MEDIA-I: China profits to soar despite restrictions

<p>A report by the International Data Corp (IDC) has found that the </p><p>Chinese online community is heading for profitability despite security </p><p>concerns, government restrictions and an underdeveloped </p><p>infrastructure. </p><p><BR><BR> </p><p>The report said that although red is a colour signifying good luck and </p><p>is the national colour of the country, it is also the colour used to </p><p>record negative revenues, which have dogged China's pioneering internet </p><p>companies. </p><p><BR><BR> </p><p>But it shouldn't be long however, before the Chinese online community </p><p>begins to bring in profits. </p><p><BR><BR> </p><p>In 2000, China's ecommerce revenue hovered at USdollars 2.1 billion. IDC </p><p>expects a takeoff to USdollars 26 billion by 2004, propelling China to </p><p>the number three ecommerce market in Asia, after Australia and </p><p>Korea. </p><p><BR><BR> </p><p>The IDC also noted in its report that Chinese consumer spending on the </p><p>internet showed signs of maturing. </p><p><BR><BR> </p><p>In a survey of respondents to banner ads during the summer of last year, </p><p>more than one-third of the 10,000 Chinese respondents reported making </p><p>one or more web purchases during the past 12 months. A total of 71.7 per </p><p>cent said they were either "somewhat likely" or "very likely" to do so </p><p>in the coming 12 months. </p><p><BR><BR> </p><p>Chinese internet users who still shop online primarily for computer </p><p>hardware and software, now focus more on media purchases such as books, </p><p>magazines, CDs, toys and games, said IDC. </p><p><BR><BR> </p><p>Despite the relatively small number of people who have credit cards in </p><p>China, the IDC survey found credit cards the most common form of payment </p><p>for business to consumer (B2C) transactions. Those without credit cards </p><p>paid cash on delivery. </p><p><BR><BR> </p><p>Revenue collected over the web is expected to grow more than 11 per cent </p><p>this year reaching to at least 30 per cent in 2004. </p><p><BR><BR> </p><p>The IDC noted security and privacy concerns were key limiting factors to </p><p>revenue growth, with four out of five respondents indicating they were </p><p>"very concerned" about credit card information being intercepted and </p><p>misused on the web. These fears, the IDC said, may not be unreasonable, </p><p>given a general lack of experience with both credit cards and online </p><p>shopping. </p><p><BR><BR> </p><p>But the bad news for China is that despite the evident enthusiasm from </p><p>its internet providers and users, the mainland's regulatory environment </p><p>remains difficult to navigate for both local start-ups and Western </p><p>investors. </p><p><BR><BR> </p><p>"Censorship is still alive and well. The State Bureau of Security </p><p>prohibits release and discussion of government information on the </p><p>internet, and places the burden of enforcing these rules on ISPs, which </p><p>can be shut down if posting of state data are found on their </p><p>facilities," the report said. However, it added that regulations against </p><p>foreign investment in ISPs would be eased following negotiations over </p><p>China's entry into the World Trade Organisation. </p><p><BR><BR> </p>