China Internet Museum

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Annual Review

Looking back at 1998, we can recall the fight against flood and disaster relief, the France World Cup and the bitter Indonesia riot. In the field of Internet, 1998 was a very important year. It was the year of exploration for business modes of Internet applications. In this year, portal websites started to become important Internet application and e-commerce started to make transactions. In this year, environment for venture capital started to be improved and financing paths for Internet enterprises were gradually clarified. Moreover, Ministry of Information Industry was established in the spring of the year as the superior authority of the Internet industry.

China's first government news portal people.cn was founded back in 1997, but the true year of portal websites in the history of China's Internet was 1998. In this year, value of portal websites was recognized by the Internet circle. Sina, NetEase and other portals that profoundly influenced Chinese people's way of information inquiry started to emerge out of transformation from other modes in this year. Except for these business websites, central news portals such as website of Xinhua News Agency (later renamed Xinhua Net), Gmw.cn and CRI Online and local portals such as online.sh.cn and wuhan.net.cn were gradually launched. Though portal products were not mature at that time and advertising income was limited, the portal age of Internet was gradually ushered in.

E-commerce attracted increasingly greater attention in this year. China's first online transaction was made in March and the first e-commerce contract was generated online. In this year, Jack Ma returned to Hangzhou and founded Alibaba together with others. An e-commerce kingdom was therefore unsealed.

In this year, the industry of venture capital closely related with Internet started to develop. The internationally famous venture capital agency IDG started to invest in new-tech industry in China and a proposal on venture capital development was confirmed as the proposal of top priority in the year's CPPCC conference. Development of venture capital solved the capital dilemma for Internet enterprises and laid the foundation for lasting prosperity of the Internet industry later.

Besides, this year, newly established Ministry of Information Industry was identified as the superior authority of the Internet industry. Existence of a superior was favorable to industrial regulation and development.

Key Events

1998In 1998, Sina and NetEase were transformed into portal websites and official news portals were launched as well

In 1998, an article titled Wars of Portals by Jiang Fengnian introduced the concept of portal website that prevailed overseas into China. Immediately, portal websites became the direction of transformation for the Internet circle.

In this year, Stone Richsight (predecessor of sina.com.cn) was transformed into a portal website. 1998 France World Cup attracted attention of the entire world and also made Chinese forum Stone Richsight popular. The website translated foreign news coverage on the World Cup in a real-time manner and won extremely high popularity with rapid, comprehensive and timely information service. On October 20, former Stone Richsight forum was changed to SRSNET and announced to launch a network portal website. In December, it acquired an information website Taiwan Huayuan, launched sina.com.cn and became a news portal website.

In this year, Ding Lei also realized that selling online advertisement via portal service was a reliable profit-making mode. In September, NetEase changed its homepage to Internet portal and launched the domain name of netease.com, which was later changed to 163.

In this year, Sohu was still at the eve of revolution. On September 15, it launched SOHOO 2.0 version, but remained a Chinese search engine. In the next March, it was comprehensively reformed into a portal website.

Official news portals were also launched one after another. On January 1 of this year, gmw.cn under GuangMing Daily was officially launched as one of the earliest news portals in China. On December 16, Beijing Municipal Government's website "The Window of the Capital" was launched, becoming China's first high-level government portal website. On December 26, the website of China Radio International, namely, CRI Online, was officially released.

Local portals kept emerging one after another as well. Websites including online.sh.cn, wuhan.net.cn, jlonline.com, Tanfo Online, 269.net and gznet.com were all gradually matured portals that integrated regional information at that time.

Mar.In March, Cheng Siwei submitted the Proposal on Accelerating Development of China's Venture Capital Undertaking

Development of Internet cannot proceed without capital and maturing of the capital circle is a major guarantee of development of the Internet industry. In 1998, development of venture capital finally started in China. In this year, Cheng Siwei, former Vice Chairman of the NPC Standing Committee and Chairman of China Democratic National Construction Association, submitted to the Chinese People's Political Consultative Conference (CPPCC) the Proposal on Accelerating Development of China's Venture Capital Undertaking, which was listed as the proposal of top priority of the year by CPPCC. This exerted profound influence over China's venture capital and hi-tech industry and the system building concerning venture capital was unfolded consequently.

On October 27, famous international venture capital agency IDG signed a memorandum with Chinese Ministry of Science and Technology. It planned to invest USD1 billion in Chinese hi-tech enterprises to support their development (software, Internet, communication etc.) and would provide Chinese businesses with value added services such as market analysis. In 1998, IDG initiated its first investment project in China, Kingdee software. In the following few years, it continued to offer financial support for Tencent, Baidu, Home Inn, Sohu, Fang.com and eachnet.com.

Maturing of the venture capital environment was significant to survival and development of Internet. At the early stage of start-up, Internet enterprises usually focused on user accumulation and lacked channels for generating income. At this point, financing service provided by angel investors and venture capital providers seemed extremely important. The majority of Chinese private Internet enterprises managed to tide over the early stage of capital shortage by relying on venture capital. Therefore, a mature venture capital market played an important role of support for Internet industry at the start-up stage.

1998 In 1998, Digital Forum, a platform for pooling Internet-related ideas, was set up

As the concept of Internet attracted increasingly greater attention in China, forums and salons themed Internet started to emerge. In 1998, Digital Forum was set up. It was a specialized Internet forum organization that started early in China and played an admirable role of promoting communication and pooling ideas. The core members included Wang Junxiu, Fang Xingdong, Jiang Qiping, Guo Liang, Wu Bofan, Hu Yong, Duan Yongchao, Wang Dingding, Wu Xiaobo and Lv Benfu. Digital Forum was originally named iClub and was held once a month. It was the most influential activity during the time of Internet wave and early-stage Internet elites such as Wang Zhidong, Zhang Chaoyang, Ding Lei and Wang Juntao almost all participated in the activity.

Digital Forum grew along with China's Internet. Adhered to the tenet of "based on the Internet spirit" , it gathered elites from different fields to discuss in depth major Internet-related events worldwide, important policies, profound social issues and global frontier and trend in the form of open forums. By doing so, it built up the primary interaction platform for pooling new ideas on China's Internet.

Digital Forum gathered industrial leaders, thinkers, entrepreneurs and service providers and promoted frontier Internet ideas to form and converge, playing an important role of enlightenment for domestic Internet industry.

Mar.6On March 6, China's first online transaction was completed

E-commerce started to rise in 1998. At 3:30 on the afternoon of March 6, China's first online e-commercial transaction was successfully completed. Beijing citizen Wang Keping purchased ten hours of Internet surfing service from 21Vianet via e-banking of Bank of China. The few simple steps were a big step in China's Internet history. Shortly afterwards, China's first e-commerce contract was generated in the transaction between Shaanxi Huaxing Electronic Co., Ltd and Beijing Haixing Kaizhuo Computer Co., Ltd on the network of China Commodity Exchange Center. Since then, the concept of e-commerce was gradually introduced into application. In July 1998, CNNIC survey statistics showed that users hoping for online shopping accounted for 78.1%, while those unwilling for online shopping only 21.9%.

Later, spirited discussions about e-commerce were unfolded. In September, the First Financial E-commerce Seminar was held by School of Banking and Finance, signaling that the academic circle started to discuss e-commerce in theory. In November, the First China International Seminar on E-commerce Strategy was held in Beijing.

As a form of Internet application that developed early, e-commerce finally started to rise in 1998. At that time, there was no way for people to imagine that over ten years later, e-commerce transaction amount would reach trillions and commodity varieties would be extremely rich. The force of Internet was always beyond our imagination.

Mar.In March, Ministry of Information Industry was established

On March 9, 1998, according to the institutional reform plan of State Council reviewed and approved by the First Session of the Ninth National People's Congress, former Ministry of Posts and Telecommunication and Ministry of Electronics Industry were combined into Ministry of Information Industry. On March 31, the newly established Ministry of Information Industry was officially unveiled in Beijing. Its main tasks were to rejuvenate electronics manufacturing, software industry and communications and promote informatization of national economy and social service.

Ministry of Information Industry existed for ten years as the superior authority of the Internet industry and was included into the newly founded Ministry of Industry and Information Technology during the institution reform in 2008. Over the ten years, there were two ministers altogether, namely Wu Jichuan and Wang Xudong. With Ministry of Information Industry being established, there was eventually a specialized department to administer Internet industrial policies, market order and formulation of related laws and rules. On September 18, 1998, the Ministry issued the Notice Concerning Issues on Practice of the Business License System for International Internet Business of Computer Information Networks, distinctly identifying ICP services and clarifying the industrial market order. The Notice also set a new milestone in the Ministry's regulation over the Internet industry.

Jul.In July, Mtone Wireless took the lead to launch commercial wireless information service

Mtone Wireless, which was incorporated in 1994 by PhD. Wang Weijia that studied in US, was the first company in China to get engaged in wireless value added business. In 1998, the company took the lead in mainland China to launch commercial wireless information service and also provide securities traders with wide area wireless securities trading application based on special wireless terminal. In this year, Mtone Wireless secured a USD9.8 million investment by Intel Capital.

The company could be described as China's earliest mobile Internet service provider, but it was not well known by the public. Today, it has shifted its main business to cell-phone application service and one third of its income derives from cell-phone games.

Jun. In June, China Internet Weekly was founded

In 1998, China Internet Weekly that focused on Internet-related news coverage was founded, becoming a major media on the Internet industry. Supervised by Chinese Academy of Sciences and hosted by Science Press, it was a bi-monthly journal that was published on 5th and 20th every month. China Internet Weekly targeted its reader groups at new businessmen, including IT practitioners, IT researchers, people following news on Internet and IT and netizens. As stated at its official website, by paying attention to new growth and discovering new growth poles in IT industry, new information-based ways of production and new consumption modes of Internet users, everyone can have his/her business value improved.

China Internet Weekly, as an Internet media that emerged early, witnessed ups and downs of China's Internet over the past ten years and could be named the living fossil of China's Internet civilization and business.

Mar.22 On March 22, The First Intimate Contact started to be serialized online

1998 was also the year of start-up for Internet literature. Taiwanese writer Tsai Jhi-heng (with pen name Pizi Cai) published The First Intimate Contact in the form of online installments and caused a sensation among the readers and even Chinese people across the world. This was the first literature work that ever succeeded online, signaling that Internet literature entered the stage of start-up and that Internet writers and readers entered the stage of cultivation.

The novel told a bitter love story, which happened in Tainan and Taipei in Taiwan. The protagonist meets and falls in love with a girl on the Internet. They eventually meet up in real life and become a couple. However, the girl is diagnosed with lupus erythematosus. The disease proves to be fatal and the girl ends up passing away. The novel integrated popular elements at that time such as the movie Titanic and New Year’s Eve. It started to be published in an electronic bulletin system of National Cheng Kung University on the early morning of March 22. Later, it was forwarded online many times, collected into a book and filmed into a movie and a TV series with the name title. The novel also exerted immense influence over college students in mainland China and many classic sentences therein were quite popular among the readers.

The novel made its writer Tsai Jhi-heng overwhelmingly famous and also opened the curtain of Internet literature profoundly affecting people's way of reading. "Internet literature getting famous – publishing books – filming movies or TV series or producing games" became a major path for Internet writers to make profit and expand influence. It was fair to say that popularity of The First Intimate Contact was of high demonstrative significance to Internet literature afterwards. In this year, a group of Internet writers in mainland China also started to get active and appear in major network forums, such as Xing Yusen, Lu Jinbo with the pen name "Li Xunhuan" and Chen Wanning with the pen name "Ning mammon".

Dec.In December, Indonesia riot triggered "the first online homeland defense"

Netizens expressing patriotic feelings online for the first time also took place in 1998. In this year, subject to the impact of Asian Financial Crisis, Indonesia suffered intensified social contradictions and an extremely brutal riot against Chinese broke out. The sad fact that a large number Chinese people were slaughtered and shops were robbed aroused indignation of Chinese netizens. In December, in the face of the crime committed by the mobs, some Chinese hackers took up the weapon of Internet to attack the mobs'website, paralyzing several Indonesian websites. The hackers hung the Chinese national flag on the attacked websites and left stern warnings.

This was the first time for netizens to express strong emotions in a large scale online and called the "first homeland defense online". In the following over ten years, multiple homeland defense events happened online, such as the collective sensations expressed online after the China-US plane crash in 1999 and the Wenchuan earthquake in 2008.