Internet Problems Beset China but Gov't. Is Upbeat

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It took China 10 days to reconnect a fiber optic cable to the United States that broke on Feb. 9 and disrupted Internet connections to major Chinese Web sites.


The disruption dramatized the problems that Chinese dot-coms face.


The Shanghai Daily reported that a major site, renren.com, would close shop within a month. However, the news and information site is still up and running and does not mention the pending shutdown.


But closure would be in line with the difficulties many sites are experiencing in their attempts to survive. Losses are heavy and continue to mount even though 22.5 million Chinese were online in December, according to a survey by the China Internet Network Information Center.


Elong.com, a 1-year-old start-up that reached 1.3 million home users, laid off half its 600-person work force in January when hoped-for banner advertising failed to materialize, the Shanghai Daily reported.


Sohu.com, the country's third-largest site with 3.7 million users, cut its staff in December and again on Feb. 9 -- from 524 to 470. The company's fourth-quarter revenues increased almost 300 percent to $2.18 million. But losses were so heavy that the company's "very survival may be at stake," according to a report by the China News Service.


Even China.com -- which has Web sites across Asia and sits on a cash cushion of more than $600 million, thanks to a successful IPO and venture capital support -- is in trouble.


But the Chinese remain upbeat about e-commerce, predicting that 70 percent of Chinese foreign trade companies will conduct import and export transactions on the Web by 2005.
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