China’s internet industry to see slow growth this year

Adrian M. Reodique | March 14, 2017
Companies should now focus on the R&D and application of emerging technologies as well as look to seize new opportunities for competition, advises a senior analyst from IDC China.

Internet

This year, China's internet industry will experience a slower growth than the previous years while the adoption of emerging technologies is expected to gain traction.

"Entering 2017, China's internet industry formally bids farewell to the fast growth of recent years, making an overall transition from an incremental market to a saturated market. However, emerging technologies such as artificial intelligence, Internet of Things and AR/VR have yet to reach the stage of large-scale commercialisation and thus hold huge growth potential," said Xue Yu, Senior Analyst at IDC China, in a press release.

"Facing the new circumstances, internet and IT companies should pay attention to the research and development (R&D) and application of emerging technologies, as well as look to seize new opportunities for competition in this new era," added Yu.

The following are IDC's predictions for China's internet industry for 2017 to 2020:

1.       The internet on-demand local services market in the country will be stabilised by the end of 2017. Top online platforms and offline merchants will collaborate extensively to improve their operational abilities and customer experience.

2.       Nearly two-thirds of internet business applications in the country (60 percent) will be under supervision of government authorities by 2018.

3.       Most of internet products or services (67 percent) will adopt some form artificial intelligence (AI) functionality by 2018. Enterprise applications will also be the key to growth. 

4.       More than 60 percent of online video content will be created by the platforms themselves by 2018. As such, three to five video platforms will most likely profit from this.

5.       Overseas markets will contribute to more than 30 percent of the revenues of large-sized mobile internet companies in the country by 2019. The main sources of revenue will likely come from India, Brazil, Southeast Asia, and other emerging markets.

6.       Crowdfunding will develop 10 percent of new products from local internet companies by 2019. It is expected to raise the product promotion success rate by at least 40 percent.

7.       Online retail transaction in the country will exceed RMB10 trillion by 2019. Standardisation, interaction, integration, and globalisation will be the main development directions for the online retail market.

8.       Forty percent of internet companies will collaborate with players in traditional industries by 2020 to accelerate their digital transformation.

9.       Internet companies will allot 75 percent of their IT infrastructure and software expenditures to cloud products and services, by 2020.

10.   More than 150 million people will regularly use augmented reality and/or virtual reality platforms to access internet applications, content, and data by 2021.