Chinese Dotcoms Undeterred by Forecasts of Slowdown in Internet Numbers

Chinese dotcoms are putting on a brave face despite estimates suggesting the spectacular growth in the number of Internet users could slow down this year, according to China Daily.

Analysts expect China could have about 35 million Internet users at the end of this year, implying 56 percent growth from the 22.5 million users the country said it had at the end of 2000.

Although that would mark a steep decline from last year's massive growth of 153 percent, Beijing-based Sohu.com said it was not discouraged.

"We expect the pattern of the last few years, a doubling every six months, to continue," said Caroline Straathof, spokeswoman for the company, which operates one of China's three most popular portals.

"If people have talked about a slowdown, we haven't seen it."

She said she based her views on Sohu.com's recent experience, as its user base rose 59 percent to 12.4 million from September to December, even accounting for its October acquisition of community website Chinaren.com.

While Sohu.com's growth in the past months might be hard for most dotcoms to beat, analysts said there might be a less radical slowdown this year than it seems as historical data tends to be fickle.

"The problem is a lot of the surveys have only just started, and until you get a couple more years of data under your belt, it's a bit like sticking your finger in the wind," said Sage Brennan, a Beijing-based consultant.

Observers saw several reasons why the Internet would still see healthy growth in the year ahead.

For one thing, it is about to become significantly cheaper for Chinese to go online, after the authorities decided to cut fees for surfing the web.

Fees for dial-up users will be cut to 0.02 yuan £¨0.24 cents£© per minute, from current prices ranging between 0.08 and 0.11 yuan for every three minutes, according to plans that will be implemented over the coming months.

"Given the decline in access charges, we might see a boost in the numbers," said Duncan Clark, a partner in telecom consultancy BDA China, which is based in China.

Faster Internet connections will also help get more people online, said Clark, who forecasts 36.3 million Internet users by late this year.

Shanghai, which hopes to become the country's telecom hub, has ambitious plans to eventually offer broadband services to all the city's 13 million inhabitants allowing them to surf the Internet, play online games and custom-order movies via their cable TV networks.

Meanwhile, the entry of new companies + many of them giants in the old economy + will also help the growth of the Internet, as it will broaden the services available to potential users, analysts said.

Legend Group, China's largest computer maker, has already made a name for itself in cyberspace, operating yestock.com, an online stock trading site, and TOL24.com, which is an education website.

Growth in China's Internet this year is likely to be concentrated among the young, analysts said.

"Even though most Internet users are between 17 and 24 years old, we don't expect that age group to be saturated any time soon," said Rajeev Gupta, a Hong Kong-based Internet analyst with Goldman Sachs, who expects 32 million Internet users by late 2001.

Chinese below 35 years of age make up about 80 percent of all Sohu.com's users and the company expects them to provide a major recruiting ground in the months ahead as well.

"The user base is still so small, and it's a big priority for young people to get online," said Straathof.

Contrary to many beliefs, most Chinese will get online in the year ahead from the comfort of their own homes, rather than from their work places, analysts said.

According to iamasia, an Internet measurement service, less than 30 percent of all Chinese go on the Internet via office computers, while more than 50 percent use their home computers.

In fact, the urge to get online is so large in China that it has become a factor in the robust growth of computer sales.

"There is a large number of Chinese families who want to be connected to the Internet, urged on by advertisements on TV and in the newspapers," said Jonathan Lu, a Beijing-based Internet analyst with International Data Corp.






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