Business

China, which has the world’s most mobile phone subscribers, may soon require new cell phone users to register their identity with their carrier.

The new regulation will be the latest move to fight against unsolicited advertisements, scams and bank fraud via short messages, experts said.

The related policies are waiting for the approval of the State Council, or Cabinet, media reported, citing officials of Guangdong Communications Administration.

The Communications Administration of Shanghai and local carriers such as Shanghai Mobile and Shanghai Unicom would not comment.

Shanghai has required new prepaid account users to show their identity papers before buying a phone since 2006.

But in the rest of China people can obtain a mobile phone service without providing personal details if they chose prepaid services, making it difficult to catch those involved in phone scams, which are becoming increasingly frequent.

In the popular schemes, scam artists send messages saying the recipient has won a lottery, or they offer fake certificates, vehicle plates or high-paying public relations jobs. They then ask their targets to deposit money into a bank account as a service charge, notary or postal fee. Some criminals, posing as bank officials, send messages about upgrading credit cards to obtain account passwords.

(Shanghai Daily June 5, 2009)

China Unicom will scrap roaming fees and additional charges on long distance calls in its 3G pricing offer, a move that analysts said was likely to trigger a new round of price wars in the industry.

The country’s second biggest mobile operator will also give customers a 50 percent discount on its 3G services price until the end of August before it expands the network to 229 cities.

Under the new pricing scheme, China Unicom’s 3G users will not be charged for incoming calls irrespective of where they might be, the company said.

The move effectively means that China Unicom will only have one set of fees for all of its voice call business in its 3G service. It will be the first among the three telecom carriers to do so.

The latest move, analysts said, was likely to force the other two operators China Mobile and China Telecom, to adjust their pricing for their newly launched 3G services, especially their voice communication pricing.

“The room for local fee reduction is quite limited as its level has already been very low, but there is still some sort of space in terms of the roaming fees and long distance fee charges,” said Wang Jinjin, head of Asian telecom research at Swiss bank UBS.

China Unicom’s move is also seen as a response to widespread customer complaint about the high 3G prices charged by the three telecom carriers.

According to an online survey by sina.com, the largest Internet portal in China, although 59 percent of 363,000 respondents said they would “ultimately become a 3G subscriber” in future, nearly half said the charges were “too high”.

For example, China Unicom’s lowest 3G service pricing package starts at 186 yuan a month, which includes 510 minutes of free voice communication.

China Unicom’s move also comes just less than one week after its chairman and chief executive officer pledged not to start a price war in the nation’s fledgling 3G market.

“The 3G market is like a freshly-baked cake. I hope it will provide new room for growth for the whole industry. (We) will not initiate a price war in this sector,” Chang Xiaobing said in Hong Kong last week.

Chang urged his two rivals to refrain from adopting practices that will result in the flare-up of fiercer competition in the telecom market.

(China Daily June 3, 2009)

US computer maker Hewlett-Packard said it would focus on low-cost computers, including netbooks and PCs for rural buyers, to boost its market share in China even as the country remained a bright spot for sales amid the global economic slowdown.

See Chin Teik, senior vice-president for HP Asia Pacific

Hewlett-Packard Co is recalling more than 15,000 laptop batteries in China because HP and Compaq laptops sold between August 2007 and March 2008 could catch fire due to battery overheating, said the General Administration of Quality Supervision on its Website.

HP, the world’s No. 1 personal computer maker, announced earlier it recalled about 35,000 batteries in Asia Pacific. For more details, Chinese users can access HP’s Website www.hp.com/support/batteryreplacement or call the free hotline 400-610-3888.

(Shanghai Daily May 27, 2009)

More than 200 people congregated in the loft of a building in Shanghai last month to watch videos. But this was no film festival or social outing.

The event was staged to allow students and other amateur video makers to showcase their creative talents to Websites, TV stations, telecommunication operators, advertisers and other commercial companies which are eager to cash in on China’s booming Internet video market.

“It’s been a long march for the industry in past years, but now we feel we are close to some success,” said Wang Wei, chief executive of Internet video player Tudou.com, which organized the event. “I never doubted the opportunities presented by the Internet, and now it’s time for both podcasters and Websites to cash in.”

Tudou hasn’t been profitable since it was founded in 2005, or for that matter, other Websites too.

Still, Tudou, Youku.com and other Chinese YouTube-style Websites have been attracting attention and some venture capital, even if the investments have yet to yield much profit, industry analysts said.

In the first quarter, the Chinese Internet video market revenue, drawn mainly from advertising, was 98.10 million yuan (US$14.43 million), a surge of 111 percent from a year earlier, according to Analysys International, a Beijing-based information technology consulting firm.

“The online video market income hasn’t been influenced by the global financial crisis, and advertisers recognize the value of the market,” said Liu Tong, a researcher at Analysys.

At the loft event, podcasters (a word derived from combining “broadcaster” with “iPod”) spoke about the video clips they produced and had the chance to talk directly with sponsors who may buy them.

“We were held back for several months by a lack of capital, but now we are going into it big time,” said Yuan Siqi, a sophomore of the Shanghai Theater Academy China, who represented a team of students bent on producing an art film entitled “Tree (Guoshu)” for online broadcast.

The team negotiated with several potential sponsors during the gathering, according to Yuan.

Online spending

China’s online advertising spending will grow between 30 percent and 40 percent year on year in 2009, according to Hans Yu, chief executive of CR-Nielsen, a research joint venture in China’s Internet market.

Online spending by consumer brands and cyber-game operators is increasing. General Motors, Nike, Coca-Cola and other big brand-name companies are already advertising on video Websites.

“The quality of the videos has improved greatly. It makes you not only laugh but also think,” said Tudou’s Wang.

Between 30,000 video clips and 50,000 video clips are uploaded to Tudou every day, and the site has about 40 million users.

During the loft event, Tudou presented awards to 16 of the 2,000 video clip entries. The winners covered a wide range of subjects, from the life of poor children in India to the relationship between Japan and China.

“The products are full of interesting ideas. It’s fresh air to me,” said Lu Chuan, the director of the “City of Live and Death,” or “Nanjing Nanjing,” as it is known in China.

Zhao Haicheng, assistant to the general manager of China Film Group Co, said China’s biggest film production and distribution firm will expand into the new media sector this year.

China Film will invest up to US$1 million for each video clip, which is normally about 10 minutes long.

In 2009, the firm will launch 150 online video programs and 150 programs on mobile phones, Zhao said.

Video Websites are expected to become another strategic channel for traditional media giants, including TV stations, film distributors and telecom operators, industry insiders said.

“Our target is to become an online HBO,” Wang said. “Users can watch the content they like and video clips made for the Internet target people between the ages of 15 and 30, who often surf online for several hours a day but seldom watch TV.”

A recent government policy gives impetus to domestic video makers.

The State Administration of Radio, Film, and Television announced three months ago that only content fit to be aired on Chinese television or in cinemas could be broadcast online.

Prior to that, Chinese video Websites were dominated by popular overseas TV series such as “Prison Break” and “Lost,” which became the hottest clicks on the Websites.

Both Tudou and Youku declined to comment on the policy change. “It’s time for us to work on creative products with 100 percent effort,” said Long Yuancheng, a senior university student who has produced some video clips about the World Cup.

3G gold mine

Another producer with the online name Cang Tiange often produces video clips based on popular online games such as “World of WarCraft.”

Long said he is seriously considering becoming a professional podcaster after graduation, but that will depend on income prospects, such as advertising-revenue sharing.

Another potential gold mine for video Websites is 3G. Small wonder that China Telecom and Nokia officials were among those who attended the loft event.

The 3G mobile communications network gives users high-speed services online, such as film downloads and video conferencing.

In January, China issued 3G licenses to China Mobile, China Unicom and China Telecom. All three have started providing 3G services in the Chinese mainland.

“Video content is a key application of 3G,” said Lv Tingjie, professor at Beijing University of Post and Telecommunications.

The relatively short video clips marry well with the formats of the Internet and mobile phones, one analyst said.

Tudou is talking with handset makers to put its Webpages inside phones, like YouTube in Apple’s iPhone, Wang said.

(Shanghai Daily May 27, 2009)

China Telecom mobile phone customers will be able to pay for purchases by tapping their 3G phones on point of sale terminals in Shanghai by the end of the year, the telco said yesterday.

The telecom operator and China UnionPay, China’s sole domestic agency for cashless payments, have agreed to jointly launch 3G, or third generation, phones that will have this function by the end of this year.

Payment by mobile phones is set to be a popular 3G application and China Telecom’s phones may be the first batch of handsets equipped with the POS payment function in China, analysts said.

The telco launched the 3G mobile payment service in Shanghai yesterday, which allow users to order concert tickets through 3G phones, for example. Users will receive a short message service to confirm the purchase and will see the cost of the tickets added to their mobile phone bill at the end of the month.

“Our plan includes launching phones with direct payment function and they will be ready by the end of this year,” said Wang Shiwei, chief engineer at China Telecom’s Shanghai branch. “After its launch, people can use phones to pay on all POS (point of sales) machines” just like debit cards. The phones may also be used on buses and on the metro later, Wang added.

Users can use the payment function by changing to a new SIM (subscriber identity module) card, which has a chip similar to that found in bank and transport cards. Paying by phone is common in Japan.

The revenue in the electronics payment market in China will reach 1.9 billion yuan (US$278 million) in 2009, a 30 percent annual rise, said Shanghai Telecom.

(Shanghai Daily May 27, 2009)

East China’s Jiangsu has become the first province to provide broadband Internet service for all villages.

The achievement was announced Tuesday by the provincial communication administration and the Jiangsu division of China Telecom.

Access for all 150,548 villages means that broadband Internet service covered every corner of the province, said Gao Tongqing, general manager of the division. “Information technology is a must to balance urban and rural development,” said Gao.

Gao said the company had invested 1.2 billion yuan (176 million U.S. dollars) this year to upgrade its broadband network.

China’s online population has exceeded 316 million, of whom 91 percent had broadband connections, according to the China Internet Network Information Center.

(Xinhua News Agency May 26, 2009)

The penetration rate of mobile phones in China passed 50 percent at the end of April, the Ministry of Industry and Information Technology said yesterday.

The Chinese handset user base grew by 8.47 million in April to hit 678 million. The mobile penetration rate reached 50.7 percent by the end of last month, the ministry said yesterday.

“There is still room for China to develop its telecommunications industry as its mobile penetration rate is still comparatively low,” said Sandy Shen, a Shanghai-based telecommunications analyst at Gartner Inc, an IT consulting firm.

In the United States and many European countries, mobile penetration rate is above 80 percent. In some countries it is at 100 percent, because many people have two or even three mobile phones, Shen said.

The fixed-line subscriber base in China dropped 7.59 million in April to 333.21 million, meaning for the first time more than twice as many phone users in China were talking on mobiles than on fixed lines, the ministry said.

China issued third-generation mobile communications, or 3G, licenses in January. 3G services include high-speed Internet access, video calls and film downloads.

All major mobile phone firms from Nokia, Motorola and LG to Lenovo Mobile have launched 3G phones in China. Some handset models were co-developed by carriers such as China Mobile and China Telecom.

China’s telecommunications revenue reached 273.51 billion yuan (US$40.22 billion) in the first four months of 2009, a year-on-year growth of 2 percent. Fixed-asset investment in telecommunications, mainly boosted by 3G-network construction, hit 64.78 billion yuan, a 16.9 percent rise from a year ago, the ministry said.

(Shanghai Daily May 26, 2009)

Shanda Interactive Entertainment Ltd will launch an initial public offering of its game business, which it plans to spin off, in the United States, the country’s biggest game firm said yesterday in a statement.

Nasdaq-listed Shanda, which didn’t reveal the timetable and financial details of the pending IPO, said the move is expected to help it develop other online entertainment business and enable the game division to be more focused.

“The purpose of the IPO is to pursue strategic opportunities in enhancing its (game division) leadership position in the online games sector,” the Shanghai-based firm said in the statement.

Shanda has submitted a draft registration statement to the US Securities and Exchange Commission regarding the IPO of Shanda Games Ltd, a Cayman Islands company which is now wholly owned by it and operates the firm’s online games business, Shanda said.

Shanda expects to remain Shanda Games’ majority shareholder after the completion of the proposed IPO. The company took the IPO path following the success of Sohu.com in listing its game division, Changyou.com Ltd, on Nasdaq, analysts said. The stock got warm market response on its first trading day last month.

The game sector is still one of the most profitable in the Chinese IT industry despite the global financial crisis. The Chinese online games market is expected to hit 31.1 billion yuan (US$4.57 billion) this year, a 49.7-percent growth annually, according to iResearch Inc. Last year, the sector’s revenue rose 52 percent to 20.7 billion yuan.

(Shanghai Daily May 26, 2009)

The9 Ltd planned to open beta testing of its licensed turn-based 3D strategic role playing game Atlantica on June 3, the Shanghai-based online game company announced in Beijing last week.

Atlantica is developed by Ndoors, the top online game developer in Korea, and The9, one of the largest domestic online game developers is the exclusive agency of the game in the Chinese mainland.

The game leads players into exploring the lost civilization of Atlantis and uses the new Advanced Multiple Operation technology, a playing mode allowing one player to control nine characters and battles of 27 versus 27.

It is the first large-scale turn-based 3D strategic role playing game in the world and won Korea’s top game award in 2008 and was ranked top 1 online game in North America for two months.

Chen Xiaowei, president of The9, said the launch of the game marks a new step in the company’s dimensional development strategy and will bring new experiences to game players.

To promote the game, a real world/virtual campaign called Fire Travel in Nine Cities will be launched on June 6.

The9 recently lost exclusive agency over NetEase from Blizzard Entertainment, the leading game producer in America, in April after four years of its licensed 3D MMORPG World of Warcraft (WoW), which drew more than 1.3 million maximum online players and brought in about 1.5 billion yuan, accounting for more than 90 percent of The9’s total income last year, according to the company’s financial report in 2008. Its stock price slumped 24.66 percent on NASDAQ the day when the news that it will lose custody of WoW was anounced.

An industry insider said the huge loss cannot be repaired in the short term. However, Chen said that she believes that the company will blaze a trail because of the launches of new games, the adoption of new development strategy and other resources.

The9 also owns agencies of several popular online games produced by Electronic Arts, the Blizzard’s main rival in interactive game industry in America who holds 15 percent of the stock share of the company. It has developed popular games like EA Sports FIFA Online2 which is the most popular football online game all over the world. The9 is also developing its own online games as well as enhancing co-operations with other domestic online game operators in order to develop in diverse ways.

iResearch said in a report that China’s online game market is expected to reach 68 billion yuan in 2012. It is possible China will overtake the US market and become the largest online game market in the world this year.

Data from Analysys International showed that in the first quarter of 2009, China’s online game industry made 5.51 billion yuan, up 8.3 percent year-on-year.

Sales of the industry grew 52.2 percent in 2008 to 20.8 billion yuan, according to data from iResearch.

In the first quarter of this year, Shanda has an income of 1.08 billion yuan, accounting for 19.6 percent of the market share in this industry. Tencent comes at the second place with 16.5 percent of the total share and followed by NetEase with 12.9 percent. The9 ranks at the fourth place with 7.3 percent.

(Chinadaily.com.cn May 26, 2009)