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2007, a Year of Change for China's Internet Market
added: 2007-03-19

CCID Consulting reviews the internet era in China in 2006, as well as what people can expect in 2007.



In 2006, China's Internet market continued to see strong growth momentum, as witnessed in 2005, however, compared to the ''collective listing fever'' in 2004 and the ''big storms'' of 2005, the year saw neither the entry of international giants nor hotspots in enterprise listing. Even Web2.0 was only a continuation of the high tide of 2005. In reality, the situation was far from impressive.

Although, behind the tranquillity, CCID is happy to see that all kinds of businesses have shown steady growth. Enterprises have also become more rational and mature through competition: Market segments such as search engines, online games, IM and e-business are more mature and the market pattern has gradually become clearer and more stable; after the over play-ups in 2005, Web2.0 has made a breakthrough from conceptual innovations to business model innovations; and online marketing and network media are also gradually warming up through stable development.
Despite a relatively quiet Internet market in China in 2006, it can be found that capital and innovation were the two main themes of the market:

- Web2.0 saw a tide of innovations. In 2006, Web2.0 profoundly affected the thinking model of the whole Internet market. Large numbers of New Web2.0 enterprises and traditional Web1.0 enterprises collectively explored the development possibilities of Web2.0. In the exploration process, business models were the key problem baffling all enterprises. Web2.0 enterprises faced the pressure to innovate and turn concepts into profit. Traditional enterprises also explored ways to use the Web2.0 concept to innovate their services models. Traditional portal websites introduced blogs, RSS and other Web2.0 services to improve user experiences. Web2.0 was also used to improve such traditional Internet services as an online community, online advertising, search engines and e-business.

- Capital played a leading role. In 2006 when the Web2.0 was at a peak, capital became a major support column for enterprises to grow. From venture capital cravings for investment in Web2.0, capital came onto the stage in a high-profile. New generation enterprises conceived various ways to attract attention from investors. The involvement of venture investment also provided a growth space for these enterprises. Meanwhile, mature enterprises used capital as a means to improve and expand themselves. Enterprises sought cooperation, while leading enterprises unleashed large-scale M&As. All these painted ''a crimson capital color'' for China's Internet market.

Through these two key ingredients of capital and innovation, we see that changes in China's Internet market are now afoot. Enterprise giants are stepping up their efforts for search engines in secret, the free service model is bringing fundamental changes to the online games market and e-business is about to pop out after many years of accumulation; the integration of enterprises in different industries and the cooperation between enterprises in the same industry forebode the arrival of new business models; frequent changes at the top executive levels remind us that changes are approaching. This series of undercurrents under a quiet surface is expected to create surging waves in 2007.

2007: Forces will Push Forward Market Development

The continuous efforts of large multinationals will certainly change the market pattern in 2007. Frequent changes at top executive levels at the end of 2006 reminded us that multinationals are now changing their development strategies in the Chinese market. CCID also believes that there have sufficient reasons to believe that such a change will produce a positive role in the development of the market and may even change its pattern:

- Mutual integration of diversified technologies and applications. The year 2007 will be a year in which Internet technologies and applications will be improved. The advent of the 3G era will speed up the integration of wireless and cable network and become the main driving force for the development of the Internet market. The in-depth integration between Web1.0 applications and Web2.0 ideas and technology will also bring new business models to the market. On the other hand, the penetration of the Internet into traditional industries and the deepening application of e-business in traditional industries will fully improve the values of Internet services.

- Mature applications drive up rational and healthy market development. In the Internet market, which has long been beset with various problems, enterprises and users have become more rational as the segments of search, e-business and online games gradually mature. This is bound to bring the market into a mature and healthy development course.

- Industry development will bring new market opportunities. Continuing their innovations in 2006, Internet enterprises have started to explore deeper into more detailed Internet application segments. Vertical search has become the most typical example. Meanwhile, along the track of integrating, Internet enterprises will cooperate more with enterprises in traditional industries. e-business will become the most important link in the process. It will deepen the Internet industry.

Overall, CCID expects to see a richer and more glorious Internet era in 2007.


Source: PR Newswire

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