Focus: China yields to a brave new Web

"IF WE were making a profit already, I wouldn't be doing my job," says Lyric Hughes, chief executive of China Online, a one-year-old Internet company.

Yet after an initial scramble for funds, financing the new company is proving almost alarmingly easy. "To start with I would go to all sorts of lengths for a $100,000 investment, but recently people have been ringing up to offer tens of millions," she says. "I do return all the calls still," she adds.

This eagerness to invest in the Internet is expanding Ms Hughes's ambitions, and their range offers an insight into the almost endless possibilities still available to the pioneers of online business. Her original plan to bring news out of China to the world has expanded to include taking the world into China. Chinese Internet service providers are few and weak, yet there is huge demand for Chinese-language content. "I'm causing some alarm to my board. I had thought we would do this some years down the line, but this business moves incredibly quickly," she says. She is also considering expanding her Internet news service to other relatively unwired parts of the globe, such as Africa.

The genesis of China Online was her 20 years' experience working for an international marketing agency that served US companies in China. Her expertise and contacts allowed her to fax out information about events in the aftermath of the death of Deng Xiaoping earlier than anybody else - earlier even than the Chinese newspapers since they provided her with news before printing it themselves.

But it was the growth of the Internet as a means of distribution that allowed her to set up China Online. "We are a technology-enabled company," she says. "Without the Web as a distribution mechanism it would have taken us many years and much more money."

Most people assume that any online provider in China has a problem with state censorship, but Ms Hughes is vehement in her rejection of this idea. The authorities are extremely concerned about pornography, but otherwise regard the Internet as a useful means of free expression, she argues. Not once have they complained to her about any news item carried by the service, which Zhu Rongji, the Chinese premier, reads regularly. This contrasts sharply with the control freaks at Microsoft, for example, who exert considerably more effort than the Chinese government to dictate China Online's content.

Her new ambition is to create, in addition to the existing English language news service on China, a package of news, entertainment and sport in Chinese for China. The structure of local telecommunications costs has made it impossible for Internet service providers to thrive domestically. They are small and weak, so the market is effectively open to an outsider.

Ms Hughes approached Ark Capital, a Chicago-based venture capital firm specialising in ethnic minority businesses, to help to raise an initial $5m a year ago. She is the first female entrepreneur backed by Ark. Of the 1,800 venture capital-backed start-ups in the US last year, 50 are headed by women.

The company's financial plan envisages break-even point next year or soon after - but the timing depends on the choice of strategy. The more ambitious it is, the later the profits start to roll in. The point, she argues, is to build a brand name and ensure that the company is first in its field. That is what builds competitive strength in the fledgling Internet economy.

Ms Hughes is the absolute antithesis of the computer nerds who have founded so many other e-businesses. Her senior colleagues in the 28 person company include Doug McGill, who set up the Bloomberg operation in Hong Kong. The company's chairman is David Hale, the economic pundit at the Zurich Group in Chicago. Then there are the employees: "They are there when I get to work and I have to send them home at night," says Ms Hughes, who has two children. China Online has more than 300 consultants and analysts to call on.

There are three existing strands to the business. It is a news agency, which has customers such as Reuters and the Financial Times. It provides a proprietary database and information service to corporate customers, including giants such as AT&T, that do business in China.

Thirdly, and perhaps still most important for growth, China Online is setting up partnerships with e-commerce companies, which will allow them to crack the enormous Chinese market. China already has 4 million Internet users, more than the UK. This is forecast to grow to 10 million by next year and overtake the US online market by about 2006.

"People in China don't really have access to shops and goods at all. They don't have banks as we know them," she says, arguing that the country might well skip the stage of having high street shops and banks.

Ms Hughes clearly has a vision of almost infinite possibilities for her business, combined with a sense of urgency about the need to grow. As with so many net entrepreneurs, whose enthusiasm is perhaps the most convincing argument for believing the US economy does have new fundamental strength, Ms Hughes sees a bright future for her China Online. "Perhaps we will hit a brick wall, but if you're not running so fast that you might crash into the wall, you're not running fast enough," she says.

http://www.chinaonline.com

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
people
News
Richard Blair is concerned the trenches are falling into disrepair
newsGeorge Orwell's son wants to save war site that inspired book
Life and Style
Audrey Hepburn with Hubert De Givenchy, whose well-cut black tuxedo is a 'timeless look'
fashionIt may be a paradox, but the industry loves it
Arts and Entertainment
The pair in their heyday in 1967
music
Life and Style
fashionFrom bathing dresses in the twenties to modern bikinis
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine