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China’s Major Internet Firms See Revenue Growth but Falling Profits Amid Epidemic

By Ding Yi / Mar 31, 2020 05:11 PM / Economy

Photo: VCG

Photo: VCG

China’s major internet companies saw modest growth in revenue in the first two months of 2020 despite the spread of the novel coronavirus, which paused much of the country’s economic activities.

In January and February, the Chinese internet sector and its related services generated a combined revenue of 131.1 billion yuan ($18.5 billion), representing a year-on-year increase of 4.5%, according to statistics from the Ministry of Industry and Information Technology (MIIT). However, the growth rate was 5.5 percentage points lower than the same period of 2019. All firms surveyed had an annual revenue of more than 5 million yuan in the previous year.

The MIIT attributed the revenue growth to virus-driven demand for telecommuting, online education and digital entertainment.

In the January-February period, revenue derived from information services, including streaming music and videos, online games and digital news, reached 96.6 billion yuan, accounting for 73.7% of the total, the ministry said.

It added that the country’s major internet firms earned 1.74 billion yuan by providing internet data services during the period, a result of rapid growth in traffic to apps amid the outbreak. As of the end of February, the number of apps available on app stores in China reached 3.52 million, the statistics showed.

Despite modest revenue growth, the surveyed internet companies suffered a year-on-year decrease of nearly 20% in total operating profit to 9.51 billion yuan during the period. But the profit decline did not dampen the companies’ enthusiasm for research and development spending, which was up 10.6% year-on-year to 8 billion yuan during the two months.

Beijing, Shanghai and the provinces of Guangdong, Zhejiang and Fujian accounted for 86.6% of the country’s total internet-related revenue, according to the statistics.

Contact reporter Ding Yi (yiding@caixin.com)

Related: China’s Major Internet Firms See 10-Month Revenue Grow 21% Year-on-Year


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