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Weekly Press Review September 19, 1999 MII czar Wu Jichuan dropped a small bombshell on China's Internet industry Monday, telling the Financial Times in an interview, "China's government still needs to strengthen its management over the information content business. So, whether or not it is an ICP or an ISP, it is about value added services. In China, the service area is not open [to foreign participation]." Although Wu the next day claimed without further explanation that his comments had been misinterpreted, he went on to tell assembled reporters, "Anything related to the operation of telecommunications services is a clearly restricted area; it is in the regulations." If Wu left things unclear, his aides reportedly echoed his Internet comments on Friday while MOFTEC helpfully jumped in too, saying that ISP services were off limits to foreigners. All this had analysts peering into the tea leaves. Some opined that Wu's comments represented a ploy in the long-running US-China WTO negotiations. Others saw a bureaucratic struggle for control over the Internet. Madeforchina.com's David Wallerstein dismissed most of these theories, arguing that a 'hardline' stance on MII's part made little sense and suggesting that the tea leaves needed to settle before MII's true intentions would become clear. But where's the fun in that? Most companies possibly affected by the decision generally reacted with public sang froid. Sina.com's president Wang Zhidong remarked, "Because I don't know the concrete substance of his remarks, I really can't comment on the effects," while Charles Zhang, chief executive of Sohu.com, commented reassuringly "I wouldn't worry about the possibility of a complete ban because it's so vital for China's Internet industry to develop." Hong Kong firms blithely insisted that they would remain unaffected. Madeforchina.com's Micah Truman simply said, "There are a million things I could worry about. If I were to focus on all the things that cause us hardship... it would make me bitter and old." Amen. A more rattled China.com saw fit to issue a press statement, but that's what happens after investors dump your stock two days running. "We have a long history of cooperation with the Ministry of Information Industry of China and we are well positioned to take advantage of China's growing economy and the ongoing development of e-commerce in China to promote exports." Did this prompt the stock's robust recovery by week's end? More likely the bullish recommendation from Lehman Brothers, China.com's steadfast Wall Street flack. Guanxi helps on Wall Street too... Meanwhile, hopes for a quick WTO deal faded with the APEC summit euphoria, with both sides accusing the other of stalling progress and no dates set for further negotiations. Chinese Trade Minister Shi Guangsheng suggested (registration required) that hard bargaining lies ahead, telling the Financial Times, Beijing's recent conduit for bad news, that the two sides are "far apart," adding, "To be honest, the views of our two sides are very different." Concerning the much touted deal offered by Zhu Rongji in April, Shi commented, "Within the list there are some items that China has committed itself to, but many are things that China has not agreed to and will not agree to in the future." U.S. Senate Majority Leader Trent Lott questioned whether the U.S. Congress would grant China permanent nondiscriminatory tariff treatment this year, something Beijing very much expects as part of any deal with the U.S. on its WTO accession. "I don't see it as a likely possibility," he said. Hold those champagne corks. And what about those forlorn soon to be foreign partners of China Unicom. MII's Wu sportingly said he would give recalcitrant foreign firms a 'yellow card,' the warning for rough play in soccer, essentially warning foreign investors that they risk losing rights to operate in China. Hong Kong's broadband power-in-waiting Pacific Century CyberWorks plans on raising more than $256 million through a share placement that the company calls the "largest Internet-related financing exercise in Asia outside of Japan." The funds will help finance the development of Pacific Convergence Corp., the company's joint venture with Intel, which will begin broadcasting a free, English-language satellite television channel next year. Richard Li's cyber flagship posted meager losses of only $4 million for the first half of 1999 in preparation for the stock offering. Pacific Century CyberWorks' parent company, Pacific Century, meanwhile inked an agreement with the Hong Kong government allowing work to begin on Hong Kong's Cyberport. Billed as a regional hothouse for developing multimedia and interactive services, the build-it-they-will-come project has drawn sharp criticism for having been awarded without public tender. MII's vice-director of planning, Wang Jianzhang, announced that China will be capable of making more than half of the components for mobile telecoms equipment now assembled domestically, noting that Beijing has already allocated $47.6 million toward this goal. The fourteen companies chosen to lead China's mobile phone vanguard in the next century will no doubt appreciate more domestic suppliers, as will those officials wishing to encourage government institutions and state-owned enterprises to buy Chinese. You don't have to be a weatherman to see which way the wind's blowin'… An official from the national copyright office told weekend conference on intellectual property rights organized by ChinaByte that China would step up the fight against growing copyright piracy on the Internet. Haidian District People's Court in Beijing had already taken up the cudgel, ruling that Sichuan ISP Dongfang Information Company would have to pay Rmb 2,000 and apologize on the front page of Computerworld Daily for ripping off Read Online Information Technology's homepage. Read Online had been seeking Rmb 199,900. Cudgel or feather? China Network Communications received approval from the Ministry of Information Industry to offer IP telephone service along with the China's top three telecoms providers, China Telecom, China Unicom and JiTong Communications. Other companies may soon join the fray. Musically inclined surfers can now follow the Chinese music scene at MTV's new Chinese-language website, MTV Chinese, with a choice of simplified and traditional characters no less. Not one for modest ambitions, general manager Paul Meyers proclaimed, "MTVChinese.com aims to be the number one Chinese music Web site in the world." Rumors abound that AOL's chairman and CEO Steve Case will visit Hong Kong later this month to bless the opening of AOL's Hong Kong ISP service. Hoping to keep their head honcho's visit a surprise, local AOL executives have refused to comment. Unfortunately, Hong Kong's American Chamber of Commerce has already publicized a luncheon at which Case will speak. Oops. China.com, exclusive distributor of AOL services in Hong Kong, will handle network services, marketing and promotion, and develop and provide local content in both Chinese and English for the new service. Yikes! Following cuts by CERNET and China Golden Bridge Network, ChinaNet reportedly plans to cut its access fees in half by the end of the year, bringing hourly prices down from Rmb 4 to Rmb 2. NASDAQ Fever: Despite Hong Kong GEM's pretensions, NASDAQ remains the Holy Grail for Greater China IT companies looking for some quick cash. Jitong Communications, China's number three telco is now looking to lure Wall Street dollars into its coffers in return for a slice of its satellite communication, Internet access and Internet value-added services (which include the Golden Bridge network). Hong Kong's Wharf (Holdings) wants to hive off its fast-growing cable divisions for a possible listing on NASDAQ, which analysts estimate might haul in more than $2 billion. Not to be outdone, property rival Pearl Oriental Holdings may soon foist its Internet online stock trading operations on NASDAQ traders. Pearl has lately gobbled up several Chinese-language websites, the latest being a 60% chunk of ebid.com.cn, one of China's fledgling online auction sites. One of the Taiwan's more popular portals, Kimo.com hopes to ply its 1.6 million daily page views, chat-room and want ad services, and robust operating losses on NASDAQ's bourse. Because it loses money, Kimo can't list on Taiwan's stock exchange. Now there's a thought. Y2K Alerts: Following recent Y2K tests in the power and mobile telecoms industries, China's banks and stock exchanges underwent Y2K testing yesterday with no apparent ill effects. The U.S. State Department meanwhile warned in a report on global Y2K preparations that parts of China faced potential service disruptions because of the computer problem. While coastal areas are generally well prepared, inland cities face potential Y2K disruptions in banking, communications, medical services and power. Britain's Foreign Office chimed in, singling out China's hospitals as cause for concern. Many Chinese don't seem to know about the problem. According to a survey of 4,500 residents in eleven major cities, one in four Chinese have no clue what the fuss is about. Only 63% of those polled could provide a clear definition of the computer glitch, with some of the rest thinking the problem referred to worms, viruses and corrupt officials. Probably problems worthy of more concern too. Potpourri: The Radio, Film and TV Information Network Center will form the China Cable TV Network Group, which set up two subsidiaries, one involved in the telecoms and the other in value-added services. Telecoms equipment maker Eastern Communications Co. has set up a joint venture with Texas Instruments for research, development and design of digital information products. California-based EnReach Technology launched Focus China, a China-based portal focusing on Internet news, multimedia, and e-commerce that targets users of set-top boxes, VCD players and other devices that allow TV Internet access. Chinese in 30 cities and provinces can now surf the Web using mobile phone services offered by recently formed China Mobile Communications Group, with new customers able to phone and surf for free until January 1 of next year. Beijing Telecom Paging Co. will route paging signals through satellites beginning next month, supposedly allowing users to page within a larger area with fewer problems. California-based Network Equipment Technologies just signed three IP networking equipment contracts with provincial Post and Telecommunications Administrations in Shaanxi, Gansu and Jilin, with financial institutions and insurance companies the intended users of the voice and data transmission services. Shanghai's Public Health Education Information Service Net opened , providing readers with medical research, medical knowledge, health regimens, food recipes and community health care service. Vancouver-based Xin Net Corp. launched its new auction site, www.xinbid.com. Claiming to be China's the first online live auction site, xinbid.com will offer up goods for sale to Chinese reading customers in China and beyond. The Canadian company's operating arm in China, Xin Hai Technology, also runs ISPs in Beijing, Shanghai and Shenyang. Oh, Mr. Wu… Waste of Bandwidth?: China 10k.com in conjunction with Asia Online Ltd., Microsoft Hong Kong Ltd. and Tiger Information Systems will broadcast China's National Day parade live. |
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