Do you sometimes have the feeling that you arrived �just a couple years late� on the Domain Trading scene? Nostalgic for the days when great domains were available for the taking by anyone with sufficient foresight and the chutzpah to ignore the naysayers? If you miss the adrenaline rush of a highly speculative investment�and the promise of astronomical returns that goes along with it�maybe you�re better off straying from the tried and true �.com + traffic = $$$� formula.

Instead, consider China: at approximately 1.29 billion people China is the world�s most populous nation, yet Internet penetration and ecommerce are still in the developmental growth stages. Major corporations in industries ranging from computers to automobiles are placing big bets on China�s future potential. So, how do things look from the domain perspective?

In this article, Tim Schumacher, CEO of Sedo, who recently returned from an extensive tour of China, Matthew Bentley, Sedo�s Director of International Operations and Hong Fang, responsible for the Chinese market at Sedo, provide you with an in-depth look into the Chinese Domain Name market.

China

Having claimed the title of world�s most populous nation, the Chinese are now rushing to also become the world�s largest Internet nation. According to statistics released by the China Internet Network Information Center, China, with nearly 80 million Internet users, currently trails only the USA and Japan.  With the number of Internet users growing at around 5% a month, a household penetration rate of 25% percent is conceivably only three or four years off. Furthermore, with China�s recent accession to the World Trade Organization (WTO) the economy is taking great strides towards global accessibility. 

The number of web sites is also rather small compared to the huge amount of Internet users. While large consumer web sites like search engines, portals, email and mobile phone sites � with 163.com and sohu.com leading the pack - are extremely popular, the total number of web sites is still rather small. Currently, experts estimate that less than 800.000 generic (.com/.net) plus a few hundred thousand .cn domain names have been registered by Chinese people. 

However, China is certainly a country worth having a look at � not only from the domain point of view.   

Domain registration

In April 20, 1994 China connected to the Internet via international special line. On May 21, 1994, the China Science Technology NET (CSTNET) began to provisionally offer domain name registration to Chinese users. In June, 1997 the China Internet Network Information Center (CNNIC) was founded.  

CNNIC is China's registration administrative organization. It is a non-profit organization of administration and service, performing duties of the National Internet Network Information Center. The management of CNNIC is handled by the Computers Network Information Center of the Chinese Academy of Science. CNNIC operates under the auspices of China�s Ministry of Information and Industry (MII), an agency that also oversees telecommunications, multimedia, broadcasting and satellite transmissions across China. 

CNNIC has posted a policy regarding intellectual property disputes on its website. The policy is very similar to the Uniform Dispute Resolution Policy (UDRP) adopted by ICANN. 

User behaviour

According to the China Internet Network Information Center, online shopping and ecommerce accounted for less than 1 percent of online activity in China. Instead, users went online primarily to obtain information, such as news, instructional content, or ebooks. 

The Chinese written language is based on a sign language, having thousands of different signs for different syllables, e.g. � �for DOMAIN, pronounced �yu ming� in Pin Yin language (Pin Yin is the standard latinized phonetic spelling of the Chinese language, it can help not only Chinese but also foreigners to learn Chinese).

So, when a western traveler visits china, the only thing he or she can usually read on signs, in newspapers or in the streets, are named using �Pin Yin� � they are written in Latin characters and visibly stand out of the usual Chinese signs. So, it is usual that the domain names are named by �Pin Yin�, e.g. Beijing.com,�Beijing� being the Pin Yin of � �. Among the various TLDs, .com names are the most popular (with .net and .org far behind), but .cn and .com.cn are catching up. Therefore, companies should, if possible, register all available TLD alternatives.

 In China, as in other markets, the ideal domain name is short and easy to write. However, since many Latin characters are not meaningful for the average Chinese, some sites have successfully developed on domain names using numbers rather than letters. Among the top 20 Chinese language sites (according to Alexa) are 163.com, 3721.com, 21cn.com, 17173.com, and v111.com. These might look like worthless domains to the western-minded domain investor, but in China they are often preferred to words in English or other Latin-script languages.

Recently, multilingual domain names are becoming popular in China. This allows users to register not only domain.cn, domain.com, domain.org but also .cn, .com, .org are valid.

 Secondary Market

The secondary market for domain names in China  currently isn�t huge, but it can be expected to grow substantially in the upcoming years. Organized platforms are � in addition to the global domain trading platform Sedo, which also has many Chinese customers � Eachnic.com and DomainPricing.com. The prices for domain names are�as with the prices for other goods in China�generally lower than in most other parts of the world.

All three companies conduct appraisals for domain names and domain escrow services. In addition, through a global cooperation with Google AdWords, Sedo is able to offer domain parking specifically targeted at the needs of Chinese customers.

Transfer of a .cn domain name from one registrar to another is allowed, but domain names registered through China-based registrars cannot be transferred into non-China based registrars, and vice versa. Domain names cannot be transferred within the first 60 days of initial registration. Also, domain names scheduled to expire in fewer than 14 days will not be allowed to transfer. These rules are based on the fact that .cn does not have auto-renewal for expired names. There are no specific rules for registrant transfers, they are handled just like .BIZ and .US at the Registrar level. 

Concerning deletion rules: Only a sponsoring registrar can initiate the deletion of a .cn domain name. If the deletion is initiated within the 15-day additional grace period, the name will be immediately made available for registration. If a deletion is initiated after the 15-day add grace period, the name will be put on a five-day "Pending Delete" status. If a domain name registration expires, the name will be put on a 15-day "Pending Delete" status. All non-expired domain names have a five-day "Pending Delete" status. When a domain name expires, it is immediately placed on HOLD and taken out of the zone files.

Local industry structure

In China, there are many companies around that provide domain registration, web hosting and other web services. Some of them, however, are only providing local service or serving niche markets. The domain industry structure is more concentrated than in the U.S., but less concentrated than for example in Germany.

Among the top players, HiChina Web Solutions Limited, formerly known as Civilink International Information Technology Co Ltd., is the leading web hosting and domain name services provider in China, having registered over 300,000 domain names and currently hosting one fourth of all the web sites in China. It also operates the domain name secondary market Eachnic.com.

Among other companies competing in the field, DomainPricing.com, which belongs to the company Xiamen Jintong Science and Technology Ltd (established in 1996 in the city of Xiamen), offers domain registration, web hosting, web design, e-commerce. Furthermore, Intonet.com.cn from Jinan (Shandong province), Hotsales.net and Shesp.com from Shanghai, China-Channel.com from Beijing and Hzst.com located in Hangzhou, are among the mid-size players in the market. 

� 2003 Sedo.co.uk

Our thanks to Tim Schumacher, Matthew Bentley and Hong Fang for their work in producing this article. If you would like to comment, write [email protected].  

Mr. Schumacher and Mr. Bentley were also the authors of a special report for Domain Name Journal on the German domain market that you can read in our Featured Columns section.

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