Nation's Internet Fever Cools Down

China's buzzing Internet industry calmed down in the latter half of 2000 as more dotcom companies began rational business operations, leaving behind the unrealistic optimism of the start of the year, said a report from the research house of the Ministry of Information Industry (MII).

The number of Internet service providers and netizens increased rapidly in the first half of last year and reached a peak when three major Chinese portals went public on the NASDAQ mid-year. But the trend could not be sustained for the rest of the year and the growth rate slowed, said the Chinese Academy of Electronic Information Industry Development (CCID) of MII.

China had 667 B2C (business to consumer) dotcoms at the beginning of last year, through following mergers, acquisitions and bankruptcies, only 205 had survived by the end of the year, CCID said.

B2B (business to business) still played a major role in e-commerce, accounting for about 99.5 percent of its revenue by the end of the year.

E-commerce revenue for the year reached 77.16 billion yuan (US$9.32 billion), of which B2B (business to business) trade brought in 76.77 billion yuan (US$9.27 billion).

Although the B2C (business to consumer) market played only a minor part, with a revenue of 390 million yuan (US$47.1 million) during the year, its customer base expanded at a significant rate, the research house said.

Beijing, Shanghai and Guangdong are the country's havens for e-commerce dotcoms, with more than half of the country's e-commerce companies located in the three regions.

The Internet service market, which mainly includes Internet access services and domain name registration, enclosed a revenue of 5.3 billion yuan (US$640 million) last year, according to CCID.

Dial-up and leased line were still the major devices used to access the Internet and contributed to more than 80 percent of the Internet service revenue, CCID said.

China Telecom, the country's major fixed-line telecom operator, controls a major share of Internet access business.

In 2001, CCID said Internet and e-commerce will have steady growth with dotcoms changing their attitude from concept competition to service competition.

The number of netizens will grow to 27 million from 22.5 million of the previous year, CCID said.

B2C trade will see 200 percent growth with a revenue of 1.3 billion yuan (US$157 million) and B2B revenue will grow by 23 percent to reach 94.2 billion yuan (US$11.38 billion) this year, according to CCID.

But the research house also warned that the immature situation of online security, the lack of online payment systems and the low level of informatization in Chinese companies still act as a barrier to the rapid development of China's e-commerce industry.

(China Daily 02/27/2001)

In This Series

Information Industrial Output to Be Quadrupled

China Encourages Enterprises to Do E-commerce

Survey Shows Low Penetration of E-Commerce

Internet Users Up to 22.50Mn in China



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