TELECOM Digest OnLine - Sorted: China to be in Top Five Market by 2010

China to be in Top Five Market by 2010

Godwin Chellam (
Tue, 15 Nov 2005 12:42:42 -0600

By Godwin Chellam

Microsoft Corp.'s Internet unit, MSN, expects China to become one of
its top five markets by 2010, fueled by growing demand for its popular
email and search engine software, executives said.

Chris Dobson, general manager of digital marketing sales at MSN
International, told Reuters the software giant intended to ride that
growth while taking a larger share of the country's nascent but
booming $500 million (287.9 million pound) online advertising market.

The world's second-largest Internet market -- 100 million Web users and
counting -- does not even rank among MSN's 10 biggest markets now,
executives told Reuters late on Monday.

"We're starting from very modest beginnings in the Chinese market, but
if we look five years out and if we haven't graduated China to be in
the top five of the world's market, then we would have failed," Dobson
said in an interview in Shanghai, where he was attending an
advertising forum.

In May, the software giant launched MSN China, a Chinese-language
portal with content provided by local partners.

The portal is run by Shanghai MSN Network Communications Ltd., a joint
venture Microsoft established with Shanghai Alliance Investment Ltd.

Microsoft has said the portal will offer far more communication, information
and content than available through the MSN services, such as Hotmail and
Messenger, it already runs in China.

Dobson said Messenger, an instant messaging platform, was especially
popular. The service now had 10 million users versus about 7 million
when it was launched six months ago.

Major foreign players such as Yahoo Inc. (Nasdaq:YHOO - news) and
Google Inc. have already opened Chinese sites and established
positions in the market through a string of acquisitions.


MSN executives said they were particularly encouraged by the growth of
the online advertising market in China, where state media said
revenues hit 1.9 billion yuan last year and are expected to almost
double this year.

"Display advertisements, for example, have been growing 50 percent
annually and we expect this trend to continue," said Chuan Luo,
general manager of MSN's Chinese venture.

But competition on search engines, fought over by Yahoo, Google and
local rivals such as Inc, and Sina Corp., remains a
big challenge.

Dobson said MSN would leverage on the popularity of Hotmail, which had
more than 200 million users worldwide, to draw users to its portal.

"We were probably late into search as a company but we've been late
before and it doesn't necessarily mean we'll be late at the end. It's
a long game, it's a big market, there's room for more than one
player," he said.

The software giant has long seen China as a key growth market, but
also a headache because of widespread software piracy and copyright

Censorship has also been a major problem for many Internet players,
who voluntarily block searches and other links to sensitive subjects
like the Falun Gong religious movement and the 1989 crackdown on
pro-democracy protesters in Tiananmen Square.

MSN was drawn into controversy earlier this year when it censored
words such as "freedom," "democracy" and "human rights" on its free
online journals, but Dobson said the portal was only acting in
accordance with local laws.

Copyright 2005 Reuters Limited.

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