A study of Internet usage in China, "The China Online Gaming Report," published by Game Trust and The Diffusion Group, suggests that China will become the top online gaming market by 2007.

Currently, China has more than 80 million Internet users and approximately 15 million broadband subscribers. Among the study's findings:

– Chinese Internet users spend an average of 12.3 hours/week online;

– Netgames and entertainment are the second most popular online activity;

– 84.3% of Internet users email; 15.9% play online games;

– 37.8% of wired households have made an online purchase.

Rapid penetration of PCs and broadband throughout China are fueling explosive growth in online gaming and other online sectors.

With the recent hype of games in China, Chinese game companies like Shanda (Nasdaq: SNDA) have gone public on overseas exchanges, but the majority of popular games in China are still created by American, Japanese, and European game companies. Chinese-made computer and networked games are still unable to capture a significant shares of the Chinese market, and more importantly these games have had hardly any acceptance outside of China.