During the past 16 months, investors have poured US $8.2 billion into "Web 2.0 companies" in China. (Business Next, the magazine in which I came across this stat, seems to define Web 2.0 as any web-based business.) Over 70 VCs have an additional $5.8 billion earmarked for the Chinese Internet market; they hope that at least $2 billion will be invested before the end of 2006.
Currently there are 122 million Chinese Internet users. Within 3-5 years, China is expected to have a larger web-enabled population than the US. Even now, 13 million regularly access the web via mobile devices, and 30 million are frequent online shoppers.
According to Business Next, the 4 top Internet business models in China are content, social networking, sale of virtual goods, and seach technologies for social media. Some success stories it cites include QQshow, a virtual social network whose members bought US $81 million of accessories for their avatars last quarter, and 51.com, the "Chinese MySpace" that spends US $250,000/month on new servers to support its rapid growth. (They are hosted in Zhejiang province in China, to which engineers from its Shanghai headquarters frequently travel. This seems to indicate a lack of good remote management tools at its data center - and possibly inadequate hosting facilities closer to home?)
Ironically, despite the massive Internet infrastructure requirements that $14 billion in new venture capital funding will generate and support, Tier 1 Research's July Data Center Supply report shows that the amount of web hosting space in China *decreased* by 2.43% between June 2005 and June 2006. Someone ought to go out there and build some data centers!
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