Editorial : China’s domain over-speculation is hurting the domain industry

‘Tis the season for December’s editorial here at DomainGang, and this time it’s about China and domains.

China’s grappling with an astounding growth in construction and technology, while suffering from social pitfalls as the world’s largest nation.

With a population of almost 1.4 billion people, China’s economy is fueled by a massive inventory of consumers; the Communist Capitalism model that its government employs, is causing waves of instability.

Production of goods is hurting the environment, and a current ban on production and even use of vehicles due to air pollution reflects the lack of an environmental-friendly plan.

In the field of domain investing, the Chinese domain investors jumped into the game coming from a huge stock market crash and a subsequent lack of understanding of crypto-currencies such as Bitcoin.

China’s domain investors have been treating domain names not as a valuable asset reflected by function, usability or meaning, but as a vessel of wealth that transports a value, to be exchanged for cash. Domain investing in China exists, for the most part, as a way to transfer money to any locale, including away from the Chinese government’s reach.

The amount of domain speculation in the past 18 months by Chinese investors has led to the peak and subsequent crash of several niche markets.

Domain chips have lost more than 60% of their value a year ago, and long numeric domains have become the equivalent of junk stock. The issue extends beyond .COM to other TLDs, including .CN and new gTLDs and ccTLDs.

Supposedly “emerging” markets aimed at the Chinese are experiencing a massive loss in retail prices, and volume of sales has been dismal. When there is an over-supply of TLDs, the markets don’t respond well to the constant trading, back and forth, of token domains that serve no purpose.

The current negative growth of .COM can be attributed to over-speculation by the Chinese and Western domainers catering to them; the industry is thus suffering and hurting by a loss of clarity in its vision. Domain investing is becoming foggy, confusing and eventually hurts those wishing to engage with it.

While emerging technologies open up the domain industry’s horizons, the current obsession with China and its magic domain “Chips” provides nothing but an expansion in one’s hole in the pocket.

With 2017 a few ticks away, domain investors need to make smart decisions regarding their investors in the coming year, focusing on a more productive angle to domaining.

Happy Holidays – see you next year.

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