The number of Internet users in China reached 290 million by the end of November 2008, making up nearly half of Asia’s estimated online population and reaffirming China’s position as the No.1 Internet market in the world. More than 80% of Chinese netizens surf the Internet by broadband, of which about half use ADSL, according to the Ministry of Industry & Information Technology (MIIT).

In China, marketers have started taking note of new digital media and its pervasive influence as Chinese consumers are moving online, not watching TV or reading newspapers. The latest total figure is an increase of 14.6% from the 253 million online user tally reported as of the end of June earlier this year.

China’s army of netizens will be a catalyst for the development of opportunities in technology and the huge domestic Internet market, in particular services appealing to the under-30 years of age. E-commerce will be next to benefit as businesses and retailers capitalise on the young, Internet-savvy generation accustomed to being engaged through Web activities.

Revenue from the fast-growing online advertising market in China for the third quarter of 2008 rose 42% from a year earlier to reach 3.72 billion yuan (US$541 million), more than double the growth in spending on traditional media; television, newspaper or magazine advertising, according to the Nielsen Co. as reported in eMarketer.

As businesses explore more cost-effective ways of reaching their target audience, online advertising spending in China, including display and search, is projected to grow between 30%-40% year on year in 2009.

Popular streaming video sites (Youku, Tudou) are one of the key emerging online platforms for ads, as well as in-game advertising. An estimated 150 million people were playing online games in June, up 35% from December last year, according to JL McGregor, which researches the industry for investors.

Evidently China’s online gaming industry is doing very well, in spite of the global economic slowdown. This can be largely attributed to the free-to-play business model adopted by most of the MMORPGs.

In the third quarter of 2008, total gaming revenues for Chinese companies (Netease, Sohu, Shanda, among others) jumped more than 50% year-on-year to an estimated US$800 million, according to Shanghai-based Internet consulting firm iResearch.

The General Administration of Press and Publications (GAPP) has estimated that the buoyant online gaming market in China will end 2008 with growth of more than 50% year-on-year, which likely explains why the government recently tried to impose taxes on virtual currency transactions. Implementation is a totally different game, of course.

In 2007, the Chinese online gaming market posted RMB 10.57 billion (US$1.55 bn) revenues, up 61.5% from the previous year, according to a GAPP report published in January this year. The number of online gamers rose 23% year-on-year to total 40.17 million. The industry was expected to generate sales revenue of RMB 26.23 billion from around 85 million gamers in 2012.

In Beijing alone, there are 3.75 million gamers out of the city’s 16 mil inhabitants, and 41 large- and medium-sized game companies that employ 87,200 staff, reported 163.com quoting Beijing Municipal Publicity Department vice director Chen Dong. Revenue from online gaming in Beijing was RMB 2.25 billion (US$329 million) in 2007, a very significant industry revenue total that was second only to finance in the service sector.