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Weekly Press Review September 10, 1999 China's WTO bid dominated much of news later in the week. After three hours of talks with Chinese Trade Minister Shi Guangsheng Thursday night, U.S. Trade Representative Charlene Barshevsky pronounced, "The discussion was constructive." That's at least better than a 'frank and open exchange of views' (diplospeak for shouting), but not overwhelmingly positive. Hinting at lingering disagreements, Barshevsky said that outstanding issues "must be resolved on a mutually satisfactory basis." Earlier U.S. demands for more concessions from China drew an expected frosty response from Beijing, which insisted that China enter the world trade body under terms granted other developing countries. An unnamed Western diplomat (read U.S. official) further muddied the waters, saying that China's top negotiator Long Yongtu had hedged on whether China would stick by the April deal that Clinton turned down. Foreign telecoms companies hope that China's April offer of 49% ownership in "information communications service enterprises" will stand. Chinese officials earlier in the summer, however, suggested that 25% might be a more realistic figure. New rules on foreign investment offer scant relief, promising only that foreign investment in value-added telecoms will be allowed on a trial basis after China Telecom's monopoly is broken up. Keep hope alive! The week's pickings began well enough with the apparent good news that Chinanet will lower its Internet access fees, following price reductions by CERNET and Golden Bridge Net. Zuo Feng, the deputy director of China Telecom's Data Communication Bureau, however claimed no knowledge of any fee reduction, stating that China Telecom did not set prices. What about merely 'guiding' them? Further lifting prospects of Internet for the masses, Malaysia-based MyWeb announced that it has already distributed more than 10,000 set-top boxes in Beijing, all of which connect to MyWeb's portal. With a growing, captive audience, the portal not surprisingly is attracting more than one million page views per day. Sohu.com has jumped into the online auction business, putting Compaq computers up for sale for two weeks beginning yesterday. Sohu thus joins fellow portal power Netease in the race to lure Chinese to trade goods online. Shoppers with a China Merchant Bank debit card can buy online; others must fork over cash. This new venture comes on the heels of a Business Week article cataloging Sohu's many problems, including arguments with investors over discrepancies in advertising revenue figures. Sohu executives nevertheless enthused about their mini-auction. "The cooperation with Compaq established a good example of co-branding," Sohu CEO Charles Zhang proclaimed. "Compaq has a good reputation in the market for its high quality products and after-sales service." High quality maybe, market share no. China's domestic manufacturers are drubbing foreign giants like Dell, Compaq, HP and IBM according to a recent IDC report, particularly in the growing home consumer market. Compaq in particular has struggled, having lost market share last year. Trying to regroup, the company ceded all marketing authority to its Shenyang-based Chinese partner Dawncom. "We are working with someone who understands the market better than we do," admitted China marketing director Tony Leung. How far they fall... Armed with a Harvard MBA and $600,000 in seed money, Shao Yibo will take on Sohu and Netease in the battle for China's Internet auctioneers. His company, Eachnet Information Consultancy, through its website has only sold 100 items, but his competitors haven't exactly burned up the cash register either. "It's definitely the David and Goliath kind of thing," Shao said. "I presume my competitors will be many." Bill Gates started small too, but then he had the sense to leave Harvard. Another unknown prospective auctioneer, Twinbays.com of Reston, Virginia, recently launched its own auction website. The company says that it has contracts with China's 10 largest auction houses and a database of 14,000 affluent Chinese "who are not afraid to buy over the net." It also claims to have held China's first Internet auction in China in 1997 and to be the first first e-commerce site in China to accept both domestic debit or credit cards and International credit cards. So many claims... With backing from Microsoft and Japan's Softbank, undersea cable company Global Crossing announced plans to wire Asia. Called East Asia Crossing, the envisioned $1.3 billion dollar, 11,000-mile network will link Japan, China, Singapore, Hong Kong, Taiwan, South Korea, Malaysia and the Philippines with fiber-optic cable capable of 80 gigabits per second (1.2 terabits using dense wavelength division multiplexing). The Asian backbone will in turn connect to Global's networks in North American, South America and Europe. The joint venture will also build fiber-optic rings around major cities in the region and terrestrial systems to link together its undersea cables. Both Microsoft and Softbank promised to use the network for all their regional traffic. To help lay all this cable, Global earlier in the week acquired a 49% stake in S.B. Submarine Systems, a Chinese cable-laying company otherwise owned and controlled by China Telecom. This purchase gives Global access to two more cable-laying ships and a cable yard in Shanghai. Unfortunately, these Chinese ships won't be bringing all this bandwidth to Chinese surfers just now as China doesn't get connected until the project's second phase finishes in June 2001. Cable's shares on NASDAQ (GBLX) jumped 26% on the news, something that drew sharp comment from Fortune's Amy Kover: "Did you ever notice people always talk about the population when they turn bullish on Asia? It's like standard throat-clearing procedure or something. Meanwhile, what happens to all those people when Asia crashes? Just wondering...." Within China, Fiber-optic links will connect the cable TV networks of Beijing, Tianjin, Hebei, Shandong and Henan by October 1. By the end of the year, 14 cities and provinces will be inter-connected. China's State Administration of Radio, Film and Television hopes that by lacing the country with broadband cable it can challenge China Telcom's virtual monopoly on Internet pipelines. Confirming earlier reports, Sina.com's top officers played musical chairs over the weekend. Sina.com's president, Wang Zhidong, assumed the CEO's mantle from Jim Sha, who in turn bumped Daniel Chiang from the chairmanship of the company's board of directors. The management shakeup comes as Sina.com, one of China's top portals, considers an IPO later this year. Australia's LibertyOne Ltd. kept its PR flacks busy this week, making three separate acquisitions in Hong Kong: a 75% stake in NetPower, a commercial website designer; a 8.3% slice of HT Hypernet, a website designer and portal focused on property; and a 25% chunk of Chinese Books Cyberstore, an online seller of Chinese books and music that sadly can't sell its wares in China. Lusting for a NASDAQ listing, the web solutions company from Oz clearly believes that Hong Kong will server as a stepping stone to China's vast markets. "By forging partnerships here, we want to use Hong Kong as a gateway to expand our presence to the Greater China market," said company COO Alan Hyde. "As an Australian company it's obviously very difficult to just turn up in Beijing and try to do business." Perhaps the just signed Australia-China e-commerce agreement with ease the way. Nah... Larger, better known companies are following this same well-worn path to China's blandishments. Early in the week rumors surfaced in Hong Kong's Chinese press that AOL and China.com would launch an ISP in the territory before year-end. The Internet behemoth soon after confirmed the rumors, announcing that the much delayed venture -- AOL Hong Kong -- will offer a full range of online content and e-commerce services. Other reports even have AOL Chairman and CEO Steve Case arriving in Hong Kong within the next two weeks in time for an official launch on September 28. Meanwhile, New World Cyberbase could only deny rumors that AOL might take an interest in the company. While some companies come, others go, voluntarily or not. France Telecom may join the growing list of unhappy foreign companies involved in 'zhong-zhong-wai' partnerships considering challenges to a recent MII edict that China Unicom jettison these now-banned arrangements by the end of this month. Less inclined to launch legal bombs, Hong Kong investors in Unicom's dreams nonetheless share the pain. One downside of one country, two systems... Swedish telecoms giant Ericsson has every reason to love China Unicom, having landed yet another GSM equipment contract, this time in Jilin, bringing the company's 1999 total to $120 million. Such bounty may not last forever, as foreign domination of China's mobiles markets does not sit well with MII's died-in-the-wool planners. Another threat to Ericsson's run could come from the Universal Wireless Communications consortium, which is promoting its TDMA standard in China. The group, which includes AT&T Wireless and BellSouth Cellular among others, hopes that its open standard will prove attractive to Chinese officials seeking possible alternatives to the now dominant GSM standard and the still proprietary CDMA standard. Then again, China may just wait for 3G. Hong Kong's Pacific Century CyberWorks apparently bolted from talks about investing in Star East Information Technology (SEIT), when someone from SEIT's holding company impolitely revealed the names of the three suitors. Yahoo! and China.com were mentioned as the other two possible investors in a venture largely focussed on Waste of Bandwidth candidate stareastnet.com. Hong Kong's premier Internet company will no doubt find better avenues to expand businesses now worth $6.8 billion according IPO-hungry Credit Suisse First Boston. CyberWorks' parent company, Pacific Century Group meanwhile has joined with DaimlerChrysler Aerospace in a partnership that eventually provide global high-speed Internet access through a fleet of satellites. The new venture, called PC Matrix, initially will lease access on one of AsiaSat's satellites and concentrate on serving Asia. PC Matrix's first satellite won't go up until 2002. First Asia, then the world... Hacker Report: Hackers may not have taken the week off, but their exploits stayed out of the news for the most part. Proving that the US government still needs a few good webmasters, one stoned American cracker decided to deface the U.S. Embassy in China's U.S. website. His handiwork included racist epithets that he later claimed were intended for ethnic Chinese members of his group. Y3ah, rit3. Linux Watch: Working with U.S.-based LinuxOne and iNTRAS and Kingstar, open source Linux publisher MandrakeSoft has opened two development centers in China to push alternatives to Windows operating systems. The group will set up a distribution channel for Linux software and support, and promote Plinux, iNTRA's Chinese language version of Red Hat Linux. In Hong Kong, Silicon Graphics started selling a new server pre-loaded with the Linux OS, hoping Linux-based machines will account for 25% of the company's revenue in the South China region within three years. Linux software developer Web Force Unlimited will help market the server in Hong Kong. Potpourri: Cisco Systems and Cable & Wireless HKT extended an existing partnership that combines C&W HKT's broadband and interactive multimedia capabilities together with Cisco's know-how in IP communications and e-commerce. Microsoft Corp. and Ufsoft Software Group, a leading financial software developer in China, will jointly develop internet finance software that will provide finance, management, accounting and other corporate applications on an internet platform. China Merchant Bank will cooperate on e-commerce with the Bureau of Post and Telecommunication, China Southern Airlines, and Sina Net, with offered services to include corporate banking, retail banking, online securities trading, online shopping, and online payments. The Bank of China has agreed to carry an Internet access card offered by Xin Hai, local ISP and operating arm of Vancouver-based Xin Net. Hong Kong-based trade publisher Asian Sources launched portals to its product sourcing database in both Hong Kong and Taiwan. Hong Kong Internet startup Outblaze Limited has created a community site for News Corporation's Star TV -- Star TV Club -- that offers web-based e-mail, chat rooms, message boards, calenders, and mailing lists. Agreements with nearly 100 publishing houses supposedly in hand, Chinese website Mount Everest-Digital Peak plans to sell 100,000 books online, making it China's largest online bookstore. Chinese pop music fans can rest easy now that Musicremark.com offers a wide selection of Chinese popular music. China's office workers could find workplace surfing more difficult if Chinese companies install Online Detective, an online monitoring program software put out by Shanghai Rainman Software Development Co. Xian has launched a new website in both Chinese and English featuring 200 undoubtedly wonderful projects in need of funding. Waste of Bandwidth?: China's 72-hour Internet torture test actually proved amusing, if not terribly useful. Eleven hardy cyber-guinea pigs survived all three days locked in a room with only a computer connecting them to the outside world. A twelfth bailed after failing to find any food or drink. Don't stop here, read China Youth Daily's blow-by-blow four-part account. |
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