Since the Internet first came to China in 1994, it has developed with overwhelming speed. In 2003, China became the world's second largest Internet market. The Internet is widely used in various aspects of people's lives, and a great many new businesses are thriving on it.

Chinese Internet users believe 2006 is the "year of blogging." Five years after arriving in China, online diaries became common among the general public after host websites like sina.com began promoting it. Having attracted celebrities from almost every field and also average Internet users, blogging has developed into the most influential Internet platform in China. Because of its blogging services, sina.com has been awarded several prizes by the Development Research Center of the State Council.

Many websites have discovered new areas in which to make profits. For example, mobile phone users can have access to all types of news ranging from football match scores to reports on major incidents at home and abroad by paying monthly fees, which are shared by news websites and mobile service companies.

"In China, to have 300 million Internet users is a piece of cake," said Jack Ma, CEO of Taobao.com, an online auction website. Although it was launched in 2003, one year after eBay entered China, it soon developed into the most active online transaction platform in the country. With nearly 30 million users, Taobao.com is attracting 60,000 new users every day. "Though eBay has a big purse, we are going to make a hole in the purse," Ma joked.

Statistics show that 70 percent of China's Internet users are under the age of 30. On this basis, some websites have focused on online games. Extremely popular with users, online games have become another source of profits.

At present, online games can provide an additional 1 billion yuan of income to China's Internet business annually, far higher than that of the film industry. According to Analysis International, China's authoritative Internet-based business information service provider, the country's online game market was worth 3.28 billion yuan in the first half of 2006, and the revenue in the third quarter reached 1.8 billion yuan, up 3 percent from the previous quarter.

Netease (163.com), the first Web portal to provide online games, which has already made huge profits, is not surprised at such a sharp growth in the game sector. William Lei, founder of Netease, believes China's online game market has the greatest potential in the world and predicts that the sharp growth in this business will last at least five years.

The profitability of China's Internet industry is much higher than that of the industry in the rest of the world. Richard Ji, Chinese Internet analyst at Morgan Stanley, pointed out that in 2005 alone, the average profit margin of China's listed Internet companies was 32 percent, much higher than the 19 percent average rate of their U.S. counterparts.

The Internet is now a bridge to the old media. The best example is the Super Girl singing contest, similar to American Idol in the United States. Thanks to the support of mobile phone and Internet users, this program soon became widely known to the public, and the audience is able to vote for their favorite contestants via the Internet and mobile phones.

According to Ji, one third of the top 20 websites in terms of the number of hits are Chinese and China has the largest number of Internet users under the age of 30. With an improved consuming power, the Chinese are paying more attention to cultural and entertainment products. "Under this circumstance, I believe this fertile land is able to breed world-class Chinese Internet companies," Ji said.