Bad news folks.....
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How to Play the Internet's Biggest Potential Market
February 22, 1999 2:59 AM PST
By Amy Bickers
Special to worldlyinvestor.com
According to Big Brains Limited, a Hong-Kong based research company, nine million people in China will be online by the year 2000. There are other signs of growth as well. Content, for instance, with tremendous growth in China's .cn and .com.cn domains, is sprouting up everywhere.
As of the summer of last year there were an estimated 160 million globally on the internet. By the year 2000, this global number is projected by some to grow to nearly 1 billion. Projections for China's internet numbers according to several articles are from 4 to 10 million. Globally, therefore, China's usage reflects only 0.4% to 1.0% of world use and an even more diminutive percent use of Chinese population.
With Internet stocks such a sizzling sector in the US, you may be wondering if it's time to plow some cash into China's burgeoning wired world. Analysts say it's an interesting prospect, but for now, there is one major barrier: the Internet is considered part of China's telecommunications industry and the vast majority of it is in state hands.
Of the many ISPs (Internet service providers) and ICPs (Internet content providers) in China, not a single one trades publicly. That goes for local Internet portals as well.
There are nearly 14,000 ISP's in China all vying for the current
users, which are adversely effected by the state's monopoly because of the high price structure for internet access that the government has in place. Unfortunately for GTCI and China Telecom lowers prices for access and CT restructures, any purported exclusivity is diminished possibly and so is anticipated revenues to be derived from an "exclusivity", that also appears to let 14,000 other ISP's exist.
But, if you think the Internet has terrific growth potential in China, there are ways to invest indirectly. A number of American companies are betting big on China, and you can easily buy their shares.
They include Intel (quote, chart, profile), Yahoo (quote, chart, profile) and Microsoft (quote, chart, profile). All are involved with trying to encourage Internet content growth in China.
European mobile phone giants Ericsson (quote, chart, profile) and Nokia (quote, chart, profile) are also investing heavily in China's wired world. They're selling and installing Internet networks in China. Nortel Networks of Canada (quote, chart, profile) and Cisco Systems (quote, chart, profile) of the US are doing the same.
It may come as a surprise to many western investors that China's Internet is blossoming. While Beijing does its best to control most other forms of media, right now the Internet is fairly unregulated as a new medium because it is still so new.
Article also failed to mention AOL...So it looks like outside dollars are being invested to open markets for the "big boys" as well.
Such competition doesn't necessarily bode well for GTCI unless GTCI only needs a very small portion of market share to realize the fictional estimate promulgated by GTCI's paid analyst WSRG. Has anyone actually done an analyst of the fees GTCI charges and the costs GTCI occurs...plus how many users that GTCI therefore needs to be a profitable entity? GTCI "longs" this is called a balance sheet and financial statement w/o it all you have is wishful thinking
However, the government has banned some news sites that originate overseas and it has taken steps to stop the distribution of news related to dissidents' activity.
Does this mean as the Chinese Government better understands the threat to its authority that the internet poses that the Chinese government will re-assert its authority?
But in general, the Chinese government is giving strong support to the development of the Internet. It has invested $10 billion in building telecoms infrastructure, much of which will benefit the Internet. The government says it plans to sink in another $50 billion by the 2001. There are a number of government sponsored Web sites as well.
Many of the government sponsored web sites spout government propaganda. China's existing telecom structure partly consists of party lines. Therefore China has to build its system from stratch and any future projections don't account for the Asian flu that has effected the other Asian Tigers
There is another way investors can potentially benefit from the growth of China's Internet market. Buy a mutual fund that invests in China's PC market.
The desire to go online is a main factor behind explosive growth in this sector. Legend (quote, chart, profile), China's largest PC seller, reported a 73% jump in sales from 1997 to 1998.
Note from statistics a jump from 1 to 2 is an 100% increase so that when number of computers in China are as minimal as they currently are, large percent increases aren't very revealing and are actually statistically deceiving and, therefore, are nothing but HYPE in this instance.
E-Commerce and China
Another potential investment would be in e-commerce, companies offering goods and services for sale over the Internet in China. Some predict Chinese Internet users will eventually go on a cyber-spending spree.
Remember Chinese don't have credit cards, and many (the vast majority) Chinese have very minimal incomes. A "healthy" income outside of the shiny glitzy "show" cities is a paltry $1.35 a DAY.
Therefore, if Chinese are to become major consumers, they need higher
incomes. Though with higher incomes, many of the Multi-nationals
located in China will have as big a reason to stay. Can hear
that giant "sucking sound" pulling jobs to India already based on this
article's unsubstantiated optimism.
But for now, the lack of a credit card verification system makes it almost impossible for people in China to shop online. Another obstacle is telephone penetration, at just seven phones per 100 people. Poor telephone line quality is also a hindrance.
But anyone who visits China these days will marvel at the incredible pace of development, so these problems could soon be solved, paving the way for more growth in China's small but expanding Internet market. It's a market many investors will want to keep an eye on, especially with Internet stocks in the US too pricey or volatile for many.
Yeah right. Those are very big obstacles to overcome.
So I wouldn't bet on big returns on any investment in China for
quitesome time. THerefore, if there is any legitimacy to any of
GTCI's claims, GTCI still has a lot of explaining to do
to justify the earnings projections put forth by their
PAID analyst WSRG
Amy Bickers is Asian Economics Correspondent for Voice of America, a former reporter and anchor for CNBC Asia and Hong Kong-based Wharf Cable, and a business news producer for CNN in New York and London.
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I own quite a few shares of GTCI. But I haven't visited the thread since it was invaded by a couple of BIG-HEAD FLIES. I don't have time to read those BS. This stock will do fine in a couple of weeks. When the stock goes over $3, the shorters will have to cover their shames (oop, I mean their "shorts").
Stock goes over $3...you say....but all I ask is why?
I have no position as I've said and I've told you my reasons
why I don't and wouldn't take a position...Yet you have not
clearly and succinctly listed your reasons for being so optimistic.
Please do so...because hitherto..all you have done is HYPE.
Stating what you believe to be my motivations is not
due diligence.
Sincerely,
ztect......spelling not checked |
