Absolute Must Read
Xnet's this is an article from todays South China Post;
Adding fuel to the recently ignited Internet fever in Asia, technology consultancy International Data Corp (IDC) predicts that more than US$200 million in fresh venture capital will be invested in mainland start-up Internet content providers (ICPs) in the next 18 months.
IDC sees positive news for ICPs, also known as Web portals, such as a huge potential audience and strong government support of the Internet.
Relatively few companies create Web portals for the mainland, but foreign companies - including those based in Hong Kong - that hope to win mainland Web surfers need to cater Web content to a fickle audience.
About $40 million already has been invested in mainland ICPs, which draw users to their Web portal to display paid advertising or sell products.
Only two Internet companies in Asia, Australian-based Ozemail and Singapore's Pacific Internet, have gone public on Nasdaq so far, with none in Hong Kong or the mainland.
That may soon change.
Two prominent portals, Sina and ChinaByte, have garnered more than $7 million each in private investment, according to IDC.
IDC predicts that Sohu and Advanced Manufacturing Online, a Singapore-based provider of electronic data interchange (EDI) services for Asian manufacturing firms, will go public soon.
China Internet Corp's China.com subsidiary is reportedly close to an initial public offering.
Investment bank Lehman Brothers recently put a $179 billion value on Hongkong Telecom's Internet businesses, despite its main Internet-oriented division, IMS, only pulling in $626 million for its 1999 financial year. IMS, which announced last month it was investing $1 billion in its Netvigator Web site to win mainland users, has been the subject of much spin-off rumours.
So far, mainland portals such as Sohu, Netease, ChinaByte, and Sina have been more successful than their foreign competitors because they are more in touch with their audience.
Jared Peterson, IDC China's research director, cited Yahoo! Chinese, which has no mainland production staff and, until recently, was totally based in northern California, as an example of how not to do it.
"It's just a translation of their international site," he said.
Yahoo! Chinese has "not been warmly received on the mainland."
Yet, the upside for new entrants - both foreign and local - is almost irresistible.
First, Chinese-language content remains scarce compared with the West.
The portal "market in China remains far from cornered. There is definitely room for investment," Mr Peterson said.
Second, the audience will grow fast, says IDC.
There will be almost four million mainland Internet users - which it defines as using the Net more than ten hours a month - by the end of the year. That will escalate to eight million by 2001, and 16 million in 2003.
Third, Beijing favours rapid Internet development.
The mainland government "is very concerned about its place in the world economy," Mr Peterson said.
Successful Net entrepreneurs need to cater to mainland users.
Mr Peterson recommends that would-be portals hire local creative talent to build their Web sites, as well as tie-up with local governments or companies.
E-commerce on the mainland is expected to grow fast, at an average annual rate of 209 per cent between 1999 to 2003, making it the third-largest market in the region at nearly $4 billion in 2003, IDC predicts.
But most of that will be business to business e-commerce, not business to consumer.
One major reason: the percentage of mainlanders who own credit cards is relatively low, with those able to purchase goods in foreign currencies outside the mainland being tiny.
An IDC survey shows only 31 per cent of mainlanders, who bought items through the Net, bought them outside the mainland despite the small number of local e-commerce providers.
Australia will be the biggest e-commerce player in Asia outside Japan, generating more than $9 billion, followed by South Korea.
Hong Kong, which will be the fifth-largest e-commerce economy in Asia by 2003, will boast $2.42 billion in revenue. |
