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pay-no-attention-to-the-man-behind-the-curtainStatistics lauding the growth of the Internet in China have become so commonplace as to inspire yawns, despite breathless press reports of hundreds of millions of Chinese going online and signing up for the ‘net.  With the Chinese Government declaring that their internet population surpassed the US last year, it would seem that the real opportunity for expansion and growth online is not in the West, but somewhere behind the Great Firewall of China. Cue the ads for Chinese Web Hosting, Chinese Industry Liaisons, and the omnipresent legions of Chinese “business agents”.

Many Western technology companies have heeded that call, but have found themselves cast into the rocks on Chinese shores — including companies like Microsoft, Google, Cisco, eBay, and YahoO!  The massive markets just never seem to have materialized in the Orient for these giants, or when success has loomed on the horizon the murky Chinese bureaucracy has stepped in to snatch defeat from the jaws of victory.  Partnerships have vapourized overnight, and (particularly in the case of Cisco) core Intellectual Property has been outright stolen, reverse-engineered, or redistributed.  Perilous waters, indeed.

So it was with this skepticism that my friend Gersham viewed the latest piece of propaganda emerging from our friends in China that we have now reached the new height of 338 million Chinese Internet users — a 13 percent increase since the end of 2008, and just about exactly one quarter of the country’s population.  All of this, of course, seems to have been tabulated and distributed by the slightly inaccurately-acronymed Chinese Internet Network Information Centre (CNNIC) which, by its own admission “takes orders from the Ministry of Information Industry (MII) to conduct daily business.”  In fact, Google “Chinese Internet Traffic” and you’d be hard-pressed to find data that did NOT originate from the CNNIC.  Hmm.  Call me a cynic.

gdp-per-capita-east-asiaIt is likely difficult for most (any) of us to corroborate or even conceptualize these high numbers, but it seems suspicious nonetheless — particularly from a country whose median income is around $3400 and whose Per-Capita GDP is ranked 104th, right behind Armenia.  In trying to substantiate this, once can point to Alexa’s site rankings which currently reveal that 3 Chinese-language web sites rank in the Top 20:  Search Engine Baidu (#9), IM chat and portal QQ (#14), and portal (#18).  Sounds good, right?  But look closely at the rankings.  Baidu, an undisputed leader in Search for China, reaches 5.73% of the internet populace, whereas Google.DE (#13) reaches roughly 3% of global internet users while servicing German, Swiss and Austrian users exclusively.  Combine the populations of these three countries and they don’t even add up to 100 million people.

Gersham pointed me toward the Firefox Download Stats, where as of this writing Germans have made 4,948,666 downloads of various firefox versions compared to only 672,972 for China.  Again, Germany has a population of 82Million vs. 1.3Billion in China.  As a control, Americans have downloaded Firefox 7,959,727 times as of this writing.  Do the Chinese really just prefer Internet Explorer?

In January 2009, Comscore measured the Chinese internet audience at closer to 180 Million users, still an impressive 18% of the Internet population.   This site quotes murky Nielsen Online data pegging Chinese Internet Users at roughly 300 Million.  Beyond these heresy reports, empirical measurements are difficult to come by.

So, let’s throw up our hands and try to reverse-engineer the data using published stats.  According to June 2009 data from Comscore, Google has captured 65% or so of US Search Traffic.  This made it the #1 web site in the world, with 157 Million US Visitors in June, according to Comscore.  In the Chinese Market, Baidu has captured 73% of Chinese search, with Google in the Number Two spot.  Yet barely moves the needle by comparison, according to,, and others.. hitting roughly 600,000 unique visitors per month globally.   High-side estimates of the Internet’s penetration in the US peg it at 72.5% of the populace, or about 220 million.  This makes the data on Google’s penetration vs the addressable market reasonably accurate (71% if you do the math).  Following this logic, if Baidu in fact has 73% of China’s purported 338 Million users, it should be ranking as the #1 web site by far, with >246 Million unique visitors per month.  In fact if any of this data were true, then Chinese sites should occupy at least 4 of the Top Ten global web sites.

Whatever your opinion of Compete’s and Alexa’s relative methodologies, it’s impossible to reconcile anything even close to the numbers coming from the Chinese Government.  If that isn’t good enough for you, let’s turn to profits.  While serving what was allegedly the world’s largest internet audience, Baidu appears to be tracking to earn about $500 Million in revenue this year.  Google’s revenue appears to be tracking to about $23 Billion for 2009 with its pithy 157 Million unique visitors.  Any way you slice it, if China’s internet userbase is as large as Beijing says it is, and if Baidu’s market share of that audience is what it’s widely purported to be, then both the number of uniques reported by external traffic sites and the revenues reported by the public company that owns Baidu should be exponentially greater.

These stats seem to either indicate that Chinese do not use search very often, or that there just aren’t too many of them heading out into the wilds of the Internet.  Either way, statistics emanating exclusively from bureaucratic sources within Beijing, particularly those which seem to fly in the face of all other external metrics, are not to be believed.  The thesis of this post is not to suggest that China is NOT a massive opportunity for online properties and other technology purveyors, it is simply an attempt to point out that, like in a lot of cases in dealing with the Peoples’ Republic of China, things are not what they may seem.  Pay no attention to the man behind the curtain.

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