Why is China buying internet Domain names?


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If you are one of the select few who are still fascinated with this domain industry you would have been wondering by now why China is buying internet domain names. Think about it, It’s a no brainer for a fast growing economy eager to take over the World.


China has invested millions in domain names despite challenges.

I was once told when wealthy people decide to invest in something, it’s usually something rare in nature. Something the general public typically knows little about. Part of that statement makes a lot of sense because diamonds are rare but their popularity somewhat debunks that theory, it doesn’t make a lot of sense to a lot. Diamonds are well-known, so what exactly is it with that shiny object that makes it so valuable? Maybe the fact that it’s an unbreakable stone which requires special conditions i.e exposure of carbon-bearing materials to high pressure making it so strong. OR maybe it’s the fact that they are  mostly used to engrave tools?

I wouldn’t think that’s what makes them attractive to rich people though. It might be that religious aspect, such a rare special stone that rich people want to be recognized with, giving  them a sense of value? Notice I keep saying rich people? There’s an apparent distinction between rich and wealthy folks. The former doesn’t quite serve a purpose of saving one’s life. Diamonds are a rare stone just like Gold which have been deemed valuable for centuries. Their ownership and value can be debated till the sun comes out.

How about the odd article about a painting selling for $100 million or a rare coin fetching $245,000 at an auction? The real story is often underneath. And that real story typically contains an established wholesale market, an ever-growing demand over time and a verifiable sales history. The value? in the eyes of the beholder.


The Rise of China

 

China, HongKong

“Save like China, consume like an American or so the saying goes.”Tweet: Save like China, consume like an American

Ok, I just made that one up. Don’t get it confused for a stereotype. It’s just a different kind of culture. I think it really shows just why the American economy has been bigger than any other. Blessed with a lot of innovators, there is always a rise of new industries, products and a willing consumer. The Diamond trade being one of those examples. Now you have the rise of domain trading, a virtual estate.

Not to be outdone,China is now home to some of the greatest wealth in the world. Did you know it is now the world’s Largest Internet Market? China has a population of 1,3B+ people. The entrepreneurship drive is also not slowing down with up and coming businesses (Startups) getting online on a daily basis to reach their target market / audience. So what has led to such a dramatic rise? So many factors but for the purposes of keeping it short and simple, we’ll cover the most notable reasons.


The rise of the Chinese internet population

This is well documented. Propelled by a low-cost labor force in the manufacturing industries even though it has had it’s fair share of controversy. The China economy is still on track to surpass the American economy by 2026,  that is if it can transition from a government-run, centralized growth model to a more market-driven one, where services and consumption play a greater part. (according to Bloomberg) . There has been complaints of human rights violations in the vast production industries but that still hasn’t stopped the emergence of Alibaba. If you know anything about what FBA means (Fulfillment by Amazon) and Drop-shipping , you would know that Alibaba is a clear stand out success where  you can find different types of manufacturing industries offering competitive or just to be blunt, cheap manufacturing prices for physical products. Fulfillment by Amazon is when a third party seller sends over products to Amazon for them to prepackage, handle and deliver to buyers. A fast growing business model taking the internet by storm. Still, the lack of investment opportunities to cater for such a huge local population in China has led to a rise in the construction of  ghost towns (you can read all about them here )and foreign property investments, which ultimately brings us to the subject of internet domain names.


“Diversify” is one of those terms that have been thrown around quite a number of times in the investment world. That seems to be the pattern here. The number of Chinese owned properties in Africa and North America is rising but what has really caught the eye is the investment of millions on rare internet domains names. These are now being traded like commodities in the domain markets giving birth to the term “CHIPS”, meaning Chinese premiums, coined by one of the industry experts. I first learnt about it from Shane Cultra, a leading industry professional. There still appears to be some confusion on who originally came up with it. I guess we’ll never know. James Iles gives you a clear explanation of what these “CHIPS” are here


You can see the numbers below from the China Internet Network information Center Under The Ministry Of Information Industry, of the growth of China Internet Users.

Year Internet Users** Penetration

(% of Pop)

Total

Population

Non-Users

(Internet-less)

1Y User

Change

1Y User

Change

Population

Change

2016* 721,434,547 52.2 % 1,382,323,332 660,888,785 2.2 % 15,520,515 0.46 %
2015* 705,914,032 51.3 % 1,376,048,943 670,134,911 4.6 % 30,782,246 0.48 %
2014 675,131,785 49.3 % 1,369,435,670 694,303,885 8.2 % 51,100,254 0.51 %
2013 624,031,531 45.8 % 1,362,514,260 738,482,729 8.8 % 50,701,259 0.53 %
2012 573,330,272 42.3 % 1,355,386,952 782,056,680 11 % 56,979,447 0.53 %
2011 516,350,825 38.3 % 1,348,174,478 831,823,653 12.3 % 56,398,548 0.54 %
2010 459,952,277 34.3 % 1,340,968,737 881,016,460 19.3 % 74,482,036 0.54 %
2009 385,470,241 28.9 % 1,333,807,063 948,336,822 28.6 % 85,638,157 0.54 %
2008 299,832,084 22.6 % 1,326,690,636 1,026,858,552 42 % 88,692,052 0.54 %
2007 211,140,032 16 % 1,319,625,197 1,108,485,165 52.9 % 73,013,038 0.54 %
2006 138,126,994 10.5 % 1,312,600,877 1,174,473,883 24.1 % 26,847,296 0.54 %
2005 111,279,697 8.5 % 1,305,600,630 1,194,320,933 17.4 % 16,483,866 0.54 %
2004 94,795,831 7.3 % 1,298,573,031 1,203,777,200 18.4 % 14,723,731 0.55 %
2003 80,072,100 6.2 % 1,291,485,488 1,211,413,388 35.7 % 21,047,175 0.56 %
2002 59,024,926 4.6 % 1,284,349,938 1,225,325,012 75.1 % 25,311,609 0.56 %
2001 33,713,316 2.6 % 1,277,188,787 1,243,475,471 49.5 % 11,159,670 0.57 %
2000 22,553,646 1.8 % 1,269,974,572 1,247,420,926 152.2 % 13,611,260 0.58 %

What makes this a more than exciting opportunity for anyone with an interest in learning then eventually investing in domains is the vast play ground it presents. The “Chips” are mainly concentrated in the Chinese market but there’s still a lot of opportunity in other niches such as Geographic, Health, Food, Diet, Games, Vacation, Music, New tech, Movies and so many more. You can either go the brandable route i.e investing in a name that doesn’t necessarily mean anything but is short, pronounceable and catchy or look into a niche that you have some knowledge in. For instance, if you are a nurse, you obviously have a better understanding of health related issues than anyone who isn’t  and that should give you an advantage on investing in domains in that niche. These would be health subject matters that people search for on a daily basis. eg GeriatricDepressionScale.com


When you look deep into brandables, The domain name Google.com is one of the most famous examples of what a short catchy domain name that doesn’t really mean anything can do to your business but don’t be fooled into thinking that’s the only domain Google owns, they also have thousands of  other domain names, with the keyword domain “search.com” the most notable one. They made sure to own the keyword of the service/product that their business is based on. There’s also a lot of changing dynamics in the domain market. Such has been the rise of this industry that even domain names thought to be worthless by some such as numbers, popularly known as N.com(eg 1.com), NN.com(24.com). NNN (568.com). NNNN(3567.com), have increased in value over the years. There is now a general belief that a long-term investment in these and well researched domain names will pay dividends in the long run. The Chinese are on it, are you? 

 


If you think you are ready to dive in, go ahead and  visit Godaddy or Namecheap to register your domain names.  Godaddy has a special first year registration fee of as little as 99c. I have been advising some of my readers to register their children’s names right away. You might never know what they might become in the future. We can help you build a mini site to journal their progress from birth, up to a time when they can take over the site when they grow up. What a wonderful investment gift that would be for them. Best advise you will ever get today.

Here’s to your success!

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About Lifanati

My name is Lifa Nati the founder and Editor-in-Chief of CheapSense.com. A website founded on the concept of buying well researched domains for a low price then selling for a profit, pretty much like real estate trading. I also review web products, subscription services and focus on price vs value. I am a former analyst with TD auto insurance division and complex property claims with the Co-operators insurance in BC, Canada. I am now a domain investor and part time consultant for an independent risk management adjusting firm. I have got to this stage of my life after going through a financial breakdown, losing my job and persistent bad spending habits. I went through a complete transformation after discovering the business of buying domains for a low price then selling for a profit. This led to the birth of the cheapsense website. I dive into saving tips and domain investing guides. Will be implementing free software for our users to take advantage of. They say things happen for a reason, my "why" is to serve.