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Portals have become the 'get rich quick' schemes of the Internet, largely launched with dreams of copying the phenomenal success of US high-flyer Yahoo!  So it is refreshing - if a little implausible - to hear William Ding Lei, chief executive of Beijing-based Netease, say he created one for the benefit of mainland Web surfers.

 Mr Ding, 28, is a fresh-faced computer whiz who last year launched a portal that has become one of the mainland's top three Web sites.

 He is the mainland's equivalent of Jerry Yang, the Taiwanese-born American who co-founded Yahoo! at the age of 24.

 A Nasdaq listing for Netease is in the offing, and Mr Ding can easily recite the string of international media publications to which he has recently given interviews.

 But despite Netease's success, the extremely polite and affable Mr Ding insists he is not in the business to make money.

 'Whether I'm going to be rich, like Jerry Yang, is not important to me,' he said.

 'What's important to me is to lead the development of the Chinese Internet industry, to be the mainstream player of the Internet world in China.'  Mr Ding would appear to be close to his goal.

 Netease has about 4.2 million daily page views and will bring in estimated revenue of US$2 million this year.

 It has about 1.7 million registered users for its free e-mail site and has recently branched out into electronic commerce.

 The numbers are comparatively small when compared with popular US sites such as Yahoo!, which has more than 200 million daily page views.

 But high-technology investors are betting that mainland Internet plays will see explosive growth in coming years.

 The number of Net users is set to rise from about 6.7 million this year to 33 million by 2003, according to consultancy group BDA China.

 Remarkably, Netease has not had any external capital funding until very recently, having relied mainly on software sales and Mr Ding's own savings for more than two years.

 Mr Ding was inspired to found Netease after surfing the Internet for the first time in 1995, a rare treat at that time for any mainlander but made possible through his job as an engineer for US-headquartered database software company, Sybase.

 'I was one of the first Internet users in China. I began to realise at that time that the Internet would be very popular,' he said.

 Mr Ding had the vision of making the Internet - which offers mostly English-based content - easier for Chinese people to use.

 His solution was to create Netease, whose Chinese name Wang yi means 'net easy'.

  Mr Ding quit his well-paid Sybase job and in 1997 started up Netease in Guangzhou with 500,000 yuan (about HK$466,850) from his own savings, earned from sales of a telecommunications-billing software that he had developed.

 'At that time I had three staff. They all liked the Internet very much . . . and were very interested in the company because they got to use the Internet every day.'  Their first task was to develop a Chinese-language software system that would enable Internet service providers (ISPs) and Internet content providers (ICPs) to offer free e-mail to mainland Web surfers.

 'I thought it would be a very cool idea if Chinese people could have access to free e-mail,' he said.

 'Within seven months we developed a free e-mail system that we thought we could sell and get some money, but that was naive.'  The system is similar to the popular US-based Hotmail service, which Mr Ding claims not to have used until after Netease's version was completed.

 But despite the success of Hotmail in the West, finding buyers for Netease's software in the mainland was difficult, and a search for a business partner proved fruitless.

 'We thought that we could partner with a firm, but nobody was really interested. They couldn't see how a free e-mail system could earn money for them.'  Mr Ding and his team persevered, and eventually managed to sell a dozen copies at $100,000 per unit, with their first customers being branches of the Post and Telecommunication Administration which offered Internet services.

 Other ISPs and ICPs followed - including Nasdaq-listed portal China.com - and the software is now used by about half the mainland's e-mail users.

 Netease also used the software to offer free e-mail on its own Web site.

  Using the money it earned from software sales, the company last year turned the Web site into a fully-fledged portal featuring a search engine, news stories, an on-line chat service and a hosting service for users' personal Web pages.

 Its newest addition is an on-line auction service launched in September, similar to that of popular US site eBay, and Netease's first foray into e-commerce.

 '[Earlier this year] we predicted that e-commerce in China would begin to take off,' Mr Ding said.

 'I thought that with an auction site on the Internet, users could have price haggling . . . rather than having us passively selling products such as thumbtacks on the Web.'  Netease ran its first series of auctions over a two-week period in July, selling personal computers and digital cameras.

 Purchasing products that you cannot see by bidding for them over the Internet is still viewed as an eccentric concept by most Chinese.

 However, the trend is set to grow, with Netease rival Sohu starting on-line auctions on its site after Netease's successful run.

 Mr Ding laughed when he recalled how curious Internet users would excitedly watch their computer screens to see the bids increase incrementally, in the same way they watch stock exchange tickers.

 Over the initial two-week period, the sales generated 2.3 million yuan, of which 200,000 yuan in commission went to Netease.

 Mr Ding is hopeful that auctions - along with advertising - will continue to bring in tidy sums for Netease.

 But the company is in need of further capital as Netease steps up its marketing campaign and staff headcount - it now employs 95 people.

 Earlier this year, it moved its headquarters from Guangzhou to Beijing, where costs are higher.

 'It's true that Netease has been making money but in order to keep things rolling you have to spend a lot of money on marketing to attract eyeballs . . . especially now that there are so many portal Web sites in China,' Mr Ding said.

 Netease earlier this month negotiated a financing deal that will give it venture-capital funds.

 Although Mr Ding would not identify the backer, Hong Kong-based Internet financing firm Techpacific.com recently announced it was funding Netease.

 At the time of our meeting, foreign investment in ICPs was still a contentious issue in the mainland.

 Mainland officials had said such investments were barred, and there were rumours that foreign stakes in ICPs would be converted into debt.

 But bilateral agreements signed by Beijing and Washington earlier this month will allow foreign ownership of up to 49 per cent in Internet companies immediately after the mainland completes its World Trade Organisation entry, rising to 50 per cent after two years.

 Mr Ding predicted that foreign investors would be welcome.

 'I would be very surprised if the [forthcoming government announcement] goes against the long-term development of China's Internet industry.'  Foreign investors are a key source of funding for the sector, having already pumped an estimated $200 million into ICPs.

 Money from Silicon Valley has so far not been a part of Netease, but Mr Ding embodies the Valley's culture.

 He dresses in the casual style preferred by many Internet executives, sporting a blue, open-collared shirt and beige corduroy trousers.

 His accessories include a fashionable mobile phone and trendy Palm digital organiser.

 He offers Netease stock options to his staff as part of their pay package in a country that for decades knew only of 'iron rice bowl' incomes provided through state jobs.

 'The employees understand what the implied underlying value [of the stocks] would be.'  The underlying value could be huge, given the appetite by US investors for mainland-focused Internet plays.

 Mr Ding does not think that Asian technology plays such as one of its rivals, China.com, are overvalued.

 SAR-based China.com, which has a market capitalisation of more than $1 billion, runs a China-focused portal that ranks 35th among mainlanders in terms of popularity and has reported quarterly losses since it listed in July.

 'For companies like China.com, the valuation of these 'dot-com' companies relies on their long-term prospects, strategy and positioning.'  Netease may become the mainland's first Internet company to list on Nasdaq, although there is not yet a timetable for the initial public offering (IPO).

 'There is a plan for an IPO but the process has not been initiated yet,' Mr Ding said.

 While a Nasdaq listing might bring him riches and fame, it is hard to imagine that it would change the softly spoken man, who one Beijing-based technology consultant described as 'home grown' and 'modest'.

 Mr Ding is also aware of his strengths and limitations, which is why he is looking for a chief executive to replace him.

 'I'm a technology person. I have no experience as a manager. I'd like to be chief technology officer instead.'  When asked if he would consider having Netease run by an American, Mr Ding simply replied: 'Maybe.'  But there is no doubt the future direction of Netease will continue to come from Mr Ding, who envisions a large Internet community for Chinese, created by Chinese.

 'A lot of the Internet companies in China are copycats of the American models. I have a vision for China. We should have indigenous Web sites that incorporate Chinese ideas and culture, rather than just copying from American brands.' William Ding Lei, 28, is chief executive of Beijing-based portal Netease. Born in Ningbo, Zhejiang, Mr Ding holds a Bachelor of Science degree in communications technology from the University of Electronic Science and Technology in Chengdu. He worked as a technical engineer for China Telecom and a technical support engineer for US-based database software company Sybase in the mainland before starting up Netease in 1997.

I have vision for China. We should have indigenous Web sites 



Netease founder Ding tells Yvonne Chan money was never the motivation