BOSTON, September 1, 2010—In 2009, the BRICI countries—Brazil, Russia, India, China, and Indonesia—had some 610 million Internet users, and this number is growing at a blistering pace: it will nearly double by 2015, hitting around 1.2 billion users, according to a new report by The Boston Consulting Group (BCG). The report, titled The Internet’s New Billion: Digital Consumers in Brazil, Russia, India, China, and Indonesia, examines in intricate detail the online behavior patterns in these countries, drawing from thousands of interviews and numerous focus groups conducted in ten cities.
“The Internet is already having a fundamental impact on consumption patterns, and the patterns we’re seeing are significantly different from those in the United States and Japan,” says report coauthor David Michael, who heads BCG’s Global Advantage practice. “Companies relying solely on traditional means for reaching consumers in the emerging markets need to understand the impact that the shift to digital media is going to have.”
Because the BRICI countries constitute many of the world’s most populous nations, it may come as little surprise that their digital-consumer ranks will swell so quickly. However, the truly remarkable development is how quickly online activity is shifting into the mainstream of these societies. Although there are only 440 million PCs in the BRICI countries at present, this number should more than double by 2015—and Internet cafés and mobile devices will also act as important means of digital access.
The habits exhibited in the BRICI countries differ markedly from those in the developed markets—for instance, instant messaging is vastly more popular, as are online music and games. There are remarkable variations among the BRICI countries as well. Social networking is more popular in Indonesia and Brazil than in any of the other BRICI countries—or even in the developed markets. And while an extremely high percentage of Indian digital consumers use e-mail, Chinese Internet users have gravitated toward instant messaging.
Among the most prominent trends is that BRICI digital consumers are far more likely to be meeting their digital needs through mobile phones than through personal computers. With PC penetration still quite low, mobile phones are cheaper and more convenient tools for both communicating and seeking out entertainment—already, the BRICI countries have around 1.8 billion mobile-phone SIM card subscriptions, more than four times the combined total of those in the United States and Japan. In fact, as sophisticated handsets become available in the BRICI markets, millions of BRICI digital consumers are leapfrogging over PC usage and going online via their mobile phones, a trend that has significant implications for their Internet-usage habits.
In addition, BRICI Internet users are unusually young—more than 60 percent of digital consumers are under the age of 35—which means that although the online habits of BRICI consumers are still being formed, these behavior patterns will have broad implications for future online activity. As they earn ever-higher incomes and develop more complex online needs, digital companies will see colossal opportunities to monetize services and products—provided that they can keep up with the pace of change in the BRICI digital markets.
Beyond examining broad trends in the BRICI countries, the report also breaks down digital usage patterns and their stages of market development on a country-by-country basis. In general, although there are market similarities across user segments, the digital markets in Brazil and Russia are more advanced than those in India and Indonesia. Meanwhile, China is far beyond its fellow BRICI markets—Internet and mobile phone use are deeply embedded in the lives of hundreds of millions of Chinese people. One reason that it is important to understand the Chinese digital market is that it offers a pointed reminder of how rapid and unexpected the pace of change in other BRICI markets may be in terms of Internet penetration rates, the number of hours spent online per day, and e-commerce adoption. Understanding the course of development in these markets will provide valuable insight into their long-term growth potential.
But the danger in marveling at the pace of BRICI digital adoption is that it is easy to overlook the fact that the BRICI digital revolution is already well under way. The crucial backdrop to the development of the BRICI digital markets is the diversity and size of the companies that serve these digital needs, such as China’s Tencent or Alibaba.com.
“The commercial opportunities in these digital markets are rapidly evolving,” says report coauthor Yvonne Zhou, a principal in BCG’s Beijing office, “and the presence of strong local competitors in many of these markets means that the ‘incumbent’ digital-market leaders in the United States and Europe should not take success in the BRICI countries for granted.”
Given how rapidly these markets are developing, companies planning entry strategies will have to act quickly—or risk missing the opportunity to connect with consumers now and grow with them throughout the coming decades.
To receive a copy of the report or arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.