- Ipsos Business Consulting

Transcription

Online Dating In ChinaSOmnline
White Paper
September 2006
Online Dating in China
Damien Duhamel & Calvin Chu
Synovate Business Consulting
www.synovate.com/bc
1
Synovate Business Consulting is a division of Synovate providing business intelligence and growth strategy consulting across Asia
Pacific. We help clients to: Prioritize Opportunities - Enter New Markets - Outperform Competitors - Enhance Distribution Boost Market Share - Maximize Customer Value - Secure Best Fit Partners
Online Dating In China
Introduction
China is a society in transition, dealing with a sea change in the social fabric of the
country and 27 years of economic reforms. Aiding and abetting this transformation
Online dating, the new
gold in China?
has been the enormous rise of the Internet, which has spawned a revolution,
challenging long held norms associated with dating, sex, love and marriage.
According to the Chinese Government, the number of internet users in China stood
at 111 million as of January 2006, making it the second largest internet user base
after the USA. Sixty percent of these nouveau ‘netizens’ are unmarried and under
30. Small wonder, “Net Love” is getting more popular among young Chinese.
Synovate Business Consulting estimates the online dating market in China to grow
from USD 16mn in 2004 to USD 250mn in 2010. A near 1,500% increase.
Internet: A Boon for the single and ready to mingle?
Twenty-seven years of the “One-child policy” of the Chinese government has led to
a remarkably skewed gender ratio in the country, where there are 23 million more
men than women of marriageable age – a phenomenon demographers term “the
“Shy male looking for
partner willing to go for
an online date”
marriage squeeze”. While the fertility ratio has declined from 6 children per woman
in 1960 to 1.7 currently, the society’s penchant for sons has not changed. This has
resulted in only 100 females available per 120 males, putting tremendous pressure
on men to find women of their choice. Furthermore, the One-child-policy has
spawned a generation that has grown up without siblings. As a result, these
individuals have developed traits such as being shy and unwilling to change and
adapt to another person.
China’s fast pace of economic growth has also meant that most young Chinese men
Career, social and time
pressures helping
online dating
and women are attaching an increasing importance to their careers and professions,
and are consequently finding less time to socialize or build networks. Today, wellheeled women are looking for men who are compatible both emotionally and
spiritually, in contrast to the old China, where marriages were fixed based on
political and professional affiliations and where couples rarely met before marriage.
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Increasing expectations about marriage have also contributed to the divorce rate
rising from 0.07% in 1980 to 0.21% in 2003. More than 80% of divorced couples
are between 30 and 40 years old, well-educated and career-oriented.
The Internet has come as a boon for these consumers. Development of chat rooms,
online porn and adult dating sites, cyber sex with webcams, blogging, etc. has led to
a substantial change in their attitudes towards sex. Young people are increasingly
using the Internet as an alternative platform to expand their social network and fulfil
their entertainment needs. Ian Stewart, Director of Youth Research at Synovate,
sums up the situation:
"Today's Chinese youth have grown up in a digital world that encourages them to surf the
Career, social and time
pressures helping online
dating grow
globe for answers to homework, for fun, games, music, and for finding friends with similar
interests; this is the norm and many young people have more virtual friends than "real"
ones. So it comes as no surprise that today's Chinese youth naturally believe that the Net
also provides the chance for finding romance - both real and virtual. And why not? If
you were somewhat shy, and had the choice between the one boy/girl at school that
may/may not want to hang out with you, or thousands online that probably do, where
would you look for companionship and maybe more? Online dating is no longer on the
fringes of the Internet. To many young people in China and around the world, dating is
the internet."
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The number of Internet users in China increased from 94 million in 2004 to 125
million in early 2006, a change of 34%. The net population is further expected to
increase to 232 million by 2010, making China the largest net market in the world.
Chinat Internet Subscriber Base
2004-2010
250
232
200
205
182
Millions
Access to net and faster
bandwidth boosting
online dating growth
150
100
167
125
94
110
50
0
2004
2005
2006
2007
2008
2009
2010
Source: China Internet Network Information Centre 2006
There are about 10 million netizens using online dating services, and the number of
Will 1.3 billion Chinese
date online?
singles who want to connect with others will multiply from 6.5 million in 2004 to 30
million in 2008. Moreover, 80% of all net users will have broadband connection by
2007, aiding growth of other value-added services such as Voice over Internet
Protocol and on-demand video. With the current humble 10% of the Chinese
population with net access, the market represents significant growth potential for
portals and local-regional-global online dating services alike, among companies such
as MSN, Yahoo, AOL, Meetic, FriendFinder and Match.com.
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The Digital Dating Industry – Love for Sale?
The online dating market in China is valued at USD 45 million in 2005 and is
expected to grow to USD 250 million by 2010.
China Online Dating Market Size and
YOY Growth 2004-2010
800
Online dating worth
USD 250 Mn in 2010
250%
USD Millions
700
200%
600
500
150%
400
100%
300
200
50%
100
0
China
EU
US
China Grow th
EU Grow th
US Grow th
0%
2004
2006
2008
2010
Source: Synovate Business Consulting 2006
Cashing in on this huge growth potential are the home-grown dating service
providers such as Baihe.com, 96333.com, Love21cn.com, Yeeyoo.com and
international social networking firms such as MSN and Yahoo.
Baihe.com, which claims to be the largest online dating service provider in China,
has its origins in Heiyou.com, a social networking site which was launched in 2003.
When its founders realized that a majority of users used the site for dating purposes,
they launched a separate dating and match-making site, Match100.cn, which was
Baihe.com and
renamed Baihe.com in 2005. The site has 5 million users with 4,000 to 6,000 new
Yeeyoo.com ahead of the
pack but not clear leaders users registering every day. Launched in 1993, 96333.com is the oldest professional
yet
dating website in China. The site is a part of SinoFriends Inc. and had 3.5 million
registered users by the end of December 2005. Another key player in the Chinese
market is Yeeyoo.com. The site, a part of the social networking site eFriends.net,
currently has 4 million registered users.
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Another major player is Love21.cn, which was started by Gong Haiyan, a student of
the Fudan University in October 2003. She claims that since the birth of her site,
400,000 users have signed up, with a remarkable success rate with 26,000 of them
ending up married. Jiaoyou.com is a new player in the market with 40,000 registered
users targeting Chinese singles both in the mainland and the Chinese community in
the US.
Some sites target
overseas Chinese while
others target different
China provinces
Besides these national players, the Chinese market has also seen the growth of
regional players. The largest regional website in China, www.zj.com has launched
the “UU Club”, to provide a platform for dating to its 6 million strong local
netizens in east China’s Zhejiang province. There are other interesting operators
such as Shenzhen-based Tencent, which provides free instant messaging services
called QQ.
However, none of these sites have more than 10% market share, leaving room for
Market open to new and
foreign players
larger international dating service providers to establish themselves in China. Meetic,
the European online and community dating site and Silicon Valley-based Mayfield
Fund have already made aggressive investments in home-grown Chinese websites.
With the number of netizens using online dating services expected to grow
significantly, most international dating services are already planning their China
strategy.
The cyber dating product mix - From plain vanilla to Blackberry swirl?
The target market for most of the online digital dating websites is the university-
No clear market
differentiation yet.
Services offered are
fairly similar one site to
the other
educated, urban professional aged between 25 and 40 years who is serious about
finding potential mates. While some players such as Baihe.com have tried to
differentiate their services, most of the online dating sites such as Love21.cn and
96333.com still provide the basic services of match-making. Users upload their
profiles and get in touch with prospects by browsing these sites.
Baihe.com members are required to take a psychological test after registration,
covering personality-related and other basic personal information. The results are
used to match member profiles automatically by the computer. Members with
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highly matched profiles are then advised to exchange their contact information.
Jiaoyou.com has tried to differentiate itself by targeting Chinese youth in the
mainland as well as in the US, to provide a wider selection.
Customer segmentation
is currently focused on
and limited to two
parameters: city & age
QQ instant message, on the other hand, targets young users aged 16 to 24. The QQ
service allows them to view the gender, age and location of the person whose profile
they are viewing. If interested, they can send messages to see if other Instant
Messaging (IM) users want to chat. Apart from these, social networking sites such as
Heiyou.com, Sina.com, Netease.com, Yahoo and MSN among others provide basic
services, which help people make virtual friends.
With the online dating market still in its nascent stage in China, there is a lot of
Coming next - More
niche marketing:
“ChinaDivorcees.com”?
scope for service differentiation. Sites that cater to different segments based on age
groups or similar profiles such as divorcees or people who share similar interests
and hobbies can be developed to better harness the market potential.
Funding and cashing in Cyber Love
China’s growing net user population have made it difficult for foreign online dating
companies to ignore the country. In response to the demand for funding and the
need for concerted development of the online dating industry, venture capitalists
Foreign firms now
gunning for a share of
the fast-growing dating
pie
have aggressively entered the Chinese market. In January 2006, Meetic invested
USD 20 million, acquiring a 70% share in eFriendsNet Entertainment, which
operates Yeeyoo.com. Meetic has also announced future plans to increase its stake
to 100%. Similarly, Mayfield Fund and GSR Ventures have also acquired 30% share
in Baihe.com, another fast growing site. Love21.cn has also been approached by
venture funds such as IDG and Cyprus Ventures, although no definitive agreements
have been announced yet.
Revenue Models: One size does not fit all
Weak revenue models
currently hamper local
sites development
Match-making revenues in China, both online and offline are valued at
approximately USD 1.8 billion in 2005. Yet, the biggest barrier facing the Chinese
cyber dating service providers is their inability to develop a sustainable revenue
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model. Most of the revenue for the industry comes from online advertising, offline
Chinese cyber lovers
not yet keen to be
locked into a monthly
paid subscription plan
activities such as arranging parties for members, or charging fees for additional
services such featuring profiles on the front page. This is because, unlike the US or
European markets, users are not willing to pay for services in China, and providers
find it therefore hard to charge subscription fees.
In America’s mature dating market, websites such as Match.com and Yahoo have
developed tiered subscription services, with charges ranging from USD 19.95 to
USD 99.95. In addition, Match.com also provides value-added services, such as
US revenue models the
way to go?
allowing members who pay extra to make a phone call to a prospective date without
exchanging numbers. In the same way, Yahoo lets users add 30-second video clips
to their profiles on the portal. Boston.com, on the other hand, does not use the
monthly subscription model. Instead, it sells credits to members (USD 24.95 for 25
credits), which can be used to reply to personals or send IM greetings to users who
post free ads.
Taking a cue from the US market, the online dating industry in China is also making
Baihe.com’s
subscription-based
services attracted only
5,000 registrations at
USD 3 per month
a concerted effort to change consumer habits by developing subscription-based
services. Baihe.com, for instance, has begun charging for its services on a monthly,
quarterly or annual basis, with a minimum charge of 25 Yuan per month (USD 3).
However, at about 5,000 registrations, the paid users segment seems tiny. The
company also plans to launch a more flexible payment system that charges users on
a per contact basis and to develop other value-added services such as member
identification and authentication.
To derive additional revenue, Baihe.com is developing an advertising business and
improving its wireless value-added services, after which the company plans to
Other revenue streams
include advertising, VAS, launch the mobile version of its service. The company is also cooperating with
partnerships, referrals,
broadband service providers such as China Netcom and China Telecom. Baihe.com
SMS, retailing, etc.
also has plans to partner with e-commerce companies especially online flower and
gift shops and other service providers closely linked with dating. These steps will
enhance Baihe’s revenue streams and help it in developing a sustainable revenue
model.
www.synovate.com/bc
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Jiaoyou.com, on the other hand, is looking towards the mature US market for
revenue generation by targeting the Chinese community in the US. QQ instant
message has also developed a fee-based service, charging users 10 Yuan a month to
view in-depth member profiles. However, for the most part, online dating services
in China continue to be provided free of charge.
However, the biggest bottleneck hampering revenue generation in China is the
Biggest revenue problem undeveloped credit card market and lack of online payment methods. Today there
is lack of credit card
are about 720 million credit card holders in China. However, according to China
access and alternative
payment modes
International Capital Corp, China's potential card base, defined as urban residents
with annual incomes over USD 5,000, numbers only 76 million. This means card
penetration is just 0.48 % of that group.
Someone’s problem
becomes someone else’s
opportunity
99Bill to become the
‘China Paypal’?
However, companies such as 99Bill, a payment platform provider, similar to PayPal,
can prove to be a viable alternative to an undeveloped credit card market. Online
dating companies can partner with 99Bill and issue pre-paid company branded
cards, which can be used by members to pay online. This measure can circumvent
the lack of credit and debit cards and help online dating companies develop
profitable revenue models. Other payment providers in the Chinese market are
MobileBest's YeePay, mobile payment providers SmartPay and UMPay, eBay
EachNet's An Fu Tong, PayPal and AliPay (Alibaba's online payment tool).
Digital Dating: The ‘not-so-long’ march ahead
With Internet connectivity and PC penetration in China predicted to increase
rapidly, the digital dating market is a huge opportunity. China’s economic
Despites technical and
development and changing social structure will be the key driving factors for online
payment barriers, online
dating will strive in China dating services. As young men and women become better-educated and careerconscious, delay their marriages or get divorced due to work pressure and
incompatibility issues, the need for alternative means of social networking will
increase. Youth who have grown up with technology will increasingly gravitate
towards the digital world for finding mates.
www.synovate.com/bc
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With social networks becoming fragmented by increasing migration from rural to
urban areas, the traditional way of match-making through friends and family is fast
My Guanxi, now online!
disappearing fast. Digital sites promise a good alternative to develop new social
connections. Another factor that drives growth is the anonymity that dating online
provides, which helps the new generation of Chinese youth, who are shy and find it
hard to mingle in the real world.
An impediment that online dating companies will need to overcome is the general
lack of trust about the online dating. Most potential users still view it as unsafe and
Online dating safety
needs to be addressed in
China too
unreliable, as compared to the traditional method of meeting through family and
friends. Websites will have to develop better authentication and identification
systems to weed out suspicious profiles and provide a safe online environment for
users to meet future prospects. This also represents potential for online security
vendors such as Honestyonline.com, backgroundchecks.com and Trufina.
Conclusion – Right time to move in?
Damien Duhamel, Synovate Business Consulting Managing Director explains: “The
“Foreign players should
enter market now to
leverage on fast growth”
birth of a “China-MTV Generation” will accelerate the online dating growth, where emails replace
poems, SMS replace flowers and fast and practical dating platform will replace Mum and Dad
introductions and recommendations – The growth in China is phenomenal and in a matter of
months the market size will catch up with Europe’s. Though the market is fast changing, today’s
early entrants will surely reap massive benefits in years to come.”
Best to go safe and focus
on Beijing and/or
Shanghai first
It is a timely opportunity to consider what China’s online dating market potential
means for various stakeholders. In rapidly developing cities like Beijing and
Shanghai, one-third of white-collar workers aged 25 to 35 years remain unmarried,
among the highest rate in the country. These cities are an ideal starting point for the
international dating websites interested in targeting the 111 million Internet users in
China.
As the market continues to develop, more users are now becoming willing to pay
for better services. A 2005 Synovate survey finding reported that 70% of
respondents were willing to pay for online dating services. However, 30% said that
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they could spend only USD 1 per month; 8% were willing to dish out USD 6 to
Subscription to be the
norm down the road
USD 12 maximum per month and only 2% could spare more than USD 12 per
month. However, with rising income levels in the country, subscribers will be willing
to pay more for better quality services. International players with well-developed
identification and authentication systems can provide value-added services that
differentiate them from the domestic players, something the young and affluent
Chinese men and women would readily pay for.
New online dating
providers need to
differentiate themselves
from the local crowd
These companies will establish a strong foothold in the market by developing valueadded authentication services, different payment options and partnering with other
online dating-related businesses. These initiatives will increase their user base and
lead to the development of sustainable revenue models.
About 35 million Chinese below 15 years of age used the Internet in 2005. This new
generation of Internet users returns from school to use the net for chatting, online
New generation of
Chinese used to online
gaming, online chatting
and soon…online
dating
gaming and eventually flirting and dating. Evidently, such a tech-savvy segment will
also use the Internet when seeking the perfect mate, providing online dating
companies a ready base of users to tap into. The cyber-road ahead looks great, with
one caveat. The early bird will indeed catch the worm; companies that enter at the
beginning of the boom will reap maximum benefits.
Latecomers, however, will find it hard to capture mindshare, wallet share and even
to penetrate the market… Will acquiring, partnering, or launching a website be the
best way to grab market share fast? What kind of entry barriers can first-movers
hope to erect, to secure sustainable competitive advantages?
For further insights please contact
Damien Duhamel
Managing Director
(65) 64 30 65 12
Calvin Chu
Manager
(65) 64 30 65 26
bc@synovate.com
www.synovate.com/bc
11

- Ipsos Business Consulting

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