Three revolutions -- media com-munications, and commerce -- are currently raging in China, SOHU.com President and CEO Charles Zhang said at the China Business Conference 2000 breakout session on Technology -- E-business/Internet/Telecommunications.

The media revolution is having the greatest impact, because, compared to just five years ago, Chinese citizens now have access to more information than ever. In turn this is awaking awareness of consumers' rights, and spurring consumption. But its rapid growth is also having a cultural and fundamental impact on China, he said.

"This is unique in China. In the U.S. the media industry is very mature, but in China, the average Chinese citizen does not have much to read and learn about, but now China is leapfrogging to catch up," he said.

The communications revolution is having a similar impact, he said. In 1994, China had about 1 million mobile phone users. That number has exploded to 70 million today. And the mobile and Internet industries are converging as people now e-mail, receive stock quotes and other information via their mobiles.

The e-commerce revolution, by contrast, is still in the embryonic stage. People were hoping that e-commerce in China would take off faster than it has, but the fundamental reason that it hasn't is simply because China's infrastructure is not in place to accommodate it.

The number of Internet users continues to accelerate, but because Chinese businessmen still prefer personal contact when doing business, exchanging name cards, and wining and dining clients is still considered the best way of doing business.

"When we talk about e-commerce, it seems the Internet can help us with everything," Mr Zhang said. "But in China, because logistics problems exist it is not that easy. Even traditional retailers and distribution businesses are not mature. But in the U.S., these industries are already mature and the Internet just makes them better. But in China the infrastructure is just not there."

Arthur Kobler (left), president of AT&T China Inc, said at the session that over the next four to five years, China will see the largest growth in telecom services of any country outside of the U.S.

"We are looking at US$50 billion per annum incremental growth. Most of that growth will come in the information intensive services, data services and the Internet," he said.

But despite the explosive growth, Mr Kobler said it was important to keep in mind that China is still in the very early stages of an information driven economy. Some 88 per cent of China's population do not have phone services. Mobile phone use is a mere 2 per cent, and Internet use is still minuscule to what it will be in five years time, he said.

Given that the China government only relinquished its monopoly on the industry in 1998, and that it is now pushing towards developing more competitive services, the growth potential is mind-boggling.

"Over the next four to five years, we will continue to see an opaque regulatory environment becoming more and more transparent, but still opaque for the short term," he said.

Mr Kobler said that for companies planning on entering the China market, it is critical that they define a service niche very clearly, rather than trying to serve the entire China market. Also, because China's regulations force foreign telecom companies to enter joint ventures if they want to enter the Mainland market, partner selection also becomes a key factor in how successful the venture will be.

Charles Wu (right), general manager, e-business Solutions, IBM Great China Group, said the opportunities for developing e-commerce businesses in China are enormous.

"The bottom line is e-commerce is a business enabling prostheses, enabling e-business between departments and companies,"
he said.

But having an e-enabled business alone is not enough, he said. In China, within specific industries, businesses can use the Internet to improve their efficiency, but innovation is also a critical factor, he said.

"Technology alone is not enough. It takes a lot of expertise and market savvy, and Hong Kong companies play a key role in this," he said.