Domain names are more than just dotcom – there's dotcom.jp, uk, au and hundreds of others around the world. China's own domain name suffix is dotcn, and the race is on for many companies to lock in their base domain name in the China market – yourcompanyname.com.cn.
In some cases, especially with larger companies, they are finding the domain name has already been registered by someone else – often opportunists looking to make a profit by selling the name. And therein lies a problem that the Chinese legal system is just beginning to grapple with the ownership and value of domain names.
A number of companies, but particularly Beijing Guowang Information Corporation, otherwise known as Cinet, started registering key dotcom.cn domain names as soon as the opportunity was made available the first public registration of a dotcom.cn domain name took place in early 1997. Cinet locked in more than 2,000, including Rolex, Cartier and Carlsberg, making a cheap gamble on the future value of these names. The initial investment was minimal Yn300 a year for each domain name. And then they waited in the hope that they were sitting on a maturing asset, like laying down wine.
The whole Chinese domain name area is under the control of the China Internet Network Information Centre, which confusingly goes under the acronym CNNIC. It reports to the Ministry of Information Industries and suffers from a significant case of bureaucratic paralysis, like many other parts of the Chinese administration. However, it is working hard to keep up with the rapid of change in this market, which didn't exist at all until 1997.
By mid-2000 around 100,000 dotcom.cn domain names had been registered through CNNIC, with new registrations proceeding at a rate of 7,000-8,000 a month. They account for only a small proportion of worldwide dotcom registrations, which by mid-2000 were being snapped up at 30,000 a day.
According to the China Data Network Service, Chinese institutions had acquired 477,900 domain names by the end of June. Registrations in the second quarter of 2000 were double that of the first quarter.
Legal cases have only recently started to come down the pipeline. The main landmark case so far involves Cinet. This company, which has the backing of a substantial vehicle manufacturing state enterprise, was sued by Ikea, the Swedish furniture manufacturer, over ikea.com.cn. The court ruled in favour of Ikea on the grounds that Ikea is a word that is only associated with the furniture company. In a separate case, Cinet was also ordered to pay Yn20,000 as compensation to Procter & Gamble, owner of the Whisper brand, for the Whisper.com.cn site.
Cinet is fighting against the possibility of many more potential lawsuits. In August, the company took out a full-page advertisement in China Youth Daily, which criticised the court rulings and appealed to the Chinese people to protect their cyber territory.
The Ikea ruling is a comfort to foreign investors. Chinese courts would appear to favour the claims of companies that registered their company and their logo in China early on, and certainly before the registration of the domain name under dispute.
CNNIC officials have indicated that a company name or logo not registered in China, but registered in Hong Kong, now that it is a part of the People's Republic, would be treated relatively kindly.
The main period of flexibility, according to current rules, comes in the one-month period after the application for the registration of a domain name and before it is finally settled. During that `pre-registration' period, CNNIC is willing to consider objections from other companies with a good claim on a domain name.
The registration process
Registering a regular dotcom domain name takes about five minutes online with your credit card. Registering a dotcom.cn domain name in China is much more complex. You can start the process online at http://www.cnnic.net.cn, but there are several offline steps that must be completed, including mailing a copy of the company registration certificate of the company applying for the domain name. Payment is also off-line.
Once documentation is received, CNNIC officials consider the application, and may either accept or reject it. The whole approval process takes just over a month. Registrations can only be done in the name of a Chinese-registered company or the China representative office of a foreign company. In some cases this raises the need for domain names to be held in escrow by Chinese companies for foreign companies that want to lock in their dotcom.cn names but don't plan to open an office in China just yet.
A recent example was the software company Symantec, owner of PC utility programmes such as Norton and Winfax. Symantec.com.cn was registered by one of the well-known China domain name squatting firms, but the company's lawyers in New York were made aware of it during the crucial one-month period. CNNIC was contacted, and CNNIC officials requested a copy of Symantec's Chinese office registration certificate. One look at it and they stopped the registration process, and shifted owner-ship of Symantec.
Chinese character domain names are another area of increasing interest. Both CNNIC and an organisation in Taiwan are operating competing Chinese domain name systems, which require special software and are in fact not directly domain names – they simply direct your browser to a chosen real domain name. So, for instance, American Express could register a Chinese character domain name – meiguo yuntong – and it could be programmed to forward anyone using the software to americanexpress.com.
The People's Daily in July published a long article discussing the relative merits of different kinds of domain names – English, pinyin and Chinese characters. Its conclusion was that pinyin is the best because it was understandable to the greatest number of people possible. One drawback of Chinese character domains, it said, is that foreigners could not read them, which would limit the extent to which Chinese domains could have an impact beyond China proper.
Traditional, standard dotcom domain names, as managed by Network Solutions and ICANN in the US, remain the most pervasive and powerful domain names in the market. It was reported in May that China had become the 10th biggest source of dot-corn domain name registrations, in spite of the significant problems involved, most particularly the shortage of internationally-accepted credit cards in the Mainland.
But there are some interesting aspects to the sort of domain names Chinese people are registering. They have a higher proportion of numbers (as opposed to letters) than domain names registered in other countries, and they often tend to use acronyms of Chinese transliterated words rather than the full words themselves. So 21cn.com, oa365.com, 163.net and 263.net are some of the biggest website in China. Pinyin websites such as renren.com (meaning peoplepeople.com) are very popular. Less successful linguistically are those that combine both English and Chinese pinyin. Mypaimai.com (my auction) and chinaren.com (china people) seem a little forced at this point, but fashions change.