With two new search engines and 800,000 new internet users coming online every week, the time to pay attention to China is now. Elizabeth Lloyd gives us the scoop.

In 1985 there was only one skyscraper in Shanghai. Today, there are over 300.

With China's economy growing at nine percent each year, it will most likely be the world's second largest by 2025 -- right behind the United States.

This emerging market is growing at break-neck speed. The number of internet users in China increases by 800,000 per week. And, in July, PricewaterhouseCoopers projected that China's media sector would achieve a 25 percent growth in revenue through 2008 due to an increase in online advertising.

So, which online marketers should be targeting China right now? To start, let's focus on the burgeoning online financial services sector.

Online banking

The Industrial and Commercial Bank of China (ICBC) -- China's largest commercial bank and the number one provider of online banking services -- has seen skyrocketing growth in their online transactions. In a release issued last month, Asia Pulse News reported that ICBC's "online turnover totaled 17 trillion yuan (US$2 trillion) in the first five months of this year, up 27.3 percent from the same period last year. While online turnover totaled only 15.4 billion yuan (US$1.8 billion) in 2000, when the bank first launched its online banking platform, the figure became a staggering 38 trillion yuan (US$4.6 trillion) last year. The number of corporate online clients now stands at 176,000 while there are now 12 million individual online customers registered."

"We aim to increase the number of our individual clients to 20 million by the end of next year, when online banking will play a bigger role in the bank's development," said Zhou Yonglin, marketing director of ICBC's e-banking department.

More than 10 foreign banks, including Citibank and HSBC, have launched internet banking in China -- even though foreign banks cannot provide online banking solutions in the local currency to individual Chinese customers (this ban will be lifted in 2006 as part of China's World Trade Organization efforts).

"The era of real tough competition between foreign and local banks is yet to come for internet banking in China," stated Zhou.

Credit Cards

However, one challenge remains: China has a very cash-oriented economy. Very few people have credit cards, which makes transactions with customers outside a particular locality quite difficult. According to the China Business Weekly, the nation's credit card holders now number 2 million, a fraction of its 1.3 billion people.

There are many initiatives taking place to penetrate this market. For example, online travel agent Ctrip.com recently announced the launch of a travel credit card with China Merchants Bank Co. Ltd. Additionally, companies like eBay's Paypal online payment unit have hired consultants to figure out how to tap into this market.

Online shopping

In April of this year, Yahoo! China entered into the ecommerce space when they announced a joint venture with Chinese portal SINA.com to create an online auctions product called 1PAI (pronounced eee-pie; the characters in Chinese mean "get a good deal"), and this offering has a platform that can be used by individual buyers and sellers as well as SMEs. Additionally, in June, Yahoo! China launched a separate Chinese-specific search product called Yisou, and this is a stand-alone URL that provides a clean, simple search box that Chinese users can use to find Chinese language specific data and information on the web.

Of course, one cannot ignore the powerful splash made last week by Baidu, the world's sixth most-visited internet site and China's leading engine operator. Some have called Baidu the "Google of China" (and note that Google owns a small percentage in the company) after its IPO on Friday.

Headquartered in Beijing, Baidu provides algorithmic search, enterprise search, and pay-for-performance marketing solutions. In its position as a leading Chinese-language Internet search service provider, Baidu also offers features such as news, MP3, and image search.

What this represents to marketers is a huge opportunity to delve into both search and online shopping to attract Chinese users. According to iResearch,

"China is the world's second-largest Internet market with about 100 million users but e-commerce is still relatively underdeveloped, largely due to lack of effective payment channels. The number of internet search users is projected to grow to 187 million in 2007."

Additionally, iResearch has reported that China's online shopping market was worth 4.2 billion yuan (US$507.5 million) last year, and is expected to double this year. It is no surprise, then, why global Internet giants -- including eBay Inc, Yahoo! and Amazon.com -- have all taken the China plunge in the last year, paying a combined US$375 million to acquire domestic start-ups, according to the China Business Weekly.

So with all this activity going on, it appears that the financial online services industry is poised for huge growth in China.

Just wait until China is scheduled to totally open up its banking sector by the end of 2006. This presents a lucrative opportunity for marketers in the financial services realm wishing to penetrate the Chinese market.

Elizabeth M. Lloyd is the Director of Strategic Development for YFDirect, the affiliate division of online direct marketing company, Netblue. Lloyd's work on international online marketing has been highlighted in numerous publications as well as in academic curricula for international marketing classes worldwide.