An Occasional View into the World of Chinese Domaining – China Domain Name Development
The Chinese government think tank China Academy of Information and Communications Technology (CAICT) has been quite active in publishing reports related to domain names.
Last week I talked about its internet trend report released in January.
During the 2nd China Domain Name Development Conference held in Beijing on January 10, the think tank released another report entitled 中国域名产业发展报告 (translation: China Domain Name Industry Development Report).
The report covers activities in 2015, and here are some points of interest I’d like to share with you.
While CAICT recognizes China as the largest internet market and domain names as the foundation of the internet, its study shows 78% of domain registrars are located in the US and only a mere 4% in China.
This suggests to me that in the long term China’s share will greatly increase in order to match the size of it’s internet market.
This also suggests that many of the largest registrars will come from China.
The report contains an interesting chart where the Internet Domain Name Index (IDNX) is plotted against Nasdaq 100.
The chart shows that, over a 14-year period ending 2014, IDNX and Nasdaq 100 paralleled in their performance.
When Nasdaq 100 rises, IDNX tends to rise too. This shows the domain market is also an indicator of the global economy.
When the global economy falls, we can expect IDNX to drop and domain names to enter a bear market. (Note: According to IDNX.com, IDNX is a price index for the domain market and calculated from more than 225,000 real sales.)
CAICT points out that in 2015 China had 36m domain names registered, representing only 12% of global registrations.
This makes China the second largest domain market after the US.
However, China leads in NewG where it accounted for 42% of NewG global registrations in 2015. The US was second with 13%.
This means that if you want to invest in NewG, China is the place to go.
CAICT is very positive about the future of Chinese IDN domain names.
Its given reasons are two:
(1) Chinese IDN matches the Chinese culture, corporate culture, and brand promotion convenience.
It is the best entry to a company’s digital world.
(2) The Chinese government, corporations, and research institutes are all working together to improve use of Chinese IDN.
Application of domain names in China is still very low.
Only 16% of domain names in China have been developed into websites.
Among the 5.6m domain names used in website development, the majority goes to only three extensions: com (3.5m), cn(1.5m), and net(0.3m).
In other words, if you want to invest in the Chinese domain market, focus on .com and .cn.
Finally, CAICT believes the Chinese domain market is still small, immature, and can be volatile at times. It’s subject to big swing caused by speculation. What does it mean? Watch out for bubbles!
The Chinese report is available from CAICT’s website at: http://conf.caict.ac.cn/whois/zxzb/201701/t20170110_2186207.html
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Kassey Lee is the publisher of Coreile Letter, a Chinese domain market newsletter containing weekly blog, news, and Q&A.
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