Author(s): Raghu Gopal
Tencent Holdings' messaging services were by far the most popular Chinese mobile apps in 2016, leading steady growth in the world's largest Internet and smartphone market, according to the Chinese government's online industry overseers.
A report by the China Internet Network Information Centre, a state agency responsible for the industry, revealed that the country gained 43 million new Internet users in 2016, a rise of more than 6 percent. This was the fastest pace of increase in several years. There are now a total of 731 million Web users in China, which is about equivalent to the entire population of Europe.
Mobility is driving a great part of this growth, which in turn is supporting a robust app economy. In 2016, the number of people who accessed the Internet through smartphones grew more 12 percent to 695 million.
According to the government agency, WeChat remained the most heavily used mobile app in the country in 2016 with more than 600 million active users. Baidu and Alibaba are also, still, among the fastest-growing smartphone apps. Baidu is the dominant Internet search engine in China with about 80 percent share of the market, and Alibaba, the undisputed e-commerce leader. We're often reminded of Alibaba's extraordinary Singles' Day event on 11 November, a shopping holiday to celebrate the unhitched. In 2016, consumers spent close to $18 billion via Alibaba's sites (see The Lonely Hearts Club Brand). This is more than twice the five-day online sales recorded during the five-day Thanksgiving holiday in the US in the same year.
However, ride-hailing apps appear to be the fastest-growing area in 2016, a segment currently dominated by Didi Chuxing — part-owned by Alibaba, Apple and Uber. Outside companies have struggled to make it in this market given the challenging regulatory environment. Uber, for example, sold its interests in China to Didi Chuxing in return for a stake in the company in August 2016.
With online consumption progressively becoming an important part of the economy, the government is now promoting its Internet Plus project, which aims to expand the role of Internet technology. The Chinese government will use the Internet as a vital instrument to usher China into an economy driven by consumer demand.
However, the growth momentum is expected to reach its terminal velocity soon, reaching a point where it will be increasingly difficult for Chinese companies simply to rely on the rise of the overall Internet population to bolster traffic and usage. It will take more marketing efforts and strategic placement with an eye on global expansion to gain scale as China's Internet users approach the billion mark.