China’s internet population rose to 384 million at the end of 2009, up almost 30% for the year, according to the China Internet Network Information Center. Nearly 30% of the people in the People’s Republic are online. The figure will probably top 400 million by the end of this quarter at the current rate of growth. That will make the number more than the total populations of the US and UK combined.
The news comes at an ironic moment as Google (NASDAQ:GOOG) is struggling with its decision to leave China if it continues to face censorship of the search results seen by the nation’s citizens.
Internet use does not necessarily mean riches for internet companies. The behavior of the Chinese online population may be very different than in the US. The revenue of Chinese search engine Baidu (NASDAQ:BIDU) was only $160 million in the third quarter compared with Google’s sales of almost $6 billion for the same period.
It is not clear that the Chinese are prepared to spend money online through e-commerce portals or that they want to use the web for much beyond information. The censorship of internet sites is so prevalent that the online population may be concerned that the government will not only track the sites that they visit but also what they buy and sell when they are online, and what they look at as they use search engines to find information.
Censorship may serve its purpose for the Chinese government, but the invasion of privacy could keep e-commerce in a nascent state for the foreseeable future. Google, with its advertising-based model, may be gambling that China’s citizens are not a good target for its service.
Douglas A. McIntyre
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