Kev's Thoughts On... China's New Media Consumption

China’s New-Media Consumption: What’s being consumed and Who’s consuming it?

It is often surprising to realize the hyper-growth in China’s media landscape began only ten years ago. Today, Television still enjoys the highest penetration rates, near 100%. However it is the younger generations, dictating an ever-increasingly larger proportion of China’s disposable income, who are growing further accustomed and attracted to New Media, meaning less time spent with traditional channels. The following is a synopsis of China’s major New Media movements and an analysis on the identity of the Chinese New Media consumer.

China’s New-Media Buzz & New-Media Consumption

1) Communicative, Multi-media handhelds: Convergence in the high-end, expansion of the low-end
Communication handhelds, namely mobile phones, have over 30% penetration rate with 437 million mobile phone users, and the growth rate is expected to steadily rise for the next 5 years. Technological convergence is giving communication devices more multi-media capabilities and multi-media devices more communication capabilities. High-end handheld devices continue to integrate functions and redefine ‘standard’ and ‘luxury’ for the media channel.
On the other end of the spectrum, major competition has erupted for the growing low-end mobile phone market. As China develops, more low-wage citizens find their financial situation improving. Each year millions of first-time mobile phone buyers enter the market. Thus competition is fierce to grab the new pieces of the pie.
Convergence will mean for advertisers some cannibalization of consumers who currently own both multi-media and communication handhelds. However the over-shadowing opportunity is the cross-sell/acquisition of new consumers to multi-media exposure who were originally pure-communication handheld users. At the same time, growth in low-end pure-communication handhelds can also benefit advertisers who use targeted text-messaging (SMS) advertisements effectively. The increasing penetration of talk & text-only phones means greater emphasis can be given to ad campaigns requiring consumer SMS participation.

2) The Chinese Internet Universe: Homegrown Champions
With 162 million Internet users in 2007 and year-over-year growth last year of 23.4%, the Internet is the greatest excitement and buzz for Chinese media development. While it is dependent on its enablers, such as PC and mobile communication devices, the strong growth of these media outlets is in large part fueled by the growing popularity of the Internet. In China, Internet users demonstrate their desire to be connected not only by the number of new users each year, but also the growing speed at which they connect. About two-thirds of Chinese use broadband connections, up 45% from last year. At the heart of the growing number of uploads and downloads are China’s homegrown Internet portals. Not only do Chinese embrace everything Web 2.0, they are doing it on their own terms. Time and again we see in the current environment, Chinese versions of popular web functions beating their original foreign counterparts. Here is a short list of the most popular to date:

Homegrown Champions
Virtual World (Social/Gaming): HiPiHi + Shanda/UOneNet/Frenzoo/Yilu/Entropia + City of Beijing/Leeuu (Romantic Chateau)
Online Search/Barter: Baidu/Taobao/Alibaba/Sina/Sohu
Web 2.0 Uploads (Blogs, Vlogs, Space, Photoshare): Sina Blogs/Sohu Blogs/Tudou/Rox/Mop/UUme/+ about 150 others

Constant vigilance must be given to the explosive developments in the Chinese Internet space. Not only should advertisers partner to create new avenues of reaching users/viewers, but also great attention should be paid to the content generated by Chinese Web 2.0 sites. These forums are the fastest and cheapest ways to gather consumer insight and reactions. In a country still heavily censored, these virtual worlds represent places with the least amount of restrictions, hence the greatest amount of genuine expression. In addition, because of the growing Chinese fixation with user-generated content, and the reduced cost-structure associated with it, Advertisers should consider deepening participation in online content production.

Media Dichotomy: Over 31 vs. Under 31

Much attention, money and effort is being invested in the emerging media channels. However advertisers must realize that other than pure communication handhelds, new media is only reaching a very specific segment of the Chinese population. Indeed new media is transforming media consumption in China for generations to come, but the large majority of China today does not participate. The major dichotomy is between Chinese who are aged 31 (1976)∗ this year or older, and those younger than 31. Those over 31 get significantly more of their media consumption from traditional media, while under-31 consumers spend exponentially more time with emerging media.
The major reason for this rapid shift in media consumption stems from an individual’s age and life-position during the years from 1996 to 1999. 1996-97 were the years personal computer use and proliferation transitioned from early adopters to mass market. 1998-99 were the years the Internet likewise gained widespread popularity. Those now aged 31 or over were in 1996-99 entering or already in the workforce. This means they have grown up without computers or the Internet as a source of recreation, and were introduced to these new media outlets in a work environment. Those under 31 would have been introduced to computers and the Internet some time while they were still students and more likely to have begun exploring these platforms in a recreational setting.
The way the computer and the Internet were introduced into an individual’s life has profound influences on how they consume media today. The most profound difference lies between over-31’s who are primary consumers of traditional media, while under-31’s increasingly rely on new media for their content consumption.

The Transitional Generation

Even for Chinese under 31 years old this year, there is a massive amount of differentiation among breadth and depth of participation with new media. Again, an important factor to examine is the age at which these individuals were introduced to the computer and the Internet. The Chinese who are this year aged 20 to 30, are the Transitional-Media Generation. Their age and situation during 1996-99 determines the amount of recreational/social time as students they would have had to grow familiar with the new technology and its full potential. If young enough, they would also have had a chance to have computer and Internet exposure within the classroom, further enamoring this generation to the new media channels.

School Level in 96-97/Age in 96-97/PC Era (96-97): Age Now/Net Era (98-99): Age Now/Typical Media Consumption(Traditional)[New Media]
Primary/7-13/17-23/15-21/(TV(h)) [Game, Chat, D/l, Novel, SMS, GamesP, MusicP]
Junior/13-15/23-25/21-23/(TV(h)) [Game, Chat, Buy(s), D/l, Blog, Novel(s), Info, SMS, Phone(s), PicSMS, GamesP, Port. Music.]
High/16-18/26-28/24-26/(TV) [Game(s), Chat, Buy(s), D/l, Blog(s), Novel, Info, Phone, SMS, PicSMS, GamesP, Port. Music.]
Bach/19-22/29-32/27-30/(TV, Series, DVD(h)) [Chat, Stream, Blog(s), Novel(s), Info, Phone, SMS, Game(s), Port. Music(s)]
Work or Mast/23+/33+/31+/(TV, Series, DVD) [Chat(s), Info, Phone]

Note: TV= Television; Game=Online Interactive Gaming; Chat=IM; D/l=Download (music, movie, tv); Novel=Online Novels; SMS=Mobile Text Messaging; GamesP=Mobile Gaming; MusicP=MP3 on phone; Buy=Online Purchase; Blog=Online Blogging; Info= Online information, esp. News, Specific Information; PicSMS=Phone Pictures sent by SMS; Phone=Chatting on cellular phone; Port. Music=Separate Portable Music Player; Series=Television Series; DVD=Buying DVDs; (h)=Half as likely; (s)=Seldom

Discussion on the Transitional Generation

We can reaffirm that TV still holds the most broad penetration, but it is evident that younger and younger generations are spending more of their time, and getting exposure to media elsewhere. A national ad campaign will continue to have a TV component, but China’s current interest in Mobile convergence and Web 2.0 are reflections of where media-channel developers see and feel consumers are headed.
An important observation is the strong upload-download culture that gains strength as the generation gets younger; demonstrating the intensifying proliferation of computers and Internet in the years after 2000. While advertisers can heavily capitalize on the successful download culture, the new heights reached by Chinese blogs in the past year show the upload culture is just as, if not more, lucrative. The major caveat for Advertisers in China when engaging with the uploading culture is the censorship issue in China. This differs from America, where the online rhetoric has always been ‘Freedom of Speech’. Advertisers in China must be weary of how to manage the risks their brands assume when playing in the ‘upload’ arena. If a brand is found to be associated with an ill-favored political upload, the repercussions will likely be more extreme than just the banning of the user-generated upload along with the ad campaign. Government relations and ultimately business operations in China can be jeopardized.
Chat and Mobile Phones continue to be used most profusely within all sub-categories; however, the functions used in the mobile phone get progressively more interactive and complex as the generation gets younger. The natural explanation supports the observation made in this analysis that earlier exposure to New Media as a recreational resource catalyses depth and breadth of New Media association. The one exception observed is the youngest age group from 15-21, who seem to be consuming less New Media, and less media in general. The explanation can be found in the stringent schooling system most Chinese children must go through. Primary and secondary school students are typically at school or in mandatory study 10-12 hours per day, 6 days a week. Compared to their American counterparts who are in school 7 hours a day, 5 days a week, it is understandable why younger Chinese students have less time to spend with media. Once students shift to a university lifestyle with more personal free time, we witness an explosion of New Media consumption. Advertisers should recognize that differing strategies apply for those students in secondary school versus university. Innovative ad campaigns will leverage a Chinese secondary school student’s long-hours in class to its benefit.
The Chinese educational system has begun teaching computer and internet use in junior high schools, but not senior high schools. The first students who went through this training are just now 15-16 years old; at the bottom of the Transitional Generation. Watching how compulsory education will influence media-consumption as this generation grows older will be important.
Finally, this Transitional Generation is again a sub-section in the fabric of China’s citizens. This category refers primarily to those Chinese who a) are educated b) had/has access to technology and the Internet (Tier 1, 2 and 3 cities) c) financially capable to either own or rent access to technology and the Internet. Deeper analysis into this and other audience subgroups will yield more opportunities for Advertisers to succeed in engaging their brands with the right Chinese consumer.