Explosive Opportunities in Chinese Internet Companies

The online community is massive in China and offers investors vast opportunities for growth. Chinese companies offering online goods and services should continue to be excellent growth stocks going forward. Just take a look at the metrics.

 There are 1.3 billion people in China, and the recent statistics reflect the growth of Internet use. In 2000, only about 1.7% of the population was surfing the Internet. However, this figure surged to 10.4% in 2006, according to the China Internet Network Information Center (CNNIC). As of the end of June, the number of Internet users grew to about 162 million, up from about 132 million Internet users at the end of 2006. The number of Chinese Internet users is closing in on the U.S.

 The numbers are impressive, and I believe there is still ample room for growth as the penetration rate of 10.4% remains well below Western numbers.

Two key factors will drive the penetration rate higher: The first is the growth of the middle class with money to spend; the second is the strong growth of broadband in China.

The size and potential of the Internet in China is a main reason why companies like Google Inc. (NASDAQ/GOOG) and Yahoo! Inc. (NASDAQ/YHOO) are expanding there.

 The Chinese love being online! The number of Internet bloggers in China is expected to surge to about 100 million by the end of 2007, according to data from the “Blue Paper on Media Industry” produced by Qinghua University. The research indicated that there were about 658 companies providing storage for blogs.

 Online gaming is also huge in China. Yahoo! China will become a business-oriented search engine. Yahoo! China is managed by Jack Ma, CEO of Alibaba, a leading Internet e-commerce firm in China. The change was due to high competition in the search area.

 The reality is that the Internet will be an area of explosive opportunities as more services are offered to Chinese Internet surfers.