BEIJING, SEPT 19: At least one Chinese Internet company and its foreign partner have given their response to rules barring overseas investment in China's Internet: ignore them. Intel Corp. announced its participation in a new e-commerce system operated by a Chinese Internet company, Sohu.com, in which Intel owns a stake. Sohu.com will use Intel technology to allow Internet users to buy goods over the Internet using electronic debit cards.The deal comes just days after a Chinese minister said foreign companies cannot own shares in Chinese Internet companies. The minister's words startled executives in China's Internet industry, a small but fast-growing sector of the country's economy.If enforced, the rules could deprive Chinese start-ups of vital overseas venture capital, as well as access to overseas stock markets. It's not clear what will happen to existing foreign investments in the Chinese industry. Dow Jones & Co., owner of The Wall Street Journal, also owns a stake in Sohu.com.Despite theuncertainty, it appears that few business plans are being rewritten. "A lot is going on around the country, and the government is taking the position of letting it happen," says James Jarrett, president of Intel Corp.'s operations in China.But Beijing's Ministry of Information Industry, which oversees the Internet, is extending to Internet companies rules that were designed to regulate telecommunications firms. And it shows no signs of backing down from its interpretation."These Internet companies, including ISPs [Internet service providers] and ICPs [Internet content providers], are using telecommunications lines to do value-added telecommunications business," Wang Lijian, vice director of the ministry's news office, said on Thursday. "Uder these circumstances, according to the spirit of the original regulations, they are all prohibited from taking foreign investment."Wang added that "there are some companies that already have foreign investment and have foreign investors; this is something thecompanies themselves will have to take responsibility for."
