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JULY 21, 2000 VOL. 26 NO. 28 | SEARCH ASIAWEEK


Wang, a programmer himself, routinely reviews the troops

Ahead of The Curve
Wang Zhidong wrote the first popular Chinese software for Windows. He spotted online opportunity when most mainlanders thought the Internet was for fishing. Can he keep Sina.com's lead against a pack of usurpers?
By RON GLUCKMAN

In a fourth floor office in Zongguanchun, a computer district dubbed Beijing's Silicon Valley, sits the man many believe ought to be China's poster boy for the Internet revolution. A multi-millionaire who in his early 20s wrote the mainland's most-used domestic software program, Wang Zhidong certainly wouldn't disappoint anyone from Central Casting. In simple green sports shirt, pen clipped to pocket, he peers through thick glasses, alternating his gaze between two computers on his desk. Even during interviews, Wang's eyes dart to the screens as he taps out e-mails between questions. Behind him, shelves heave with computer manuals. Beneath the desk are his shoes.

Who's to complain if the boss of Sina.com, China's leading Internet portal, wants to work in socks? No less an authority than Wired magazine, the electronic-age Bible, touted Sina.com as an emerging Chinese version of America Online, America's busiest Internet service. After going public in April, Sina.com's market capitalization has exceeded $1 billion. Four company websites — for Taiwan, Hong Kong, the mainland and overseas Chinese — have more than six million registered users and rack up some 27 million page views daily. Among China's growing middle class in Beijing, Shanghai and Guangzhou, Sina.com is the most popular Chinese portal, according to the Beijing Youth Daily. But with a brace of other China-based portals vying for the same market, the question is: for how long?

For now, at least, Wang, 33, could conduct business in his underwear and still be a role model. No question, eccentricity becomes the modern Internet guru. Not that the youthful Wang is an in-your-face weirdo. In fact, he is rather retiring, a local boy who is less comfortable in public than some of his Western-educated peers. "There are those that live and die on the oxygen of Western public relations," says Duncan Clark, founder of Chinese research firm BDA, who has known Wang for five years. "They speak English and get most of the press." Wang doesn't court publicity, he says, "but he is clearly influential. To be so in this industry, you have to have the respect from the techies, which he does. He's an engineer who has proven himself."

That's no mean feat for someone who never laid hand to mouse until he was in college. The eldest son of a poor school teacher, Wang as a boy excelled in math, chemistry and biology, but his real interest was electronics. Scattered around the modest family home in Southern China's Guangdong Province were the parts of various childhood projects undertaken by Wang, often assisted in his experiments by his younger brother, Wang Zhidang (who today works at Sina and designed the site's search engine). "Before I went to university in Beijing, I never touched a computer," says Wang. He is, however, a quick study. "He learns so fast," says Wang Yan (no relation), a Sorbonne-educated lawyer who headed up Wang Zhidong's first Internet foray. "He's not a talker. He's a doer."

Those two attributes — quick to comprehend and quick to act — are among the most serviceable character traits for an Internet CEO. Sina.com's current lead over numerous rival portals vying for mainland eyeballs is partly attributable to the fact that Wang listed his company on Nasdaq before most competitors, thus locking up a cache of investment capital before investor enthusiasm for dotcoms waned. But years before, he was busily establishing his credentials as a "first-mover" in China's computer industry. In 1995 — about the time Microsoft Chairman Bill Gates was scrambling to adjust to an Internet-inspired industry windshift — Wang had already been running a profitable Beijing software company, Stone Rich Sight Information Technology (SRS), for two years. On a trip to the U.S. that year, he got his initial exposure to cyberspace and immediately sensed its importance as a communications medium for China. "He got online for the first time," recalls Wang Yan, "and stayed online for two whole days. It changed him a lot. Right away he started planning his Internet strategy. He began to imagine a different future for the company."

Not everyone imagined the same future. His programmers saw honor in crafting codes, not hosting chat rooms. Management and investors were equally skeptical about tinkering with a winning formula. When Wang launched Project Surf, as the Net initiative was dubbed, company insiders called it Project Stinky Fish. A disdain for things supercillious — and many people at the time thought the Net was just that, a sideshow — was part of a culture that Wang himself fostered. At SRS, his partner and sidekick was Yan Yuanchao, one of China's top computer scientists. Completely self-taught, Yan honed his skills in the early 1980s by inventing computers for industrial use, and he later helped build China's first personal computer. At a time when the country claimed only two IBM PCs, one was assigned to Yan. With it, he scripted CC-DOS, a nifty program that provided Chinese characters for Microsoft's DOS operating system, a predecessor to today's widely used Windows.

Wang's own coding credentials were equally impressive. He first started writing software while attending Peking University, freelancing on projects for tech shops that sprang up in the surrounding Haidian area. After graduation in 1989, he was recruited by the university and joined its Founder Group. Locking himself in a room, the then 22-year-old created BDWin 3.0, an early Chinese-language conversion program for Windows. In 1992, he set up his first company, Suntendy Electronic Technology and Research. There, he developed RichWin, a software "shell" program that allowed Chinese-speakers to use Windows as easily as people who spoke English (Microsoft was not to come out with its own Chinese-language version of Windows for another three years). After receiving backing from Hong Kong electronics distributor Stone Group and forming SRS, Wang flogged RichWin until he cornered the Chinese market. The program at one time was estimated to be running on 80% of mainland PCs.

Despite the fact that in 1995 Chinese Net users numbered a few thousand Communist Party members, Wang wanted to bet the company on the next big thing. "I just felt it was the right move, and that we should do it," he says of his Internet foray. In early 1996, SRS put out a version of RichWin that allowed browsers to display Chinese characters. A website was launched for software support, along with an electronic bulletin board. The latter was supposed to allow customers to report software bugs, but before long it was being used for all manner of chitchat about sports, relationships, games and current events. The bulletin board evolved into a regular online community and an early multipurpose Web portal — a Sina.com precursor. In 1997, after a real-time webcast of China's participation in the World Cup, the site soared. More than three million page views were recorded daily. The mainland Net boom had begun.

Wang was still looking for a larger audience. He found it through an unlikely alliance with three Taiwanese students from Stanford University. The trio had created their own website, called Sinanet, to reach overseas Chinese — hoping to use the Net to work around China's strict censorship which choked off the flow of information both into and out of the country. The students used campus PCs to post freely-obtained stories from China, Taiwan and the rest of the region. Sinanet melded nicely with Wang's fledgling site. In 1998, venture capitalist Daniel Mao, an early backer of SRS, put together a merger. Mao is now chief operating officer at Sina.com.

The merger between the Beijing software company and the California dotcom was not entirely smooth. "The cultures were very difficult," Wang concedes. "We not only came from different countries, but different backgrounds." Jim Sha, a veteran of Oracle and Intel before helping found Netscape, was brought on board as CEO. Given the miniscule net numbers in China, Sha wanted Sina to cater to overseas surfers, while Wang wanted to focus on the mainland's vast potential audience. Within six months, in what one business magazine called a "purge," Sha was ousted and Wang took over as the unquestioned leader.

Although management differences have been ironed out, the company has not been spared further setbacks. Critics say Sina.com waited too long to go public. A listing was planned for 1999. But becoming the first Chinese dotcom to sell its stock on Nasdaq was fraught with complications. The government in Beijing does not want foreigners to hold stakes in domestic Internet companies. To work around state policy and get clearance from regulators, Sina had to set up a complicated investment structure that segregates its principal assets — the China-based operations — from a company incorporated in the Cayman Islands and headquartered in Hong Kong. That vehicle was the one that was listed and is the one in which new stockholders actually own shares.

If the unusual corporate structure didn't scare off investors, the stock offering prospectus might have. Its dense legalese is grim, Cold War-style reading, complete with warnings that Sina's mainland website can be shut down at any time by a government that tightly controls online content. Yet, when Sina.com debuted on Nasdaq, investors shook off March's global tech-stock meltdown and greeted the newcomer rather warmly. The stock climbed to more than double the $17 offering price in ensuing weeks (it opened on July 11 at $27). When rival Chinese portal Netease listed late last month, it slid 17% on its opening day.

Wang, who has millions of dollars worth of options riding on the stock value, isn't spooked by the dotcom shakeout or the way prices have plummeted. "I think it's a good thing both for the industry and the users," he says. "It's making the competition more rational as the industry focuses more on the fundamentals of the business rather than the hype."

Of course, his company is sitting on a fresh $68 million raised in the IPO — funds that represent a crucial advantage as Chinese-based portals battle for survival and a share of China's fast-growing market, expected in several years to have 50 million Net users, an online population second only to the U.S. Wang is thinking big. "I don't see Sina as simply a portal," he says. "I like to say that Sina is like [America Online] and Microsoft and eBay combined." Although the company offers a lot of the same fare as competitors Netease, Sohu.com and chinadotcom — news, online shopping, chat rooms and dating services — Sina is also a software company. Like America Online, it can provide its own search engines, e-mail and even language translation. "Software is perhaps the most competitive advantage we enjoy," Wang says.

Another is Wang's own indefatigability. "It's amazing how quickly he has caught on to running the company," says Wang Yan. "He grasped very quickly not only the essence of finance, but also the entire Silicon Valley style" — meaning a 24/7 work schedule. On any given day, Wang can be found in his office, shoes off, as he works the phone in search of an acquisition or answers e-mail from dozens of new divisions. Making room for the family is easy. His wife of nine years also works at Sina, and there are no children. In short, holidays never happen. Wang Yan says the boss hasn't taken a vacation since college. "On holidays, he flies to the U.S. or Hong Kong to work there." Wang's last lark was a visit to the Universal Studios amusement park in Los Angeles, an afternoon squeezed in this year during a business trip. "Actually, it's not really a big change," Sina's chief says of his shift to Internet time. "Life has never been simple for me. I like to work."

Work, lots of it, lies ahead. Sina is losing cash in buckets, $38.9 million in the nine months ended March 31. Revenues are growing quickly — in the quarter ended June 30, the company reported sales exceeded $5.5 million, 50% higher than the previous quarter. But cash flow from e-commerce and banner ads only slightly offset the company's gigantic marketing expenditures as mainland portals joust for mindshare. Chinadotcom (like Sina also officially headquartered in Hong Kong) is cash-rich. Netease just raised money by going public. Sohu is due to list any day. A war of attrition is in the offing, though the day when China's Internet population is large enough and rich enough to support just one Sina.com, let alone several look-alike websites, seems far away.

Yet Wang expects calm to prevail. "I envision big changes ahead, and very soon," he says. "The exact timing is difficult to predict, but one only has to look at the U.S. Probably within one or two years it will be game over for many of these companies in China. "Some will have to change their business models, and many will go through mergers." And Sina? "We'll be around, bigger and better," he says. That's a first mover talking.

Write to Asiaweek at mail@web.asiaweek.com

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