hongkongsunrise

Forget Internet censorship and cybersecurity for the moment.

Contemplate this: China will own a majority of the world’s web addresses in the next few years and likely a huge chunk of its live websites.

ntldstatschina

According to nTLDstats, China owns 44.1% of all new domain name extensions since they first launched in 2014.

This is not speculation. It’s reality.

Why?

The numbers speak for themselves.

At 721 million online users, China has the world’s largest Internet population. All of them need access to information, products and services. The majority of them access the Internet through hundreds of smartphones and devices, each with their own apps and browsers. China’s largest online shopping spree, Singles’ Day, research showed that a third of users planned to use their desktop/laptop to purchase, and almost a fifth planned to use their mobile browser.

China already owns more than 54% of domain names on the world’s new domain name extensions since they were introduced two years ago. The vast majority of Internet addresses that aren’t on .com or .net are probably already owned by Chinese citizens.

When the market matures and the dust settles, China will be best positioned for growth on the web through these new extensions. Even Alibaba has joined the bandwagon and currently runs an auction site that sells domain names and has owned its own registrar platform similar to GoDaddy under the umbrella of its cloud service, Aliyun (阿里云). Google only recently caught up to Alibaba with its on registrar service at domains.google.

In the past year alone, new domain extension registrations (see this for a simple primer) have increased from 8.96 to 25.57 million registrations, and 7.6 million of them are being used by their registrants in some way, meaning they aren’t parked on a blank page. .COM, .NET, and .ORG still take 81.5% of market-share in terms of domain names, but it is only a matter of time before choice becomes more important than legacy. Though they cannot legally host non-.COM or .CN websites yet in China due to government regulations, Chinese are still buying domain names in droves in anticipation of the opening floodgates.

Consider the following five points:

China has a massive Internet population

Over 58% of China’s users came online in the past 8 years, starting when China surpassed the US in 2008 at 298 million users.

China now makes up a fifth of the entire world’s Internet population and only at a penetration rate of 52%. For comparison, the US still only has 288 million users, and though India is catching up fast, its Internet speeds are still the slowest in Asia at 3.6mbps compared with 5.2mbps for China.

If China were to bring online 88.5% of the rest of its 660 million its population–the current penetration rate of the USA and Canada–it would represent more than one-third of the world’s Internet population, or 36% (1.22 billion). China brought on 30.8 million new Internet users in 2015 and is on track to do the same this year.

Though China has had lulls in Internet growth in 2004 and 2005 and is becoming more and more saturated, there is no indication of a slowdown in service sector and online growth, particularly as Chinese companies seek to expand out of China.

Global Internet policy is about to become multistakeholder

icannsmalllogoStarting October 3rd, the US government began formal procedures to relinquish its oversight of the Internet’s domain name system to a multistakeholder body called the Internet Corporation for Assigned Names and Numbers (ICANN) (for a guide, see this excellent Slate article explaining the DNS system and ICANN), headquartered in Los Angeles since 1998.

This means that Internet policy decisions will involve public and private leaders collectively deciding policy from now on. Certainly China wants to take a large part in this process and you can bet that their government will be pushing for greater access, but government oversight is prohibited, so they will be a voice, not necessarily the decision-maker. China is fine with this. Their Cybersecurity Administration expressed support for the transition a month ago at a press conference in anticipation of the World Internet Conference. That conference begins today in Wuzhen, and we can expect more statements of support to come out of it.

ICANN and the founder of the Internet, Sir Tim Berners-Lee, assure the world that governments and private interests will not gain inordinate control over the Internet, but there will certainly be more decision-makers involved. ICANN has no control over cybersecurity or censorship. It is a decision-making body for the DNS system. In theory privatizing the Internet for governments and industry leaders to collectively decide policy will make the Internet more open and efficient.

There is no denying that China has and will shock the domain name system with a huge influx of money. The tech mergers & acquisitions started last year in earnest and will likely continue, with speculation that a Chinese company may attemp to purchase Twitter.

China’s app market and QR code system isn’t killing domain namesstatcountersmall

App usage is severely hindered by phone storage space and data transfer speeds on mobile. Particularly in China, data has not reached the point of

WeChat has an internal browser. Most pages in WeChat are displayed on an internal API that often displays mobile sites from URLs. QR codes are scanned IN ORDER TO go to a website, and advertisements often include both QR codes and website URLs.

China’s UC Browser is the world’s second-largest mobile browser by market-share at 17.9%. Opera, the world’s 4th largest at 17.9%, was recently acquired by Chinese firm Kunlun.

China follows trends, particularly from the government

When the Communist Party sets goals, business leaders respond in step. Typically trends develop quickly when government incentives hit the scene and especially when it involves economic growth and development.

Introduced in 2015, the “Internet Plus” policy of China’s central government outlines expansionary goals for the Internet over the next 5 years.

Large Chinese companies are on-board

Alibaba has quietly built up its web-hosting business since 2009 when it purchased HiChina (万网). Over the past few years, they’ve become one of the largest and most respected web service providers in China. They are also the 6th largest registrar in the world, rapidly gaining markershare against the likes of GoDaddy and others.

Another hosting provider and registrar, West.cn (西部数码) in Chengdu, alone owns literally a fifth of the world’s new domain extension registrations, or about 4.78 million domain names.

Websites hosted in China are increasing at 7.4% every 6 months

China self-reports about 4.54 million websites hosted within its borders. This, however, does not account for websites hosted outside of China or websites hosted on unauthorized domain name extensions.

This represents a tremendous growth potential.

Though China represents about 2.6% of websites online today, a very large amount of websites will be launched or owned by Chinese in the next decade.

Chinese invest heavily in fixed assets, and domain names and websites are effectively “online real estate”. WeChat alone accounts for an explosion of mini-websites and live apps that load in its native web browser. If you aren’t building a mobile website for China that loads correctly in WeChat links or QR codes, as one web design blog explains, you are effectively irrelevant to a majority of Chinese users. All of these websites need design work, hosting services and web pages.

So this isn’t the 80s

This is an entirely different going-abroad game than Japan in the 1980s. The Internet didn’t exist back then, and Japan’s economy was showing weakness much earlier.

If you’re an online business, you should be considering China. Chinese businesses will soon be advertising incessantly on Facebook and Twitter, setting up hybrid English/Chinese websites, media companies, e-commerce shops, groups and clubs of all sorts with millions of new brands and services on the Internet. They have the capital and the technology to make significant inroads in the next decade.

Internally, China’s Internet takes on a life of its own, integrating with with a lot of pent-up demand for integration

As of October 2016, the world has 177.2 million active websites. A vast majority of those are hosted in the United States, but the next largest wave of Internet growth is owned largely by China. Take note.

(InternetLiveStats.com)

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