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Strategies & Market Trends : China Warehouse- More Than Crockery

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To: RealMuLan who wrote (2695)2/18/2004 11:40:55 AM
From: RealMuLan  Read Replies (1) of 6370
 
Digital China is booming
By Jayanthi Iyengar

Nothing epitomizes the challenges of providing balanced information via the world wide web better than the subject of the Internet in China. There are two digital Chinas - the much publicized one of political repression and blocking "forbidden" content - but that one is dwarfed by the booming digital China of shopping, trading, chatting and playing games. And that's where the boom is.

Running a simple search for "Internet access China" on Google throws up 3,420,000 links in 0.20 seconds. Of the first 100 results, over 40 percent relate to information on the repressive tactics used by the Chinese government to control information, particularly politically "undesirable" information.

Less than 20 percent highlight the Internet boom that is sweeping China, but the details of the boom are spelled out in four recent reports. They are from the Chinese government's China Internet Network Information Center (CNNIC), the Beijing-based Chinese Academy of Social Sciences (CASS) in collaboration with the Markle Foundation, the International Telecommunication Union (ITU) and Neilson/Netratings.

CNNIC's numbers are considered to be official data. CASS is of Chinese origin but the US-based Markle Foundation is a non-profit organization that studies the potential of emerging information and communication technologies and promotes their use in health care and national security. The ITU is globally recognized. Its Digital Access Index (DAI) covering 178 countries goes beyond measuring Internet access using physical numbers. Instead, it includes other parameters such as infrastructure, education and affordability in order to determine the digital competitiveness of a particular country as compared with other ITU member states. Neilson/Netratings is an equally well-known known global consulting firm, which set standards in Internet audience measurement and analysis.

Two sides: Expansion of Internet, repression of content
These four reports, read with the glut of information proliferating the Internet, make one thing clear. There are two sides to digital China. On one side is a country that systematically represses content and free expression, using law and technology to aid it in this process. On the other side is a country that has embarked on the China Wide Web project, which aims at creating in a short time as much nation-based, Chinese language content as possible.

While this expansion project is underway, China also faces the challenge of controlling unruly, unapproved media on a daily basis. Many Internet experts, however, like Professor Jonathan Zittrain, co-founder of the Berkman Society for Internet & Society, Harvard Law School, believe that ultimately efforts at control will be unsuccessful.

Today, China's technologies not only block forbidden information - primarily about political dissent, religion, Taiwan, Tibet, and other topics - but they also give the state the power to investigate, prosecute, and sanction those who seek and/or receive forbidden information.

"Internet filtering tends to dampen and discourage Internet use. Of course, things could be worse - countries like Cuba and Uzbekistan restrict Internet access even more tightly than China. Relative to the more restricted world (Cuba, Uzbekistan, and to a lesser extent Saudi Arabia, the United Arab Emirates, and Iran), China's approach makes the Internet more accessible and more useful than would otherwise be the case," says Benjamin Edelman, a researcher at Harvard University.

Professor Zittrain and Edelman ran what is believed to be the first Empirical Analysis of Internet Filtering in China. The analysis was conducted between May and November 2002, and it found ample empirical evidence of filtering of unapproved content by the Chinese authorities.

Edelman said his study showed that China blocked a large amount of material cutting across substantive categories, but with special emphasis on regional political issues (Taiwan, Tibet, etc), on religion, on tourism to other countries, on health, and other topics. He also found evidence of extensive mistaken blocking, seemingly accidental, of innocuous content - reflecting a lack of precision in certain Chinese blocking methods. "Subsequent to this study, my sense is that China's filtering methods have become more precise, better able to block what China doesn't like, without blocking what the country considers permissible," he states.

His views are echoed by Professor Zittrain, who points out that if anything, filtering has gotten increasingly subtle over time. The Chinese experiment now revolves around "blocking out individual pages rather than whole sites, automatically blocking web searches containing certain search terms, or simply encouraging the use of Internet cafes rather than individualized connections, so usage can be monitored by passersby", he says.

Booming digital China is not about politics
While that is one China, there's another booming virtual China, which can be ignored only at one's peril. This is a China where repression has failed to check Internet penetration. The official CNNIC pegs the number of Internet users at 79.5 million at the end of 2003, surpassing previous projections of around 78 million. These figures make China the second-largest Internet users in the world, next only to the United States with about 165.75 million, and well ahead of Japan's 56 million, going by the Central Intelligence Agency's (CIA) World Factbook for these countries.

The growth in numbers has caused jubilation within China but has raised some eyebrows elsewhere. This is because the Chinese government's figures represent an unprecedented half-yearly jump in number, up from 58 million in 2002 to 68 million (17 percent growth) in mid-2003 and 79.5 million (17 percent growth) at the end of the year. This data is also in sharp contrast to earlier projections made by the Chinese themselves. For instance, Hu Qiheng, chair of the Internet Society of China pegged the number of Chinese netizens at 78 million for 2003. She was speaking at the Second Internet Conference of China in December, just a fortnight prior to the release of the official figures. By her estimates, there would be 500,000 websites and 30 million online computers in China by the end of the year. Against this, the government's CNNIC has placed increased access to Internet websites at 595,550 (60 percent growth) and computers linked to the Internet at 30.89 million, representing a 48 percent growth during 2003.

Such anomalies in numbers are not abnormal when it comes to Chinese data. The Chinese government's figures generally tend to be questioned, but CNNIC's figures have been questioned in particular in 2001, when Iamasia, an independent research firm, released figures for Internet users. Steve Yap, communications director for Iamasia, pegged the number of China's Internet users at 15.2 million at a time when CNNIC was claiming 20 million. That was in the past, but even today there is a question about what defines an Internet user - the Chinese government defines a user as one who uses the Internet for at least an hour per week.

Net penetration in China, of course, is way behind the US and the global averages in percentage terms, with only about 5.6 percent of the Chinese population of 1.27 billion having Internet access, as against 10.7 percent globally and about 63.2 percent in the US.

Average Internet user: educated, young, male
However, what is also undeniable is that the Chinese are investing heavily in infrastructure.The average Internet user is an educated, young, single male 15 years to 35 year of age. He is more interested in chatting and playing games on the Internet than trading, checking e-mail or surfing the net for forbidden content. An average Chinese Internet user spends 11.3 hours a week playing games, making China a mega-market for electronic games. According to China's General Administration of Press and Publication (GAPPPRC), it approved 37 new games in 2003.

Also, though China's netizens are comparatively uneducated, the number of highly educated (post-graduate) Internet users is growing. Further, Internet users seem to be concentrated in industries and fields such as manufacturing, education and public management, social organizations and the IT industry, which is exciting business forecasters like Neilson/Netratings and others.

Email - through which forbidden information could be transmitted and exchanged - is not an obsession for most Internet users in China, though simple message service (SMS) and web-based messaging is popular. "About 20 percent of Internet users do not have e-mail accounts. For those who are using e-mail, only 20 percent of them check their accounts every day. Yet many Internet users prefer [companies] ICQ or OICQ," says Professor Guo Liang, who led the study by the Chinese Academy of Social Sciences (CASS).

The CASS report has a specific segment on public perception of the Internet as a tool for political self-expression. Professor Guo says that in his opinion, Internet penetration would touch 150 million by 2005 - though the Chinese government would like this figure to be 15 percent of the population or about 190 million users. However, even assuming all of those who use the Internet use it to surf for unapproved content, it would still be less than 15 percent of the Chinese population. These figures, Guo says, contradict the impression that most Chinese use the Internet for political self-expression or that the Chinese government represses its citizens extensively. However, he is among the first to concede, "While the Internet is still relatively new to China, it is already changing Chinese cultural, social and political institutions."

The political dimensions of the report apart, the CASS findings are highly regarded, as there are few other reports of comparable depth and detail mapping China's Internet potential and penetration. Guo's 2003 report is the second in the academy's series on Internet use in China. The first was released in 2001 and studied Internet use in five big cities. The second, currently cited study, completed in 2003 after two years' work, covered 12 cities and five small towns.

The study, called "Surveying Internet Usage and Impact in Twelve Chinese Cities", this study is based on door-to-door interviews with 2,457 Internet users and 1,484 non-Internet users. It makes the point that rural China offers as much potential for Internet growth, as does urban China.

"The Internet has the potential to contribute significantly to the future of the people of China. Professor Guo's findings show that in China, the Internet has the ability to expand the flow of information and spur economic growth," said Zoe Baird, president of the Markle Foundation. Guo said, "With the arrival of the Internet, the Chinese people have the opportunity to access information, communicate and conduct economic transactions in a new way."

Lessons from SARS - shop at home
The year 2003 was monumental for digital China in many other ways. The severe acute respiratory syndrome (SARS) epidemic opened China's eyes to the potential of the Internet as a tool for furthering commerce. Western observers say that SARS taught Beijing how difficult it was to control the spread of information in the Internet age and that it could be waging a losing battle if its aim was merely to control information.

China, however, drew a different and innovative lesson from the same experience. The conclusions should be compulsory reading about why digital China cannot be dismissed as being repressive and controlled. With so many people afraid to venture out because of SARS, they shopped at home, sent messages from home and played Internet games at home.

Online shopping, short message services and online games were three rapid growing application of the Internet in 2003, says CNNIC. It points out that because of SARS, online shopping and message service found a second development opportunity in 2003. Among those surveyed, only 8 percent never visited a shopping website, while 40 percent of those who visited shopping websites made online purchases. They bought books, audiovisual material and products; communication equipment was the principle product of on-line shopping.

During the year, website message service users sent out 10.9 messages a week, which the Chinese consider to be a large market of which everyone wants a share. Almost all the major websites and many specialized-service websites opened messaging services, which has become one of the important and steady income sources in the country. And the stock prices of [messaging companies] Sina, Sohu and Netease soared on NASDAQ. "Short message service played a vital role in the process," said the People's Daily.

Professor Guo provides a more balanced and telling interpretation of the situation, which cannot be ignored by serious China watchers. "I believe last year was a milestone [in the sense] that several cases happened, including Sun Zhigang, SARS, Liu Yong and BMW," he said. " It is obvious that more and more people are trying to use the Internet to express their opinion and the online discussion did change the government thinking and policy," he said.

The details of Sun Zhigang's death in police custody in Guangzhou was picked up by the conventional media from the web. The arrest, prosecution and death sentence of crime lord Liu Yong symbolized the Chinese government's determination to crack down on corruption. The provincial courts had given him a two-year reprieve from a death sentence, but it was rejected by the Chinese Supreme Court in December 2003 and Liu was executed soon afterward, sending home the message that the government means business. The word was spread on the web.

Concerning BMW, the Chinese government was forced to listen to angry Internet users who accused the courts of letting off lightly the female driver of a BMW car who ran into a peasant in a tractor in the city of Harbin. The woman was heard threatening the peasant after she had a minor accident in which her silver BMW was scratched. Word spread on the web - and so did the outrage.

English no longer crucial in technology
The International Telecommunications Union study makes an equally important point in China's favor. It suggests that English is no longer a decisive factor in quick technology adoption, especially as more content is made available in other languages. "Until now, limited infrastructure has often been regarded as the main barrier to bridging the Digital Divide," says Michael Minges of the Market, Economics and Finance Unit at ITU. "Our research, however, suggests that affordability and education are equally important factors." Half of the Internet users in China, for instance, are university educated. Surprising though it may seem, ITU ranks China (0.79) below Sweden (0.83), but above Canada (0.78), the US (0.78), and Britain (0.77) in its latest Digital Access Index.

atimes.com
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