Boom Times For Chinese Internet Start-Ups

China's vast and growing number of web users is driving demand for tech services.

HONG KONG -- In a crowded office in suburban Beijing, a dozen young computer programmers are busy trying to make their first million with an Internet startup.

An Ran founded website design and develop company Alltosun two years ago. He formerly was R&D supervisor at Sina SINA ( SINA - news - people ), one of China’s most-visited online portals, and the project director at UUSee, one of China’s largest live TV broadcasting websites. “Most of our clients are young start-ups," said An, whose clients include Chinese, British and German companies.

An’s Alltosun is a snapshot of what is taking place in China’s Internet business landscape.

The IT design and development sector alone reaped 7.27 billion yuan ($1.1 billion) in revenue in January and February, with an annual growth of 24.5%, according to the latest government data. Alltosun’s revenue last year reached nearly 400,000 yuan ($58,000) is expected to exceed one million yuan ($146,000his year. Urbanites in China’s 60 biggest cities spent over 70% of their spare time on the Internet, according to a March survey by McKinsey & Co.

China’s expanding internet users’ guarantee potential success for the country’s internet start-ups. Official statistics showed that China’s internet users have reached 384 million by the end of 2009, more than the total population of the United States.

American International Data Group saw an investment opportunity in China’s Internet industry back in 1992, when Patrick McGovern decided to set up IDG Venture Capital and invested in start-ups like Tencent QQ and Baidu.com, ( BIDU - news - people ) which have since grown into China’s leading internet services portal and search engine, respectively.

DG VC now manages a $2.5 billion fund in China with a large proportion in the IT sector. Of the 200 companies it has backed, fifty have gone public or been bought by other companies.

Another Chinese start-up is Nanjing-based china-tomb.cn, an online mourning website.

“I saw people discussing where they could sweep their ancestors’ tombs without going back home on an overseas online forum four years ago, and that’s how I got the idea of setting up an online tomb-sweeping website.” said Yuan Jun.

For 10 yuan ($1.40), mourners can set up online memorials and tombs for their late relatives, upload photos and videos of them and burn virtual incense and offerings of money. Page views per day reached over 10,000 during the Qingming festival, when Chinese families traditionally visit their relatives' gravesites and practice rituals such as kowtow and money offering.

“Our customers are primarily from Japan, U.S., and Chinese coastal cities like Fujian, who cannot get back home during China’s tomb-sweeping festival,” said Yuan. “They are happy to pay for online mourning as they find it convenient and easy to use.”

Jennifer Po-ying Chueng, 04.23.10, 12:30 AM EDT

Source: http://newscri.be/link/1080471
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