Financial analyst and Editor in Chief at Cftmedia, Ryan He, is in no doubt that the mobile sector is the most exciting area in China's internet industry. He cites China Mobile, the world's biggest cell phone operator, which has around half a billion users and accounts for almost half of the people in the country. 

Ryan He, financial analyst and Editor in Chief at Cftmedia. [Photo: CRIENGLISH.com/ Dominic Swire]

"If more than 50% of china's population have a cell phone then this number is already twice that of internet users in China. The next generation is growing up with a mobile in their hand. So if one can find applications to develop for this market, there will be many opportunities."

A second factor that is likely to tap into the potential of China's rural masses is the recent decision by internet regulator Icann to allow domain names to be written in text other than English characters. The move means that users in China will be able to access websites directly in their own language. A huge boost for those who struggle to use or remember domain names in an alphabet they are unfamiliar with.

"Although China's internet penetration is already big, there is another half of the population that lives in the countryside that doesn't know English so well," explains He. "Businesses focusing on this group of people will have a lot of opportunity. In this field there is no competition, no big companies. No Intel, no Microsoft. That means many opportunities for new entrepreneurs."

Such potential for growth, such huge rewards. Sounds remarkably similar to ten years ago during the internet bubble of the late 90s that saw investors throwing crazy sums of money to just about any organization that had ".com" in its name. Unfortunately, all too soon it became apparent that many of these new startups were unable to cash in on their supposed potential. Are we likely to see a similar scenario in China? Not according to Wenzhi Lai, CEO of classified advertiser edeng.cn.

"I don't think there's a bubble here in China right now," says the young bespectacled entrepreneur, pointing out that today's internet is very different to that of ten years ago. Now, he says, there is much more competition due to the fact that anybody can do business online with relative ease, adding that, in the wake of the global financial crisis, companies are now a lot more frugal with their cash.

"It's very different to the bubble the US saw in the last decade. I don't see many enterprises wasting a lot of money now. They are developing some real stuff that will help grow their businesses," he says.

Predicting for certain whether China will be able to take full advantage of the huge potential for growth within its internet sector would require an electronic crystal ball, a feature not even the boffins at Google have come up with yet. But what is clear is that even if the online sector grows at just a fraction of what some expect, this is still likely to make a significant number of investors very happy indeed.