An Internet censorship specialist revealed on Wednesday that TOM-Skype, the Chinese partnership of eBay’s Skype, is monitoring and storing text chats. Skype is a widely used messaging and voice chat service that identifies itself as being secure for communication due to its encryption technology. China’s government set keywords to flag messages on the service, where they would be analyzed for IP addresses and usernames. This information was stored insecurely, leading to its discovery by Canadian researcher Nart Villeneuve at the University of Toronto.

“Skype encryption ensures that no other party can eavesdrop on your call or read your instant messages.” says their security page , but has a policy of responding to “lawful requests from relevant authorities.”  The FBI wants telephone tapping laws on communication services like Skype, but these do not apply to instant text messages that skip the phone system entirely. The Chinese version of Skype allows surveillance of messages with flagged keywords, some of which include “democracy” and “Tibet.”

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It appears that in a country where over 90 percent of the downloaded music is illegally pirated, if you can’t beat them, join them. Google, Inc. has launched a free and legal music download service that is available exclusively to internet users in China. The plan is for the Web site to sustain on advertising revenue, which will be split among Google, a Chinese music company named Top 100.cn, and the participating music record labels. The move symbolizes a potential shift in strategy against piracy, which is also a significant problem— albeit much less pervasive—in America and other countries. The International Federation of the Phonographic Industry estimates that the music industry loses hundreds of millions in dollars as a result of piracy.

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DEMO held its first international conference in China September 6–8, 2006. Held in Tianjin north of Beijing, the event brought together some 30 innovative hand-picked Chinese companies. The purpose of the semi-annual DEMO conference is simple: over the course of three days, a concentration of promising companies demo emerging technologies to an audience of investors.
Demonstrations at the China conference included:

• MobiWallet: uses an RFID chip to turn mobile phones into a contactless, electronic mobile wallet for instant e-ticket and fare payments.
• Wireless Health Monitoring System (no website yet available): a medical application that makes it possible to remotely monitor and analyze a patient’s health data and send diagnostics and alerts.
• QuDing.com: A news submission and voting site for Internet users. Chinese adaptation of successful sites such as Digg, Del.icio.us, and Bloglines.
• Hongxiu.com: An atypical website that is already off to a successful start in China. It lets people easily publish their own stories and news on the Internet. Of readers, 70% are professional women—a characteristic that could interest certain advertisers.
• AreYouHere: This solution presented by ClicMobile makes it possible to create online communities via mobile phones as well as computersmakes it possible to create online communities via mobile phones as well as computers. makes it possible to create online communities via mobile phones as well as computers.

On his blog, Jake Ludington offers detailed reviews of the most notable companies at the event.

According to the 18^th report published by the China Internet Network Information Center (cnnic.cn), Internet growth in China has again reached a new level.

As of June 30, 2006, there were 123 million Internet users in in China, up 12 million in six months. Of these, 77 million (more than 60%) have a broadband connection. According to the CNNIC report, there are now 788,400 websites.

Of China’s 200 million students, 30 million use the Internet on a regular basis—that’s 15.4% of the student population. This percentage jumps to 50% among students pursuing advanced degrees.

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The European Commission published the results of the fifth European Innovation Scoreboard (EIS) on January 12. Brussels believes that, if the current trend continues, the gap between the 25 member states of the European Union and the United States will not narrow. Northern countries—Finland, Sweden, Denmark—scored the best, but Germany and Switzerland also did well.

Five key aspects of innovation were examined: innovation drivers, knowledge creation, innovation and entrepreneurship, application, and intellectual property. According to the Commission, the EU invests nearly one third less in research than does the United States, a disparity that is increasing rather than decreasing.

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Despite constant media attention surrounding the Internet in China, people still know very little about this new Internet frontier. Hardly anyone can tick off the names of dotcoms that are a part of daily life for Chinese Internet users.

We know all about using MSN Messenger to chat with friends, Amazon.com to buy a book, and eBay to sell a vintage collection of Rolling Stones LPs. Not so in China.

Exit MSN Messenger. The young (typically urban) Chinese Internet community uses QQ to chat online and goes to Joyo.com (recently acquired by Amazon.com) or DangDang Bookstore Online to by the latest Harry Potter book in Chinese. For online buying and selling, Shanghai and Beijing websurfers log into TaoBao.com, the country’s leading online auction site with over 10 millions users—20 times more than are registered with its competitor eBay China.

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Kamel Ouadi, the new L’Oréal CRM and e‑business director for China, met with L’Atelier BNP Paribas at his new Shanghai office. Ouadi came from Paris in January to implement a new marketing strategy that is already succeeding with eLadies, a site developed in partnership with China’s number-one portal, Sina.com.

L’Atelier: How is L’Oréal using the Internet to market itself in China?

Kamel Ouadi: We are primarily experimenting with the tremendously popular portal eLadies launched in April 2002 in partnership with the number-one Chinese portal, Sina, which attracts two million visitors a day and has nine million members. Our approach is mainly service oriented. We provide information on all our product lines and upcoming events.

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With 111 million current Web users and a likely 25 million new users by year’s end, China has the stuff to make more than one e-business-smitten investor go bananas. It’s a €1.6 billion market that has really skyrocketed in the past five years, explains Hou Tao, assistant manager of the research department at iResearch, the leading Chinese e-business consulting firm. According to Hou, the bulk of market profits are generated by games, advertising, and search engines.

Games make up the majority of Web-related revenues, totaling more than €60 million, but Hou downplays this: “Growth in this market soared until 2001; it continues today, but at a gentler pace.” Game companies Shanda, NetEase, and The9 alone make up two-thirds of the market.

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Interestingly, many Chinese Web addresses are number based: 163.com, 18900.com, 7cv.com, 263.com, 5291.com, 3721.com, 126.com, hao123.com, etc.

You’re probably thinking that such addresses—mainly made of meaningless numbers—would be hard to remember. True, but not necessarily any harder than addresses based on the 26 letters of the Roman alphabet are for a Chinese person, especially one who doesn’t know English.

In many cases, the more universal language of numbers thus provides highly effective mnemonic devices for remembering an address. This is especially true in the Chinese culture, which attributes particular meanings to certain numbers, some positive, some negative. Against all appearances, the series of numbers in these Web addresses hold specific meanings that help Internet users remember them. And they are intentionally selected to associate a positive meaning and image with the site.

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One essential difference between U.S. and European Internet demographics and those of China is that more than half of all Chinese Internet users are under 25 years old. That’s the largest community of young websurfers in the world, outranking even the United States.

Marketing specialists and advertisers have it right: The best way to reach the much coveted market of young Chinese consumers is through the Net. Companies specialized in such matters, like U.S.‑based Market China Inc.(www.marketchinainc.com), describe it as “a gateway to China’s youth market.”

For hot content, young Chinese Web hipsters go to general entertainment Yahoo‑type portals that are community focused. Top sites include Sina.com, Sohu, and Netease (www.163.com/). All three are listed on the Nasdaq.

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