Rural youth offer next Web frontier

09:09, November 16, 2010      

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Internet giants such as Tencent and Baidu are looking to cyber-savvy but cash-poor rural youth in China's smaller cities as the next frontier to keep up their explosive growth.

  Compared with Japan and South Korea, two of Asia's most wired countries with more than 70 percent Internet penetration, China has a modest national penetration rate of 30 percent, despite its status as the world's biggest Internet market with 420 million users.

  Internet use is particularly low, around 20-40 percent, in the country's populous but relatively low-income central and western provinces such as Henan, Sichuan and Hubei, where analysts see the biggest chances for huge growth.

  Companies such as Tencent, Baidu and Perfect World, whose products use less bandwidth and cater to simpler tastes of users in smaller markets, could be best placed to cash in on the spread of Internet access to those areas, analysts said.

  "If you look at absolute dollars, it's coming from coastal cities," said Jin Yoon, a Hong Kong-based analyst with Nomura. "But if you look at central and western China ... that's where the growth is coming from." Official data show about 30 percent of current Internet users, or about 126 million, live in rural areas. In the third quarter, China's Internet economy was worth 41.4 billion yuan ($6.2 billion), a third of which was e-commerce, data from iResearch shows.

  Another major factor limiting Internet growth in the countryside is less developed telecommunications, with broadband relatively scarce.

Source: Global Times


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