What will the next generation of Internet services mean for China? 　　What Is Web 2.0?
　　Web 2.0 generally refers to a second generation of services available on the World Wide Web that let people collaborate and share information online. In contrast to the first generation, Web 2.0 gives users an experience closer to desktop applications than the traditional static Web pages. The term may include blogs and wikis (a web application that lets anyone add and edit content). To some extent Web 2.0 is a buzzword, incorporating whatever is newly popular on the Web, and its meaning is still in flux.
　　Source: Wikipedia
　　The Web 2.0 buzzword, having gathered speed in the United States in recent years as a way to describe new, more collaborative Internet applications, is attracting the attention and money of a batch of Chinese start-up firms.
　　
　　But will it attract the people?
　　
　　Late last year, the China Internet Society released a report that tracked this second major round of Internet boom. The findings of the report, titled China Web 2.0 Current Situation and Development Trend, indicate little awareness in China of the Web 2.0 concept, with 73.3 percent of respondents showing an ignorance of the idea or its applications.
　　Despite this, major Internet companies, entrepreneurs, portal sites and foreign venture capital all seem to be angling to get in on this potential market, with confident, even aggressive plans. Still, whether Web 2.0 is really the next big thing remains a big question mark.
　　
　　Baby steps
　　
　　Blogging is considered the Web 2.0 entry point for Chinese Internet users. With a blog, a person is involved in the creation of information, rather than just staring at static web page, a core idea of this second generation of Internet.
　　Applications that make it relatively simple to post blogs have lowered the entry bar for writing or posting photos online, and over the past few years the blogging trend has injected excitement into the Internet industry, giving rise to a new generation of entrepreneurs.
　　In 2004, there were fewer than 10 websites hosting blogs in China, but now the number is nearing 100, in addition to portals providing blog spaces for users. These sites have been the beneficiaries of all the attention.省略, a major blog service provider, received coverage in BusinessWeek magazine at almost the same time that Tooduo.com, which means “potato” in Chinese, a leading podcasting site (a way to publish and download audio files), was written about in The New York Times.
　　“Still, blog hosting websites in China earn revenue mainly from the mobile WAP [wireless] service and advertisements, far from the core competencies of Web 2.0. To understand the essence of Web 2.0, we still have a long way to go,” Hu Yanping, Director of the Communication and Development Center of the China Internet Society, said in an interview with Beijing Review.
　　
　　Venture capital comes
　　
　　Alongside the buzz, investors are emerging for market shares through backing Web 2.0-related startups.
　　Oak Pacific Interactive, formerly known as ChinaInterActiveCorp., announced in early April that it had finished a new round of financing worth $48 million from a consortium of leading global private equity and venture capital firms.
　　Oak Pacific runs a number of well-known Chinese websites that fall under the Web 2.省略 (where users post photos), Uume.省略 (a popular online community) and wowar.com (a well-known gaming site).
　　According to Joseph Chen, Chairman and CEO of Oak Pacific, the new funds will be used to expand the company’s portfolio of digital entertainment assets and build brand awareness. Oak Pacific sees itself as a leading Web 2.0 platform for its offerings in online advertising, wireless value-added services and broadband entertainment options.
　　Apart from just being the new generation of Internet usage, Web 2.0 is also changing the operational formula of media and communications companies.
　　Investors are trying to find the ideal business model, with recent headlines recording takeovers involving Web 2.0 companies, such as Google’s purchase of Blogger, and eBay acquiring of Skype, where a program lets people make telephone calls over the Internet.
　　So-called Web 1.0 companies are using their lion’s share of capital to take control of potential future threats, while Web 2.0 companies are in a hurry to cash in on it all and meet the growth in demand, joining up with big players or being infused with venture capital.
　　
　　Going local
　　
　　The Internet industry in China is said to be a goldmine of opportunities for entrepreneurs and investors, since China’s GDP is one eighth that of the United States but its Internet business stands at only 2 percent of the U.S. market. There is significant room for growth. So what will this mean for Web 2.0?
　　Richard Weidong Ji, Vice President of Goliath Investment Bank Morgan Stanley’s China Internet sector, said the IT business faces a localization problem, as with other businesses. Understanding the culture of the Chinese market is of key importance in order to be able to offer the right content and services.
　　China has a significant number of people using handsets, meaning mobile phone or PDAs, and has the largest number of mobile phone users in the world. Wireless value-added service brought in some $700-800 million to China’s Internet business annually on average, twice that of online broadband entertainment and three times the amount brought in by online advertisements.省略, China’s most popular search engine, said this April during a session of the Boao Forum for Asia.
　　According to Li, the number of Internet users is only slightly more than a third of all mobile phone users in China. He predicted that with the application of the third-generation mobile communication technology, known as 3G, cellphone users would have the biggest potential for crossover to being users of the Internet, and by extension, Web 2.0.
　　According to statistics from the Ministry of Information Industry, there are nearly 100 million netizens in China and more than 400 million cellphone users in the first quarter of 2006.
　　Despite this, Li said he isn’t satisfied with the development of the Internet in China. Internet access is only available to 8 percent of the Chinese population.
　　
　　Challenges ahead
　　
　　“Web 2.0 won’t have a great impact in the next few years,” said Wang Jiaping, a software engineer at Microsoft China’s R&D center.
　　According to Wang, Web 2.0 is more than just technology. He thinks it’s more likely to be a new pattern for using and developing technology in a highly connected world.
　　“Actually, Web 2.0 is an implementation of the idea of improving computer applications on the Internet. I think many new techniques will emerge and the old ones will be reformed and redesigned to be integrated for the next generation,” he said.
　　Wang pointed to BitTorrent, a file-sharing program that has become one of the most popular on the Internet, as an example.
　　“It was born to gather the resources of scattered PCs to improve the basic application of file downloading. In the old days, people searched contents providers for files they wanted to download, and resources were centralized. But now, more PCs are connected, which greatly raises the computation and storage capacity of individual users,” he explained.
　　Wang said the creation of an Internet in which people are more involved in the creation and dissemination of information could be the main significance of Web 2.0 in China.
　　“If the next generation arrives, there won’t be much difference [in technology] in China than in the United States. But for China, there might be a greater influence on the public, especially with the increasing number of Internet users, to create a stronger and more powerful voice from the public.”
　　However, according to Hu from the China Internet Society, Chinese companies are at a disadvantageous position in terms of global Internet competition, following their U.S. counterparts in technology without mastering the core competency.
　　“So the current situation with Web 2.0 is that, though we may highlight some localized innovations and applications, we are still lagging far behind,” he said, adding that other problems include a lack of innovation and strategic awareness in China that results in poor market strategy and inefficient information sharing.
　　Any hesitation on the part of investors may originate from a thin, overly simple profiting model and an unclear picture of market climate, Hu added.
　　“Possible problems and challenges, in a sense of both social and technical, have been found after making the report [on Web 2.0]. For example, most users could not accept the charging of a subscription fee for SNS service [social networking service, for dating or meeting friends], and some blogs maintained by individuals promote garbage information to the public,” Hu said.
　　In addition, intellectual property rights protection, scrutiny of content, the limited effects of advertisements and the cutthroat competitions among small Web 2.0 operators are all headaches.
　　However, regardless of these potential problems, the buzz around Web 2.0 continues.
　　As the head of a company leading the pack with its varied Web 2.0 applications, Google China’s President Kai-Fu Lee broke the silence on Web 2.0.
　　The competitive opportunity for startups is to fully embrace the potential of Web 2.0, said Lee. With users’ participation, surviving Web 2.0 companies will create intelligent network applications that learn from their users to set up a global connection, not just in the software interface, but also in the sharing of the database.
　　“It is very likely that Web 2.0 will overturn our traditional Internet,” Lee told reporters at a recent press conference, though he added the concept still lacks a convincing standard and business model. “It is still being shaped by a user-oriented approach.”

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