The stage of industry formation

2002

In 2002, China's Internet industry, in stock market terms, gradually completed the bottoming process and was ready to rise. As a man who endures trials will be blessed, the industry would soon push past the low moments after the Internet bubble burst and a new period of development was about to start. In this year, Internet companies actively explored business possibilities, looking for a way out. Games and e-commerce became breakthrough points; people began to realize the value of website portal. The Internet industry began to show signs of recovery. China's three major portals, SOHU, SINA and NETEASE, start to make quarterly earnings.

As an important Internet application at that time, the operations of website portals gradually went on the right track and began to make a profit. At the same time, portals were also actively exploring a variety of business models, adding diversity to business territory. In the second and third quarters, SOHU, SINA and NETEASE announced to achieve positive operating cash flow or profitability. Media described the changes as "the first glimmer of dawn for the Internet industry" or "the leaving of the winter of Internet industry". It was explosive good news for the Internet industry, because the three portals were the benchmark of Internet companies, similar to the current Tencent, Baidu and Alibaba. The burgeoning growth of these major companies indicated that the spring of the Internet industry was coming.

Portals have diversified approaches to making money and these approaches gradually became clear in that year. Website portals and online media began to set foot in the e-commerce industry. Although not too successful, these attempts were a useful way of exploration in the industry. Sohu launched lymmj and Sohustock in this year, and joined hands with the Beijing Post Office to build a distribution system. NETEASE launched an online auction business; Ynet, the website of Beijing Youth Daily, launched a group purchase platform.

2002 also saw the development of the online gaming industry. Sales of online games was on a par with sales of stand-alone games. According to conservative estimate, the sales of the online gaming market in 2002 at least doubled the level in 2001, which was RMB 300 million. Gaming became an important pillar of revenue for the Internet industry. Shi Yuzhu once said, although online gaming was neither highly valued nor well-reputed in the Internet industry, it contributed 70 percent of revenue of the Internet industry. It was true that gaming also helped the Internet industry go out of the shadow of the dotcom crash. In 2002, the online gaming market ushered in an avalanche of products, including but not limited to Legend of Mir, introduced by Shanda from South Korea, Millennium, Stone Age, Three Kingdoms Online, Three Centuries, Heroes of Jin Yong Online, Red Moon, Way of the Heroes Online, Monsters & Me, King of Kings and Dragon Raja.

In 2002, e-commerce websites also set on the road to growth. Some companies obtained investment and some were steadily pushing out new services. In March, eBay invested USD 30 million in EachNet which was a very important e-commerce platform at that time; Alibaba was firmly dedicated to developing its B2B operations at that time and put great efforts in promoting “TrustPass” under the slogan "Let Honest Businessmen Get Rich First"; 2002 saw rapid development and fierce competition in the important sub-sector of the e-commerce industry, travel booking websites. The leading websites offering online travel services at that time including CYTS, eLong and Ctrip.

In 2002, the government also put great efforts in administration and infrastructure construction of Internet. A series of laws and regulations were introduced to regulate the network culture market and to strengthen the management of business premises offering Internet access services. In 2002, the Ministry of Culture issued the Notice on Strengthening Management of Network Culture Market. After the fire outbreak at Beijing Lan Ji Su Internet Cafe, the Ministry of Culture, the Ministry of Public Security and other departments joined hands to strengthen the management of Internet cafes. Later, Measures on the Administration of Business Sites of Internet Access Services was introduced. In the field of Internet information dissemination, the Tentative Provisions on Administration of Internet Publishing was also released in this year. Internet Society of China issued Self-regulation Convention for Internet Industry in 2002. By November, more than 1200 units had signed the Convention. These efforts helped improve the Internet environment.

It was also in this year that China Mobile officially launched GPRS services and China Telecom launched a Vnet, adding to the diversity of Internet access methods. China also began to implement domain name management regulations in 2002.