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It has been a big year for domain name sales to Chinese buyers. By far, most of 2015 published domain sales over $100,000 in the marketplace were either bought by Chinese or by someone who invests in certain domain categories catering to Chinese investors. To understand why, let’s look at China a little closer.

Except for the United States, China has produced more millionaires and billionaires than any other country.  This well-heeled group has been increasingly investing in domain names as a safer, more dependable investment alternative to stocks. The shift is not unusual, since any time one type of speculative investment dries up (stocks, real estate, collectibles, etc.), investors seek substitutes.  Think about the Macau gambling crackdown of 2014.  The cash reserves at Asia’s biggest gaming hub did not just disappear; instead, Las Vegas saw a Baccarat surged over 85%.

The demand for domains as an investment asset class has helped make Chinese investors dominant players in the market.  This is great news for domain owners. The government of China has long regulated and rigidly imposed restrictions on money leaving the country, so Chinese investors had to find other investment vehicles that did not violate the law.  Domain name investing meets that need.  Better yet, Chinese investors may believe that unlike generic top-level domains (“gTLDs”) controlled by the China Internet Network Information Center (CNNIC), the Chinese government could not arbitrarily seize gTLDs under contract with ICANN, especially if owned and registered by foreign entities outside of China.  Thus, these assets have some external protection.

For Chinese investors, the demand for domains is not only linked to wealth protection and portfolio diversification but also asset liquidity.  They understand economics and how the scarcity of finite domains impacts value. These savvy buyers invest heavily in premium domains and mostly focus on Chinese lucky numbers, Pinyin language domains,  Chinese premium letters, and other short domains. They pay top dollar for what they consider to be the best because they know that there is a finite number of these domains available and fewer still for sale at any given time.

China has approximately 1.4 billion citizens. The USA in comparison has 320 million. The population of China has one of the highest penetrations of Internet access in the world and this all started long before the rest of the world became dependent on mobile devices and apps.  This translates into a group of mature Internet users who are intimately familiar with the internet, domain names, and technology.  However, due to many manufacturers and vendors using Alibaba and other outsourcing portals early on, the need to also move away from portals and cater direct to clients has never been greater than today.

It all translates to this: Opportunity has never knocked so hard for domain owners or buyers. Are you ready for what’s next?

Tracy Fogarty

Founder & CEO at eNaming
With over 20 years in the brokerage business, Tracy Fogarty has helped thousands of clients achieve their goals on both sides of the negotiation table. Creative and result oriented professional, Ms. Fogarty strives on honest communication, value proposition, the big picture perspective, and bottom-line profitability.