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China may have world's largest online population in two years

BEIJING (AFP) - China's Internet population could overtake the United States as the world's largest within two years, but foreign dotcoms may have to wait much longer to profit from it, analysts say.

While usage will pick up as computers get cheaper and the Internet becomes more attractive, local culture and habits constitute formidable barriers to entry for overseas businesses, they said.

"I believe China will overtake the United States in less than two years," said Huang Hui, the director of the Center of Internet Studies at the Shanghai Academy of Social Sciences.

"The growth of Internet users in China is much higher than in the United States," he told AFP.

The number of Americans on the Internet currently hovers at around 210 million, an increase of little more than two percent from a year earlier, according to industry estimates and US government data.

China, on the other hand, saw its Internet population soar 23.4 percent in 2006 to hit 137 million, according to the most recent figures from the government-controlled China Internet Network Information Center.

"The growth now is gaining much momentum. We're expecting even faster growth in 2007 and 2008," Wang Enhai, director of the center's information services department, told the state-run China Daily newspaper.

Wang, too, expressed confidence that it would take no more than two years for China, already the world's second-largest Internet market in terms of people connected to cyberspace, to take over the global top spot.

"An increasing number of people are now getting hooked to the Web as PCs and Internet access are becoming affordable and Internet-based offerings diversified," he said.

The newspaper said China's 461 million mobile phone users would increasingly adopt new technologies enabling them to access the Internet while on the move.

The new statistics from the center implied that more than one in 10 Chinese had become an Internet user.

"The online population now makes up 10.5 percent of the total population," the center said in a statement on its website. "In Beijing, it now exceeds 30 percent of the total population for the first time ever."

With user penetration hitting 10 percent, the Internet will create a "vast array of opportunities" for business, according to the China Daily.

"As Internet users approach 10 percent of China's population, the Internet is becoming a 'mainstream medium'," the newspaper quoted investment bank Morgan Stanley as saying.

Even so, the actual impact on business remained to be seen, according to Huang of the Shanghai Academy of Social Sciences.

"China can't catch up with the United States in terms of e-commerce," he said. "The Americans have advanced and secure online payment systems, and credit cards are universally used."

In China, online purchases are typically delivered to the door, with cash payment taking place directly.

Equally serious, from a foreign perspective, is the limited luck non-Chinese enterprises have had so far in carving out a piece of the market.

Xie Wen, a former CEO of Yahoo! China, told the China Daily that common failures of foreign dotcoms include a lack of understanding of Chinese users' habits and slow progress in tailoring overall operations to fit the culture.

"If they don't change themselves in China, they will never win in this large market," Xie was quoted as saying.

Date posted: January 24, 2007 Last modified: May 23, 2018 Total views: 8