Forget Millennials, the Internet’s Most Wanted Users Are Older — and Poorer

An anonymous reader writes: China’s relatively young internet industry is facing a mature-market problem: User growth for popular online services such as instant messaging, search, online news and video has fallen to single digits. Online population growth has hovered around 5% to 6% annually since 2014, which is only slightly higher than in mature economies. Unlike in many developed markets, a vast number of Chinese are unconnected. As they slowly come online, they’re creating a sizable market that companies can tap into — if they can figure out how.

“The Chinese internet is experiencing the third wave of [a] demographic dividend,” said Wang Hua, a partner at venture-capital firm Sinovation Ventures, at a speech in December. The first wave, he said, were early adopters, while the second was driven by young people in major cities. “About half of the Chinese population is not yet heavy internet users, and they’re the third wave of the demographic dividend,” he says. “And they’re usually the ones that are in charge of a family’s daily consumption.” Only 56% of 1.4 billion Chinese — about 772 million people — use the internet, according to official data. The U.S. reached that level of penetration in 2002, according to the United Nations. Interest in the lower end of the internet market has been building; live-streaming services have managed to attract working-class Chinese. This time around, the spread of e-commerce and new business models are unlocking more potential.