Internet Firms Scaling Great Wall of China

When three Stanford graduate students created a Web site with information from Taiwan in Chinese three years ago, it was so popular that would-be viewers jammed the bandwidth and crashed the university’s server.

“We got kicked off,” said one of the culprits, Hurst Lin. “But we realized we were on to something.”

That something became Sinanet.com, one of the Web’s most popular Chinese-language sites with an estimated 1.2 million page views a day. The guide was like a beacon in one of the Internet’s last frontiers, where finding specific Web pages in Chinese was largely a matter of guesswork, word of mouth and luck.

Last month, after several years of jumping technical and political hurdles, Sinanet added a Chinese search engine, and on Wednesday will unveil a partnership with Excite that will allow users to comb 1 million Chinese Web pages for information. Yahoo, AltaVista and Netscape have quickly followed suit.

Before, creating a special system to navigate the Chinese portion of the Web didn’t seem possible or profitable. In China, fewer than 10% of the people have their own telephones, much less computers. Access to the Internet was expensive and tightly restricted, Chinese Web sites were sparse, and Internet advertisers nonexistent.

But since the Chinese government began to officially encourage Internet use for research and business, providing computers for universities and state-owned companies, user numbers surged from 60,000 to nearly 600,000 in just over a year, according to the Ministry of Information Industries. Another 1.75 million people are online in Taiwan and Hong Kong, putting Greater China on track to be the world’s largest market after the U.S. by 2001.

But most significantly for a country where farmers commonly dig up telephone cables to scavenge the valuable copper circuits, unwittingly disrupting service, China is laying a countrywide fiber-optic network. It will be connected to a $1.2-billion China-U.S. cable network traversing the Pacific Ocean floor, giving China an explosion of digital capability by late next year.

China is about to be wired, and Yahoo, AltaVista and home-grown innovators are rushing to cash in.

It has taken awhile to get here. When Jerry Yang and his friend David Filo were sitting in a Stanford dorm room in 1994, compiling “for no apparent reason” what would become Yahoo, Yang said, they certainly weren’t thinking about creating a global directory. English characters use a different coding system than Chinese.

Then there’s the fact that the simplified characters used on the mainland are different from the traditional characters used in Hong Kong, Taiwan and much of the overseas Chinese community. Making a Chinese Yahoo meant conceiving a whole new system that could handle them all. And even though Yang is originally from Taiwan, his company launched versions in a dozen other languages before tackling Chinese.

The new product, Yahoo!Chinese, includes free downloadable Chinese software to use with the site. Sinanet made it even easier by including a GIF, or graphic, interface with a built-in translator, so a user can type in keywords in English or simplified or traditional Chinese characters and get results in all three formats. The graphic interface is slower but means that a surfer can use it at an Internet cafe or university machine with no special software.

“It’s like saying, ‘My dog can talk. It talks slowly, but hey, it can talk,’ ” Lin said.

But even more daunting than the technical problems are the political puzzles. Beijing’s authoritarian government has long held tight control over information and is wary of what flows in from outside. In exchange for access, Internet users are supposed to register their modems with the Public Security Bureau and sign a pledge not to harm state interests.

It’s not always clear what those interests are until the site is suddenly blocked.

“The government doesn’t tell us not to list this or not to list that,” said Charles Zhang, 33, founder of the Beijing-born version of Yahoo called Sohoo.

So Zhang consults informally with officials to learn what crosses the line. For example, pornography is taboo but sometimes tolerated. “What they’re most concerned about is ‘reactionary’ Web sites,” he said, namely those with information on Taiwanese independence, Tibet or political dissent.

Cupertino, Calif.-based Sinanet has been blocked intermittently over the last three years because of politically sensitive content on the site, especially news from Taiwan during tense times between China and what it considers its rogue province.

“It’s a balancing act,” Lin said. Sinanet has kept links to Taiwanese newspapers but decided not to carry the Apple Daily, a popular and sensational Hong Kong newspaper banned in China. The company is working on a separate “politically correct” version of its site just for the mainland.

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Santa Clara, Calif.-based Yahoo, which launched its Chinese version in May, has dealt with censorship and particular sensitivities around the world. These range from classification issues--”Do you categorize Messianic Jews who believe in Jesus under ‘Jews’ or ‘Christians’?” asks Yang--to deciding whether to list neo-Nazi sites.

“Yahoo is a directory, not a host,” said Yang while publicizing the site in Hong Kong, where fear of offending China verges on obsession. “We should not be held responsible for the content of the sites we point to.”

But Yahoo agreed with Singapore’s government not to index sex sites and is playing it safe in China as well.

“The policies aren’t very clear about what is regarded as politically sensitive,” Yang said. “But we’ll do what they say because if you want to do business there, you’ve got to follow the law.”

Making money through the Internet is still a difficult task in the U.S., where advertisers are unsure how much bang they get from their cyberspace buck. So selling advertisers on China has been even harder. But if anyone can do it, it’s Yahoo, which had revenue last year of $67 million.

Seven charter sponsors back Yahoo!Chinese, including Cathay Pacific, IBM and Motorola. The site already has several hundred thousand page views a day since its May 5 launch, “pretty good for a baby project,” International Vice President Heather Killen said. But they don’t expect to make money on it for a while.

The important thing, most agree, is just to be there, and the sooner the better as Chinese users--and advertisers--multiply.

Nicholas Negroponte, co-founder of Wired magazine, noted China’s potential and provided $225,000 in seed money to Beijing-based Internet Technologies China to start a Chinese version of Yahoo. Intel and three other investors later infused another $2 million.

The result: Sohoo, whose name suggests “Sino-Yahoo” and translates to “Search Fox” in Chinese. Its model, Yahoo, employs Net surfers to identify good sites and then manually catalog them--unlike AltaVista and other search engines, which rely on computer “spiders” to crawl the Web and index material by proprietary algorithms. Sohoo uses both people and spiders, and Zhang boasts that their catalog is both larger and more local than Yahoo’s.

Sohoo is also the first of the group to win home-grown advertisers, showing the potential of the Chinese market. Banners for a Beijing liquor company and a Chinese cancer medicine share the page with ads for Intel and telecom giant Ericsson.

Netscape joined in too, unveiling on May 14 a Chinese Net guide along with its Chinese-language browser, which opens the door to a Chinese intranet within the Internet. It’s no search engine yet, but it does have international news and content compiled by Hong Kong’s China Internet Corp., or CIC, with backing from official mainland partners Xinhua News Agency and the Ministry of Information Industries.

“We are going out into the world, getting content and tailoring it for China,” said Alex Lanceley of CIC. “Right now, the most inhibiting factor is not censorship, but the lack of good Chinese-language content.”

In fact, most of the Chinese Web sites are created by Chinese speakers in North America, said Sinanet’s Zhang. That’s changing quickly, though, as more users in China learn how to make their own pages, and more companies discover that the Internet delivers their message to the most educated and elite audience in China.

Lemon Eastern, a Web consultancy based in Hong Kong and Shanghai, is helping Bertelsmann create a Chinese online bookstore; Netscape is selling encrypted software on the site; and users can buy and sell stock through E-trade on Sinanet. Most customers come from Hong Kong, Taiwan or the U.S. at this point, though, because even fewer mainlanders have credit cards than computers.

“A lot of people are working on this,” Sean Clarke of Lemon Eastern said. “Someone is going to get it right, and when they do, they’re going to make a lot of money.”

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Researcher Bao Lei of The Times’ Hong Kong bureau contributed to this report.

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URLs Across the Water

Yahoo: https://www.chinese.yahoo.com or https://gbchinese.yahoo.com

Sinanet: https://www.sinanet.com

Sohoo: https://www.sohoo.com.cn

Alta Vista: https://www.altavista.digital.com

Netscape: https://www.netscape.com

China intranet: https://www.cww.com