China's Internet user base touched 123 million... (8/22/2006)

China's Internet user base touched 123 million by the end of June 2006, reflecting a 19.4 percent YoY growth.

Significantly, China's Internet population differs from that of the West, as acceptance is disproportionately younger than in more developed countries.

This observation was shared by Tom SooHoo, chief executive officer, eLong, one of the speakers during the inaugural session of the Travel Distribution China 2006, being held in Beijing.

As we have seen in more developed countries, convergence of increased user groups, technology, and e-commerce and credit card security, we believe, will stimulate more Internet penetration and usage. China's Internet population does differ though, from that of the West as acceptance is disproportionately younger than in more developed countries. Higher age and higher income population groups are under-represented,?he said, during the `The future of travel distribution in China?session.

He felt that both pure Internet access numbers, and the ability and willingness of Chinese consumers to book and pay online for travel are critical.

Drawing comparisons between the online travel markets in the US and China, SooHoo said while the business model is merchant-oriented in the US, it is agency/merchant one in China. The booking method is mainly online in the US, whereas it is inclined towards call centre in China. Significantly, the credit card is the preferred payment method in the US, while it is mainly cash in China.

SooHoo acknowledged that call centre currently play an important role in booking process but he expects online travel experience to gradually emerge as a major channel. The control in decision making, freedom to make choices, wealth of information, convenience and content being stronger than available via call centre mode makes online a strong channel,?he said.

During the same session, Yang Tao, vice-president ?vacation department, Ctrip.com said that China is in the first phase of the three-stage travel expense development: sightseeing ?leisure ?vacation.

Tao shared that 70 percent of Ctrip business customers book offline through call centre while 70 percent of FIT customers book online (Biz customers: FIT customers = 7:3). He added that FIT continues to grow in the online travel market.

SooHoo agrees with the fact that there is a growing trend pertaining to a group of travellers in the higher social demographic segment breaking away from the conventional packaged tours, opting instead for free and easy travel.

Ctrip.com's Tao, on his part, said that technology will bring in real-time information, more choice and more convenient transaction and lower cost. On main challenges, he referred to customer behaviour, method of payment and credibility of online transaction.