CCID CONSULTING ANALYZES CHINA'S INTERNET INDUSTRY.

CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), has recently released its analysis on China's Internet industry.

Following the dormancy in 2006, the Internet industry in China has finally met fast growth in 2007. In the past year, B2B, B2C and C2C have all made major progress. Online games have once again become a leading force for "enterprise listing." The seemingly stable competition pattern of search engines suggests innovations and improvements. Mobile IM has been developing rapidly, becoming a place of strategic importance for operators. Innovation and advancement have become the theme of China's Internet market as a whole in 2007.

China's online game market reached 11.35 billion Yuan

In 2007, Perfect World, Kingsoft, NetDragon and Hugeman were successively listed on NASDAQ, the Stock Exchange of Hong Kong Limited and the New York Stock Exchange, showing that the online game profit model has also won recognition from the mainstream capital market.

Recognition from the capital market reflects the pace at which China's online game market is evolving. CCID Consulting's surveys show that over 50% of the existing netizens have played online games, which has become a major form of leisure and entertainment for them. In 2007, China's online game market grew significantly. The market scale reached 11.35 billion Yuan, up 74.6% over 2006, level with the growth rate in 2003. This shows that China's online game market is entering a new growth cycle.

In 2008, China's online game market will maintain its high growth momentum and present new growth characteristics. Players seek more dominant power in games, and profit models have diversified. The competition in the online game market have transferred from product to culture.

There are almost 60 million users in China's IM market

In 2007, China's IM market entered a period of adjustment. The focus of market growth shifted. Service providers have started to pay more attention to the future growth of the mobile and enterprise IM markets.

In 2007, China's personal IM market users accounted for 92% of the total netizens in China. The entry threshold to the personal IM market has gradually been raised. Two major competitors have emerged in China's personal IM market.

Because service providers have squeezed opportunities from the personal IM market, mobile IM and enterprise IM have become new business growth points in the IM market. In the mobile IM market, there are almost 60 million users. Tencent, Microsoft and PICA have improved their products. However, because of existing operators' strong operational advantages, it is difficult for new service providers to make fast breakthroughs in the market.

Relatively speaking, enterprise IM applications will become the hotbed for new service providers. IM products do not have a high penetration rate among enterprises in China. International giants and emerging domestic enterprises are at the same starting line. Because enterprise IM is separate from the competition between the personal IM market and the mobile IM market, its growth environment is relatively stable.

China's search engine market reaches 2.93 billion Yuan

In 2007, China's search engine market grows fast, reaching a size of 2.93 billion Yuan, up 76.5% over 2006.

In 2007, China's search engine market became more concentrated. The gap between vendors has further widened. The first-tier vendors consisting of Baidu, Google and Yahoo (China) have a market share of 92.2%. The structure of the market is basically that of an oligarch monopoly. There are many highlights in the vertical search fields. These include e-business, living services search, job seeking, talent, shopping, real estate and tourism. These fields become more integrated with e-business. Meanwhile, the search engine market will see competitions centering around improving user experiences.

Transaction volume in China's e-business market is expected to reach 1.7 trillion Yuan

In 2007, China's e-business market has maintained its previous solid growth momentum. In the first 10 months of the year, e-shopping accounted for 0.8% of the total national consumption, representing a growth of more than three times over 0.25% in 2006. E-business grew along with the changes in demand. It is no longer a network of traditional businesses. It has started to penetrate into all Internet fields and has gradually been integrated with many elements of the Internet. It has guided the Internet and even created user demand.

Looking at 2008, e-business will more widely integrate with Internet applications including search, IM and Web2.0 to improve user experience and promote eventual transactions. Yahoo, Google and other search enterprise will not sit idly by in the face of Baidu's C2C performance. They are bound to speed up their exploratory efforts in the e-business field, while Tencent, a representative of IM enterprises will continue to increase its e-business input and try to realize considerable transaction volume through huge user numbers. Numerous Web2.0 enterprises need to make an effort to look for a cut-in point into e-business to solve their profitability problem. Portal websites will also start to consider how to make use of their flow advantages to come out of the constraint of their monolithic profit models through e-business.

About CCID Consulting

CCID Consulting Co., Ltd. (hereinafter known as "CCID Consulting"), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is directly affiliated to the China Center for Information Industry Development (hereinafter known as "CCID Group"). Headquartered in Beijing, CCID Consulting has set up branch offices in Shanghai, Guangzhou, Shenzhen, and Harbin, with over 300 professional consultants and industry experts. The company's business covers over 200 large and medium-sized cities in China. Apart from home market development, CCID Consulting establishes international cooperation links across the United States, the Asia-Pacific region and Europe with agents in the U.S., Japan, South Korea, Australia, Singapore, Italy and Russia, with the aim of going global.

Based on four major competitive areas: powerful data channels, industrial resources, intense knowledge and a deep understanding of information technology, CCID Consulting provides customers with consulting, research and IT outsourcing services covering strategic planning, IT applications, marketing strategies, human resources and information technology outsourcing. Customers range from industrial IT users, telecommunications companies, energy companies, finance companies, and automobile companies, to government departments at all levels and diversified industrial parks. CCID Consulting commits itself to be the number 1 consultant in strategic consulting, the number 1 brand for strategic consultancy, the number 1 advisor for enterprise management and the number 1 consultant for government decision-making.

For more information, email to liuyan@ccidconsulting.com or visit http://www.ccidconsulting.com.