From the archive- **China’s Internet around 2001ish**

Draft –suggested outline for a piece on China’s Internet culture –

Did SARS save China’s Internet industry?

Go go gadget woks – China’s Internet is on a roll

The Internet – China’s new rock and roll

China’s Netizen’s slip through the censor’s net


China’s Internet users transcend the Matrix

China’s Netizens transcend the Matrix

China has an estimated 60 million Internet users –almost equal to the entire population of Britain. This number will grow to around 80 million by the end of the year, unlike the British population, unless the number of asylum seekers dramatically increases.

Unlike Britain, where more usually means less, in China more always means more – more people means more investment, more money, more potential  –and more hits on your Internet site.

Only in China would the owner of a portal, Haisong Tang of, comment that his lowly 1 million hits a day meant he was “off the radar.”

In July investors poured almost $300 million dollars into the Nasdaq listed Chinese portals, and in convertible bonds, and the stock prices of the three sites are leading the U.S tech market. An investment in two years ago would have reaped a 4000% profit today.

So what’s behind this current flurry of excitement in an industry pretty much written of a year ago?

There has been a huge increase, especially in broadband users, in the first half of this year in China, essentially during what is now referred to as ‘the SARS period.’

As mostly the urban population had to stay at home for several months –SARS pretty much cut off most social activities and travel – for news, escapism and social interaction people turned to the Internet. This was added to by SMS news services –websites sent text news to mobiles at a cost of about 1 pence a message, this kind of service became popular with the start of the Iraq war, and was reinforced by the outbreak of SARS. One pence a message does not sound like much, but when ten million people sign up for the service it works out quite well.

But what is so fascinating about the Internet in a Communist dictatorship? Is it not all propaganda endlessly watched over by hordes of secret police? Do people just log on to brush up on Chairman Mao thought and Deng Xiaoping ideology you may well ask?

The typical Chinese Netizen, as they are referred to, is young, with no siblings, the result of China’s one child policy. As a demographic group China’s Netizen population are the first real post-Mao generation. They surf the Internet for entertainment, news, job hunting, to send e-mail, to chat, play games, sell second hand items, and send text messages and pictures. Essentially the Internet has become an integral part of China’s youth culture – along with mobile phones, computer games, Taiwanese pop stars, Korean soap opera stars and Japanese cartoons. This has followed through into the office working population – and the Internet has replaced the newspaper as the most popular way to waste time in the office. For instance the first message that comes up on a terminal in KPMG’s Shanghai offices is a very austere: “if games, animations, animated pets, screensavers, chat software or other prohibited software is found on this computer it will immediately be reformatted by the IT department.”

Investors and venture capitalists run around Shanghai shouting about ‘digital convergence’ and invest tens of millions of dollars in schemes such as LCD advertising screens for lifts and taxis, and marketing people give inspirational speeches about how cutesy but cheeky animated cartoon rabbits are the prefect e-mail advertising gimmick.

Chinese will be the most popular language on the web by the end of the decade.

Despite news to the contrary most Chinese Internet users can access foreign news and information as readily as Internet users in most other countries around the world. The Chinese government has essentially tried to install a system of monitoring and blocking – but given the sheer volume of traffic – the officials in China’s Public Security departments looking after ‘information safety’ have little real chance of monitoring even a small percentage of user behaviour. Certain servers are watched more than others, but as China’s Internet service providers boom, the government is fighting a losing battle against market forces.

What tends to happen now is that officials practice what is known as “killing the chicken to frighten the monkey.”

When either through an informer or by chance officials come across seditious content they will publicly severely punish the individual involved, in the hope that the mass users would be frightened into behaving themselves. 

Traditional Chinese media – both broadcast and print- are controlled via simplistic mechanisms and party discipline, but as the internet grows like an out of control microbe, the government does not have the resources to cope.

Control of newspapers is relatively simple, censors tell editors what is sensitive, where to ‘follow Xinhua’ via a daily fax, and anyone who fails in this regard is fired. TV media too similarly is dominated news wise by CCTV, where only the most politically trusted journalists are allowed into the studio. 

One manager of one the top three portals joked “I have 40 policemen in my office. They know more about what goes on my website than I do.” But China has tens of thousands of popular web-sites – a police station cannot be installed into every one.

The older, less modernizing elements of the party are also unaware of the Internet except it provides departments with online name cards, one local press article complained. One popular rumour among Chinese journalists is that former President Zhang Zemin, on a visit to the People’s Daily offices in Beijing, was directed to view the People’s Daily online edition, and was said to remark “Ahh, these computers, now they have Chinese words.” Whatever next?

China’s Internet is not as well behaved as the party would like, but this is softened by the Internet’s current trend to make money –and various government organizations and individuals having ownership in a hazy world of silent partners, share ownership and the party’s moves to attract modern entrepreneurs, such as Internet CEOs, into its ranks.

  Soft-sex, titillation, plagiarism, naughtiness and general entertainment based content rules. Crime reporting gets a free reign, and stories with themes such as ‘my real life as a prostitute’ or ‘sold as a sex slave’ generate as much interest as they would in the Sun or Sunday Sport. A quick browse of various sites shows some excitement that Chinese actress Su Huilun appeared in British magazine FHM, “Su Huilun on the front cover of the magazine (FHM) represents the sexy local setting and customs (of China),” boasts, run by the country’s advertising association.

China’s printed media is strictly controlled – but on the Internet millions of Chinese users browse over to sites such as the Singapore based for the latest political news about China’s leaders, and rumours relating to the Hu – Jiang handover. 

Pornography makers and distributors face very severe punishments, including the death penalty, if caught in China. But owning pornography for personal use is not actually illegal. This has led broadband Internet service providers such as China Telecom, the local equivalent of BT, to post warnings to its users that hackers often lurk around pornography sites, and suggesting that they do not register any personal or banking details with such sites, as they may be stolen.  Users even surf pornography in Internet bars, leading Chinese officials to insist that Internet bars install nanny software, that blocks such content. Of course such severity is met with the usual head nodding, as most such dictates are. Internet bar owners install the software, then disable it when the fuss dies down, a contact at the local police station will let them know when the next check is coming, and so life goes on. Many Internet bars even have ‘private rooms,’ where users (often truant school boys) can browse in private for a few extra pence per hour. The local press regularly runs stories on young boys disappearing for days on end into Internet cafes, which provide boxed lunches, and are open 24 hours.  Users often sleep at terminals, in between bouts of network games. One popular story ran that a man stayed in an internet café in Wuhan for 60 days, non-stop, until the bar kicked him out due to his ‘body odour.’

The Internet bar has become for many Chinese youths what the pub is to British teenagers, a place to hide from their family, hang out until the early hours of the morning, playing games, but in China there’s very little drinking, the buzz is generated in the death-match shoot ‘em up games. There are an estimated 100,000 Internet bars in China. Approximately sixty thousand venues saw business suspended in a nationwide crackdown last year, and are now in the process of being amalgamated into ten officially appointed ‘Internet bar chains,’ on the McDonald’s business model.

China’s Internet users are quite evenly split gender wise, and the female netizens are proving more likely to spend money on things such as cultivating online pets or shopping for clothes.  One of the biggest money spinner for China’s most popular portal sites is online dating. Flirting anonymously or in person in chat rooms, via SMS text messages and bulletin boards has proved a big hit with China’s Internet users. But complaints are rising about the numbers of suggestive and frankly crude messages being sent, and a person with a popular profile can get dozens of propositions a day.

Most urban teenagers have a network of “Wangyou” (Netfriends) across the county built up via ‘s QQ chatting service, very similar to MSN’s messenger.

such as,, and,

China’s media must make money. Slipping.

But what do those censors take offense to? Politics, but they do not interfere with ‘business’.

Business in Chinese Internet portal is racy news- SMS messages and saucy pictures, dirty jokes,

???Uninterested in domestic politics,

And according to one piece of research from Chengdu, capital of the populous Sichuan province, 90% of males and 60% of female Netizens aged 17-24 visit adult websites. The People’s Daily put the figure lower, at somewhere below 50%, during one of the periodic campaigns to create ‘healthy information.’

Similar numbers gamble, either within Internet bars in small networks, or online.

The Internet is where the high moral standards of the party clashes with China’s current young generation obsessed with Japanese cartoons, Korean pop stars, computer games and getting job. The pressure on young people is high –families with only one child have high expectations, which means the escapism of the web, as well as the loneliness of long hours of study, strict school system, means many turn to the web to find friends. Internet friends are known as ‘Wangyou.’ People arrange to meet them via SMS and texting in popular spots around town, and again, the government and local police have had to warn against fraudsters taking advantage of web-based relationships to commit petty crime and worse.

One site, colloquially termed the Land of Peach Blossoms was busted in the port city of Dalian, (formerly known a Port Arthur) saw 8 people arrested and 155 users questioned .

for escapism and social interaction people turned to the Internet.


Chinese TV during the period was never ending programs about SARS and officially sanctioned ‘family entertainment’, and newspapers also contained the never ending officially sanctioned stories about SARS.

 So what do these Internet surfers, or Netizens, as they call themselves in China, get up to?

The average user

Chinese hacker gangs

Online fraud


The more serious side – the “informatization” E government initiativeSURVEY

Overview of Chinese netizens online behavior

Internet usage in China has been witnessing a rapid growth.  In January 2001, the numbers of Internet connected computers and Internet users hit 8.29 mln and 22.50 mln respectively, more than double the figures a year before, according to China Internet Network Information Center (CNNIC). The geographical location of users has become more widely distributed.  Though Beijing, Guangdong and Shanghai still host 30.99% of all users, this percentage has decreased heavily from the January 2000 of 47.12%.  Meanwhile, household Internet penetration has also been on the rise, according to NetValue, the rate in Beijing, Shanghai, Guangzhou and Shenzhen stood at 17.9% last January, while in March 2001, the rate increased to 19.4%.

How do they use the Internet?

Most Chinese users connect to the Internet through phone lines.  A CNNIC survey in January 2001 show that 68.58% of users are dial-up subscribers, and only 16.18% use digital subscriber lines (DSLs), while the rest use both services.   Recently, with the fast expansion of broadband network infrastructure, the number of broadband users has increased rapidly.  And the heavy Internet users are more likely to subscribe to broadband services than those light and/or new users.

Most likely, a Chinese Internet user will connect to the network at home (with a possibility of 60.27%) or at his/her working place (with a possibility of 43.92%).  While the following facts seems to confirm that users are more likely to connect at home, they only do so from 18:00 to 24:00, when more than 30% of all the users are on line.  85.85% of users pay their bills by themselves, or at least part of the bills.  And high school and college students are most likely to obtain Internet access at an Internet bar or at school.

China’s netizens now log onto the Internet more and more frequently.  According to the latest NetValue report, the number of days connected to Internet per user at home reached 9.6 days in March 2001, increasing from 8.1 days in February.  However, the duration of time online seems to have decreased.  The January 2001 survey by CNNIC indicated that an average user was on line for 13.66 hours per week, compared with 17 hours in January 2000 and 16.54 hours in July 2000.  Some analysts believed that the decrease was attributable to the fast growth of new light user groups.

What are they doing online?

According to a NetValue report, web browsing accounts for about 60% of an average user’s online activity, and e-mail takes up about 19%, almost half of non-web activity.   E-mail service dominates non-web Internet usage.  More messages are being sent and received.  In March 2001, an average user sent 7.3 messages and received 18.6 ones, while a heavy user would send and receive 11.9 and 46.7 messages respectively.  A user usually registers for and owned several e-mail accounts.  The January 2001 survey of CNNIC showed that an average user owned 3.24 accounts.  

Internet Activity Ranked by Frequency

Type of activity Distribution of days connected on February Distribution of days connected on March
Web 58.2% 60.9%
Mail 18.6% 19.1%
File transfer 6.3% 5.0%
Instant messaging 11.2% 9.6%
Audio-video 1.8% 1.6%
Chat 1.3% 1.1%
News protocol 0.9% 1.2%
Games 1.7% 1.5%

Base: Beijing, Shanghai, Guangzhou and Shenzhen February to March 2001                                                                        Source: NetValue

Top 3 Internet Functions Ranked by Usage Frequency

Type of function Possibility of usage when logged on, Jan. 2000 Possibility of usage when logged on, Jul. 2000 Possibility of usage when logged on, Jan. 2001
E-mail 71.65% 87.65% 95.07%
Search engine 50.40% 55.91% 66.76%
Software download/upload 44.16% 50.69% 50.56%

Source: CNNIC Survey in Jan. 2000, Jul. 2000 and Jan. 2001

When asked what they were using Internet access for in the CNNIC January 2001 survey, 68.84% of the respondents said they were searching for information, and 51.37% also said they just wanted to entertain themselves.  Only 11.25% claimed that they used Internet for work.

Among various types of information, News is most often requested and read.  It has the largest group of viewers.  As the CNNIC survey showed, 84.38% of all users read news on the Internet.  The second most popular type of information is that on computers, read by 58.00% users, followed by entertainment and leisure.  During 2000, all top 7 most popular information types witnessed an increase in request and demand, especially news and job-hunting/recruitment posts.

Top 7 Types of Popular Online Information

Types of Information Reader-User Ratio, Jan. 2000 Reader-User Ratio, Jan. 2001
News 65.52% 84.38%
Computer related 51.70% 58.00%
Entertainment/Leisure 38.79% 52.66%
e-books 38.04% 45.99%
Science and Education 31.43% 35.77%
Finance and Stock Exchange 21.22% 22.88%
Job hunting/recruitment post 19.25% 29.12%

Source: CNNIC Internet Survey, Jan. 2000 and Jan. 2001

Though most users are still mainly looking for domestic information, this share decreased to 70.94% in January 2001, down from the 80.19% in last July, according to CNNIC.  The Chinese Internet users are become more open and becoming more concerned about the world situation.

Where do they go when online?

When Xiao Chen logged onto the Internet every morning, he would read the news at Sina News Center first.  Like many others, he also set Sina as the home page for his web browser.  Without doubt, Sina enjoys the highest popularity among China’s Internet surfers. This fact is confirmed by NetValue’s March 2001 report on Chinese Internet behavior.  Sina maintained overall No. 1 ranking for both properties (a group of domains) and the domains. Sina visitors are the most loyal and “sticky”.  An average visitor spent 66.3 minutes on the site, compared with the 39.5 minutes and 35.4 minutes per visitor at and respectively, the two domains closest to Sina in the loyalty rankings.  However, attracted the largest number of overall visitors.  In March, 59% of all home users visited the site at least once.

Top 10 Domains

Domains Overall Ranking 1 2 3 4 5 6 7 8 9 10

Base: Beijing, Shanghai, Guangzhou and Shenzhen March 2001              Source: NetValue

Online Advertising, online Shopping, Stock Exchange-Finance: promising sectors?

Predominantly attractive to most Chinese Internet users are the various free services on offer. Online advertising is believed to be the main income source supporting free service providers.  45.63% of all Internet users said that online advertisements should have more effective promotional results, as shown in the CNNIC January 2001 survey.  But, how do the surfers receive those ads appearing on their computer screen? Not as well as the dotcoms expected.   Only 12.89% of them regularly clicked his or her mouse on ads and 37.16% sometimes, when facing viral online advertisement links.   However, there is still hope, for the reception towards ads appeared to be much warmer than it was last July, when only 7.68% of users clicked regularly on ads and 25.18% occasionally.

Online shopping led the list of online businesses the users believed to be most promising.  According to CNNIC, 61.41% expected the sector to have a bright future.  And the number of online shoppers grew rapidly last year.   By January 2001, 31.67% of Internet users had completed a purchase online in the past year, up from the 8.79% a year before.  23.90% of users visit e-commerce web sites regularly, and another 45.17% visit sometimes.   What do they usually buy?  Usually those standardized products which users have already tried and tested.  Book and magazines, computer related products and A/V products are ordered most often, respectively with 58.33%, 37.47% and 29.07% of online shoppers having bought such goods.  Yet, the online shopping business has great room to improvement.  Only 27.72% of online shoppers are satisfied with their experience.  A number of problems are hindering a rapid and healthy growth of the sector.  32.03% of users feared that there was no guarantee of product quality, after-sales service and sellers’ credit, 31.20% were concerned about security problems, while 12.59% complained about inconvenient payment methods (many online-shops only accept postal remittance).  One user in Nanjing once bought movie VCDs from a Beijing-based online store, paying instantly by credit card.  Nearly one month later, he received his goods, but found the plastic cases were broken. So he contacted the store by e-mail, but received no feedback. Many such similar stories aren’t rare among online shoppers.

On the list of most promising sectors, network-based communication, online education and online securities trading followed online shopping in popularity, respectively winning 55.33%, 54.54% and 49.14% of non-exclusive votes in CNNIC January 2001 survey.  And early this year, the Chinese netizens started to show ever greater interest in the stock exchange-finance sector.  NetValue reported that from December 2000 to March 2001, the number of Internet home users in Beijing, Shanghai, Guangzhou and Shenzhen, who had visited the sector, had steadily increased, jumping up to 32%.   Such a big increase might be the result of the arduous marketing efforts of existing stock exchange-finance web sites and the traditional securities brokers who have been in a rush to establish and strengthen their online-trading arms.  Now, the individual securities traders are increasingly ready to search for reference information on the Internet, and an increasing number of them are starting

Internet: Police destroy the online prostitution criminal gang

On October 16, after the local police station of the Land of Peach Blossoms of Dalian receives the masses that” someone issues and reports, Organize police strength to organize work immediately , by 4 o’clock on the afternoon of October 20, succeed in destroying this criminal gang, Arrest 8 suspects.

Through inquesting and learn this criminal gang at” sea”( network name), some ginger, some( women), Deng 4 people slowly as the tap, Organize, recommend and hold and leave the prostitution activity. ” sea” responsible for and announce prostitution and whoring information at 150 yuan for once at Internet, And registers and compiles a register to the net explorer that is” interested in”, including the content, such as name of the network , telephone number,etc.. After,give from relevant informations to” sea”s rented house house-owner some ginger is and the under the care of some of ginger to screen connection of on net explorer that compile a registers, Information is given some, Deng to the whore who rents its house soon after succeeding, And whether slowly, at residence prostitution or connection other whores come this prostitution Deng. By to at present, this case involve at 155 of net explorer who whoring ” interested in”, 11 of whore altogether.

It is reported some ginger, Deng, suspected of being involved in and recommend, hold and leave criminal to detain public security organ activity prostitution at some slowly, Have peoples besides accommodate and educate, at administrative detention because of prostitution and whoring.





The Web site of the government does not become” Web site of name card”

Originally for meeting information age convenient, swift, heavy amount of information,etc. characteristic and government Web site that set up, Can’t but often and even can not get in half a year once a month and upgrade effectively, it is very few to have a look around to persons ¡­¡­” Web site of name card”, call upon one after another on the international forum of technological innovation of information of China( Jinan) which a lot of experts run here in the face of this kind of chicken ribs, Web site can’t have been this government.

Zhu Gaofeng, former vice-president of Chinese Academy of Engineering, points out while expounding the fact the road of China’s informationization, Flow in the face of fund, information flow, trend who material flow ” select good woods perches” within the range of world, The reform in government organization and function of our country develop and must move forward with the electronic government in coordination , Among them occupy the Web site of government of important statuses and should become a relevant information and serve the Web site , Not merely the static webpage of” stagnant water and one pool” is or the individual’s information detached island. Especially a lot of Webs site of local government can not upgrade , The same as name card, one is enough. How could such an Web site common peoples interesting 2 timeses come over? If this kind of current situation can not change for a long time, it was common people’s confidence to the electronic government that dampenned, Especially the trust to the government initiative spirit and speed.

From introduction,at information-based degree high Hong Kong relatively, devoted to the government information centre Web sites of construction of in recent years at special zone governments( receive good result of at, Deserve to draw lessons from . This Web site is one of the mosts popular Web site of government of the world at present, 2001, The having a look around to persons of it is close to 500 million. Hong Kong” electronic government” introduced” public service electronization” project in 2001, The citizen can obtain 130 and come from 40 governments’ making policy electron public service that department offers through this plan.

Vice-president of Chinese Academy of Engineering Wu HeQuan says , the Web site of the government is regarded as and shows the important window of the government image, It is surprising to invest in enormous, development speed, it is really too regrettable not to utilize carefully . Area of Asia originally very limited address IP that get assigned, occupy IP the also insufficient to utilize existingses of resource, Along with the development of magnanimity information of network of future generation, these very difficult to find space who oneself base on Web site.


Internet bars, or Internet cafйs as they are termed in Europe - in China
are  usually  called "Wang Ba" - directly translated  meaning  Net  Bar.
Increasingly  popular as entertainment venues in China, the  government,
at  the  highest levels, has been showing signs of distinct disquiet  at
the  phenomenon.   Following a series of security  checks  on  bars  and
Internet portals by the PSB - China's police force - earlier in June,  a
fatal fire at a popular bar in Beijing brought the whole industry  to  a
standstill while safety checks were carried out.  There is now arising a
split  between  the "green net bars" - officially sanctioned  bars,  and
"black net bars" - underground, unlicensed operations.
There  are serious contradictions in the government's behavior - on  the
one  hand  China is going full out on an "informatization" drive  -  the
government would like the majority of the urban population to be  online
at  least  by  2008 (the date of the Beijing Olympics) - ordering  their
dinners  from  the local restaurant, accessing courses  in  E-education,
filling  in  forms  on  E-government websites or virtually  shopping  on  But  on  the other hand  -  the  government  is  not
comfortable with the very nature of the Internet - having access to  the
information superhighway means much more than being able to order pizzas
-  users  have been displaying tendencies to surf sites with undesirable
content, post undesirable comments on bulletin boards, and getting up to
all sorts of disreputable behavior. At the vanguard of this disreputable
behavior is the Internet bars - full of teenagers until the early hours.
The more the government learns of their activities the less happy it is.
Confronted  with  the "informatization" reality of a  young,  tech-happy
generation spending their nights in cheap Internet bars China has  taken
the  obvious  step - and is setting about restructuring, rectifying  and
regulating  the  Internet  bar  industry  into  something  a  bit   less
The  new trend - to set up chain bars, easy to regulate and control,  is
being  supported  at  all levels, politically and by  big  corporations.
China Telecom is beginning to offer discounts to chain operations, while
the government is regulating the smaller operators out of existence.  It
looks like Internet bars are going to be big business in China, and  the
rest  of Asia for that matter. Hong Kong, Thailand and Taiwan also  have
thriving  Internet bar industries.  But operators of the new McNet  bars
will have to make sure they get all their licenses in order first.  Each
province  will  be  bringing out its own set of rules -  hopefully  each
province  will  not  try  to  out-do the other  in  severity.   Zhejiang
province  recently  announced it will be encouraging  the  formation  of
parent  committees to watch teenagers in the bars - a kind of real  live
net  nanny  system, to supplement the net nanny software being installed
by the PSB, according to a report posted on China Telecom's website
A high growth industry
Internet users in China are now estimated to have reached 33.7  mln,  50
times  higher  than five years ago. Among this large  number  of  users,
15.4%  of  them  surf  in the Internet bars.  Previously  Internet  bars
originally referred to the bars where drinks were available, as well  as
having a few computers for customers to do a bit of light browsing.  But
in China now, any place that offers Internet services could be called an
Internet bars or Internet cafй, and drinks usually either come out of  a
self  service  vending machine or from a shop around the  corner.  Food,
similarly,  is  ordered in, usually of the RMB 5 "hefan"  (boxed  lunch)
variety.  The relatively low proportion of personal computers in  China,
partly  due  to lower spending power, as well as lack of  space  in  the
average  household,  has played a deciding role  in  the  popularity  of
Internet  bars in China. Customers in Internet bars invariably are  low-
spenders,  even though they might come from a high-income bracket.   But
the small amounts add up - if a bar charges RMB 5 an hour say, if in  24
hours  a  100 PC bar has 200 users, who stay for a 5 hours average  each
(mostly  playing  LAN games - very few would actually go  online),  that
would  amount  to RMB 5,000 a day income, not far off  RMB  2  mln  (USD
240,000) in one year.  That's not including value-added services -taking
a  cut  from the hefan, cigarette sales and drinks machine -  many  bars
also  sell software and other items.  The bars have also become  a  hot-
spot  for  advertisers, less now than during the dot com boom,  but  for
larger  operations  there's still money to be  made  in  letting  brands
promote  in-house.   As the bar would probably cost around  RMB  400,000
-500,000  to set up, after taking away operating costs there's  still  a
healthy  profit  to be had, which is attracting high  numbers  of  small
businessmen to enter the business with a small capital outlay.
The  accessibility and variety of Internet bars is another  reason  that
has  created the growth in user numbers.  Tea houses, which  are  packed
with  card and mazhong playing customers all night sipping a re-fillable
RMB  5 cup of tea - have found a more modern equivalent in the all night
budget Internet bar.  In today's China there are Internet bars on  every
street  corner,  though  this may well change once  the  new  government
regulations  come  into  place.  It  is  estimated  that  Internet  bars
(including  legal  and illegal) in Shanghai alone, one  of  the  biggest
cities in China, now number around 3,000.
The number of Internet bar users in China (Unit:  ,000)
Source: CNNIC
Requirements for bars
But as with any booming business model, there's heated competition going
on  among  Internet  bar operators, and there are winners,  and  losers.
Those  small-time investors who rushed into the business to make a  fast
buck are now mostly in a rush to get out. The larger operations such  as
the  officially highly praised Eastday are slowly flexing their  muscles
as the smaller players are forced out of the market.  So as Internet bar
operations  inevitably get larger - so to is there a growing expectation
among  users for better quality equipment, service, and price.   Setting
up  a  100  or 200 PC operation, with all the add-on network  equipment,
toilets,  sofas  and so on, isn't something you can  do  with  only  the
advice  of a mate who is good with computers.  There's a growing service
industry  providing the bars with their hardware, software and technical
service  requirements.  Besides actually setting the place  up,  serious
consideration needs to be paid to getting the various licenses.
To   open  a  qualified  Internet  bar,  hardware  is  the  first  major
consideration.   The  hardware solution directly affects  how  much  the
profit  an  owner  could  make. Nowadays, most  owners  are  choosing  a
solution  whereby  one  server links all the terminals  to  realize  the
connection of the Internet, means all the computers can be online  while
keeping  the  connection fee down. This solution is  widely  adopted  in
almost  all  Internet  cafes in China and is  thought  of  as  the  most
economic  solution for small-and-medium-sized bars.   This  does  though
lead to complaints, when young Wang opens twenty windows on his terminal
simultaneously,   downloading  video  clips,  slowing  down   everyone's
Internet access speed.  There is a growing trend noticed in Shanghai for
higher  priced bars to offer broadband connections, which is  especially
popular  with  online  game fans, and video downloaders.  And  lets  not
forget  the computers - certain firms offer the build your-own solution,
allowing computers to be tailored exactly to the bar's requirements, and
cheap.   These firms invariably supply the Internet bars,  and  often  a
full  time  service engineer.  Below is a sample compilation of  what  a
typical Internet bar operation might use.
Hardware requirements for Internet bars
Server                For computer            No special requirement
Terminal              For computer            No special requirement
Phone line      For Internet connection      56KB/s, lower speed. not
                                            suitable for Internet bars
ISDN            For Internet connection        128KB/s, low speed.
                                                Replaced by ADSL.
ADSL            For Internet connection     512KB/s, the commonest way
                                                   to connect.
DDN             For Internet connection       2Mbit/s, higher cost.
                                            Mainly use in campus' LAN.
Coaxial line       For LAN equipment          No special requirement
BNC                For LAN equipment          No special requirement
RETICLE            For LAN equipment          No special requirement
Others             For LAN equipment          No special requirement
Source: PC home
Monitor                         Numerical control 15
CPU                           Intel Pentium III 733MHZ
Motherboard                Gigabyte GA-60XM7E (Intel 815E)
Memory                           HY 256M PC133 SDRAM
Hard Drive                         IBM 30G(ATA100)
VGA Card                                i752
Sound Card                          Creative 128
NIC                           Realtek PCI 10/100M RJ45
CDROM                                 ACER 50X
Floppy drive                        Samsung 1.44
CASE                                  ATX 300W
K+M                                 PS/2 (normal)
Source: PC home
Monitor                               15  or 17
CPU                       Intel Celeron II 600MHZ or higher
Memory                       128M PC 100 SDRAM or higher
Mainboard       Intel 810 (Integrated video card Intel i752AGP, Sound
                              Card AD1816 PCI, RTL8139)
CASE                                     ATX
K+M                                 PS/2 (normal)
Source: PC home
The  software  on  offer in Internet bars plays  an  important  role  in
attracting  customers. The tables below shows some  mainstream  software
being used in Internet bars in mainland China.
Basic Software
System                      Server: Windows NT 4.0/ Linux
System            Terminal: Microsoft Windows 98/Microsoft 2000/XP
Browser                      Internet Explorer/Netscape
Proxy server                   CCProxy;Winroute;NAT32
Management                            SYNLEAD;
(time and fee
Monitor/Secur           Filtration Expert 1.0; MeiPing Kavass
Source: PC home
Major Software
Media player   RealPlayer; Winamp; Windows Media Player (bound with MS
Mail Server    Outlook Express (bound with MS Windows); FoxMail; XMail
FTP                                CuteFTP; AceFTP
Share                       Morpheus; Napster; WorksLink
Chat                            MSN; OICQ; ICQ; MRIC
Game          Chinese: Stone Age; CS;SC; Mud; Card and Chess; YingYong
                  Pirate/Genuine: most best selling US/Japanese and
                                European game titles
Source: PC home
Having  read  this  far into the survey, it should be realized  that  in
China,  to  open  an  Internet bar is not as easy as  you  might  think.
Establishing a legal Internet bars normally follows (at least) the  five
steps below:
1.  Application for an Internet bar management license from  the  chosen
2.  Application  for  a  "security" license of  from  the  local  Public
Security Bureau.
3.  Application  for an Internet bar management license from  the  local
Industry and Commercial Bureau.
4.  Application for a Internet bars charge permission license  from  the
local Price Bureau.
5.  Application for Internet bar tax registration license from the local
Taxation Bureau.
6.  Other  license  applications depend on the special  requirements  of
various areas.
The  process  of  application is not easily accessed by persons  without
'guangxi'  (connections), and can take several  months,  if  not  years.
There are certain pre-qualifications - for instance the applicant cannot
have  a  current work unit.  Many companies who apply to  have  internet
bars  included in their business range would have to go through a  long,
and not certainly successful procedure to achieve this.  Therefore, most
Internet bars we are seeing on the streets are illegal.
New bar regulations, and closures
The  number  of  closures of Internet bars has reached unbelievable,  by
June 26, less than a week after the fire in Beijing, Shanghai's Industry
and  Commerce  Bureau announced it has closed 244 bars in the  city  for
'fire safety problems.'  Over the last twelve months Interfax China  has
reported  several  campaigns, in December 2001 the  State  Economic  and
Trade Commission said 94,000 Internet bars were investigated nationwide,
with 17,488 being shut down, 48,000 reregistered, and 28,000 ordered  to
overhaul  their operations within set time limits. In July  2001  public
security  departments  checked  nearly 78,000  Internet  bars  during  a
special  action, and punished 14,400.  The departments found  that  over
30%  of  Internet bars nationwide were unlicensed or not fully licensed.
In  August  2001  it  was announced that Video game, film  and  Internet
content  would  be rectified, and a campaign was launched, concentrating
on rectifying the content of  video games, audio visual products and the
Internet,  three  of the "four major" cultural products administered  by
the Culture Ministry's Market Administrative Service Bureau.  The fourth
major  cultural  product is historical artifacts.   Then,  on  June  the
fourth  this  year the government again launched a new campaign,  giving
the  PSB  more powers to control Internet usage and content.   This  was
followed  shortly  afterwards  by the  fire  in  Beijing.   Usually  the
computers  are  being sold in batches of 50, coming  from  medium  sized
In  a bid to better monitor Internet bars, and to squeeze out small  and
badly  managed operations by market forces rather than direct government
intervention, the Shanghai government says it will help the  development
of  Internet  bars  chains  in the city.  However,  before  the  current
intense   supervision  of  Internet  bars  ends,  no   application   for
establishing new Internet bars will be accepted, Du Lexing, director  of
the  Market  Supervision Department, directly in  charge  of  monitoring
Internet  bars,  under  the  Shanghai  Cultural,  Radio,  TV  and   Film
Administration Bureau, told Interfax in an exclusive interview.  On  May
10, the Ministry of Culture released new requirements for setting up new
Internet bars.  Du told Interfax that the regulations to be released  by
the Shanghai government would be even stricter that the requirements set
by the Ministry of Culture. The to-be-released requirements are: minimum
numbers  of PCs (72), space (180 m sq) and roof height (2.7m), according
to Shanghai Ribao, though Du did not comment.
Location & charges
The  main  users  of Internet bars are predominantly young  people  aged
between  15 to 25, mostly high school or university students and  recent
graduates/first jobbers. It is apparent that the owners of Internet bars
have  realized that this is their key demographic, therefore almost  all
Internet  bars  are to be found near schools or offices.  For  instance,
there  are  dozens  of  Internet bars clustering around  the  well-known
universities  in  Shanghai,  and these bars  are  full  day  and  night,
according to our Interfax investigations - though these bars now will be
in danger of closing, as the Shanghai government insisted that bars will
now  be  distributed proportionally 1 bar to 10,000  people,  with  each
small  district  only  being able to offer 1  license.  That  means  the
Universities  will most likely be only allowed one bar  each  -  meaning
that one bar had better be big.
The  student  bars tend to be cheaper - charging around RMB  3  or  even
lower  per hour to attract the customers, the low charge determines  the
corresponding  low budget environment usually associated with  students.
Most of these bars have not got a complete set of licenses. On the other
hand,  those  bars near the office areas offer a more cozy  environment,
better space, bright lights, high quality computers and various kinds of
drinks, etc, charging around RMB 8 per hour.
Customers behavior
The  Internet  has certainly caught the imagination of  China's  younger
generation, as have computer games.  Especially following the  country's
relative  isolation in relation to the rest of the world,  the  Internet
has  come  as  something  of a revelation, both  to  Netizens,  and  the
government.  Students are still the largest group of Internet bar users,
so we sent an Interfax special correspondent undercover to find out what
kind  of  behavior  takes place in these 24 hour bars? Previous  surveys
conducted  have  revealed  that young people  spend  their  time  mainly
chatting,  playing games, watching movies, and browsing in the  Internet
Chatting - Because of the one child policy of China, 99% of young people
aged  below  24 have no siblings. So in sharp contrast to  their  family
life  the  Internet has caused some young people to lose their  balance,
according  to  one source. Using chat tools such as OICQ  and  MSN  some
teenagers chat with their virtual friends often into the early hours  of
the morning. It has become a fashion to have web friends and lovers, and
talk about them as if they were real.
The  "Yellow  -Net" - In Hongwei Zhang's Phd paper for  the  College  of
Criminal  Justice  at  Houston  State University  "The  Emerging  Carnal
Internet  and Its Social Control in China," he says that: "for  ordinary
Chinese,  the  carnal  Internet especially is believed  to  exert  great
negative  influence  on juveniles. Increasingly, pornography  and  other
adult  related content is being found to be addictive, like a drug which
young  people   luxuriate in  and go even mad."  Zhang's  definition  of
carnal  Internet is: "the so-called carnal Internet means that by  using
computers - mainly the Internet to transit sex-related content, such  as
obscene  words, pornography, movies, DVDs or other broadcast  materials,
and advertisements for introducing prostitution and so forth in order to
receive  illegal  interests  or  other  benefits."   According  to   his
research: from the investigation of the Internet bars around the Chengdu
universities area (in Sichuan Province), it was said that 90% of  17-24-
year-old  male and 60% of 18-24-year-old females visited adult websites,
and  34.6%  of  Cantonese youths confessed to visiting sex websites.  He
quotes  Renmin Ribao, saying nearly 50% of all teenage cyber-surfers  in
Beijing  browse  the Internet for study purposes, while the  other  half
indulge themselves in on-line games, chat and even adult websites."   It
should  be  noted  that a good proportion of the 50% studying  are  most
likely at home, not in an Internet bar.  Zhang partly blames this  trend
on the lack of sex education in China's schools.  This trend has greatly
contributed  to  urgent drafting of "Online Security"  laws  to  control
Internet behavior.
Game  playing - Except for chatting online, playing games  is  the  most
popular  behavior in Internet bars. There are three main  categories  of
games,  simple cards or majiang (mazhong) inspired games,  role  playing
games  and  Mud (multiple user dungeons). The latter two categories  are
predominantly  male, inspiring the comment  "(these  games)  make  these
young  complacent  boys to enjoy their imagination of being  the  hero,"
from one female Netizen studying at Fudan University.
Movie  watching - The broadband connection in Internet bars has provided
a  new  form  of entertainment, allowing users to watch and/or  download
motion pictures, predominantly from Hollywood and Hong Kong. There is  a
plentiful  supply  of pirated online movies, which is  an  international
phenomenon, not unique to China.
Browsing  &  BBS  -  Yes,  some users actually visit  Internet  bars  to
innocently  browse the Internet. Some search for news  and  information,
others  post  to Internet discussion groups and bulletin  boards  (BBS),
though  posting  comments  on bulletin sites is  becoming  more  tightly
What  should  be noted - that, apart from the tragedy in Beijing,  there
are  very  few  reports of 'real' violence or disreputable  behavior  in
these  bars.  Users tend to pay their bills quietly, there's very little
hooliganism or vandalism, and virtually no consumption of alcohol.  Most
of the lewd, violent or disreputable acts are committed in cyberspace.
A taste of the market:
Despite  the numbers of Internet bars in China, there are few bars  that
have  reached  a  level that meets with both the users  and  governments
approval. The list below outlines a few of the successful ones (at  time
of writing):
Some typical "Famous Internet bars" across China
Name           Location/Address        Charge        Brief Introduction
Boil 100       Heiping street,     RMB 4 per hour    50 terminals; high
                   Beijing                           speed; 17  display
Bright        No.165, Ro.Haidian  RMB 6-7 per hour,    More than 120
Information       , Beijing       Free at 7:00-9:00    terminals, 17
Port                                     AM            display, high
Chuangtian    No.67,Ro Zhonghua,  RMB 4 per hour or    90 terminals;
                  Shanghai.        membership card   large space; cozy
                                                       environment .
Manda         No.169, Ro. Middle RMB 3 per hour, 15  40 terminals; high
              Jianguo, Shanghai.  Yuan/Whole night         speed.
New World       No.129/30, Ro.   RMB 3 per hour, or    100 terminals;
                North Cuihua,       RMB 10 Whole       free hot drink
                    Xi'an              night.           available at
Dong Hui        Erdong River,     RMB 2.5 per hour,   Thousands of mp3
                   Tonghua         RMB 10 = 10:PM-       available.
TianCao          No.10, Gaobo     RMB 1,5 - 1.8 per      Favorable
garden          street, Weihai          hour          environment, low
                                                         charge and
Source: Interfax
The  uninterrupted  opening  and closing of  Internet  bars  across  the
country  has  also boosted the business of those who offer technological
support services. The list below outlines several such companies - which
provide related services for Internet bars:
Technology support companies in China
Company Name                          Business
ChaoYue         Providing services of establishment of LAN, Broadband
                               connection, and so on.
Chuang Wei         Providing the Internet bars solution and so on.
Beng Teng net Internet bars solution providing, network shares, and so
DTK                     Providing Internet bars solution,etc.
Fang Zheng     Providing YuanMing Wangbo Internet bars solution, etc.
Source: Interfax
Market prediction
Following the regular tales of students going missing for days/weeks  on
end  in Internet bars, the recent fire, and reports in the Chinese media
of  the "uncounted number of students losing their academic studies  and
daily  lives,"  the  government has is in full swing  to  "rectify"  the
market.  Thousands of illegal Internet are being closed down (again)  as
has  so often happened before. But this time the attack is more serious,
and  prolonged - in Beijing, authorities set a three-month  campaign  to
sort out irregularities in the Internet bar market.
As  pointed  out earlier in this survey, the future trend inevitably  is
leading towards the growth of chain Internet bars - though we can  still
expect  a  few  more waves of activity by the smaller  operators  before
"market forces" have their way.
As  analyst  at  Norson  Consulting ,Craig  Watts  told  Interfax:  "The
Internet  bar  in  China is a compelling business  proposition.  Branded
chain-style  operators with shops accommodating more than 100  computers
and  offering better accountability to the government are just beginning
to  emerge  and  will  likely drive the single  unit  operators  out  of
business in the same way convenience stores are replacing small mom-and-
pop  shops throughout Shanghai.  The transition will take time, however,
and in the meantime the government will continue to wage pitched battles
against the Internet bar industry. "

05/04/2002 17:49 : CHINA IT & TELECOM REPORT (Weekly,En)

China's online youth 

As  the globalization trend gradually assumes a dominance over the lives
of  a  majority  of the world's population, people are  finding  contact
easier   than   ever,   as  global  cultures  blur   and   international
communications  improve.   This  is  partly  happening  thanks  to   the
invention  of the Internet, with its estimated 500 mln users around  the
world.   In China, nearly 33.7 mln people (and counting) now travel  the
virtual world, and this number is expected to increase to 100 mln in the
coming  year.  Of these online Netizens youth is a predominating factor,
and   this  survey  is  an  attempt  to  explain  some  of  the   online
characteristics  of this demographic group, their likes,  dislikes,  and
preferences.   A key group in the sales of online products,  e-commerce,
mobile  phones, chat rooms, impulse buys, candy bars and fashion related
items  they are a marketers nightmare as they are both easily  led,  but
yet fussy- disloyal, yet loyal, hard to define, yet like to join groups,
individualistic yet trend followers. Welcome to the world of youth.  For
research   purposes  Interfax  China  asked  a  selection  of   Shanghai
university students to help in the compilation of some of the  opinions,
tables and ideas presented in this survey.
Figure Source: CNNIC; Chinatelecom
                    China's online users- the numbers
                              (unit: '000)

Source: CNNIC
Analysis overview
Truly  mature  Internet services appeared in China in  mid  1990s,  when
people  could  remotely log on to web-sites, send & receive  emails  and
exchange  their views in BBS through telnet by dialing up through  their
phone  line.  At that time, the main users were young professional males
with  majors in Computer Science.  With the development of the Internet,
accessing  the net is no longer that complicated, which has created  the
chance for larger numbers of people to go online by using their own home
computers.   Since  then,  surfing Internet has  become  more  and  more
popular  in  mainland China.  CNNIC shows, from 1999 to 2001,  that  the
main  body of online users were within the age group of 18 to 24,  which
accounts  around  50%  of the total of China's Netizens.   It  has  been
noticed that the number of users' aged under 18 is also on the rise.
               The percentage of China's online users' age

Source: CNNIC
Like  the  age  diagram, imbalances also exists  in  the  allocation  by
location  of  Internet users in China. Again from  CNNIC's  stats.,  the
online  users in mainland China mostly congregate in the few big cities,
especially  Shanghai, Beijing and Guangzhou, accounting for nearly  half
of the total number of net users.  Remote regions, like Xingjiang, Tibet
and  Ninxia  contribute  almost  zero  percent  to  the  numbers,  which
indicates that the prevalence of Internet use is also linked closely  to
the economic development of the regions.
           The percentage of China's online users' allocation

Source: CNNIC
From the statistics, it can be concluded that the main online population
are  those  youths  aged from 18 to 24 living in the  major  metropolis'
dotted  around  the coasts and in capital cities.  These are  the  Young
Analysis  of  data from China's annual Household Income and  Expenditure
Survey done by the State Statistical Bureau on the distribution of urban
households  by income from 1992 to 2000 indicates that in 2001  the  top
10% of all urban households in the country earned over RMB 34,000 pa.
This  top segment of Urban Households is particularly important  to  the
producers and distributors of most consumer products and services.
The distribution affluent households is not even across the country.  It
is  estimated that in 2001 a total of 84% of such households  reside  in
just 8 Regions.
The  Guangdong Region came top with 39% of affluent households in  2001,
Shanghai and its adjacent Regions came in second, with 31.1% and Beijing
and adjacent Regions accounting for 14.2%.
This  has  significant implications for the future of  Hong  Kong.  It's
survival  as  a major business center may simply result from  being  the
point of contact with nearly half the affluent households in China.

Source: MarketEstimator - Urban China by Region
Educational level
Statistics  shows that most of China's Young Netizens have a  relatively
high  educational  level, more than half Netizens possess  a  university
degree.   But  with  the  increasing popularization  of  Internet,  this
percentage will decline, the online users distribution appears much more
balanced to reflect the general population.
          The educational level of China's online users (2001)

Source: CNNIC
Attitude of Young Netizens
MTV,  bastion of perhaps the Internet's greatest enemy - TV  -  compiled
research  on the attitude of youth in Asia, to determine the differences
between  them and their western counterparts "Generations X, Y  and  Z,"
which  was released to Interfax.  MTV estimates around 88 mln households
in China are equipped to receive cable TV.
According to MTV their core demographic is: 15-24 (over 30%),  with  50%
of  viewers  aged  between  15-34.  They prefer  to  go  out,  like  new
technologies,  are  trend pioneers, spend more money  on  cosmetics  and
perfumes,   prefer   Internet  usage  and  are  devoted   music   lovers
(surprisingly).   In  China  MTV has cooperated  with  legend,,
Siemens,   Sony,  Cadbury  and  Johnson  and  Johnson  in   co-promotion
Global  youth  are concerned about drugs, aids, crime, racism,  divorce,
the  future  and their personal relationships. They trust in themselves,
family/friends,  change and technology.  It was  also  found  that  most
youths  want an exciting life full of challenges and intensity (ie.  not
The major difference between China and the rest of Asia and the world is
the  intense  optimism  in  cities like  Guangzhou  and  Shanghai,  when
compared  with residents of say Japan and Singapore, who are still  more
optimistic than their US cousins.  The Europeans still tend to  be  more
pessimistic.  TV still gains a 90% or higher interest rate  amongst  all
these groups, with only Latin America slipping to 86%.
MTV  defines its MTV generation Asia as culturally oriented, looking for
the  new,  willing  to try, optimistic, committed to  the  future,  feel
fortunate, like the idea one community and are culturally respectful.
Members   of  Generation  X  on  the  other  hand  are  individualistic,
impatient, skeptical, pragmatic, pioneers, feel entitled, a community of
one, consciously tolerant and redefining family.
Browsing habits
The  reason why the Internet has attracted so many young people to troll
through  cyber  space  is the Internet's increasing  tendency  to  allow
information  transfer  in a speedy and convenient  fashion.   "With  the
Internet, people are closer than ever, only one-click can link one  with
his  long-distance friend," identified on student to Interfax.  A result
of  a  survey conducted by CNNIC shows that the most important functions
for  Chinese  Netizens  is  sending and  receiving  e-mails,  and  then,
downloading  software  and  information, followed  by  chatting  online.
Since  the  inception  of  the  MonternetError!  Bookmark  not  defined.
(China's  main mobile Internet portal site) adopted by China  Mobile  in
2000,  interaction  between the Internet and mobile  phones  has  become
another craze amongst youth in China.
Ian  Stewert,  Director  of  the Filter Group identified  the  following
trends as growing in popularity among today's youth in Asia:
Hip Hop- hitting the mainstream
Spa's - paying (a lot) to look healthy
Retail - stores/boutiques that have an artsy feel
LAN gaming - the take over of Net cafes
80's -revival
70's - the revival is coming!
The   key  themes  as  identified  by  Stewert  are:  Individuality-   a
fragmentation  of  styles  across  music  and  fashion,  and  an  ironic
collective desire to be different.
Big brands- losing their dominant position, as small brands and "uncool"
brands  are  now cool (Ie: a pair of old liberation army boots  are  now
preferable  to  Nike trainers, with some).  Fake, and super-fake  brands
are  also  crumbling big name brands foothold, as consumers  are  losing
trust in both product and price.  No-brands are also now cool.
Mix  'n  match/  cut  n'  paste:  Personalization and  customization  of
everything from mobile phones (face plates, stickers, aerials,  etc)  to
shoes is now common.
Digital  -  the  technology explosion is encouraging the  current  young
generation  to be interested in forwarding culture, a new dictionary  is
emerging,  pop  culture is expanding very fast, there is a  "no  turning
back attitude," and "friends help friends master technology."
As  far  as  Stewert is concerned to win with this demographic companies
need to:
Be tribal- connect to the groups passions
Seek leaders- to understand and access these groups
Go viral- to leverage forward looking culture
Be realistic- to build lasting relationships
Reinvent- move fast to stay ahead of the curve
Have impact- do things that haven't been done before.
                            Popular Websites among Chinese youth
Site Name                                Features
Google             Search engine, the search result never let one down.
Yahoo         Chinese version of world's largest portal site. Photo album is
                                 its most welcome service.
Pchome       Virtual community relating all computer stuffs. From software to
                            hardware, digital gizmos to flash.
Roungshu     China's largest original literature site, everyone could realize
                                 their writer dreams here.
Chinaren         It's classmates' cache help one pick up the school life.
Yifan                     Online books library, free downloading.
Flashempire                      Professional flash site.
Chinamp3          Large music database, also providing countless free mp3
(source: Interfax, comments from students)
Popular Chatting tools among Chinese Youth
Name                   Description                     Download Site
QQ            Most popular chat software of
              inland china, especially among
                      the teenagers.
MSN            Binding software of Windows
Messenger     operation, easy way to contact                n/
                     one's old buddy.
MIRC         An ancestor of online chat with
                   powerful functions.
ICQ           Most popular chatting tools in
                the world, a very place to
             improve one's foreign language.
Yahoo          Lovely chatting environment
Messenger           attracting girls.
(source: Interfax, comments from students)
SMS  (short  message  services)  allows Internet  users  to  send  short
messages  to  mobile phone users anytime, anywhere, now without  network
restrictions  among mobile operators, whose advantages include  catering
to the demands of young people pursuing novelty and speed.  According to
figures  from  China Mobile, 10 bln short messages were  sent  by  their
subscribers  in  2001.  Since SMS was introduced in  China,  an  English
language  nickname of "Smart Marvelous Service" came about (as  revealed
by  one  student),  perhaps highlighting the lack  of  cynicism  amongst
Chinese students.  The potential profit from SMS became something  of  a
last straw to several web-sites hoping to survive the downturn.
China's main SMS providers
Site Name                               Description
China Mobile     Personalized face off with one's mobile phone. Providing
                information including real-time quote, world news, weather,
                               horoscopy, jokers and so on.
(source: Interfax, comments from students)
Broadband is offering the online gaming community a new life.  A  survey
shows  that about 31.1% of China's net users seek entertainment  on  the
Internet.   Among  which,  most of them have experienced  online  games.
Excitement  and interaction are the major reasons for the  growing  game
industry. Happy submarine launched by shanghai online, for instance, was
heavily  subscribed by users on its first day. As it  is  still  in  its
initial stage, online games still have a lot of room for development.
Some online game sites
Name                                    Description
Shanghai     It's happy submarine vividly display the teamwork spirit, lovely
online              colorful design attracts the youngsters' eyeballs.
Our game      Large game portal site of traditional Chinese games, including
                                  cards, chess and so on.
China game
17173              Large portal site provides various online RPG games.
(source: Interfax, comments from students)
Bank Cards ownership/usage
The  difficulty of credit cards application procedures and the adherence
to  the  traditional  concept of money in China  has  improved  somewhat
lately,  with a noticeable growth in the numbers of credit  cards  being
used  by China's Netizens. Most bank cards in Young Netizens' hands  are
debit  cards, which have similar functions to credit card,s  except  the
individual overdraft facility. But up-til-now the atmosphere surrounding
the hacker populated Internet has exerted a negative influence on online-
shopping businesses.  Postal and bank tranfers, as well as COD (cash  on
delivery)  are  still the most practical forms of payment  preferred  by
those  who wish to shop online. This obviously leads to a lack of  sales
amongst a demographic looking for instant gratification on the Internet,
though  does highlight the perhaps under valued concept of the  Internet
as  an  online  brochure- many young shoppers check out what  they  want
online before heading downtown to the mall.
Major bank cards belonged to China's young netizens
Card Name                               Issued Bank
Great wall                             Bank of China
Dragon card                       China Construction Bank
Peony card                Industrial and Commercial Bank of China
Pacific card                    Communication Bank of China
Yikatong                           China Merchants Bank
Source: Interfax
Consumer behavior
Online shopping
When  the  new buzz word "e-commerce" showed up, people enthusiastically
thought  the revolutionary era of business had come.  But how great  has
its real impact on these teenage Netizens?
             China's Online users' earning percentage (2001)

Source: CNNIC
As  the above diagram shows, a group with earnings of less than 1500 RMB
(including  no  earning  power - but let's  not  exclude  pocket  money)
accounts  for  nearly 60% of the total Internet users.  This  is  mainly
because  the major part of China's online users are people aged  between
18 and 24, who mostly are students, first jobbers or hanging out.  Thus,
low  priced  and fashionable merchandise like software (including  games
and  applications), books and media-related products like CDs  and  VCDS
are  the  most wanted commodities.  Unfortunately for manufacturers  all
these products are the most heavily pirated, with the last estimation of
pirated software sales accounting for over  94% of all software sales in
China.   Pirates tend to sell their products at a tiny fraction  of  the
real  cost,  from  small stalls and street markets - certainly  not  the
A  survey conducted by CNNIC in 2001 revealed that 31.6% of online users
shopped  online because of the convenience, lower prices and  the  user-
friendly  aspects of online-shopping. Though the Young Netizens  have  a
lower  economic  capacity, their spending power can't be underestimated.
Teenagers set trends, they are always keen on adopting new fashions  and
are  easily influenced by their peers. On the other hand, they are  also
ambitious  consumers  due to their easily-come-by money   received  from
their  parents.  Very few Chinese students hold down part time jobs,  as
rural  workers often look to the service industry in the big cities  for
their  livelihood.  The high percentage of bank cards  is  also  slowing
breaking  down  the obstacles in the way of online payment.  Hence,  the
major  potential  perceived problems of Netizens are:  the  security  of
online-exchange  and the post sale service. If these problems  could  be
successfully solved, the future of online-shopping is much brighter.
Figure Source: CNNIC
The problems of online trade concerned by Chinas' Internet users (2001)

Source: CNNIC
Online swap/auction
Establishing  price  through negotiation is almost a  daily  routine  in
China, the Internet offers Netizens the opportunity to discuss prices in
"the  virtual  flea market" as one student put it.  With the  successful
experience  of  American counterpart eBay, " Bright minded  Chinese  are
gung-ho,"  said one student -describing the rush to emulate  the  trend.
The  'newness'  of  bartering online has attracted  many  Chinese  Young
Netizens,  about  80%  of  the users of Eachnet,  one  of  China's  most
successful  online auction sites, are young people age from  18  to  30.
Some  youthful  users also treat it as the place to  make  their  pocket
money,  selling off bits and pieces around the house that maybe Mom  and
Dad  won't  miss,  which  is partly the reason the  auction  sites  have
flourished.   Eachnet unfortunately introduced charges last  August,  to
weed  out  the  'non-serious'  sellers, which  somewhat  dampened  their
Figures: Eachnet
China's main auction/swap websites:
Name                                    Description
Eachnet      China's most famous auction site, welcomed among young netizens.
Clubciti         Site designed to face the all Chinese society without the
                                   national boundaries.
Coolbid                     Largest e-commerce site in Taiwan,
Lalasho                        Preshopping orientation site.
(source: Interfax, comments from students)
Consumption orientation
In  spite of shopping online, Young Netizens still prefer to shop in the
real  world.   Advertisements play an important role in  their  behavior
while shopping.  Besides their peers suggestions, Ads, appearing on web-
sites, Television, newspapers and magazines are usually define their pre-
shopping orientation in deciding what to buy.  Some world famous  brands
like  Nike and Coca Cola, who set up their own unique trademark  brands,
are  easily  accepted by these youngsters. A unique consumption  culture
has gradually formed among China's Young Netizens.
The  portrait of China's young netizens (age from 18 to 24)  consumption
tendency, as defined by Interfax research

      Digita MobileFashio  Food  Drink Music  Movie   TV   Radio Magzin Comic
         l   phone    n                                           es /    /
      gadget Brand  Brand                                        NewspaCartoo
         s                                                        pers   ns
What' Digita MotoroEsprit MacDon Coca   Pop  Hongko  MTV    FM    ELLE Japane
s        l     la     ;   ald's  Cola  songs ng and Discov 103.7 South   se,
hot?  Camera Nokia swatch  KFC   Pepsi  from Americ  ery    FM   Weeken such
         ;   Ericss   ;   Pizza        Hongko  an   Channe 101.7   d;    as
        MD;    on   Nike;  Hut          ng,  moives   l          ShanghDetect
       MP3;                            Taiwan   .                  ai    ive
       PDA;                             and                      weeklyKonan,
                                       wester                      ;     and
                                         n                       Shengj Slam
                                       countr                     iang  dunk.
                                        ies.                     weekly
Where   Big   Cell   Big  Around Every RecordTheate Music  Radio  News Shangh
to     malls phonesdepart  the  genera stores  rs;  channe  set  stalls  ai
get    like    '     met  street   l     .     and    l,         aroundforeig
it?   Bainao storesstore.   s   stores       DVDs & Docume        the  n book
      hui(SH around                           Vcds  ntary        streetstores
         )    the                             rent  channe         s.   , and
             street                          stores   l.                news
               s.                               .                      stalls
(source: Interfax, comments from students)
The End
More students comments:
"The  virtual  community demonstrates a brand new way  of  life,  almost
everything could be done through Internet in the near future."
"China's  Young  Netizens  are the leading  group,  whose  demands  will
directly influence the climate of China's Internet."
"It  is  clear that in this furious Internet competition,  who  win  the
hearts of Young Netizens, who win the battle."
Interfax  reports,  IQPC's  Teen China, CNNIC:  China  Internet  Network
Information Center affiliated with the Chinese Academy of Science.

At  the  Teen China event, attended by Interfax, marketers explained  their
strategies for attracting young consumers in China, through the Internet, e-
mail and other media.
Gilad  Coppersmith, business development manager of McCann  Erickson  China
said  :"Apart  from  the Internet, I really don't think there's  any  other
media  in China that especially is doing a good job of appealing to youth."
Coppersmith went on to say that he still feels that there is a gold rush at
present,  as  foreign companies attempt to establish a  media  presence  in
China.   "Pearson's (Pearson Broadband) recent deal with  CCTV  will  allow
them  to  broadcast their programs nationwide, and at the same time promote
their  other  products with the media time made available to  them.   Today
companies  should  think about creating their own media  to  promote  their
products,  and that media can eventually pay for itself in the long  term,"
Coppersmith said.
Soo  Yee  Kim, from Jigsaw International said that following her  company's
research   into  the  market  they  found  that  China's  youth  are   very
sophisticated, and that they often visit company web-sites to check out new
products, especially to see that in China they are getting the best and the
latest  models of products like mobile phones.  According to Kim  the  most
popular  company  web-sites and brands are sites like  and  Following her research Kim found that Korea's Samsung was
considered the best brand for mobile handsets among China's youth,  linking
to  the  current Korea fad in China.  Kim also pointed out that the  banned
Taiwan TV series F4, watched by many teenagers on pirate DVDs, VCDs  or  on
the Internet, was typical of the aspiration based content that appeals to a
youthful generation whose watchword is change.
Nickleodeon representatives, whose channel currently broadcast in  a  half-
hour  daily slot on CCTV 7, said they are considering launching their  web-
site in China sometime this year.
E-mail  marketers  Made  For China (MFC) made  a  strong  pitch  for  their
permission  based  e-mail site -'s services.   According  to
Byron  Constable,  president  and  co-founder  of  MFC,  his  site  already
registered  10 mln users this year, where Netizens log in to specify  their
preferences  for  lifestyle, entertainment, sport or  other  categories  of
information.  Constable's clients then email their targeted messages to the
groups  who  opt in to receive their messages.    According to Constable  a
winning e-mail will be forwarded to the Netizen's friends.  To succeed an e-
mail  has to be visually interesting, include sounds, be quirky and clever,
and  not  to  obviously  an advert to appeal to Netizens.   Constable  then
proceeded to show the conference flash animations featuring Liu Mang Tu  (a
Korean  animated rabbit) and Xue Cun (an obscure singer made  famous  by  a
flash  animation  of one of his songs), both winners in  the  viral  e-mail
sector.   To produce an e-mail flash animation in China Constable estimated
a  price tag of about USD 1,800 for design, and RMB 1000 (USD 120) per 3000
targeted users to send it through an e-mail marketing company

Bosses of an Internet bar in Wuhan expelled a customer in disgust, after
he  lived  on the premises for 60 days.  According to Wuhan  Wanbao  the
customer  took  advantage  of a monthly card,  which  allowed  unlimited
access  for  the entire month.  The management were surprised  that  the
customer  in question refused to leave the bar, he played one particular
game  non-stop, eating two ordered in boxed lunch meals and a packet  of
instant noodles a day, drinking complimentary mineral water, sleeping on
the   computer  desk,  and  only  using  the  restroom  facilities   for
rudimentary  sanitation.  After he had used up two of the monthly  cards
the  Internet  bar refused to sell him another, "after 60  days  without
changing clothes or bathing other net explorers would not dare to sit by
him," the manager of the bar told the paper.

While  China's Internet population has grown to over 54 mln  this  year,
the  third  largest  in the world after the U.S. and Japan,  competition
among  Internet  access service providers also has heated  up.   Chinese
netizens  now  can  get access to Internet via 9 separate  technologies:
PSTN, ISDN, DDN, LAN, ADSL, VDSL, cable modem, PON and LMDS.
The  narrow  band  PSTN (Published Switched Telephone Network),  or  the
traditional  dial-up,  is the most widely used  Internet  access  means,
which  only needs a telephone line and a modem costing several  hundreds
of  Renminbi  (tens of U.S. Dollars).  The highest PSTN Internet  access
speed  now  available is 56k/s.  Users have to pay both Internet  access
fees  and telephone fees under the postpaid mode, or buy Internet access
cards under the prepaid mode.  Common billing rate for PSTN is about RMB
4 (USD 0.48) per hour.
ISDN  (Integrated Service Digital Network) used to the best  choice  for
Chinese netizens to enjoy faster Internet access speed, which can  reach
a theoretical maximum rate of 100-128 k/s.  But actually access speed is
much  lower,  and  the  narrow  band ISDN does  not  support  high-speed
applications like VOD (video on demand).  ISDN needs a network  terminal
NT1  and an ISDN adapter.  An external network terminal costs about  RMB
1,000 (USD 120) while an internal terminal is priced RMB 300 (USD 36) to
RMB  400 (USD 48).  Monthly subscription fee of ISDN is about 1.5  times
over  the common telephone line, and actual Internet access service will
cost  double that of the PSTN.  An outstanding advantage of ISDN is that
users can surf online and make telephone calls at the same time.
ADSL (Asymmetrical Digital Subscriber Line) and cable modem are the  two
most  popular  ways  for  broadband  Internet  accesses.   ADSL,  mainly
provided by China Telecom and China Netcom, can provide an upload  speed
between 640 k/s and 1 Mb/s, and a download speed of between 1 Mb/s and 8
Mb/s.   Always  online,  so no dial-up is necessary.   Of  course,  such
service  needs  more  expensive equipment and  a  higher  billing  rate.
Common installation fee of ADSL is about RMB 300 (USD 36) and users also
have  to pay a monthly subscription fee ranging from RMB 49 (USD  6)  to
RMB 380 (USD 45.9) according to the service they select.
Cable  TV operators are mainly providers of cable-modem Internet  access
services  in China.  Leveraging the expansive current cable TV  network,
the cable-modem now is becoming a serious competitor to the ADSL.  There
are  two  kinds of cable modems, asymmetrical speed type and symmetrical
speed  type.   The former has a same speed for both upward and  downward
data  transmission, ranging from 500 k/s and 2 Mb/s,  while  the  latter
supports  upload speeds of 500 k/s to 10 Mb/s and download  speed  of  2
Mb/s to 40 Mb/s.  Despite a similar billing rate with ADSL, the security
and  access  speed of cable modem Internet access is questioned  because
local  cable  networks are not connected and none has its  own  Internet
backbone.   Cable TV operators have to lease Internet ports  from  China
Unicom, China Telecom or China Netcom.
LAN (local area network) is the mostly used community broadband Internet
access method in China, which is based on Ethernet technologies.  It can
provide over 10 Mb/s shared bandwidth, which can be upgraded to over 100
Mb/s.  At present, China Telecom, Greatwall Broadband, Blue Wave Web and
local radio and TV operators are major suppliers of LAN services.  Users
have to pay initiation fees of RMB 500 (USD 60) and monthly subscription
fees  of between RMB 100 (USD 12) to RMB 150 (USD 18) according to  user
hours.  The comparatively low speed and the network security problem are
two major obstacles to the future development of LAN.
DDN  (Digital  Data  Network) targets more corporate users  rather  than
individuals.  Users can choose access speeds from 1x64K/s to 32x64K/s at
difference prices. A 128K/s DDN special line provided by China  Telecom,
for example, cost lease fee of roughly RMB 1,000 (USD 120) a month.
VDSL  (Very High Speed Digital Subscriber Line) can provide much  faster
access speeds when compared to ADSL with copper lines.  Upload speeds of
VDSL  can reach 2.3 Mb/s while download speeds reach 55 Mb/s.  But being
an emerging technology, VDSL can only realize effective transmission for
a  distance  of  1 km.  Long distance transmission of VDSL  still  needs
further research.
PON  (Passive  optical networks) is a also new Internet access  service,
which  includes ATM-based PON and Ethernet-based PON.  Users  share  155
Mb/s  bandwidth on one OLT (optical line terminal), and the access speed
can range from 64 k/s to 155 Mb/s.
Major  Chinese telecom operators are pushing forward the utilization  of
the  LAN-based LMDS (local multi-point distribution system), or  usually
called  wireless LAN.  The wireless access technology can bring a 25Mb/s
speed  at maximum to each terminal user, and users of each base  station
share a total bandwidth of 600 Mb/s.  If there are too many users in one
base  station,  the  bandwidth allocated to each user  will  be  greatly
narrowed.   China Netcom has launched the LMDS service under  the  brand
name "Mobile Office," for trial operations.

Following  recent announcements that Chinese authorities plan  to  clamp
down  on  Internet bar operations in more remote areas,  Beijing  Daxing
District Administration of Industry & Commerce (AIC) announced they have
recently  raided  an  underground Internet bar, located  in  the  remote
Qingyundian cattle farm in Beijing.  The AIC discovered the Internet bar
was  equipped  with  a small video camera to warn those  inside  of  any
impending raids.
The  Daxing  AIC  Qingyundian office confirmed  to  Interfax  that  this
underground Internet bar was discovered through anonymous informers.  On
the  day of the raid, the boss was not found onsite.  Five computers and
one  fixed-line telephone set were impounded by Daxing AIC together with
the small video camera. The majority of the customers caught inside were
teenage  students living in the neighborhood, some of who  confessed  to
playing  truant  frequently and indulging themselves in Internet  games.
Presently the case is still under going.
Huo  Yan, director of Daxing AIC, told Interfax that this was not  their
first  time to discover an unlicensed Internet bar in remote areas since
the  four  ministries began releasing regulations to guide Internet  bar
operations,  which have also been found in other districts  of  Beijing.
However  an  Internet bar being equipped with a covert mini  camera  was
seldom seen.
In  2002,  a series of nationwide checks was carried out by the Ministry
of  Information Industry (MII), the Ministry of Culture, the Ministry of
Public  Security and the State Administration for Industry and Commerce,
in  order  to  close down all unlicensed operators. The crack  down  was
caused by concerns over 'information security,' the effect of games  and
uncensored  Internet  access  on  students,  and  security  of  premises
following a fire in an Internet bar in Beijing.

China's Ministry of Culture (MOC) announced on June 8 that a total of 10
companies have been licensed to build nationwide Internet bar chains  in
China.  Apart  from these 10 licensed operators, the ministry  will  not
issue  new  licenses in the future, and relevant application work  as  a
result has stopped.
"All  these 10 licensed firms are big companies with operations covering
the  whole  country,"  a  senior official  within  the  Network  Culture
Department under the Ministry of Culture, told Interfax in an interview.
"Besides these 10 nationwide operators, some companies, including  China
Telecom  and China Netcom, are building regional Internet bar chains  in
certain provinces, which are licensed and administrated by local culture
authorities," he added.
10 licensed operators of nationwide Internet bar chains
Companies                                        Companies
China Youth Network Home Co.             China Antique Information
                                             Consulting Center
Beijing Zhonglu Shikong Culture               Capitel Network
Development Co.
China Digital Library Ltd.                     China Unicom
Asia United Telecom Network Co.       CEC Huatong Communications Co.
Greatwall Broadband                    Ruide Investment Holdings Co.
Source: Ministry of Culture
The  Chinese  government has greatly enhanced control and regulation  on
the  booming Internet bar industry after a fire broke out in a  Beijing-
located Internet bar that led to 24 deaths and 13 injuries. During  last
year's  massive  rectification campaign, more than 3,300  Internet  bars
were  shut  down.  It is roughly estimated that there are  over  over  100,000
Internet bars all over China. The Ministry of Culture is seeking to form
nationwide Internet bar chains in a bid to phase out small Internet  bar
operations, which are very difficult to monitor and regulate.
Read China to set up 2,500 Internet bars across China within 18 months 

Read China, one of the major Internet service providers in China, will  set
up  approximately  2,500 Internet bars across China  within  one  and  half
years. The company plans on becoming a leader in China's Internet bar chain
industry  within two years, Dai Shuyu, a PR official with Read China,  told
Interfax in an interview.
Read China's Internet bars across the country will be set up in two styles,
corporate-owned bars and franchise bars. Although the corporate-owned  bars
will be firstly set up as models for local franchise bars, the majority  of
the  company's Internet bar chains will be franchisee bars in  the  future,
said Dai.
The  management of Read China's Internet bar chains will be conducted under
a  principle  of  "five  identifications" and "one  centralization".  "Five
identifications" entails that all of the company's Internet bars  must  use
identical   logos,   identical   operation   methods,   identical   service
regulations,  identical ISPs and identical terminal software systems.  "One
centralization"  means  that  all the terminal  PCs  inside  the  company's
Internet  bars will be monitored by a central management platform,  located
in the corporate headquarter of Read China.
Read  Investment Holdings, the parent company of Read China, is one of  ten
companies  that  have been licensed to build nationwide  Internet  bars  in
China. Furthermore, China's Ministry of Culture (MOC) has already announced
that  it  will not issue new licenses in the future upon such applications,
as Interfax previously reported.
The other nine licensed companies are China Youth Network Home Co., Beijing
Zhonglu  Shikong Culture Development Co., China Digital Library Ltd.,  Asia
United  Telecom Network Co., Greatwall Broadband, China Antique Information
Consulting   Center,  Capital  Network,  China  Unicom  and   CEC   Huatong
Communications Co.

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