China Now Has 557M Mobile Internet Users, Claims The Government

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The China Internet Network Information Center (CNNIC), a government organization, has released its latest report on Internet usage (link via Google Translate). It claims mobile Internet users reached 557 million as of December 2014, a growth of 11.4 percent from the year before.

It’s important to note that the CNNIC’s report does not break down mobile user by SIM cards, which may skew its findings because dual-SIM phones are popular in China. The figures, however, underscores China’s importance to hardware manufacturers as the world’s largest smartphone market, as borne out by Apple’s latest earnings report and Xiaomi’s relatively quick ascendancy.

Overall, there were a total of 649 million Internet users in the country, marking a steady five percent increase from last year. This brings China’s Internet penetration rate to 47.9 percent.

In terms of apps, mobile games and messaging apps like WeChat remain highly popular. In fact, 90.6 percent of mobile users now use a messaging app, said the CNNIC. Mobile travel bookings were the fastest-growing app category, however, with a 194.6 percent increase in usage last year.

Other types of apps that did well include mobile payment and mobile banking, which is good news for companies like Alibaba and Tencent that have taken advantage of shifting regulations and China’s attempts at financial reform to launch private online banks. Use of mobile payment apps grew 73.2 percent, while mobile banking apps grew by 69.2 percent.

More welcome news for China’s Internet giants include increasing adoption of online-to-offline services (O2O). The CNNIC found that 39.2 percent of consumers in the country’s biggest cities, including Beijing, Shanghai, Guangzhou, and Shenzhen, used O2O services last year, and the number is also steadily growing in “second- and third-tier,” or smaller, cities is also gradually increasing.

O2O is an important part of Alibaba and Tencent’s strategy as they seek to squeeze more sales out of their existing network of online users.

The report did note, however, that O2O markets for food (including delivery services) and leisure activities (such as movie ticket orders) appeared to be maturing, while medical and household O2O services have more potential for growth.

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