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November 27, 1999
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Internet whiz, 28, is China's Bill Gates

Bankers woo him, fans stop to chat

By Tony Wong
Toronto Star Business Reporter

There are days when William Ding has trouble stepping out for dinner from his office in Beijing without someone stopping him to talk about computers.

As the founder of Netease, one of China's top Internet companies, the shy 28-year-old is perhaps that country's most recognized technology entrepreneur.

``Most of the time they'll just say, I saw you on TV or something like that, before they talk about computers,'' says Ding with a laugh.

In a country thick on ideology but thin on heroes of the Internet revolution, Ding has the public profile of a minor Bill Gates. He is an Internet visionary in a country that has precious little knowledge of the Internet.

In Toronto to speak this week at a Canada-China Business Council conference, he quickly becomes lost in the cavernous anonymity of the Metro Toronto Convention Centre.

In a dark blue suit he bought four days before in New York for his first visit to Canada - ``I didn't really own any good suits before so I needed something'' - the quiet, self-effacing Ding has zero profile in North America.

You may not know Ding now, but he is a heavyweight in Chinese cyberspace. Investment bankers have been patiently wooing him for the opportunity to take his company public, which he hopes to do next year.

The hype has already started. There is the cover story in Business Week profiling Ding as China's Web master. There are the interviews with the Wall Street Journal and ABC's Peter Jennings.

There are huge expectations of Ding, who founded his company only two years ago with $60,000 of his savings. Today, he employs 110 people, including his younger brother, who refused to join the company at the beginning, telling Ding, ``It's a pipe dream, you'll never make any money.''

Most people are betting that the explosion of Internet use in China will happen sooner rather than later. Although only 4 million people use the Internet in China now, it is estimated that in two years the online population will hit 27 million as computers become more affordable.

The big Internet players know what's at stake and are fighting to see who will dominate the gateway to the Net in the world's most populous country. Among the big guns are Yahoo Inc., which started its own Chinese language site last year. The other player is Sina.com, which targets Chinese net surfers worldwide.

But Ding's company is the most home-grown of the bunch. And he seems to have had something of a head start, at least in the tricky business of electronic commerce.

Over the last two years he developed the first Chinese language search engine, and produced a free e-mail system similar to Microsoft's Hotmail. Today, the company claims about 50 per cent of China's Internet population use free e-mail systems powered by Netease software.

In July, Ding's company held the first online auction in China, selling 110 personal computers for $150,000 (U.S.). The company has 1.7 million registered users and generates 8 million page views daily.

But it is the electronic commerce side of things that may be the most profitable - and the most problematic - part of the business for Ding.

Because few Chinese have credit cards, many of the orders had to be processed c.o.d., so while customers could shop using the latest technology, they were limited by a country-bumpkin financial infrastructure.

``It will be difficult at first, at least until the market matures,'' says Ding. ``But there is obviously huge potential.''

That potential lies in the fact that while retail stores compete against the Internet in North America, that isn't necessarily true in China.

``Retail stores are not much competition. They have very few products to sell and they aren't as sophisticated as in North America,'' says Ding.

So consumers, at least the wealthier ones who can afford access to a computer, are shopping over the Internet. A surprising 25 per cent of his customers are in rural areas, where they have few outlets at which to shop and where there is no such thing as a Sears catalogue.

Still, with only an estimated $2 million (U.S.) spent last year on Web advertising in China over-all, making money isn't easy. The most profitable way to go, at least until online users increase, has been for companies such as Ding's to aggressively sell retail sites.

``We will continue to try and solidify our customer base, to try and develop much more of a relationship with the customer at this point,'' says Ding.

Ding grows animated when talking about China's inevitable entry into the World Trade Organization. Yesterday, China's top WTO trade negotiator, Shi Guangsheng, was in Toronto talking about the significance of the trade deal to North America.

``This will create tremendous opportunities because it really opens the technology industry, the growth will be substantial,'' says Ding.

Foreign companies will be allowed much greater leeway to invest in telecommunication and technology firms such as Ding's, which will only make his Netease more valuable, a fact not lost on Ding.

It is a big leap for a young man who looked like he might have a lifelong career working for a state owned telecom company, where he worked as a network manager after graduating from university with a degree in communication technology.

After two years, he moved to a technical support job at a U.S. company, where he became involved in Internet programming. A year later he was working at a private Internet service provider, which went bankrupt competing against giant China Telecom. In 1997, with the help of three engineering students, Ding started Netease to develop a free e-mail system.

``At the time no one cared about free e-mail, and then Microsoft bought Hotmail, and of course, things changed very quickly,'' says Ding.

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