China Emerging_ 1978-2008 - Xiao-bo , Wu [66]
In Beijing, a young software engineer named Wang Zhi-dong was able to obtain funding from an American venture capital firm, which was the first Chinese Internet company to be funded in this manner. When he first set up his website, he posted to a number of special forums and discovered, to his surprise, that the response to technology forums was lukewarm, while the response to the sports forum was red hot. On October 31, China’s national
The placard erected by one of China’s earliest Internet companies, Info Highway: “How far is China from the Information Highway?”
soccer team participated in the World Cup final rounds of qualifying games in Asia, held at the Jinzhou Stadium in Dalian. China lost to a small oil-rich country named Qatar that has a population of only 520,000. At 2:15 a.m. the following morning, a Net friend named Lao Rong published an article in the sports forum, titled “No Tears at Dalian’s Jinzhou.” Within forty-eight hours, this article had received 20,000 hits and had become the first Internet article to receive mass attention. The grassroots nature of the Internet and its astonishing speed of information transmission were realized in China for the first time. Wang Zhi-dong’s forum was later to become the influential and powerful news portal called Sina.
Zhang Chao-yang or Charles Zhang, a graduate of MIT in Boston, also started a website in 1997. He called it Sohu. He received US$225,000 as start-up capital from two American professors, one of whom, Nicholas Negroponte, was the guru of the digital age. Initially, there was no content on the website, so Charles simply uploaded Negroponte’s book, Being Digital. He too had little idea of how he was going to make money. Later, when the initial investment was all spent, he sat on pins and needles until he was able to obtain US$2.15 million in investment from Intel and Dow Jones. As the “Chinese representative,” he was included in Time magazine’s “Fifty Global Digital Heroes,” and subsequently became the first of China’s Internet-economy heroes.
In 1999, Sina had Morgan Stanley as its partner in going public. Morgan Stanley was a great investment firm, but it had little understanding of the Internet, especially since this was a Chinese Internet company. All Morgan Stanley knew was that this would definitely be a very lucrative business. During the negotiations, Sina noted that a strategic direction for the future would be to set up a “portal website.” Morgan Stanley’s senior officer lowered his head sideways and said to the person in charge of the project, “I always thought Sina was an Internet company. What do they want a door for?” He had not yet learned the difference between a “door” and a “portal,” but his enthusiasm for this Chinese company continued just the same. In 1997, all three large portal websites, Sina, NetEase, and Sohu, were listed with brilliant results on NASDAQ.
These Internet companies and others were basking in the warmth of their listing success when a dose of reality struck. In April 1998, NASDAQ suddenly crashed, and within half a year, its index dropped by 40%. A market value of US$8.5 trillion evaporated. All the main Internet companies were in trouble, and the various Chinese companies listed in the United States were notimmunetothegeneraldecline.Sina’ssharesdroppedtoalowofUS$1.06; Sohu.com dropped to US$0.60; and NetEase was even worse, with its share price falling to a mere US$0.53. The tender young Chinese Internet economy fell into a chasm from which no more bubbles were to emerge for some time.
Microsoft’s Chairman, Bill Gates, at the opening ceremony of the 2007 Boao Forum.
The worst of all was NetEase. At one point