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The weather in the sail city is funny. We should be enjoying warm and sunny days in late spring now, yet it's still cold and sometimes wet. The heaters have not been packed away, and the electric blankets are still in use at night before we go to bed. Like the weather, there are things in life that are totally out of our control. What I have learned is to try to adapt to the situation. Here's the post.

November 2, 2016 (Wed)

Is China the largest domain market?


Recently I read several articles that got me thinking about domain investment in China. Has China become the largest domain market in the world? If not, is it possible that China will become one soon? If China becomes the place with the most domain activities, what does it mean to the domain industry in general and domain investors in particular?

According to the article "It’s official—China is the largest iPhone market in the world," there are now 100 million iPhone owners in the USA compared with 131 millions in China. This is earth shattering when you consider two facts: (1) iPhone is an American product. It was launched in the USA in June, 2007 and then officially available in China in October 2009. So the American market had a 2-year lead over China. (2) iPhone is an expensive product. Contrast the $55,837 per capita gdp for the USA with the $7,925 for China (2015 figures). Isn't it mind boggling that a market started earlier with much more affluent consumers who could afford expensive products was overtaken by China!

If this can happen to the mobile phone market, can it not happen to the domain market? I first become interested in this trend when Xiao Dong LI of China Internet Network Information Center (CNNIC) said in January this year that he had no doubt that China would become the largest domain market in the world. The news site Jiemian.com also reported that domain sales in China was $750m (5b yuan) in 2014, $1.68b (11.2b yuan) in 2015, and forecast the sales to reach $15b (100b) in 2016. That's incredible growth!

During the World Domain Conference held in July, 2016, it was reported that China accounted for more than 40% of global domain sales. There was nothing like this announced before, so China suddenly emerged as a major player in the domain industry. (I have yet to see actual global sales data and its breakdown by country.)

Recently, Simon Cousins, a co-founder and CEO at Allegravita, a well-known agency helping foreign domain registries enter China, mentioned "the world’s biggest domain name market, China" in a recent blog post on TheDomain.com. I hope he can elaborate on this point. Nevertheless, all these jigsaw pieces point to the possibility that China is already the largest domain market in the world.

If China is the largest domain market in the world, what does it mean to domain investment? Currently, China mainly plays as a big buyer of domain names, buying both in the lower end (bulk purchase) as well as the higher end (very short .com names). But, over the longer term, it is natural to expect China to start to sell to the world domain names that they have accumulated. There are already some hints in this trend.

On August 1, domain registrar West.cn joined SedoMLS to enable all domain names registered on West.cn to be available for sale via Sedo's global sales network. In the same month, the company also launched its global domain trading platform on West.xyz. (West.cn alone accounts for 20% of global domain market in new extensions, with 4.5m of NewG domain names under its management.) Long term, I see all major domain registrars offering their domain marketplaces for the global audience. This will allow domain investors new channels to buy and sell domain names as language and payment barriers are removed.

In the long run, I see the possibility of a global domain exchange where ownership transfer and payment will be instant. The process will become so easy that the general public will finally be involved. Domain investment will mean purely buying or selling of domain names; no technical issues such as name servers or hosting will be involved.

Certainly, we are still in the early stage of domain investment.