China’s Web 2.0 Boom

Think Silicon Valley is hot on Web 2.0? You’re right. It is. Want to know where else you can find a place abuzz over Web-based firms, from startups to big leaguers? China.

Though we advise that you do not “forget Silicon Valley,” as Michael Kanellos lectures in the opener to a recent piece published on CNET’s News.com, we definitely hope you begin to pay attention to the capitalistic shift happening in the PRC (People’s Republic of China), which isn’t only fueling growth in the energy and manufacturing industries, but also in the technological sphere. Yes, it’s true. China’s having a boom of it’s own.

China isn’t only making a great number of the PCs the well-connected of the world utilize. The country’s citizens are keeping some of the circuitry for themselves and creating startups cheaply and building them quickly due to some developers’ “ability to tap the local market better than multinationals like Google.com or Amazon.com.”

Kanellos writes that the “increasing penetration of PCs and Internet-enabled cell phones” resulting from the rise of the middle class allows the feverish expansion of the number of websites, online gaming services, and advertisers to occur. In our view, this is only the first stage in the country’s Web-based development. Many nations to the east and west of the PRC witnessed the same changes years ago. We’re likely to hear a lot more news of this sort emanating from China in the coming years.

(Perhaps it’s best that much of the connected class in China missed Web 1.0 entirely, and now gets to experience for the first time it’s own virtual technological revolution with a caliber of code that’s on par with much of what we ourselves interact with on a daily basis. They missed the days of horrifically bad HTML. There’s got to be some good in that.)

There are of course plenty of variables to be considered when dealing with a hot potato like the growth of the Internet in China, not the least of which being the constant presence of regulators/authorities within online communities, and the diminished supply of information due to censorship. Some believe the steady increase in use of Web-based utilities and the proliferation of virtual forums in the PRC will only force the government to loosen it’s grip on Net activity, but only time will tell whether the national authorities will opt to open access further or not – if they choose option #2, Web growth will plateau and actually recess because of the establishment of limitations.

Amid efforts by the Chinese government to keep a tight lid on Internet activity, the Web industry is doing remarkably well, all things considered. The country even has it’s own popular YouTube-like creation, dubbed KU6.com. Begun last September in a market already saturated with some 200+ video sharing sites, KU6 is one of the most successful to date. It sees 2 million unique users a day (as documented in late May) and is growing at a rate of 200,000 users per day. It only took KU6 roughly 3 months to “break even” financially (no loss, no profit) as well. Alexa’s ranking system puts KU6 at #46 of the most popular sites in China.

If all goes well for the variety of online businesses in the PRC and the government recognizes the benefit to steady Web growth, we’ll see many more KU6s coming down the pipe. Or the “tubes,” as it were.