China is currently the world’s most connected country with 253 million Internet users and more than 600 mil mobile phone subscribers. Chinese consumers have swiftly emerged as power users of mobile applications, Web 2.0 technologies and instant messaging (IM) services and no, it’s not Microsoft.

As of the second quarter of 2008, there are 426 million active IM accounts in China,  increasing 8% quarter-on-quarter (396 million, Q1 2008) and up 13% from a year ago according to the IM Quarterly Tracker from research consultancy Analysys International.

Not surprisingly, Tencent QQ continued to dominate the Chinese IM market with 80.2% market share, representing 341 million active user accounts. QQ has successfully cornered the young digital generation, grabbing more than 30% share of China’s undergraduates, and by the end of June, total registered QQ subscribers had reached 822.2 milllion.

China Mobile’s integrated communications service, Fetion, has also witnessed rapid growth to hit 18 million active users, up 17% Q-o-Q. Launched in 2006, Fetion is a free mobile-PC chat and SMS service that comes preinstalled on China Mobile handsets. The company claims to have 111.81 million total registered subscribers.

China’s Fetion moved up 0.2% this quarter to achieve 4.2% market share, just enough to overtake MSN Messenger (4.1% share at 17.5 mil users, up 6% Q-o-Q) to rank 2nd this quarter, followed by Aliwangwang, Sina UC, Skype, Netease PoPo, Yahoo and others respectively.

China IM Market 2nd Quarter 2008 – Source: Analysys

For the second quarter, the above 9 main IM service providers in China accounted for 1.33 billion registered accounts, rising 25% YoY. The number of concurrent IM users grew 40% from the corresponding period last year to peakat 53.51 million.

Comparison: China Instant Messaging Market – First Quarter, 2008