or transferred to accounts held with Alipay, Alibaba's

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third-party payment affiliate. Yu'EBao garnered more than 16.0 million accounts only four months after its


Taobao.com is the largest online retail website with registered members exceeding 170.0 million. Goods
provided by Taobao include cars, computers, clothes and household articles. Specific services provided by
Taobao are customer oriented and create a harmonious environment for customer-seller communication
and trading.

Stores within Taobao have employed various video technologies to provide attractive and helpful services.
In December 2010, Taobao set store-opening tests for potential sellers to raise the entry barrier level and
the overall service quality of sellers on the website.

Taobao has also created a "real-name certificate system," which requires specific and real information of
buyers and sellers to ensure information security. In order to raise its credibility, Taobao employs a credit
evaluating system, which helps buyers and sellers learn more about each other and curbs potential

Currently, Taobao has approximate 500 million registered members and over 800.0 million products
listed for sale.

In 2015, Taobao made changes to its new modules: Q.TAOBAO.COM (Chinese made quality products) and
G.TAO.COM (global shopping).

Q.TAOBAO.COM drives many province and regions to develop products with 4,500 factories joining the
Taobao platform with the aim of providing international quality commodities for consumers. Second, its
"characterized China" activity covers 93 cities in 31 provinces and established 190 local shops with the aim
of establishing high-end local specialty markets. Third, on the platform of G.TAO.COM, large cross-border
commerce is aided by bonded warehouses in Shanghai that sell daily products made outside of China. The
above three modules are Taobao's horizontal markets in order to cover as many fields of online commerce
as possible.

Another trial is through its vertical online platforms: IFashion, JIYOUJIA.COM, and CDJ.TAOBAO.COM.
IFashion provides the most comprehensive fashion resources and information for consumers.
JIYOUJIA.COM offers a one-stop upgraded service surrounding solutions for households.
CDJ.TAOBAO.COM, also known as Alipay Lab, is a business incubation platform.


In November 2012, Taobao Shopping Center, an independent B2C platform was established. In January
2012, it was renamed Tmall. Tmall provides a large variety of goods, including 3C products, clothing and
household appliances. Well-established brands, such as Belle, Nike, Adidas, Aokang, have established
flagship stores in Tmall. Since its establishment, Tmall has received widespread appreciation because of its
good standing and qualified products. Also the promotions on Tmall greatly increase its popularity and
expand its brand. On November 11, 2014 (Bachelor's day in China), total turnover of Tmall was $9.3
billion. Tmall's turnover during Bachelor's Day reached a record-breaking $14.7 billion in 2015.

Tencent Holdings Limited

Industry Brand Names: QQ, QZone
Market Share: 7.0%

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Established in 1998, Tencent Holdings Limited is one of the largest instant messaging service providers in
China. The company provides internet value-added services, mobile and telecommunications value-added
services, online advertising and other services to Chinese enterprises and internet users.

Tencent Holdings Limited was listed on the Hong Kong Stock Exchange in July 2004. It has become the
second largest internet service company in the world and has covered almost all kinds of internet services.
One of Tencent's key advantages is the large amount of QQ users. There were about 843 million active QQ
IM users by the end of June 2015, although it is likely some users own more than one QQ account.

The company's major subsidiaries include Tencent Technology (Shenzhen) Ltd., Tencent Technology,
Tencent Limited, Realtime Century Technology Limited. In March 2014, Tencent purchased 15% shares of
Jingdong (360Buy), which aims to provide better e-commer services and bring better online shopping
experience for customers through cooperation with Jingdong.

Financial performance

In 2015, Tencent's revenue increased by 27.8% from 2014. QQ users increased to 658.0 million, and the
number of WeChat users increased to 762.0 million. Company revenue is estimated to increase to $20.48
billion in 2016.

In 2014, Tencent's revenue increased to $12.81 billion. Benefiting from China's expanding mobile users,
Tecent's intelligent terminal QQ users increased by 33% to 576 million. In 2014, the number of WeChat
users increased by 41% to 500 million.

In 2013, Tencent's revenue increased by 41.3% to $9.83 billion. During the year, the company's mobile QQ
users and Weixin (WeChat) users increased by 74.0% and 121.0%, respectively. A significant increase in
principal eCommerce transactions volume and fees led the company's eCommerce transactions segment to
grow over 121.0%, increasing the segment's revenue share from 10.0% in 2012 to 16.0% in 2013.

With the rising number of game players and the application of its open platform, revenue of Tencent
surged by 53.8% to about $6.96 billion in 2012. Tencent also established a strong presence in a wide range
of mobile application categories such as communications, social networking, media, security and browsers.
Tencent has developed some of China's most popular mobile applications, including Wireless QQ and

In 2011, Tencent continued its strong growth and heavy investments in strategic new products such as
Weibo, e-commerce, online security and online video. Its total revenue increased by 55.8% for the y ear.

Baidu.com, Inc.
Industry Brand Names: Baidu Safety Center, Baidu Knows, Baidu Hi, Baidu Y oua
Market Share: 4.6%

Established in 2000, Baidu.com has become the leading Chinese language internet search engine and the
highest ranked internet traffic site in China. The company mainly provides search services and its major
subsidiaries include Baidu Online Network Technology (Beijing) Co. Ltd., Baidu (China) Co. Ltd. and
Baidu Netcom Science Technology Co. Ltd. According to the CNNIC, Baidu search engine wa s the first
choice for over 90% of search engine users in 2014. In August 2010, Baidu was listed on NASDAQ stock

In 2000, Baidu started providing improved search engine technology for Chinese web portals, which
enhanced its profitability. The company developed rapidly and gained many clients such as Sina, Sohu and
263.com. However, these clients used Baidu's search engine as a supplementary service. Baidu then
became a competitor of Sina, Sohu and other websites and developed its search engine business. As a

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result, the former major clients formed partnerships with Google and other similar companies. However,
Baidu succeeded in its search engine business by launching a new business model of bidding ranks for
search engines, and expanding its content to MP3s and photos.

In 2015, Baidu continued to strengthen its mobile business. In the first nine months of the year, Baidu user
numbers from mobile search and mobile maps increased by 26.0% and 34.0%, respectively, to 640.0
million and 330.0 million. Revenue generated by Baidu reached $10.6 billion, up 34.2% from 2014.

In 2014, Baidu generated revenue of $7.87 billion. Baidu invested heavily in research and development in
the year. As end of the year, Baidu had 500 million mobile users, and the company's revenue from mobile
business accounted for 42% of total.

In 2013, Baidu purchased video service of PPS with $370 million. In line with flourishing internet
financing, Baidu launched its money management product of Baifa Online.In 2013, Baidu a ccounted for
81.6% of internet search traffic in China. The company reported revenue of $5.3 billion in 2013, up 49.3%
over 2012. This increase was mainly attributable to the increase in the number of active online marketing
customersfrom 596,000 in 2012 to 753,000 in 2013. The increase in average revenue per customer rose
from $6,000 in 2012 to $6,971 in 2013.

Baidu achieved total revenue of $3.54 billion in 2012, a sharp rise of 53.5% from 2011. This increase was
due to a substantial increase in revenue from online marketing services. The number of active online
marketing customers increased from 488,000 in 2011 to 596,000 in 2012, and the average revenue per
customer increased from approximately $4,600 in 2011 to $6,000 in 2012.

In 2011, Baidu realized revenue of $ 2.3 billion, much higher than annual revenue in 2010 due to more
active marketing customers. The main reasons are increasing popularity of online marketing and large
amount of visits to Baidu websites.

Netease.com, Inc.
Industry Brand Names: Y odao, World of Warcraft
Market Share: 1.5%

NetEase.com was established in 1997 and has developed into a major provider of Chinese language content
and services through online games, wireless value-added services and internet portal businesses. It was
listed on the NASDAQ in 2000. In March 2012, the company name was changed into "NetEase, Inc.".

Company revenue derives mainly from charges for online games, wireless value added and other fee-based
premium services, and selling online advertisements on the NetEaseNetEase websites.

In 2001, NetEaseNetEase established the first partnerships with telecommunication carriers and entered
the short message service (SMS) market. The SMS business developed quickly and the company started
became profitable in 2002. Non-advertising revenue contributed a larger share to the company's total
revenue, mainly due to growth from online games. In 2002, the company began to charge for its online
game Westward Journey II, due to the high number of users. NetEaseNetEase then continued to invest in
research and development of online games.

Financial performance

In 2015, NetEase's revenue continued to increase rapidly. In addition to its traditional businesses of online
games, advertising, and e-mail, the company expanded into new business areas. Revenue generated by the
company totaled $3.6 billion, up 91.0% from 2014.

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In 2014, NetEase generated revenue of $1.9 billion. Online game services contributed 83.9% of NetEase's

In 2013, NetEase made revenue of $1.6 billion, an increase of 24.2% over 2012. Online game services
contributed 85% of NetEase's revenue, while advertising services held a share of 11.2% during the year.

In 2012, NetEase continued to develop its online games and advertising businesses, which are its highest
revenue generators. Total revenue was estimated at $1.30 billion in 2012, up 9.5% up from 2011. Relatively
slow growth was mainly due to the decreasing popularity of its online games.

In 2011, NetEase realized revenue of $1.2 billion, 87.8% of which was contributed by online games. In
2010, revenue of NetEase totaled $841.9 million, representing a 50.4% increase from 2009. This
performance was mainly boosted by strong financial results from online games and advertising services,
which increased by 30.7% and 27.2%, respectively, in the year.

Qi Hu 360 Technology Co. Ltd.

Market Share: 0.8%

Qi Hu 360 Technology Co. Ltd. (known as 360) is a leading internet and mobile safety product and service
provider founded in September 2005. It was listed on the New York Stock Exchange in March 2011.

360 provides high quality and free safety services in order to solve various safety issues that users come
acrosson the internet. So.com (also 360 Search) is one of main products of the company. By the end of
2013, monthly active users for 360 Search reached 354 million, with an internet user penetration of a bout

360 Search was launched in August 2012 and features news, a game center, a shopping portal and many
other applications. 360 Search brought dramatic changes to the industry by partnering with industry
competitors and aiming to control the spread of fraud, misinformstion, and fishing websites.

As of 2015, monthly active users were 514.0 million, with an internet user penetration rate of about 96.6%.
Revenue generated by the company totaled $1.8 billion during the period.

Driven by significant growth of the company's search business and mobile application stores, the company
generated revenue of $1.39 billion in 2014.

In 2013, the company realized revenue growth of 104%, totaling $671.0 million. This was largely due to its
PC terminal safeguard products, which accounted for 95.0% market share in China.

Sohu.com Inc.
Industry Brand Names: Sogou, Tian Long Ba Bu (TLBB), Sohu Passport, Sohu Blog
Market Share: 0.7%

Sohu.com originated from Internet Technologies China Incorporated, which was set up in 1995 and
launched its original website under the domain name Sohu.com. It soon became a large-scale enterprise
focusing on the search engine business in 1998, when the company name was changed to Sohu.com Inc.
The company started to provide news and content services in 1999, and was listed on the NASDAQ
exchange in 2000. The company provides an array of products and services through various web
properties, including aggregated content, communications and community, searches and directories,
wireless services, and online games.

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In recent years, Sohu has spent tens of millions of dollars to acquire enterprises and expand businesses.
Advertising has become a major revenue source and has maintained rapid growth since 2001. The
company's wireless value-added businesses have declined due to intense competition within the industry.
Its Sogou search engine service, as a growing new business, is under competitive pressures from Baidu,
and its niche market share is unstable. By the end of 2013, the number of active users for Sogou input
method in PC terminal reached 458 million and in mobile terminal, 200 million, which ranks among the
top ones in China.

Financial performance

In 2015, Sohu expanded its mobile presence and continued to partner with Tencent. The com pany
generated revenue of $1.9 billion, up 15.8% from 2014.

In 2014, Sohu generated revenue of $1.55 billion. The high growth was contributed to steady growth of
brand advertisement business and dramatic growth of Sogou business. Sohu media platform users
transferred to the clines and mobile platforms rapidly.

In 2013, revenue for Sohu totaled $1.4 billion, up 31.2% from 2012. The high growth was contributed to
dramatic growth of brand advertisement business and Sogou business. Attractive video content and
cooperation with Tencent had strengthened competitiveness of Sohu.

Sohu resumed solid growth in 2012, with total revenue growing by 25.3% to $1.07 billion. Sohu
strengthened its market position in online video with its collection of differentiated content. For search,
Sohu once again achieved triple-digit revenue growth, mainly driven by increased traffic and improved
monetization. And Changyou, Sohu's online game subsidiary, delivered another year of record results.

In 2011, Sohu realized revenue of $852.0 million with online advertising and online games contributed
40.1% and 51.2% respectively. In 2010, Sohu reported revenue of $612.8 million, up 18.9% from 2009.
Revenue from brand advertising, online games and searching services increased by 20.0%, 22.0% and
120.0% respectively in the year. Market share of internet video increased from 3.4% to 13.4%, due to
company's strategy to provide HD movies. The Sogou search engine became increasingly popularized
among domestic users, which brought in more revenue for Sohu.

SINA Corporation

Market Share: 0.3%

In 1998, Stone Rich Sight Information Technology merged with Sinanet.com and set up Sina.com, which
has developed into the largest Chinese web portal. The company has several regional websites worldwide
and provides various services including online media and entertainment, wireless value-added services, e-
commerce and enterprise e-solutions for personal, business and government use. The number of registered
users has reached 230 million and daily page-views are 500 million worldwide. SINA Corporation
developed steadily after listing on the NASDAQ in 2002.

The company provides services through five major business modules: Sina.com (online news and content);
Sina Mobile (mobile value-added services); Sina Community (Web 2.0-based services and games); Sina.net
(search and enterprises solutions); and Sina e-commerce (online shopping).

In 2015, Sina generated revenue of $880.7 million, up 14.7% from 2014.

In 2014, Sina generated revenue of $767.6 million, among different business sectors, the revenue from
Sina microblog surged by almost 80% from 2013.

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In 2013, Sina made revenue of $665.1 million, up 25.7% over 2012. This increase in revenue in 2013 was
mainly due to the growth of portal advertising and Weibo or Weblog. As a percentage of revenue, portal
advertising and Weibo contributed 57.0% and 28.0%, respectively. In 2013, approximately 72.0% of Sina's
advertising and marketing revenues in China were derived from the automobile, fast moving consumer
goods, internet and financial services, IT and telecommunication sectors.

Total revenue of Sina increased by 9.6% to total $529.3 million in 2012. Growth in online advertising
revenue and other non-advertising revenue partially offset the decrease in mobile value-added services
(MVAS) revenue. Advertising and MVAS represented 78.0% and 13.0%, respectively, of total revenue in

In 2011, Sina realized revenue of $482.8 million, with about 76.4% contributed by brand advertising. Y ear-
on-year growth was 14.8% from 2010. However, due to the depreciation of its investment in China Real
Estate Information Corporation (CRIC) and MCOX, Sina reported a profit loss of $1.4 billion in 2011.

Other Players
In the niche market of application services, the industry's small and medium -sized enterprises, most of
which have annual revenue under $40,000, account for over 98.0% of total enterprise numbers. These
firms provide services in more than 50 segmented markets including web portals, search engines, instant
messaging, news, blogs and bulletin board systems (BBS). The diversification of businesses is the main
reason for the low industry concentration level.

In this industry, different enterprises take the leading positions in segmented markets. For example,
PCauto, Chinacars and Autohome are leaders in specialty automotive trading websites; and Tudou and
Ucool are top in the video blog market.

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Operating Conditions

Capital Intensity
The level of capital intensity is medium.
Intensive investment in research and development is required
Short manufacturing equipment replacement cycle
High wages for employees

In China, most enterprises in the industry have low start-up capital costs and are small in scale. However,
for larger firms that offer a wide range of services and have extensive development networks, significant
investments are required for computer equipment and research and development of products and services.
Innovation has become one of the most important dimensions for competition in this industry

The industry's depreciation costs are large as companies spend large amounts of money buying servers,
network equipment and data storage equipment, and upgrading them to meet the growing demand every

Employees in this industry are characterized by high-level academic backgrounds and are relatively young.
Therefore, large enterprises in this industry pay high wages to retain capable employees.

For every dollar spent on labor (wages and R&D costs), about 30 cents are invested in capital. This shows
that the Internet Services industry in China is a moderately labor-intensive industry, but technology is
playing an increasingly significant role.

Technology & Systems

The level of technology change is high.

With the evolution of Web 2.0 in 2006 and Web 3.0 in 2010, enterprises in this industry have experienced
rapid growth in technological advancements, which supports new services and brings more income.

The development of technologies and innovation will become an increasingly important factor for the
Internet Services Industry in China in the outlook period. China initiated the establishment of CNGI
(China Next Generation Internet) in 2003, covered most cities in China by 2007. Most CNGI built by
carriers have met national standards. The application and services based on CNGI will become the key
driver for the industry's development in the future.

The Chinese government also included the development of internet technologies in the Twelfth Five-Year-
Plan (2011 to 2015). The government encourages enterprises to develop technologies and products based
on CNGI, continues to build and upgrade CNGI, and has set up national engineering research centers. The
government supports research on CNGI and key technologies, development of key equipment, key software
and applications, as well as the industrialization of CNGI. This is expected to guide the transition of the
internet from IPv4 (internet protocol version 4) to IPv6 (internet protocol version 6).

Revenue Volatility
The level of volatility is medium.

The number of internet users in China has continued to increase at a rapid rate in recent years. This has
contributed to industry volatility as industry revenue continues to increase at high rates each year.

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The development of technologies brings new services to the industry and internet users. Further, as
companies continue to increase investments into online advertising and other internet services, more
consumers will utilize the Internet and drive further industry revenue growth and volatility in the future.

Regulation & Policy

The level of regulation is heavy and the trend is increasing.

Regulation on Administration of News and Information Services on the Internet

Regulation on Administration of News and Information Services on the Internet was promulgated in
September 2005 by the State Council Information Office of the People's Republic of China and Ministry of
Information Industry (MII). This aims to regulate internet news information services and satisfy general
public demand for internet news and information. Internet news information services mentioned in this
regulation include publishing news information via the internet, providing electronic bulletin services on
current affairs, and transmitting information on current affairs to the public.

The establishment of the internet news information service providers shall be subject to the examination
and approval of the Information Office of the State Council, according to decisions of the State Council, the
Information Office of the State Council or information offices of provincial governments.

Regulation on Internet Information Service of the People's Republic of China

Regulation on Internet Information Service of the People's Republic of China was approved by the State
Council and promulgated in 2000. In this regulation, the government requires that commercial Internet
Information Servers (IIS) should obtain licenses and non-commercial IIS should report their services for
official records. A commercial IIS provider must apply to corresponding provincial IIS administrations or
the department of the State Council in charge of information industries for its license to operate an IIS
value added telecommunication business. A non-commercial IIS provider must report its operations for
official records at corresponding provincial telecommunication administrations, or the department of the
State Council in charge of information industries. If a commercial IIS provider applies to have its business
publicly listed in domestic or overseas stock markets, or to establish a joint venture or partnership with
foreign investment, it must have the prior permission of the department of the State Council in charge of
information industries.

China Internet Domain Name Regulation

China Internet Domain Name Regulation was formulated by MII in 2004 in accordance with relevant
Chinese laws and administrative regulations and policies in order to resolve domain name disputes on the
internet. It is applied to resolve disputes stemming from registration or use of the ".cn" country code top-
level domain names and Chinese domain names, which are subject to the management of the China
Internet Network Information Center (CNNIC). The regulation requires that applying for establishment of
a domain name root server or domain name root server operator shall be submitted to the Ministry of
Information Industry.

Administrative Measures on Records of Non-commercial Internet Information Services

Administrative Measures on Records of Non-commercial Internet Information Services were issued by MII
in February 2005 and carried out from March 2005. MII and the provincial telecommunication
administrations are responsible for the execution of these measures and the annual inspection of websites.

These measures require individuals or institutions that provide non-commercial information services on
their websites in China to register with the provincial telecommunication administrations, which should
complete registrations within 20 days of receipt of complete applications and issue registration numbers
and electronic certificates to the applicants.

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An Information Systems Services (ISS) provider must display the registration number at the center of the
bottom of the website's main page. ISS providers will be fined $1,250 for failure to register their websites.
Internet service providers will be fined $125 for providing links to a website without a registration number.

Telecommunications Regulation of PRC

Telecommunications Regulation of PRC, which is the basic regulation for the Internet Service industry in
China, was promulgated by the State Council and came into effect in September 2000. Internet and other
public data transfer businesses are categorized as basic telecommunications services. Internet access
services, online data processing and transactions and e-mail and internet information services are
categorized as value added services.

The operation of basic telecommunications services is subject to the examination and approval of the
department of State Council in charge of the information industry. A license for operating basic
telecommunications services should also be obtained. The operation of value added telecommunication
services covering an area across two or more provincial regions is subject to the examination and approval
of the department of State Council in charge of the information industry. A Cross-regional Value-added
Telecommunications Service Operating Permit should also be obtained.

In 2010, large quantities of websites were shut down by authorities due to concerns about internet security
and intellectual property protection. This also had a great influence on online music and video services by
raising the cost of internet resources for the industry players.

In August,2014, to maintain public network environment safety, the Ministry of Industry and Information
Technology issued "Opinions on Strengthening Internet Safety of Telecommunication and Internet

Industry Assistance
The level of industry assistance is medium and the trend of industry assistance is increasing

There are no specific tariffs for this industry.

Government support for the Internet Services industry in China occurs is as follows.

Building internet infrastructure networks and improving domain name system

The government set up a special fund to develop and build internet infrastructure networks. There are now
nine internet infrastructure networks in China, including CHINAnet, CHINAgbn, UNInet, CNCnet, CMnet,
CERnet, CSTnet, GWnet and CIETnet. The government added a new tier of domain names (.mil) under the
generic top-level domain name (.cn) to meet the needs of the Internet Services industry.

Government policies

The Chinese Government has issued many regulations and rules to standardize the industry. These
regulations impose restrictions on enterprises and ensure a safe environment for the industry to develop.

Promoting the development of new services

In 2004, the government issued a new regulation named Electronic Signing Law of China, which gives
legal guarantees for electronic commerce and promotes the rapid development of electronic commerce
business in China.

Twelfth Five-year Plan

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The Chinese Government also included the development of internet technologies as a key point in the
Twelfth Five-Year Plan (2010 to 2015). The government encourages enterprises to develop technologies
and products based on CNGI, continues to build and upgrade CNGI, and has established national
engineering research centers. The government will also promote the development of the internet in rural

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Key Statistics

Industry Data
Users in
Establish- Employ- China
Revenue IVA ments Enterprises ment Exports Imports Wages (Millions of
($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) people)

2007 18,616.4 8,555.8 23,520 16,460 200,000 - - 1,758.9 210

2008 21,697.5 9,922.3 28,835 20,591 240,000 - - 2,171.8 298
2009 26,477.4 12,179.5 31,089 22,346 270,720 - - 2,743.6 384
2010 30,340.6 13,896.0 33,300 23,786 317,284 - - 3,389.8 457
2011 38,290.5 17,690.1 35,107 25,023 374,712 - - 4,234.8 513
2012 51,845.3 21,458.9 36,871 26,224 584,174 - - 5,122.6 564
2013 74,242.5 24,696.5 38,567 27,352 924,016 - - 5,980.7 618
2014 114,407.7 28,089.1 40,187 28,446 1,438,580 - - 6,907.1 649
2015 185,454.9 31,601.8 41,754 29,527 2,219,775 - - 7,894.8 668
2016 293,204.2 35,141.2 43,341 30,590 3,391,816 - - 8,929.0 685
2017 431,596.6 38,971.6 44,901 31,596 5,077,549 - - 9,991.6 -
2018 613,298.8 42,907.7 46,248 32,481 7,423,376 - - 11,060.7 -
2019 850,645.5 46,941.0 47,525 33,293 10,600,582 - - 12,177.8 -
2020 1,153,475.3 51,118.8 48,808 34,125 14,830,214 - - 13,334.7 -
2021 1,537,582.5 55,463.9 50,016 34,953 20,287,732 - - 14,521.5 -

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Annual Change
Establish- Employ- Users in
Revenue IVA ments Enterprises ment Exports Imports Wages China
(%) (%) (%) (%) (%) (%) (%) (%) (%)

2008 16.6 16.0 22.6 25.1 20.0 N/C N/C 23.5 41.9
2009 22.0 22.7 7.8 8.5 12.8 N/C N/C 26.3 28.9
2010 14.6 14.1 7.1 6.4 17.2 N/C N/C 23.6 19.0
2011 26.2 27.3 5.4 5.2 18.1 N/C N/C 24.9 12.3
2012 35.4 21.3 5.0 4.8 55.9 N/C N/C 21.0 9.9
2013 43.2 15.1 4.6 4.3 58.2 N/C N/C 16.8 9.6
2014 54.1 13.7 4.2 4.0 55.7 N/C N/C 15.5 5.0
2015 62.1 12.5 3.9 3.8 54.3 N/C N/C 14.3 2.9
2016 58.1 11.2 3.8 3.6 52.8 N/C N/C 13.1 2.5
2017 47.2 10.9 3.6 3.3 49.7 N/C N/C 11.9 N/C
2018 42.1 10.1 3.0 2.8 46.2 N/C N/C 10.7 N/C
2019 38.7 9.4 2.8 2.5 42.8 N/C N/C 10.1 N/C
2020 35.6 8.9 2.7 2.5 39.9 N/C N/C 9.5 N/C
2021 33.3 8.5 2.5 2.4 36.8 N/C N/C 8.9 N/C

Key Ratios
Imports/ Exports/ Revenue per Wages/ Average
IVA/revenue demand revenue employee revenue Employees wage
(%) (%) (%) ($'000) (%) per est. ($)

2007 46.0 0.0 N/C 93.1 9.4 9 8,794.5

2008 45.7 0.0 N/C 90.4 10.0 8 9,049.2
2009 46.0 0.0 N/C 97.8 10.4 9 10,134.5
2010 45.8 0.0 N/C 95.6 11.2 10 10,683.8
2011 46.2 0.0 N/C 102.2 11.1 11 11,301.5
2012 41.4 0.0 N/C 88.8 9.9 16 8,769.0
2013 33.3 0.0 N/C 80.4 8.1 24 6,472.5
2014 24.6 0.0 N/C 79.5 6.0 36 4,801.3
2015 17.0 0.0 N/C 83.6 4.3 53 3,556.6
2016 12.0 0.0 N/C 86.4 3.0 78 2,632.5
2017 9.0 0.0 N/C 85.0 2.3 113 1,967.8
2018 7.0 0.0 N/C 82.6 1.8 161 1,490.0
2019 5.5 0.0 N/C 80.3 1.4 223 1,148.8
2020 4.4 0.0 N/C 77.8 1.2 304 899.2
2021 3.6 0.0 N/C 75.8 0.9 406 715.8

Figures are inflation-adjusted 2016 dollars

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CLICK-THROUGH RATEA measure of the success of online advertising campaigns, it is the number of
clicks on an ad divided by the number of times the ad is shown, expressed as a percentage.

INTERNET SERVICE PROVIDER (ISP) Supplier of internet access to end users.

REALLY SIMPLE SYNDICATION (RSS) A standardized format used to publish frequently updated
website entries, such as blogs and news.

WEB 2.0 Sites and features that engage users to interact with each other. Examples include blogs and
social networking sites.

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