IDC: 2015 China Internet Industry Top10 Predictions

IDC: 2015 China Internet Industry Top10 Predictions

02 Feb 2015

Beijing, February 2, 2015 – The latest research report “Ten Predictions of China’s Internet Industry, 2015” to be released by IDC reviews the major historical events of China’s Internet market in 2014 and predicts key trends worth noting in 2015. Zhang Yanan, Research Manager of IDC China, believes that “the rapid development of China’s Internet industry relies on three major factors: first, China’s Internet industry is gaining more and more attention nationwide and globally; next, China’s Internet penetration is increasing steadily; finally, the — shifting of consumers from the older generation to the younger one and the changes of consumers’ demands prompt personalized brands and products. With this background, IDC predicts China’s Internet trends in 2015 from multiple angles, including industry, products and technologies.

2015 China’s Internet Industry Top10 Predictions:

  1. China’s Internet will infiltrate into the 3rd- and 4th-tier cities, and dividend brought by these new users will appear
  2. China will become the world’s mobile Internet heartland
  3. The destruction and transformation of traditional industries brought by Internet will no longer be a dream
  4. Online-to-Offline (O2O) will assist traditional E-business suppliers to extend their business to personalized services
  5. Cross-border E-business and mobile E-business remain two highlights in the traditional E-commerce market
  6. Pan-entertainment industry with IP license as the core will be put into practice further
  7. Private banks and equity-based crowd-funding will lead Internet financial market
  8. As the main method for mobile payment, QR codes will impact the elderly and housewives
  9. Internet companies will race to capture car networking and car after-service market
  10. Network security will be elevated to the national security level

Among the numerous predictions, IDC suggests industrial readers to pay special attention to the following keywords:

New demographic dividend, personalized service E-commerce, pan-entertainment, QR code payment

For the Chinese Internet market in 2015, IDC analysts highlight the following trends:

First, China’s Internet will infiltrate the 3rd- and 4th-tier cities, and the dividend of new users will appear. In 2015, IDC predicts China’s Internet will infiltrate  the 3rd-tier and the 4th-tier cities further, and as many as 400 million China’s rural non-Internet users will be the next wave of demographic dividend. Rural young people who are receiving education will become the main force in early development. Smartphones and mobile Internet will also spread quickly among them. IDC predicts that China’s smartphone shipment will reach 450 million units in 2015, among which many of the low-end smartphones will be purchased by consumers in the 3rd- and 4th-tier cities. From the application point of view, entertainment and social applications (such as music, chat, games, reading) will be most appealing to these consumers. But, as the main e-commerce companies like Alibaba and are penetrating to rural areas, China’s rural market with 700 million people will be the next blue ocean market for E-commerce.

Second, O2O will assist traditional E-commerce suppliers to extend their business to personalized services. IDC expects that O2O will remain the industry hotspot in 2015, pushing traditional E-commerce suppliers to extend their business from physical goods to personalized services. Personalized service E-commerce will develop in specific industries. Firstly, food and beverage, housekeeping, maternal and child care and education industries will be the main development directions for O2O. Secondly, traditional industries, especially 3C and the clothing apparel companies will attract offline crowds to online stores with QR codes, and will further realize the traceability of consumer’s whole service process relying on such platforms as WeChat.  Thirdly, O2O will continue to be the focus of BAT (Baidu, Alibaba, Tencent) competition, for example how to use the underlying information services such as map to promote its O2O market value will become one of the problems worth top consideration. However, with more and more industries coming into O2O competition, vertical O2O platform will face a wide range of failures after dumping in great amount of investment dollars.

Third, pan-entertainment industry with IP license as the core will be put into practice further. The growth of PC gaming market is stable, while that of mobile game market is slowing down from its heated growth. Internet companies which traditionally reply on revenue from gaming will further explore their business growth model with economy of scale. Under this circumstance, obtaining IP content resources via capital operations and cross-industry cooperation will become one of the core growth strategies. In 2015, cross-industry cooperation of literature, film and television, as well as gaming and animation will deepen, significantly uplifing the market value of those listed companies.

Fourth, QR code payment pushes non-mainstream users such as the elderly and housewives to the Internet. A new round of “cash back” promotion campaign based on mobile payment will be launched again around the Spring Festival in 2015. QR code, as the main entrance of the mobile Internet traffic, will be the key battlefield of market competition. QR code payment based on WeChat ecosystem will become the main model of networking for offline enterprises. Meanwhile, Alipay will also further promote QR code payments, especially in the life service market, such as supermarket, convenience store and vegetable market. Mobile payment access will give priority to QR code, and seize non-mainstream Internet users like the elderly and housewives. IDC predicts that the turnover of mobile transactions will exceed that of PC transactions on Alibaba’s “Singles’ Day” in 2015, with the proportion raising to about 60%.

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