China Surpasses U.S. In Internet Use
New York - Chinese Internet users spend nearly two billion hours online each week, while the U.S. audience logs on for 129 million hours per week.
That's the bombshell Dr. Charles Zhang, chairman and CEO of Sohu.com (nasdaq: SOHU - news - people ), dropped last month after ringing the opening bell at the Nasdaq, a milestone for a Beijing-based company.
Zhang reported that, according to his internal research, Chinese Internet users numbered over 150 million--and possibly up to 200 million--and Sohu.com, including all of their properties, was in the top five most trafficked sites in the world. Nielsen NetRatings, which doesn't have statistics for China, reports that the U.S. had 154 million active users in January 2006. This means that China, if Zhang is correct, is at or above the U.S. in the number of Internet users and that these users stay connected far longer each time.
How could the milestone of China surpassing the U.S. in Internet users have gone so unremarked? It turns out that it isn't that easy collecting data on over a billion people in a country as vast as China, where most people are not connected by phone lines.
The China Internet Network Information Center (CNNIC) reports that the number of active Chinese Internet users was 111 million by Dec. 31, 2005, up from 94 million a year earlier. And over the past two years, it has been growing at a steady rate of 18%. However, according to Zhang, the CNNIC polling is conducted by calling fixed line phones. "Young people do not use fixed line phones. They all have mobile phones," Zhang said, explaining why he believes the CNNIC is reporting lower-than-accurate numbers.
What's up with all that time online? This is the first time in Chinese history that the nation has been connected. As Zhang explains, "People log onto the Internet and Sohu.com because, in China, there is no Forbes, Reuters or The Washington Post. Print media was all state-controlled and official, and the Internet filled this void." Indeed, according to the CNNIC, 67.9% of online use in China is spent devouring news, more than searching (65.7%) and e-mailing (64.7%). By contrast, only 3% of Yahoo!'s U.S. traffic clicks over to news.*
Moreover, China has a lot more room to grow than the U.S. While roughly half of the U.S. population is actively using the Internet, just 11.7% of the Chinese population is currently plugged in.There are 400 million cell phone users in China, with over 6.1 million mobile users connecting online.** As cell phones increasingly become the connection of choice, you can expect China, which is a generation ahead of the U.S. in mobile technology, to lead the world in mobile Internet-access growth. And everything will hit hyperdrive over the next two years, as the country ramps up to host the summer Olympics, which are being held in Beijing in 2008.
So why is Sohu.com the hottest site on the Web these days, when Baidu.com (nasdaq: BIDU - news - people ) is the better known brand in the U.S.? Sohu.com is up 40% this year, while Baidu.com, the blazing IPO of last summer, has lost 9% since January and is down 63% from its 52-week high.
While Sohu.com, Sina.com and Baidu.com are all in the top ten of most popular global Internet site--above Amazon.com (nasdaq: AMZN - news - people ) and AOL--Sohu.com has twice the revenue and three times the net profit of Baidu.com. And Sohu.com is the official Web site for the 2008 Beijing Olympics. Additionally, Sohu.com was the first publicly traded Chinese company, alongside Sina.com, to adopt Sarbanes-Oxley accounting standards, which speaks well of the management team of Zhang and CFO Carol Yu.
Is Sohu.com better than Baidu.com for your portfolio? I asked that question and more in the Forbes.com Video Network Q&A with Sohu.com's Zhang.
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