One Billion Customers - James McGregor [70]
By the mid-1990s, China’s economic reforms were entering their Wild West days. Unlicensed exchanges trading everything from soybeans to steel were popping up all over the country. We couldn’t keep up with the demand for financial and economic data and news. Our terminals carried price feeds from the fourteen main Chinese commodity exchanges, as well as from the two Chinese stock exchanges. Our international information covered every important financial market in the world. All told, our terminals had sixty thousand pages of constantly refreshed real-time information, and Reuters’s system was even larger. Chinese banks were installing our terminals by the hundreds, each at a cost of $2,000 a month, so that their traders, like those in financial firms around the world, could spend their days and nights staring at the screens, watching world events and news stories drive prices up and down.
Xinhua, of course, saw all this happening and began to lust after the obvious profits in the financial news and data business. It was stymied, however, by China’s banks and trading firms. With some $100 billion in foreign exchange reserves at the time, China was becoming a significant player in world financial markets. Traders in Beijing’s banks needed real-time access to the same market-moving data and news as their competitors in Bonn, Boston, or Bangkok. Dow Jones and Reuters supplied the data and news that were the lifeblood of the markets. China’s banks and commodity trading firms didn’t want Xinhua in the middle of their information flow. They figured that Xinhua’s censors would slow news delivery and kill controversial stories that China found distasteful but nonetheless moved financial markets where Chinese traders had positions to defend.
The Hong Kong Huckster
As Xinhua sank into its bureaucratic swamp, Ma Yunsheng, who was running the agency’s Hong Kong public relations operation, began thinking about how the Internet might be a way to make some real money. He teamed up with two U.S.-educated Hong Kong Chinese entrepreneurs. James Chu was a UCLA computer science graduate who had bounced between real-estate sales and mail order marketing. Peter Yip was a computer engineer with an MBA from the Wharton School and had experience in strategic planning at KPMG Consulting in the United States. Together the trio dreamed up a plan for Xinhua to use its political clout to gain monopoly control of the Internet in China. The plan was to create the China Wide Web, a separate network walled off from the global Internet’s World Wide Web. The Internet in China would be a closed user group with paid-only access under the control of a Xinhua subsidiary to be called China Internet Corporation, or CIC. CIC would filter any information from the Internet that crossed into China’s border, ridding it of unwanted political and social content, and translating it into Chinese. Given China’s focus on economic development, CIC’s key content would be business information. CIC would build a twenty-thousand-square-foot complex in Shenzhen and hire platoons of Chinese translators to fill it. Fantastic financial projections were assembled, with estimates of more than one million customers and hundreds of millions of dollars in revenue within a few years. Xinhua, desperate for more revenue, bought the entire scheme. In 1994, the agency registered China Internet Corporation (CIC) in Hong Kong as a wholly owned subsidiary of the Xinhua News Agency.
While Ma and Chu worked on getting political permission to control the Internet, Peter Yip set out to raise capital among Hong Kong’s tycoons. A short but sturdy man with