Cheer for China's internet firms

Three of China's biggest internet firms have reported strong profits, as they continue to benefit from growing demand for paid online services such as games and messaging.

Online services provider Netease and Chinadotcom, which mainly sells software to other internet companies, both unveiled profits for the third quarter, after being in the red a year earlier.

Both companies have targeted the fast-moving mobile telecoms market for growth, after revenues from mainstream internet use in China started to slow down last year.

The results come a day after Sina, by some measures the country's biggest internet portal, announced record revenues and profits for the quarter.

Ups and downs

Many Chinese internet firms have struggled over the past couple of years, as heady predictions of market growth have failed to materialise, and markets have been uncomfortably overcrowded.

THIRD-QUARTER RESULTS IN BRIEF Sina: $11.7m profit, $30.8m revenue Netease: $10.2m profit, $17.7m revenue Chinadotcom: $6.1m profit, $24.4m revenue

But overall revenues have bounced sharply this year, partly because the Sars virus encouraged people to stay indoors, but mainly because Chinese consumers have taken eagerly to paid services such as online gaming.

Strong growth in these sort of premium markets is in contrast to many Western countries, where internet firms have found customers reluctant to pay for more than add-on services.

Even online advertising, a sluggish market in the West, has taken off this year in China.

Chinese internet firms also benefit from extremely low costs, allowing them to be highly profitable even on modest revenues.