Eye on China: Mobile internet for masses

Living in China one tends to have a somewhat rose-tinted view of the Old Country. For long-time China residents, especially those who visit Europe less and less as the years go by, it's axiomatic that everything is better back "home".

What a shock then on travelling through many parts of Europe this northern summer to discover how backward internet connections are.

In Germany, one converted mansion I stayed in didn't even have a phone in the bedroom, let alone internet access.

Admittedly, that was in a part of Germany previously behind the Iron Curtain, but even in wealthy and sophisticated Munich, internet connections were ponderous and expensive.

On one occasion, I paid US$10 ($14) for one hour's access. The worst was not the outrageous price but that I was prevented from opening more than one window at a time. Not only was I paying an extortionate rate, but the data I was downloading was being severely rationed as well.

Has no one bothered to lay down sufficient fibre-optic cables in the world's third-richest country?

In contrast, the most backward parts of China will host large internet cafes where many young people and other low-income groups congregate for email and games. The cost is a few US cents and access is broadband.

And in the big cities, while many down-market local hotels will not offer internet access themselves, billboards carry numbers which you can dial to set up your own dial-up account. It takes five minutes and you can use any phone within reach. Like many things in China, it's cheap, it's simple and it works.

The evolution of China's internet is one of the biggest business stories of the year, especially after search engine Baidu's hugely oversubscribed Nasdaq IPO this northern summer.

The sector has many classic China features: it has been heavily (and successfully) supported by the Government, the numbers involved are huge and it's not turning out as many people expected.

The prime driver of the internet in China has been mobile phones, not PCs as in the US. There are tens of millions of mobile phone users in China who can't afford PCs, much less laptops.

As a result, a Chinese industry has evolved for providing content to mobile phones, originally based on SMS (short message services).

Originally, these revolved around downloading jokes, ring tones and pictures. But recently, businesses have sprung up targeting mobile phones as business users.

The argument goes that with thousands of small businesses and businesses reps crisscrossing the country and unwilling to fork out for a laptop, it makes sense to offer mobile phone applications which can help their business needs.

Thus, sales reps and small franchisees can send tables and financial data back to headquarters using tailor-made software.

It will be interesting to see to what extent Western business re-examines the worth of intermediate mobile internet technologies such as WAP as a result of their success in China.

PCs are popular in the richer cities of China. Experts suggest that this is because Chinese children have been deprived of siblings due to the single-child policy. Keen on communication with their peers, PCs have been a godsend to kids.

The local press often carries stories about the dangers of children staying too long in front of those hypnotic screens - especially in view of the growing popularity of online multi-player games.

Intellectual property issues have had an impact on mobile phones and PC internet services in China.

One games entrepreneur told me that the beauty of online role-playing games was that they couldn't be ripped off like single player games. (You have to break into the servers instead of just copying the CD).

For mobile phone services providers, with text messaging running out of steam after years of meteoric growth, mobile phone music downloads could prove the next Eldorado.

Users have long figured out how to download music for free to their PCs, but not to their mobile phones.

Downloading music for a fee to mobile phones and using it as ring tones and call waiting tones will provide a valuable fillip to the business of such companies.

There are many more wrinkles to Chinese internet usage. I can't understand why anybody would invest in an online "business to consumer" model like C-trip or Elong, which do online bookings.

It seems much simpler to me to pick up the phone, choose the best flight and hotel with a proper human being, and get the ticket delivered.

However things pan out, and some interesting and different business models are sure to emerge, it's clear that China has achieved a major success in its internet rollout: Online communications has enriched the lives of many million of people in the process. It certainly doesn't seem to have reached the same stage in Europe.

* The writer remains anonymous to protect his position in China.