China becomes second largest Web market

By Eric Auchard and Jonah Greenberg

NEW YORK/BEIJING: China overtook Japan in July to become the world's second

most active Web audience, and its personal computer market is set to surpass

Japan later this year, according to several industry sources. The most populous

nation, which in 2001 outpaced the United States to become the world's biggest

mobile phone market, is benefiting from years of rapid economic growth of at

least 7 percent a year that has fueled an explosion in electronics demand.

In international Web traffic, however, China

remains a distant second to the United States. Chinese Web surfers overtook

Japanese, despite Japan's higher number of individual users, because the Chinese

have become more active users of the global Internet. With 1.27 billion

residents, China accounted for 6.63 percent of all global Internet traffic

during July, according to San Diego, California-based WebSideStory Inc., a top

supplier of Web customer tracking software.

"We're seeing China and other countries grow into significant players on

the Web," said Geoff Johnston, vice president of WebSideStory's statistical

service. Japan, which with a population of 127 million is one-tenth the size in

China, was close behind with 5.24 percent of global Web site traffic, followed

by the United Kingdom and Canada, each with about 3.9 percent. Fueling Japan's

growth is the explosion of mobile phone networks used to reach the Web.

Germany was just behind the United Kingdom and Canada, with 3.64 percent of

the global Web audience, Johnston said. The United States accounted for 42.65

percent of all Web traffic in July. This lopsided dominance reflects America's

role in pioneering and commercializing the international network of networks,

which make up the World Wide Web. The U.S. audience has slipped from around

45.02 percent in early 2001.

The rankings are based on electronic surveys of 125,000 sites globally using

WebSideStory software. Some 20 to 30 million unique visitors are tracked through

the survey. "We probably monitor 10 to 20 percent of everyone who's on the

Web in a given day," Johnston said.

Technology markets tilt toward China

Separately, the Asia head of Intel Corp., the world's leading maker of

computer chips, said in a speech in Malaysia that China was expected to overtake

Japan in terms of the number of PC units shipped to customers in either market.

Christian Morales, Intel's vice-president of Asia-Pacific, said that Japan's

decline reflected the stagnation in Asia's most mature economy over the past

decade, and the countervailing vibrancy of emerging markets like China.

"Before, we thought it would take another year or two. But this year

itself, China will overtake Japan in the personal computer market," Morales

said in a speech in Kuala Lumpur. Precise figures on global Internet use are

impossible to come by, owing partly to incomplete record-keeping and concerns

about privacy by Web users. Estimates veer all over the map, from some 100

million to well above 250 million global users.

Last week, the closest thing to official numbers for China were released in a

survey prepared by the nation's Internet address authority, the China Internet

Network Information Center. This report, posted at http://www.cnnic.org.cn,

showed fast growth in Web users compared with the second half of 2001. A surge

of 12 million new Internet users in China in the first six months of this year

pushed its users to 45.8 million.

That's ahead of estimates by technology market research firm International

Data Corp. of Framingham, Massachusetts, which had forecast the Chinese Internet

audience to grow to 44 million for the 2002 year as a whole from 30 million in

2001. John Gantz, research director of IDC, said that his firm estimates that

Japan's Internet audience will grow to 59 million in 2002 from 46 million last

year. This puts it still well ahead of China in its absolute number of Internet

users.

Furthermore, while analysts agree that China's numerical dominance is

inevitable, overall spending on technology in China remains far below the levels

in the United States, Japan and several Western European countries. This is

likely to remain true for much of the next decade, Gantz suggested. WebSideStory

does not track the absolute number of Internet users. Rather, it measures

traffic to 10 to 20 percent of the world's Web sites, including most of the

major attractions.

As such, the statistics may undercount actual Internet use within China. The

6.63 percent figure represents Chinese-based traffic to Internet sites globally,

Johnston said. IDC's Gantz speculated that the difference between the two

organization's findings may reflect the fact that China has less localized

Internet content, forcing Internet users to search globally, while Japan is more

self-contained online.

While in the 1990s the penetration of personal computers was the principal

driver of Internet growth, the wireless phone is now responsible for the bulk of

new Internet users being added in the world. IDC estimates that more than 70

percent of users now coming online do so via handheld mobile screens.

© Reuters