More Chinese use smartphones to access the Internet

Nearly 80 percent of Chinese people who use the Internet are using smartphones to go online, the highest proportion ever, industry research revealed on Wednesday.

The nation added 43.8 million mobile Internet users in the first six months of this year, lifting the total population to 464 million, according to the China Internet Network Information Center.

A sales clerk demonstrates the speed of mobile 4G telecom services to customers in Guiyang, Guizhou province. The number of mobile Internet users in the country reached 464 million at the end of June, according to the China Internet Network Information Center.TAO LIANG / XINHUA

The total number of Chinese Internet users also hit a record high, adding 26.56 million to 591 million, said the center.

The mobile Internet sector is showing a stronger growth momentum than the traditional Internet front, said the report, giving credit to the rapid expansion of third-generation communication infrastructure and the increasing penetration rate of smartphones.

The nation's Internet companies are eyeing the mobile business, hoping investments in the emerging segment could yield higher profits.

Earlier this year, Alibaba Group Holding Ltd, the most valued Internet company in China, spent $880 million investing in micro-blogging portal Weibo.com and navigation company AutoNavi Holdings Ltd to get a bigger foothold in the mobile world.

Tencent Holdings Ltd, owner of the popular instant messaging service WeChat, is looking to commercialize the app used by 300 million people by introducing a payment feature to the product.

On Tuesday, Baidu Inc, which runs the country's most-used search engine and is often considered to be slow to move into the mobile sector, decided to purchase the top app store in China —91 Wireless — spending $1.9 billion. The company only spent roughly $22.5 million on acquisitions last year, according to Bloomberg News.

"Going mobile is every Internet company's priority," said Dong Xu, an analyst with Beijing consultancy Analysys International. "Industry leaders such as Alibaba and Tencent have been successfully mapping out plans to tap into the new area."

The turnover of China's mobile Internet market exceeded 20 billion yuan ($3.3 billion) in the first quarter of this year, a jump of 75.4 percent year-on-year, according to Beijing-based iResearch Consulting Group.

The market for mobile shopping is quickly expanding although telecom operators' value-added services such as messaging have still to take the biggest share. The turnover of the mobile shopping sector hit an historic high of 26.7 billion yuan in the first quarter of the year, while the amount a year ago was a little more than 7.6 million yuan, said iResearch.

However, analysts worry most Internet firms have no idea about how to enter the multibillion dollar industry.

"Only a few companies have a clear route map for the mobile Internet market and most of them have yet to find the right approach for the new business because the rules for the new sector will be very different from the ones used in the traditional Internet era," said Dong.

Mobile Internet could become a difficult area for hardware manufacturers as well.

Xiaomi Technology Co, a maker of Android-based smartphones, said on Tuesday it has more than doubled its revenue in the first half of the year, selling 7 million handsets. The company sold 7.19 million smartphones throughout 2012.

Lenovo Group Ltd and Huawei Technologies Co Ltd also engaged in cost-cutting competition after both companies released high-end smartphones this summer.

China's smartphone shipments registered 78 million units during the first quarter, up by 117 percent year-on-year, according to the latest data from IDC, a United States research company.

The company estimated smartphone shipments in China will exceed 460 million units by 2017, with a market size of 740.5 billion yuan.