Last week I saw a post on Domain Name Wire inviting comments on the Chinese domain market and whether the bull run has ended. That got me thinking. According to World Domain Conference 2016, China now accounts for more than 40% of the global sales of domain names. Will China continue to grow and remain important? I think so, because the fundamentals are very good, as follows:
Large internet population. China has over 700 million internet users now, and there is no reason why it cannot exceed 1 billion in the years to come. These users are very internet savvy, thus creating many opportunities for businesses online.
Internet startup boom. It does not require much capital to start a business in China, so a lot of young Chinese entrepreneurs are creating internet companies.
Government policies. One is the Mass Entrepreneurship and Innovation policy which encourages creation of companies, and the other is the Internet Plus policy which encourages traditional industries to move online.
Domain name as part of a brand. More and more companies are realizing that domain name is the door to their corporate world and are willing to buy a good domain name that matches their brand name.
Direct traffic. Internet users are changing their habit from relying on search engines to using more direct visit. As an example, after Jing Dong upgraded to JD.com, consumers started coming to the JD site directly, saving the company $20 million a year in search engine placement.
Status symbol and competition. When Le TV upgraded from Letv.com to le.com, they became the talk of the town. The company reportedly spent $10m to shorten its domain name from 4 letters to 2 letters. Now, an expensive domain name becomes the status symbol of a company and brands compete to outshine each other.
In short, as long as these fundamentals remain in place, China will continue to grow. There will be many bulls and bears in the future, but the dragon will still provide lots of opportunities to domain investors in the west.