Chinas online community
As Chinas online community, currently the largest in the world with some 221 million users, continues to grow, venture capital firms and Internet and new media companies have been rushing to get a chunk of this enormous market. But ambiguity and uncertainty over Chinese government restrictions on the industry have left many investors bewildered.
Earlier this year, Chinese authorities issued warnings to numerous websites offering video-sharing facilities and began tightening the censorship of certain online content. Realizing that this was beginning to send shockwaves through the thriving Internet industry, potentially leaving companies about to invest reconsidering their plans, the government backtracked and issued 247 licenses to video-sharing websites. Most of the companies that received licenses are television stations. The Chinese government posted a list of those granted permits on its website sarft.gov.cn. Amongst those given the green light for video-sharing features are various local news agencies including state owned, Xinhua.com and People's Daily, Others included on the list are Sohu.com and Tencent Holdings.
Facebook made an unobtrusive entry into the Chinese social networking scene last week from its sunny, Palo Alto, base in California. But it may need to open a local operation if it wants to break into the Chinese social networking market. Well-established local social networks look set to hold their ground against foreign competition. Xiaonei.com, a Facebook look-a-like, recently raised $430 million extra funding to help it stave off competition from Facebook and has a growing user base that currently stands at 9.8 million; it will take some outdoing. Then there is teen social network site, 360Quan.com, owned by Beijing based, Koolanoo Group, which has some 30 million users and is reputedly China’s fastest growing SNS and its largest teen website. Giant Tencent, which is Chinese run, tops the list with a massive 105 million users on its Q-zone. Some foreign Internet companies have encountered various problems with the Chinese authorities limiting their activities and Facebook may need local management and a local base if it wants to make a stand in the local arena.