Good morning, Commissioners, Ladies and Gentlemen,
My name is Hurst Lin. I am the General Manager of SINA US operations and a co-founder of the Company. I am honored to be invited here today to make a few comments regarding the impacts of China’s accession to WTO on our company and our industry.

In my view, China’s accession to WTO will be regarded as a historical milestone in both China’s and the World’s economic development as this event formally integrates the world’s largest nation into the economy of the world. With one sixth of the world’s population and a dynamic economic growth, China is well on its way to become a global economic engine that will help drive the world economy.

However, this is not to say that there will not be some potentially serious issues or obstacles along the way to integrating China into the world economy. For instance, for the US, the already large trade deficit with China may continue to grow. For China, the onslaught of foreign competition against its inefficient state-run enterprises could swell the ranks of unemployed thereby leading to potential political instabilities. Both of these developments if not managed properly may lead to increasing frictions between the two nations to the detriments of the consumer, business and national security interests of both nations.

Given that numerous works and studies have already been done on the macro economic impacts of the above issues, I will restrict my comments only to the particular impacts on SINA and the industry we operate in- i.e. the Internet industry.

On this count, it is our view that China’s entry into WTO has proven to be very beneficial for SINA and our industry as a whole. In particular, China Government has made great strides toward making the operating environment for SINA and our peers in China much more hospital than ever before.

Now allow me to go into greater details:

The first positive impact that we felt from China’s accession to WTO was a large change in the investment and legal climates for foreign investors in our industry. Prior to WTO, China had a rather defensive economic policy. Indeed many industries were off limit to foreign investments. The Internet industry was one such industry. In 1999, our company with US venture funding was looking to establish a presence in the rapidly growing Internet market in China. With WTO still more than two years away, we had to construct various joint ventures and complex corporate holding structures to enter this market. These various awkward setups contributed to very high expenses and also added a layer of unnecessary corporate complexities and investment uncertainties for our shareholders. Fortunately, as China’s negotiation with both the US and EU drew closer to successful conclusions in late 2000, the China Government began to informally relax its restrictions step by step. Subsequently, not only was SINA able to operate successfully in China, we were able to receive permissions from the Government to make an initial public offering on the US stock exchange in 2000. Today, the investment climate is even brighter with China as an official member of the WTO. The China Government has reversed its prior defensive policy and embraced a very aggressive schedule to open up more Internet and high tech related industries for foreign ownership and investments. Consequently, our company will be able to take advantage of these policy changes to expand into new areas to further the growth of our business.

The second positive impact is the opening of the rapidly growing high technology market in China to foreign firms. This was accomplished through the relaxation of investment rules as I mentioned above and the lowering of tariff and non-tariff barriers to imports. As more high technology companies increase their export into or establish manufacturing in China, our company has seen a dramatic decrease in the costs of our high tech equipment purchase. This has helped our company to increase sales and decrease costs in China. Furthermore, as our business in China expands we have increased our equipment purchases from our suppliers, many of who are American firms. This, in turn, has assisted these firms to gain a foothold in the emerging China Internet market. Indeed, in the time leading up to China’s entry into WTO and thereafter, we have not only seen our suppliers prospered, we have also seen our business partners prospered as well. For instance, in early year 2000, we assisted Dell Computer in setting up an Internet marketing campaign in China to sell PC to the burgeoning Internet user population. Over the course of two short years, Dell Computer has risen from a minuscule market position in China to become the number one foreign brand PC maker. This is a tremendous achievement for Dell, in light of the fact that China is now the second largest PC market in the world after the US. Naturally, as we contributed to Dell’s success in China, Dell, in turn, has rewarded SINA generously through their strong support of our business. We see this mutual support between SINA and its suppliers and business partners as part of a virtuous circle in our industry. Indeed, we believe that as time passes, there will be an increasing critical mass of American businesses operating in China who can leverage the local talent pools and their market know-how to support one another to produce high quality products for sales both in China and on the international markets. As a matter of fact, the Chinese governments both on the national and local levels are investing heavily in building and marketing economic zones with excellent infrastructures to attract such concentration of foreign businesses.

The third positive impact is the increasing ability for US firms to tap the great human capital in China. China has many great universities that produce excellent knowledge workers. Prior to the opening of China, only a small fraction of these talents were being utilized through their emigration to places such as the US and Europe. Today, companies are utilizing these talents directly inside China to produce goods and services for domestic consumption and export. Take SINA for instance, we have been able to rely on our Chinese staff to produce the bulk of our Internet programming at a fraction of the costs incurred by many of our competitors. Through the World Wide Web we offer these programming to our users worldwide from Asia to America and to Europe. Thus by utilizing Chinese talents, we achieve the goal of offering high quality products with minimum costs to our customers and along the way maximize the returns to our US shareholders.

Lastly, with China’s accession to WTO, in time, many Chinese firms will undoubtly become world-class in scale much as many Japanese and European companies did in the 1960’s and 70’s. When such time comes, these companies will inevitably follow the footsteps of their European and Japanese predecessors in making large investments in the US. They will do so to be close to the US market and in the process help to recycle a good portion of the trade surpluses that China accumulated over the years. In fact, a few of our largest domestic Chinese business partners, such as Legend Computer and Haier Appliance have already begun to explore making investments in the US.

In summary, I would reiterate that China’s accession to WTO marks an important milestone in the world’s economic development. By formulating appropriate foreign and economic policies toward China, the US can go a long way to help China make a smooth transition to an open market economy and ensure the well being and prosperity of one sixth of the world’s population.

This concludes my formal remarks. Thank you.