The dot-cn boom?

[ADM@Asia]:
Commuting in Shanghai is kind of like going back in time. More specifically back to circa 1999 and the height of the dotcom boom.

Why? Because the last time I was surrounded by so many internet brand advertising on my commute was when Netscape was “hip” and AOL was “hot”. A time when Yahoo-oooo commercials ruled the airwaves and “You’ve Got Mail” was trendy (and a movie starring Meg Ryan…)

Fast forward a decade-plus and on the other side of the planet a whole new breed of internet brands are now demanding my attention. Complete with flashy models, glossy production, catchy taglines and bold and expensive media placements, these Chinese internet companies are spending like the web hey-days.

Internet users in China surpassed 450 million last year. By the end of 2010, there were 13.5 million online stores in China. That is a whole lot of brands fighting for clicks. But the market seems to be supporting with over 158 million online retail shoppers and growing. Online retail spend topped 513.1 billion yuan ($79.3 billion), representing 3% of total retail sales, according to China E-Business Research Center. While still small compared to mature internet markets like the U.S., it grew at an astounding up 97.3 percent year-to-year.

In such a competitive marketplace, it’s no wonder Chinese online brands have been marketing themselves with such ferocity. These brands wrap subway stations, plaster themselves on platforms and take up entire train compartments. They run glitzy TVCs on 10ft x 15ft digital billboards and flash animated messages on digital posters up and down escalators.

Despite the clear rise in ecommerce in China and the fact that they pioneered ecommerce in their home countries, multinational brands are surprisingly slow in launching their own online initiatives here. According to a recent American Chamber of Commerce research report, when asked the question, “To what degree has your company adopted e-commerce as part of your sales channel?” a surprising 40.7% of multinational companies in China answered “Not at all today and no plans to do so” compared to only 6.5% local Chinese companies giving the same answer.

So the question is what’s holding multinationals back? Perhaps it’s because they still lack a firm grasp on the Chinese online consumer behavior? Or maybe it’s the sensitivity and restrictions posed on internet activities (ie. the Great Firewall)? Whatever the case may be, the proactive multinational brands that successfully leverage their online expertise from home (North America / Europe) and their offline presence on the streets of China will undoubtedly emerge as the biggest winners (example: www.gap.cn).
- by ADM @Asia
 

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