The stage of industry formation

Updated: Dec 25, 2018 en.internet.cn Print
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Within the first five years in the new century, the Internet development in China entered into the industry formation stage, when the Internet information services system was basically established. During this period, China’s netizen scale was quadrupled and the Internet services market saw a preliminary user scale effect. With the expansion of netizen scale, Internet companies which mainly provide search engine, E-commerce, instant messaging, social networking and online game services sprang up one after another. Moreover, the government departments developed relevant regulations as well as mechanisms, and the industry organizations were established and began to play a positive role.


On April 13, 2000, SINA was listed in NASDAQ, followed by NETEASE and SOHU. In the same year, among other things, the one-hour delivery service launched by eNet China solved the distribution problem of e-commerce; Alibaba and ICBC jointly launched their B2B e-commerce online payment services; China Mobile launched the Monternet Program, creating a rudimentary model of the Internet content industry chain; encouraged by the upsurge of online media, many mainstream media increased their investment in website development; online literature was an increasingly important part of the country's publishing industry; China's online game market was burgeoning. The government began to attach more and more importance to the development of the information industry and the Internet industry. Informatization became a priority in China's development strategy, and a series of regulations was introduced to control online news. Meanwhile, many traditional IT giants and traditional industry powers, optimistic about the development of the Internet, also began to set foot in the Internet industry in 2000.


In early 2001, China Mobile announced that, starting from February 21, the fee for information-on-demand services would include communication fee and information fee, among which the communication fee was 0.1 yuan per message, and some Internet companies began to jump on the bandwagon of short message services (SMS). Some firms took the initiative to create opportunities and launched paid mailbox and homepage services, etc. Tencent also seized the opportunity to grow despite adverse conditions by taking advantage of its huge user base and diversified billing models.

The year 2001 was also a turning point for China's online gaming industry. In 2000, online gaming sprouted up from the launch of the King of Kings. After Shanda introduced a massively multiplayer online role-playing game – the Legend of Mir II, which was licensed from South Korea in November 2001, the online gaming industry yielded usually brilliant results and became one of China's most profitable industries.

The year 2001 was also an important turning point for the restructuring and opening up of China's telecom industry. China Telecom was split up into roughly north areas and south areas in this year. In this year, China Unicom developed CDMA network which was the second nationwide mobile communication network in China, following the GSM network. The restructuring of China Tietong Telecom into a commercial telecom operator was also completed in the same year. After China's accession to the WTO in 2001, Alcatel signed an agreement with China to merge its main business in China with Shanghai Bell to form Alcatel Shanghai Bell, which was the first Sino-foreign joint stock telecommunications company in China. The joint venture showed that China's telecommunications market was gradually opening up to foreign capital.

In the same year, two software companies, Kingdee and UFSoft, also brought good news to the Internet industry in China. The listing of the two software companies also boosted stocks of domestic software companies.

By the end of 2000, the goal of "making vigorous promotion of nationwide economic and social informationization into a strategic measure covering the entire picture of modernization construction" set forth in the Proposal of the CPC Central Committee for the Formulation of the Tenth Five-Year Plan for National Economic and Social Development was fully implemented in 2001. Policies promoting informationization of governments, enterprises and education facilities were also introduced. In September 2001, the Guidelines of the Tenth Five-Year Plan for the Information Industry was officially released. It was the first industrial plan after informationization was made into a major strategic measure by the central government, laying a solid foundation for the orderly development of the entire Internet industry.

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