[registrars] Internet in China

["Robert F. Connelly" <rconnell@psi-japan.com>]

Dear Colleagues: Perhaps you'll find some interest in this newsletter
about China.  Regards, BobC

CHINA INFORMATION TECHNOLOGY LAW NEWSLETTER

Vol. 3, No.10 - August 2, 2002

TOPICS THIS ISSUE:

• Internet Cafes Reopen In Beijing
• 46 Million People Used The Internet In China
• China Unicom to Invite CDMA Bidding
• Legend Holdings Unloads Its Yestock.Com Shares
• China Internet Portal Sohu Reported Profit

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Internet Cafes Reopen In Beijing

Approximately 30 Internet cafes have reopened recently in Beijing city after passing safety tests. 

They are the first batch of the city's 2,400 internet cafes given government approval to resume business after a fire killed 25 customers at an Internet cafe in Beijing's university district last month. Approvals were given by the Ministry of Culture, the Public Security Bureau and the telecommunications administration. 

These Internet cafes will operate under strict new regulations, such as, no smoking within the premises, close of business by midnight, windows must be unbarred, the premises must have fire extinguishers and all computer users must be registered. Further, in line with China's strict controls on Internet contents, materials containing pornography, violence or gambling will not be allowed. 

South China Morning Post reported on July 18 that the Hong Kong government suggested that those below the age of 16 must be accompanied by an adult if they wish to enter an Internet cafe late at night. Hong Kong, however, has not moved to tighten control of political content accessed via the Internet. 

(Source: Associated Press)

46 Million People Used The Internet In China

According to "China Internet Network Information Centre", by the end of June this year, almost 46 million people used the Internet in China compared with 33.7 million at the end of year 2001, an increase of more than a third from the beginning of this year. 

There were a total of 16.1 million computers with access to the web and more than 125,000 Internet domain names using the country's .cn suffix. However the figures showed that on-line access is a highly regional affair, with more than 40 percent of Internet users based in just three prosperous places, Beijing, Shanghai and the Guangdong province, while one percent of web surfers were based in the country's impoverished western regions. 

Internet users were also predominantly young, with almost 40 percent aged 24 or below. 

(Source: China Daily)

China Unicom to Invite CDMA Bidding

China Unicom, the second largest mobile telecom carrier in China, launched its CDMA (code division multiple access) network on January 8 this year. It is now busy conducting field trials for equipment from different telecom equipment vendors. Bidding will start soon on equipment procurement for the network upgrade. 

China Unicom spent more than 24 billion yuan (US$2.9 billion) last year on the first phase of the construction of its CDMA network. It was reported that the upcoming upgrade would also cost the company billions of yuan, although an exact figure was not available. 

In last year's equipment purchasing of China Unicom, international giants, including Motorola, Nortel, Ericsson and Lucent, jointly collected 70 per cent of the contracts. Domestic vendors ZTE (Zhongxing), Huawei, Datang, Jinpeng and Dongfang shared the remaining 30 per cent. Domestic companies may get bigger shares this time because they offer reliable quality and major price advantages. 

China Unicom's procurement has become particularly valuable to equipment vendors due to the shrinking global investment in the telecom sector. Almost all international telecom equipment vendors are suffering heavy losses because many operators have stopped buying new equipment. However, China's telecom market, especially its mobile sector, maintained a steady growth in the first half of the year with more than 5 million new users a month. 

(Source: USITO)

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Legend Holdings Unloads Its Yestock.Com Shares

China's largest PC manufacturer, Legend Holdings, has sold all its shares in the mainland's financial Web site Yestock.com for 20 million yuan (US$2.42 million). 

Legend Holdings acquired 40 percent of the shares in Yestock.com for 300 million yuan (US$36.23 million) in August 2000. As a result of the said acquisition, Legend Holdings became the largest shareholder of Yestock.com. 

Thus far, Legend Holdings has unloaded two Internet service companies as in June 2001, Legend Holdings successfully sold out its shares in FM365. 

In June 2001, Legend Holdings and Internet giant AOL announced a joint venture, whereby each party held 51 percent and 49 percent shares, respectively. Their pledged investment was US$100 million each in the joint venture. 

The US$100 million from Legend Holdings was secured with FM365 assets, including FM365 staff, servers, computer equipment and software, which means that except for FM365, Legend Holdings will not input a substantial amount of money into the joint venture, according to International Finance News. 

( Source: ChinaOnline LLC)

China Internet Portal Sohu Reported Profit

According to Beijing Morning Post, China's major Internet portal Sohu.com reported its first ever profit in the second quarter of the year. 

The Nasdaq-listed company posted a revenue of 6.13 million US dollars in the second quarter, with a gross profit of 49 percent. The company's revenue rose 36 percent in the second quarter over the previous quarter, or 113 percent year-on-year. 

In fact, Sohu said this is the eighth consecutive quarter in which it has posted double-digit revenue growth. 

Advertising contributed 55 percent of Sohu's revenue in the second quarter, due mainly to the increase in advertising during the World Cup season. Other major revenue sources include short message and personal value-added services. 

Sohu's chief executive officer Zhang Chaoyang said he is very satisfied with the first quarterly profit, which has come six months earlier than expected. He is looking forward to the company's first profit- making year in 2003. 

(Source: 2002 Xinhua News Agency)

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The China Information Technology Law Newsletter is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.