from the FT fwiw:
ft.com
CHINA: Giant's online date with destiny
Chairman Mao might not have approved, but his countrymen are in the grip of a new kind of revolutionary fever, writes James Kynge
The chances are Chairman Mao would not have cared much for the internet. The online auction houses, dating agencies and raw capitalism that has become cyberspace's guiding ideology would probably have left the Communist revolutionary underwhelmed.
Yet in these dizzy days of incipient internet fever in China, even the Chairman's old slogans are being reworked into a sales pitch.
"Serve the people," says Martin Wu, a Taiwanese manager of Coolbid.com, an online auction house and dating agency that began operations on the mainland this week. "We are here to serve the people. The cool people, that is."
Coolbid.com is one of a raft of start-up ventures driving what has over the last few weeks become, unmistakably, a boom.
The rush of venture capital firms, the rash of new China-focused web sites and a scramble to buy China-related cyberstocks listed in Hong Kong are some of the symptoms of a fever that may go on and on.
In certain circles in Beijing, the traditional greeting "have you eaten yet?" is being replaced - a little humorously - with "have you logged on yet?" This may be followed by "do you have stock options yet?"
The Beijing Daily captured the mood this week with the headline, "The internet economy: The bubble that cannot burst". But is such boundless optimism justified?
It is hard to find a pessimistic voice. China.com, a China internet firm whose stock price rose several times from US$20 when it listed on Nasdaq in July, predicts 33m Chinese internet users by 2003, up from an estimated 7m.
Some analysts regard this as conservative. The rapid roll-out of fibre-optic networks throughout China by China Telecom, the dominant state operator, and China Netcom, the third state carrier, should help ease bottlenecks, accelerate access times and boost the market for internet access via television.
Other technological advances, such as China Telecom's planned launch next year of a mobile phone able to send e-mail, may also raise the internet's profile. Expectations that Beijing may approve online share trading over the next few months could likewise prove a boost for the public acceptance of e-commerce.
There appears to be little shortage of venture capital available to promising - and even not so promising - mainland start-ups.
International Data Group of the US has set aside $100m for investment in Chinese firms, around 50 of which have already been selected. Softbank of Japan has earmarked $20m for mainland investments, one executive says. US companies W.I. Harper, Goldman Sachs, Intel and Yahoo! are also getting involved.
At Beijing University, dormitory No 9 is full of wannabe web start-ups, as students devising business plans huddle around computers.
Promising internet content providers are giving a measure of credibility to China's great online leap. China's answer to Amazon.com, the virtual bookstore, has launched online sales of books in Chinese. Homeway, a leading Chinese financial information web site, expects to start offering stock trading services over the internet once regulatory approval is given. Yaolan, a Chinese language site, targets parents of China's "little emperors". The site carries 1,300 pages about pregnancy and childcare.
Almost all these start-ups, and the hundreds destined to follow next year, will seek to list either on Nasdaq or on the Asian second board exchanges which are eager to lure them.
But for potential shareholders, there is a significant "regulatory risk" beyond the vagaries of market fluctuations. The ministry of information industry (MII), while happy to see the internet develop, is fundamentally opposed to the prospect of foreign venture capitalists reaping much of the profits from listings.
Some investors feel the MII can do little to stop them, especially if they domicile the listed vehicle offshore. But the MII runs China Telecom, which supplies all fixed lines to domestic internet service providers.
The ministry also has a department to police the net, and is able to shut down undesirable web sites at will.
China's entry to the World Trade Organisation, expected some time next year, will allow foreign companies to take a 49 per cent stake in Chinese internet firms. But many Chinese web start-ups have already ceded much larger foreign equity stakes.
Their fate is uncertain, but it appears unlikely Chinese authorities will approve their listings until they comply with the rules. |
