CHINA INFORMATION TECHNOLOGY LAW NEWSLETTER
Vol. 3, No.14 - November 13, 2002
TOPICS THIS ISSUE:
- Full-Service License Might Be Issued To All Operators
- In Quarter Three, Netease.com's Revenue Increased 93.3 Percent
- Internet Challenges China's Tourism Industry
- Internet Helps Chinese Farmers To Sell Potatoes
- China Offers Its National '.Cn' Internet Addresses To Foreign Companies
- China's IT Industry
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Full-Service License Might Be Issued To All Operators
According to an unidentified official of MII, China Mobile, China Telecom and China Netcom may obtain a full-service license (data, value added, fixed line and mobile) as early as next March. The issuance of three full-service licenses is being discussed and that the operators will obtain the licenses (including 3G licenses) inexpensively. However, China will not auction the licenses off as the Europeans did.
Some fund managers predicted previously that it would cost China Telecom about US$2 billion to get a mobile license.
Analysts believe this as a strong boost to China Telecom's ongoing IPO plan. Other analysts, however, see the move more as a symbol. Even if China Telecom were to obtain a mobile license, it will not be able to compete with China Mobile and China Unicom for mobile phone business in the near future.
Source: USITO
In Quarter Three, Netease.com's Revenue Increased 93.3 Percent
In the third quarter, NetEase.com Inc., an Internet technology provider in China, made RMB74.4 million, US$9.0 million, in revenues. This is a 93.3 per cent increase over quarter two, an increase of RMB67.2 million, US$8.1 million, over total revenues of RMB7.2 million, US$0.9 million, for the same period in 2001.
NetEase Web has a total of 80.7 million registered accounts at the end of the third quarter, an increase of 23.8 per cent over the 65.2 million accounts at the end of the second quarter, a 141.6 per cent increase over the 33.4 million accounts at the same time in 2001, and which number continues to grow. According to the spokesman of NetEase Web, advertising revenues grew to RMB9.8 million, US$1.2 million, for quarter three, representing a 21.8 per cent increase over RMB8.0 million, US$1.0 million, for quarter two, and a 133.3 per cent increase over RMB4.2 million, US $0.5 million, for the same period in 2001.
The company attributes the revenue increase mainly to continued growth in its fee-based services, such as wireless short messaging services (SMS).
Gross profit in quarter three rose to RMB50.3 million, US$6.1 million, increasing 128.8 per cent over quarter two's RMB22.0 million, US$2.7 million. The same quarter last year had a loss on revenues of RMB8.7 million, US$1.0 million. Strong revenue growth also helped gross margins, which increased from 57.1 per cent in quarter two to 67.6 per cent in quarter three.
Source: ASIA PULSE
Internet Challenges China's Tourism Industry
According to Liu Jiaxiang, the chairman of the China Travel Service Group of China (CTS), Chinese travel agencies have great potential as tourism suppliers, but they are facing two major challenges: internet and foreign competition.
Liu Jiaxiang explained that globalization in the information era has provided consumers with greater and more direct access to tourism resources. Some of the original functions of travel agencies are being challenged by internet.
Liu added that China's entry into the WTO expedited the "opening" of the tourism industry. Growing numbers of foreign and domestic enterprises want to enter the market, and competition is much fiercer than before.
Since the 1990s, Chinese travel agencies have been bidding farewell to the high profits of the planned economy era. China's 10,532 agencies reaped combined profits of 1.23 billion yuan (US $ 150 million) last year, with turnover reaching 58.9 billion yuan (US $ 7.3 billion), one third of that of American Express.
Facing the challenges, many travel agencies are implementing new measures to confront the challenges. Mergers are one of the measures adopted, and are an efficient way of optimizing resources and increasing in scale. Listing the company on the stock market, cooperating with foreign companies and exploring overseas markets are other measures favored by Chinese travel agencies.
Source: Business Daily
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Internet Helps Chinese Farmers To Sell Potatoes
The widespread influence of the Internet on Chinese people even extends to Chinese farmers. China's landlocked western regions benefited from Internet.
Dingxi, which is a prefecture of northwest China's Gansu Province, is one of China's three largest potato- growing bases. The "potato king" of Longxi County in the prefecture, He Qingji, is very grateful for the worldwide web.
He said that thanks to the Internet, finding buyers is no longer a headache for him. "In the past, I'd go to great pains to find buyers, mostly through acquaintances or by making telephone calls. Even if I found some in the end, the prices tended to be very low. But, with the help of the Internet, finding buyers is easy now," said he.
By surfing the Internet, he has found customers in foreign countries, such as Malaysia and Singapore. His potato sales to Malaysia and Singapore now amount to between 40 million yuan, about US$4.82 million, and 50 million yuan, about US$6.02 million, each year.
One of the most favorite website among the farmers is called as " Xingnongwang", a pro-agriculture website set up by the provincial meteorological bureau, which offers a wide range of information about agriculture, including market analysis, where to find buyers and sellers, new production techniques and prevention and killing of insects. Another farmer in Dingxi County, Wang Juntang, said: "I know all about the market from Xingnongwang. I no longer worried about potato sales." All counties in Dingxi Prefecture, which annually produces more than four million tons of potatoes, now have access to the website. Its influence is spreading across the province.
Latest statistics show about 56.6 million Chinese people nationwide use the Internet via their home computers, which is the second only to the United States.
Source: Malaysian National News Agency
China Offers Its National '.Cn' Internet Addresses To Foreign Companies
In order to expand its online presence, from December this year, China will allow overseas Web sites to use addresses with its ".cn" national suffix.
This will give foreign companies a chance to attract China's fast-growing population of Internet users, and also help Chinese government's campaign to exploit the Web commercially.
Under international rules governing use of the Internet, China owns the ".cn" suffix. Until now, it only allows Chinese entities or foreign companies with a substantial presence in China to use it.
In October, the government signed up an American company, NeuStar Registry, to offer it to foreigners. NeuStar's vice president for sales and marketing, Richard Tindal, attended a conference of the International Corporation for Assigned Names and Numbers, or ICANN. He said: "there is going to be a very high demand due to China's opening up" commercially.
According to Mr. Tindal, a Chinese agency is to decide which addresses are appropriate and to check the content of ".cn" sites since Chinese government is very sensitive about political content and bar Chinese Web surfers from seeing a wide range of foreign sites run by news organizations, human rights groups and Chinese dissidents.
There is no information what the fee would be for registering a ".cn" address.
For the past seven years since ".cn" was first offered, it has attracted fewer than 130,000 subscribers - small for a nation of 1.3 billion people. By comparison, NeuStar signed up 400,000 subscribers for the United States' ".us" suffix in a couple of months.
However, it is expected that there will be a large registrations for ".cn" addresses.
Source: The Associated Press
China's IT Industry
During the first eight months of this year, the IT industry in China attracted more than 5.1 billion US dollars of foreign investment, which counts 15 percent of the country's total foreign investment. Ma Dexiu, director of the hi-tech industrial development department of the State Development Planning Commission, said recently that in the first half of this year, an average of 160 million US dollars of foreign direct investment (FDI) entered China every day, and more than 90 percent of US transnational companies have chosen to invest in China.
Mr. Ma said that more and more international companies have begun investing their latest technology in China, and FDI has diverted in recent years from simple processing to the creation of upper and down-stream products. So far, nearly 400 of the world's top 500 enterprises have invested more than 2,000 projects in China with over 100 research and development enters.
China's IT output grew by an average annual rate of 20 percent in the last decade, three times the gross domestic product growth, and is expected to exceed 1.6 trillion yuan, which is 192.7 billion US dollars, in the year of 2002.
According to official statistics, China is the world's biggest producer of mobile phones, DVD players, color TV sets, program controlled switches and other electronic equipment. China's information technology industry is already among the top three globally, and has become increasingly important on world market.
Source: People's Daily
The China Information Technology Law Newsletter is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.
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