This market report provides a comprehensive overview of the Internet segment of the market across the various economies of Asia. The overview naturally includes a look at the broadband segment within these markets.
While there is considerable activity in the Internet and online markets across the region, the market in Asia continues to be dominated by the big players of North Asia, (South Korea, Japan, Hong Kong, etc), with a significant role also being played by some of the South East Asian countries (Singapore, Malaysia, etc). Of course, in terms of sheer Internet user numbers, China (300 million) and India (95 million) maintain a real presence, despite their modest user penetration figures. Notably, China surpassed the US in 2008 to become the largest nation of Internet users in the world and by end 2009 was showing no signs of slowing down.
The countries in the second band - roughly between 10% and 30% user penetration - are to be found in expansion mode when it comes to their Internet market segments. But there is a clear gap (almost 20%) to be bridged before they can be counted in the top grouping. China has jumped from 16% penetration in 2007 to 23% by mid-2009; however, its broadband penetration is still languishing around the 5% mark. Thailand and Vietnam (both with 26% user penetration) play lead roles in this middle grouping. We typically find that in the last few years both operators and governments have started to give priority to expanding Internet access and speed in these countries. Indonesia has moved strongly into this group, overcoming major infrastructure challenges to provide Internet to its citizens; its 14% penetration represents a very significant 33 million users.
In the third grouping - those markets with a user penetration of less than 10% - we tend to find those countries that, for whatever reason, have not yet ‘got their act together’ when it comes to Internet. Of course, some are performing relatively well under difficult circumstances. The war-ravaged Afghanistan is managing 2% user penetration under extremely difficult circumstances. Then there is the tiny fledgling nation of Timor Leste (East Timor), which has continued to struggle with political instability as it attempts to build its national infrastructure. At the bottom end of the Internet scale in Asia, however, we find a number of countries that are simply struggling with poor telecom infrastructure and generally underdeveloped regulatory regimes. Included amongst these are Nepal, Turkmenistan, Cambodia, Tajikistan, Bangladesh and Myanmar.
Internet penetration and users in Asia by country - ranked by user penetration - June 2009
Country Internet user penetration (%) Internet users (thousand)
South Korea 77% 36,800
Hong Kong 75% 5,250
Singapore 75% 3,600
Japan 74% 94,000
Taiwan 68% 15,800
Macau 62% 340
Brunei Darussalam 58% 240
Malaysia 57% 15,300
Azerbaijan 41% 3,500
Maldives 27% 80
Georgia 27% 1,100
Thailand 26% 17,500
Vietnam 26% 22,500
China 23% 298,000
Kyrgyzstan 17% 900
Kazakhstan 16% 2,500
Indonesia 14% 33,000
Mongolia 13% 400
Pakistan 11% 19,000
Uzbekistan 10% 2,800
Tajikistan 10% 650
India 8% 95,000
Sri Lanka 7% 1,400
Armenia 6% 200
Bhutan 6% 40
Philippines 6% 5,800
Laos 5% 300
Afghanistan 2% 500
Nepal 2% 550
Turkmenistan 1% 80
Cambodia 0.5% 80
Bangladesh 0.4% 600
East Timor 0.2% 2
Myanmar 0.2% 120
(Source: BuddeComm based on industry data)
Top 10 broadband markets in Asia - ranked by subscriber penetration - June 2009
Country Broadband subscriber penetration (%)
South Korea 32
Hong Kong 28
Brunei Darussalam 3
(Source: BuddeComm based on industry data)
Note: Users are those accessing the Internet from school, university, cybercafes, work accounts as well as from individual household or business accounts. Subscribers are the number of individual paid Internet access accounts, eg a work account is just one subscription but can have many users within that one subscription.
Data in this report is the latest available at the time of preparation and may not be for the current year.
China - Digital Economy - Annual growth in online payments of over 110%
Lisa Hulme-Jones - Senior Analyst Asia
The internet has become an engine promoting the economic development of China. It is the largest internet market in the world and at the start of 2010 had 384 million netizens. China’s internet industry is expected to continue to recover in 2010, with a combined revenue expected to exceed RMB100 billion (US$14.66 billion) and growth surpassing 50% year on year .
IT, including the internet and its industry has made significant contributions to the rapid growth of the Chinese economy. Since 1995 the average growth rate of the added value of Chinese IT industry grew at over 26.6% annually, with its proportion in the national economy increasing from less than 1% to 10%. The combination of the Internet and the real economy, the reform and enhancement of traditional industry through IT, have given an impetus to the restructuring of traditional industry and changing of the pattern of its development.
In China, the development and application of the Internet has given rise to the emergence of many new industries. Services for the development of industries such as industrial counselling, software service and outsourcing are mushrooming. The role of IT in promoting independent innovation, energy conservation, emission reduction and environmental protection has become ever more prominent. The internet has emerged as a new strategic industry in China’s development of a low-carbon economy.
China’s spiralling online population has turned the Internet into a forum for citizens to express their opinions in a way rarely seen in a country where the traditional media is under strict government control. The internet has had a subtle unifying effect on China. The diversity of Chinese dialects, often an obstacle to comprehension of the spoken word, does not limit written comprehension.
However, Internet development and application in China is imbalanced regionally, and between urban and rural areas. In 2009 China Mobile continued to pursue the rural market development strategy. The company took advantage of State policies to reduce development costs for the rural market and took a first-mover advantage in rural markets. While urbanisation progresses in rural areas, this market presents significant potential and as such the rural market continues to be a key growth driver.
The three full-service operators are expected to compete aggressively in 2010 and into 2011. Value-added services will continue to grow as revenue from traditional voice services continues to decline. The convergence across telecommunications, internet, and radio and TV broadcasting networks will form a new market beyond the traditional telecommunications industry. The huge popularity of the internet will continue to pervade all aspects of society as China strives to establish its innovation credentials.
E-commerce is undergoing rapid development. The e-commerce of large enterprises has expanded from online information release, purchase and sales to integrated online web design, manufacture and management between upstream and downstream enterprises. Small and medium-sized enterprises have strengthened their awareness of the application of e-commerce, and the number of enterprises using e-commerce is steadily increasing. Online retailing is expanding quickly, and the market is being gradually regulated. According to a government sample survey, over 50% of big enterprises have established an e-commerce system; over 30% of small and medium-sized companies find their product suppliers through the Internet, 24% of them are engaged in marketing via the Internet; and there are over 100 million online buyers in China. Specialised e-commerce services are taking shape. The supporting systems such as digital authentication, e-payment and logistics are being gradually formed.
China’s internet industry generated a total of RMB74.3 billion (US$10.89 billion) in 2009 according to iResearch. Revenue grew by 30.7% in 2009 compared to a growth rate of 52.6% in 2008. The most rapid growth was seen in the e-commerce market, in which the online payment sector represented the fastest rate of annual revenue growth at 110.2%. The online shopping sector followed with revenue growth at 93.7% in 2009.
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