Industry Overview
The internet industry has been the fastest-growing industry in China over the past decade, but in the last two years, due to anti-monopoly measures and the impact of the epidemic on the economy, the overall growth rate has declined. These two factors happening simultaneously have led the market to believe that the profit-making ability of internet companies has been significantly weakened compared to the past, even becoming a public utility.
Therefore, when analyzing the internet industry, we first need to clarify some basic facts.
For example, we can see that the e-commerce industry had a noticeable decline in growth rate in 2021, but in fact, if we compare it with the overall consumer consumption, the e-commerce growth rate is still significantly higher.
It is worth noting that the growth rate of e-commerce in 2021 was achieved based on the high growth base of 2020, while the growth rate of social retail was declining in 2020. Therefore, the growth quality of e-commerce in 2021 is much higher than the overall social retail growth.
In terms of specific penetration rates, it can also be seen that the industry as a whole is still in stable growth, albeit with a slight decrease in momentum.
Therefore, if we believe that in the long-term future, the overall consumption growth rate will return to a level near GDP or slightly higher than GDP, then it is still reasonable to expect the e-commerce sector to maintain a double-digit growth rate in the medium to long term.
In terms of advertising, the scale of the domestic advertising industry is around just over 900 billion, while the current scale of internet advertising is only around 300 billion to -400 billion. In the future, with the economic recovery, the advertising sector is expected to stabilize and grow again, and internet advertising is likely to continue to erode traditional advertising...