Technology in the world around us is changing incrementally every day. These changes are much more noticeable when you look over long periods. In some ways, developing nations (for example, China, Brazil) have a significant opportunity relative to the developed world (for example, United States, United Kingdom) to create more efficient and less costly infrastructure. In short, developing nations are able to skip some of the more costly ways of building infrastructure that developed nations have undertaken. This allows them to save money and introduce change much more quickly.
Telecommunications infrastructure is a good example. In many areas in the U.S., wires at the top of telephone poles are still used to transmit phone calls. In newer neighborhoods, these lines are often underground, but wires are still necessary. As we move forward in time, the demand for wired communications is likely to continue to dissipate. In many developing countries, you will see cellphone towers much more frequently than traditional phone lines. Building cellphone towers lowers costs and also helps make such services more accessible.
A similar phenomenon is underway in retail shopping. According to data from eMarketer and Statista, in China, internet and smartphone penetration stand at 46% and 47%, respectively, compared to 87% and 56% in the U.S. As penetration levels in China continue to move toward parity with Western economies, hundreds of millions of new potential e-commerce buyers will come online.
According to data from WWW Metrics, in Nigeria and other African countries, a growing generation of young, internet-savvy individuals has embraced new, online technology. While the overall number of users is still far below the world average of around 30%, it is increasing as Africans become more familiar and proficient with online shopping. E-commerce activities have expanded in Nigeria, South Africa and Kenya due a combination of the proliferation of mobile phones and the availability of faster internet networks.
In South Africa, 51% of individuals with internet access shop online. In Kenya, 18-24% make online purchases. In Nigeria approximately 28% of the population has internet access according to International Telecommunication Union figures. The number of mobile cell phone subscriptions has topped 87 million. A new group of internet developers are eager to increase buying options by providing discounted deals on a wide range of products and services.
These factors will cause the retail shopping industry to develop much differently in developing nations than it has in the U.S. In the developed world, hundreds of multi-unit retail chains and billion dollar shopping malls have been built for much of the last 30 years. Developing nations were not meaningful participants in this trend. This leaves consumers in these countries with limited access to physical storefronts. As a result, they are ready to dive headfirst into the more efficient e-commerce model.
We believe the growth in online shopping and mobile communications will continue. When evaluating potential investments for inclusion in client portfolios, we have taken these trends into consideration. This has led to the avoidance of more traditional retail companies. At the same time, we favor attractively valued companies that can benefit from growth in e-commerce as well as the related technology that can benefit from growth in smartphone sales.