In China, corporations are continuing to turn toward capitalism in an effort to be as least politically influenced as possible. Taxes on businesses in China (excluding Hong Kong and Macau) are often as high as 40%, with virtually no room for leeway such as tax cuts or shelters, making businesses eager to release themselves from the hawk-like eye in Beijing. From the largest Chinese corporations to the smallest start-ups, both executives and investors are encouraging free-market trends similar to those of the world’s richest and most developed nations. Large foreign private-equity groups such as Blackstone, Carlyle Group, and Warburg Pincus have become hesitant in recent months to pour more money into China, in the fears that its historically strict regulation on enterprises will not ease. And they have the right to be cautious, because the latest revelation comes courtesy of the media, one of China’s fastest growing and potentially-profitable sectors.
China is home to the world's largest population of Internet users, and there's reason to believe they will want to use the Internet in ways similar to their Western peers. So as the popularity of video-sharing sites like YouTube has exploded in the U.S., China has seen a slew of look-alikes pop up. Meanwhile, Google's $1.7 billion acquisition of YouTube in October 2006 lit a fire under the sector in China. That in turn spurred an influx of foreign venture capital -- close to $300 million committed to eight online video sites alone since 2006. However, the government regulation for what appears on the screens of the locals is very restrictive in the effort to disseminate state propaganda – sex, slander, violence, and perhaps most of all, political information – has restricted the Chinese from advancing to be as mature and informed as their Japanese neighbors, for example. Beijing has softened somewhat recently, providing a wide range of broadband infrastructure available throughout the country, transforming online video from a niche application to a mass market. The expansion for internet seems endless, with slightly more than 17% of China’s entire population [1.3 billion] even connected to the Web. However, the preventive effort in Beijing still frightens investors with dollar-denominated funds – many are looking to other sectors of China’s booming economy such as pharmaceuticals, mining, and urban development companies in the hopes of hitting the bull’s-eye. Of course there will continue to be billions invested into Chinese media for decades to come, but investors must be wary of government’s sensitive censorship role and how much longer it will last.
China is home to the world's largest population of Internet users, and there's reason to believe they will want to use the Internet in ways similar to their Western peers. So as the popularity of video-sharing sites like YouTube has exploded in the U.S., China has seen a slew of look-alikes pop up. Meanwhile, Google's $1.7 billion acquisition of YouTube in October 2006 lit a fire under the sector in China. That in turn spurred an influx of foreign venture capital -- close to $300 million committed to eight online video sites alone since 2006. However, the government regulation for what appears on the screens of the locals is very restrictive in the effort to disseminate state propaganda – sex, slander, violence, and perhaps most of all, political information – has restricted the Chinese from advancing to be as mature and informed as their Japanese neighbors, for example. Beijing has softened somewhat recently, providing a wide range of broadband infrastructure available throughout the country, transforming online video from a niche application to a mass market. The expansion for internet seems endless, with slightly more than 17% of China’s entire population [1.3 billion] even connected to the Web. However, the preventive effort in Beijing still frightens investors with dollar-denominated funds – many are looking to other sectors of China’s booming economy such as pharmaceuticals, mining, and urban development companies in the hopes of hitting the bull’s-eye. Of course there will continue to be billions invested into Chinese media for decades to come, but investors must be wary of government’s sensitive censorship role and how much longer it will last.
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