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Imagine, for a moment, that you're a Chinese entrepreneur, running a financial-information Web site. As one of many services on your site, you post hundreds of business-related articles each day. While general-interest portals in China have had their share of grief from Communist officialdom for running news items that don't fit the party line, you figure that you don't have to worry about upsetting the government. After all, you're staying clear of politically sensitive areas like Taiwan, Tibet, or the Falun Gong, the religious group that has recently incurred the wrath of President Jiang Zemin for using e-mail as a way to organize protests against the government.
But one day, you're not as vigilant as you should be. You publish an article that has nothing to do with these taboo areas but still manages to offend some local mandarins by accusing a provincial official of corruption.
Now, you're in big trouble. The authorities decide you're guilty of rumor-mongering. Part of your penalty: For more than two weeks, your financial Web site can't post any information about Chinese stock markets -- or anything else, for that matter. You can't run ads, even though you rely on them for much of your revenue. All your Web site can do is announce to your readers that it is temporarily closed for business.
SCHOOL'S IN SESSION.
That, in a nutshell, is what has happened to Yi Chong. The 27-year-old entrepreneur from the central Chinese city of Wuhan runs a site called China Finance Information Network (www.cfi.net.cn) that is suffering through a 15-day, government-imposed suspension. Chinese Web surfers who go to the site now find no financial data, no business clippings. Instead, in bold letters, there's a notice that says "Suspension of Service Announcement." The terse note explains that CFI Net has been dark since May 12 and cannot start up again until May 27. During that time, employees of CFI Net are undergoing "political education."
That's just one punishment CFI Net has incurred for the mistake of running an article last March from The Sun, a Hong Kong newspaper. The item alleged that a local government official in Hubei, the province in which Wuhan is the capital city, had received shares in a state enterprise. The report constituted "rumors that damaged the government's image," according to the Wuhan public-security bureau. So the local government ordered CFI Net to close for 15 days, and to pay a fine of $1,800.
On May 18, I called Yi, who goes by the English name Mike. Speaking in Chinese, he told me that the government was treating his company unfairly. "Every day, we have 500 articles on our network, sometimes 1,000," he explained. "There's no way to investigate each article." Besides, he added, "We didn't write it. We certainly didn't have any bad motive. [Our mistake] was unintentional."
BIG LOSSES.
In China, that's no defense. Early this year, the government made it clear that it was going to hold Chinese dot-coms responsible for the material that appeared on their sites -- in everything from chat-room discussions to personal Web sites to news clippings. Yi happens to be one of the first entrepreneurs to find out what that policy means.
What sort of impact will this have on CFI Net? According to Yi, before the crackdown, his site each day had about a million page views, from 100,000 daily users. The company, which Yi started in 1998, has 20 employees in Wuhan. Yi doesn't have any government backing (not surprising, given the severity of his punishment). While Yi had been in discussions with potential venture-capital investors, now, he told me, the shutdown "will certainly have a impact" on those plans.
And it's not just the investors who are going to be wary. When it comes to ad revenue, Yi said, "the losses are very big." As a result of the suspension, he estimated that CFI Net has already lost $120,000 in advertiser spending. "Fifty percent of our advertisers are lost," he said.
THINK AGAIN.
To see just how serious a punishment Yi is receiving, consider the worries that dot-coms have in other parts of the world. For an Internet business, being up "24/7" is a must. In the U.S., the stock of an Internet company can plunge if the site falls victim to hackers.
Late last year in Singapore, I interviewed an Internet entrepreneur who explained that he had moved his servers away from a Web-hosting service in the island republic and switched to the U.S. because the service wasn't speedy enough in Singapore. Sometimes, he complained, the servers in Singapore went down for hours before technicians could fix them. And in those few hours, the entrepreneur griped, he would be losing a lot of money. CFI Net isn't down for hours, it's down for weeks.
As bad as its punishment appears to us, CFI Net may have gotten off easy. The government hasn't shut it down forever. CFI Net hasn't lost its licenses. And Yi and his colleagues haven't been arrested. An Internet entrepreneur in Beijing whom I called told me that we should see Yi's punishment as a sign of progress. Chinese journalists have landed in jail for lesser offenses.Maybe that businessman in Beijing is right. But we should also see this case as a sign of the obstacles to a New Economy in China. Many critics of China like to think that the Communist government cannot control the Internet and its abundance of information. Try telling that to Mike Yi.
Einhorn is Hong Kong correspondent for Business Week. Follow his Online Asia columns every Monday, only on BW Online EDITED BY DOUGLAS HARBRECHT
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