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Subject:      CND-China, June 19, 1999 (CN99-06)
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+-+-+-+-+-+-+-+-+-+   C h i n a   N e w s   D i g e s t    +-+-+-+-+-+-+-+-+

                       Internet Technologies in China

                           (CND-CN, No. CN99-006)

                              June 19, 1999

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                                ISSN 1024-915X

Table of Contents                                                 # of Lines
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1. News Brief (8 Items) ................................................ 218

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1. News Brief (8 Items) ................................................ 218
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  (1) Cisco Builds Third Phase Of China's National Financial Network
  (2) East-1 Internet TV Set-top Box to Challenge Microsoft's Venus System
  (3) Sun China Developer Association Hong Kong Branch Formed
  (4) E-Commerce Presents New Challenge to Tax Authorities
  (5) German Airline Lufthansa Eyes Ln-line Ticket Sales
  (6) Hong Kong May Declare Dec 31 a Holiday to Minimize Y2K Complications
  (7) America Online Buys 10% Stake in China.com Corp
  (8) Government Agencies Rush to Establish Web Presences
                          ____   ____   ____

(1) Cisco Builds Third Phase Of China's National Financial Network

[CND, 06/05/99] Cisco Systems is in the process of building the third
phase of China's National Financial Network (CNFN), asia.internet
reported.

According to Cisco, with the addition of more IGX 8400 wide-area ATM
switches as well as software and network management services, the
country's national ATM backbone for financial institutions will have its
reach extended to cover 31 provinces and the four major cities of
Shanghai, Beijing, Tianjin and Chongqing.

With future value-added services including multimedia and full-scale
Internet access in mind, CNFN is designed to be the major network backbone
for China's banks.

Since 1996, Cisco has been involved in the development of the financial
network.  Last year, for the first two phases of CNFN project, Cisco
started to supply IGX 8400 WAN switches and 200 cities across the country
were linked.

With the additional multiservice enterprise switches and network
management systems deployed, CNFN will achieve transmission speeds of 155
Mbps and support both frame relay and ATM applications.  (Ray ZHANG,
Charles MOK)
                          ____   ____   ____

(2) East-1 Internet TV Set-top Box to Challenge Microsoft's Venus System

[CND, 06/07/99] The East-1 machine, an Internet TV set-top box
domestically made by Shanghai Gotop Research Company will challenge
Microsoft's Venus operating system, AFP reported citing Xinhua.

It's said that users of the East-1 machine will be able to have Internet
access using regular TV sets.

"Since the East-1 has been researched and developed by domestic
manufacturers, its price will be only half of the Venus operating
system," Cui Wei, general manager at Gotop was quoted as saying.

Also, the machine can be used as a word processor, a fax machine or a
video player, he added.

Xinhua reported that Shanghai Yihao Industrial has signed a contract with
Gotop to buy 100,000 of the East-1 machines.

There are 317 million television sets and 40 million VCD players in China.
But only about five percent of Chinese households own computers.

Some anaylsts forecast a potentially big market in China for set-top boxes
that allow cheap Internet access without the high costs of purchasing a
computer.  (Ray ZHANG, YIN De An)
                          ____   ____   ____

(3) Sun China Developer Association Hong Kong Branch Formed

[CND, 06/07/99] Sun Microsystems has established a branch of the Sun China
Developer Association (SCDA) in Hong Kong, Newsbytes reported.

The SCDA was established last year by Sun to help Chinese organizations
develop new software products for its Solaris operating systems and
Java-based products.

The association currently has about 250 corporate and individual members
in China and provides developers with products, support, and marketing
services.

The SCDA has three membership categories: individual, corporate and
partner.  (Ray ZHANG, YIN De An)
                          ____   ____   ____

(4) E-Commerce Presents New Challenge to Tax Authorities

[CND, 06/08/99] China's tax officials are worried that fast expansion of
e-commerce could lead to an even higher degree of tax-evasion in the years
to come, AFP reported quoting the official Wenhui Daily.

In the first large-scale case uncovered to date, the Luohe Taihao Co. of
Henan province was found to have avoided 1.7 million yuan in tax
obligations stemming from on-line sales, said the paper.

However, legal loopholes are still abundant, since the country has no laws
or regulations specifically governing e-commerce yet, the paper said,
citing the Guangdong Provincial Tax Bureau.

Even though the concept of e-commerce is still in its infant stage, due to
the limited credit-card and Internet penetration among consumers, it is
following the world trend into double-digit growth.

"Internet commerce has created a serious challenge to traditional
tax-collection methods," said a tax bureau official in Shenzhen city.

It could "shake the entire tax-collection structure" because the paperless
transactions involved are almost impossible to trace.

Often time, tax authorities cannot locate the physical company behind a
URL.  (Ray ZHANG, YIN De An)
                          ____   ____   ____

(5) German Airline Lufthansa Eyes Ln-line Ticket Sales

[CND, 06/08/99] German airline Lufthansa is considering selling tickets
on-lin in Greater China, AFP reported.

Internet users in the Mainland, Hong Kong and Taiwan will be able to bid
for 51 pairs of round-trip tickets.  Minimum bids are 10 yuan for the
Mainland, HK$88 for Hong Kong, and NT$388 for Taiwan.

It's very likely that the final winning bids will be below prices charged
by ticket agents.

If the pilot program turns out successful, Lufthansa will launch
full-scale sale of air tickets on-online, cutting back its traditional
sales channel, the ticket agents.

Following its success in Europe, Lufthansa has tried on-line auctions in
Singapore, Thailand and Malaysia, and claims to have sold 71,000 tickets
through the Net this year.

Lufthansa was not the first airline to sell tickets through the Net.
Cathay Pacific started auctioning flights between Los Angeles and Hong
Kong more than three years ago.

But the Internet culture was not quite there back then to provide online
sales a profitable veture, a marketing manager at Cathay Pacific thinks.

In 1996, American Airlines dabbled with the idea in the US, but it was
generally ignored by the public.

"American Airlines' timing was not very good," said Juergen Thomsen,
Lufthansa's regional general manager.

Lufthansa says it came out with the auction just after the Internet boom,
but before other major competitors caught on to the plan.  (Ray ZHANG,
Charles MOK)
                          ____   ____   ____

(6) Hong Kong May Declare Dec 31 a Holiday to Minimize Y2K Complications

[CND, 06/15/99] Hong Kong government believes its computers will be able
to avoid the Year 2000 bug problems, but might make the last day of 1999 a
holiday, just to be on the safe side, AP reported.

The government thinks that by shutting down banks and other businesses
that rely heavily on computers, unforeseed complications can be avoided.

The holiday was suggested by Hong Kong's Association of Bankers.  Its
members believe that an extra holiday will give them more time to ensure
that all their end-of-the-year accounting are correct.

The idea of an extra holiday, at least for the financial institutions, was
supported by the Hong Kong Monetary Authority--the territory's de facto
central bank--and the Hong Kong Securities and Futures Commission.

If this idea does materialize, Hong Kong will not be alone.  Other places,
including Britain and numerous banks throughout continental Europe are
declaring Dec. 31 a holiday.  (Ray ZHANG, Charles MOK)
                          ____   ____   ____

(7) America Online Buys 10% Stake in China.com Corp

[CND, 06/15/99] US Internet Service Provider America Online (AOL) has
taken a 10-percent stake in Hong Kong-based Internet firm China.com Corp.,
AP reported quoting a spokesman for the local firm.

The company spokesman gave no further details including the cost of the
purchase.

China.com Corp. is majority-owned by New World Infrastructure.  The AOL
deal comes just days ahead of its 50 million US dollar debut on the US
Nasdaq market.  It highlights AOL's regional expansion strategy.


China.com Corp is an affiliate of China Internet Corp and runs the
bilingual web sites china.com, hongkong.com and taiwan.com, as well as
operating on-line advertising company 24/7 Asia.

"AOL is making a lot of effort to move into the Asia Pacific market,"
Internet analyst Peter Hitchen of IDC Market Research was quoted as
saying.  "We are going to see increasing (incidence) of AOL buying stock
in companies with a presence in Hong Kong but with ambition to move into
the mainland market as well," Hitchen added.  (Ray ZHANG, YIN De An)
                          ____   ____   ____

(8) Government Agencies Rush to Establish Web Presences

[CND, 06/17/99] Increasingly aware of the growing importance of the
Internet and an expanding number of Net users, the Mainland authorities
are racing to launch their own governmental Web sites.

There were 1,564 government sites whose addresses end with gov.cn, South
China Morning Post reported quoting Xinhua.

According to Xinhua, there are now 41 government ministries have a
presence on the Web, and it's estimtated that some 80 percent of the
government ministries and ministerial departments would have their own web
sites by 2000 under the "Government Online" campaign, initiated earlier
this year by the State Economic and Trade Commission and Chinanet.

Sites launched by the mainland's Ministry of Foreign Trade and Economic
Co-operation and the State Economic and Trade Commission have been met
with "great success," Xinhua said.  (Ray ZHANG, YIN De An)

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