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Chinese Domain Market Newsletter
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August 24, 2016 (Wed)

Learning from Chinese domain market data


Yesterday I collected and then presented data from CNNIC surveys on Chinese domain names. Now I'd like to look at the data and see if we can find some trends. While data on .cn is available since 1996, I have not found the same for other extensions until 2005. That's why the .cn chart is the only one that starts from 1996.

The Chinese domain market really took off in 2007, and then suddenly dropped off in 2010 and 2011 caused by .cn rule change (which I'll explain later). However, the market has returned, and has been growing steadily since 2012.



.cn
.cn started its spectacular rise in 2007 amidst speculation spurred by low .cn registration fee (30 cents for example). However, December of 2009 saw a sudden change in direction when the Chinese government announced a new rule which required registrants to submit personal information and photo identification. This rule especially hurt investors outside China as many simply let their domain names drop. (Godaddy even stopped .cn registration in March, 2010 and not resumed until early 2016).

However, genuine demand for .cn domain names from end users once again propelled .cn to grow again, starting 2012. Now that stringent rules are well in place to monitor ownership and operation of .cn, I don't see dramatic fluctuation such as that to occur again. Therefore, large drop (like 50%) in .cn registration is quite unlikely, and growth of .cn will be subject more to economic cycles in China.



.com
Unlike .cn, the growth of .com has been steady and upward. The stringent rule introduced to .cn in 2009 apparently has not affected .com in a significantly way. On the whole, .com is a solid extension in China, sustained by genuine demand from businesses wanting to be present on the internet.



.net and .org
Both .net and .org are minor players in China, accounting for only 4.5% and 1% market shares respectively. While they are still growing in numbers, I'm not sure about their future. This is because recently many new extensions as well as country extensions have been promoted in China. For example, according to Namestat.org, there are now 2.3m .top, 1.0m .wang, and 0.9m .win registered in China. They may marginalize .net and .org in the future.




Conclusion
Compare the 710 million internet users with the 1.4 billion Chinese population, we can see the internet still has a large room to grow. The natural user growth, internet startup boom, and strong government initiatives will support continuous long-term growth of the Chinese domain market. The future for domain investors in this market looks good.

As of January 2016, 31 million domain names were registered in China, with 53% by .cn and 35% by .com. Together they account for 88% of the market. So, mainstream domain investment in China is all about .cn and .com, where .cn is king in terms of registration number and .com is king in terms of value and prestige. This trend will probably continue.

Finally, the sudden introduction of a new rule on .cn by the Chinese government in 2009 should remind us of the country risks that we face if we invest in a country extension. For this reason, .com will remain as the most valuable extension in China because of its continued end user demand, USA jurisdiction, and its applicability both inside and outside China.