1 of China’s 5 major internet app sectors will make ‘next 5bn’

1 of China’s 5 major internet app sectors will make ‘next 5bn’

Staff Reporter

2014-05-11

One of the five major applications in China’s mobile internet sector–which include smart hardware, mobile e-commerce, location-based services, mobile games and mobile search–is expected to create the “next 5 billion” due to the surging number of mobile internet users.

The “next five billion” is a popular term in China’s financial industry, which was coined at the 2014 Global Mobile Internet Conference held on May 5 and May 6, where issues such as how to earn the next 5 billion yuan (US$802.3 million), how to become the next company worth 5 billion yuan and how to attract 5 billion mobile internet users over the next decade were discussed.

“The mobile internet sector’s ‘next five billion’ will be created in smart hardware integrated with wearable technology,” said Liu Jiangfeng, president of the Huawei Honor Business Unit.

Global tech giant Google bought smart appliance firm Nest and launched Android Wear this year, while Facebook acquired Oculus and Apple introduced Carplay.

Chinese internet giants, including Tencent, Baidu and Alibaba have also rolled out their own smart hardware products recently.

The second potential area for development is mobile e-commerce.

According to data from Shanghai-based IResearch, the third-party mobile payment market was worth 1.2 trillion yuan (US$193 billion) in 2013, skyrocketing by 707% from the previous year, and this figure is expected to grow a further 141.1% this year.

An expert in the e-commerce sector stated that payments made through smartphones had posted explosive growth over the last two years. In 2013, online sellers achieved at least 200% growth in sales in general and mobile payments were up by 212% year-on-year to 10 trillion yuan (US$1.6 trillion).

Location-based services (LBS) were another potential area for growth. Nearly 70% of mobile applications are related to LBS, making LBS a basic function for mobile internet applications.

A growing number of online applications are adopting digital map services, navigation and LBS, covering areas of industrial production, livelihood services and social networks.

The “next five billion” mobile internet users will become significant drivers of development in mobile games.

The number of gamers worldwide was pegged at 500 million in 2012, which doubled to 1 billion the following year and the number is likely to exceed 1.5 billion in 2014.

The income generated from global mobile games stood at US$9 billion in 2012 and US$19 billion in 2013 and is projected to reach US$26 billion in 2014 and US$60 billion in 2017.

China Mobile Games Entertainment Group chief executive officer Xiao Jian pointed out that China is expected to become the world’s largest market for mobile games over the next two years.

The last area with potential in the mobile internet sector is mobile searches. The competition among Baidu, Alibaba and Tencent is intense in this sector.

According to IResearch data, mobile searches will make up a large ratio of the estimated 500 billion yuan (US$80.3 billion) mobile internet market.

UK telecoms research firm Juniper Research reportedly indicated that advertising expenses for mobile search services were forecast to reach US$16.8 billion in 2018, compared with US$6.4 billion in 2013.

At present, the number of global mobile internet users exceeds 1 billion, while in China the number of mobile internet users reached 837 million during the first quarter of this year, according to the website of Guangzhou-based 21st Century Business Herald.

Wu Hequan, a research fellow at the Chinese Academy of Engineering, stated that internet traffic soared by 81% during 2012 and 2013, and was expected to grow further with the popularization of the fourth-generation (4G) network.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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