Chinese Internet start-ups get crimped on crowded Web

By Melanie Lee and Huang Yuntao

BEIJING (Reuters) - Entrepreneurs are finding the road to Internet riches in China increasingly rough, facing a thicket of regulatory issues, stiff competition and a frontier mentality that leads to frequent underhanded practices.

Chinese Internet start-ups have evolved since the early days that produced such local legends as search leader Baidu and online commerce giant Alibaba.com, which have trumped global giants Google and eBay in the world's largest Internet market with more than 300 million users.

But the country's Web 2.0 phase has become much more complex, cluttered with companies trying to find their niche in everything from social networking, to gaming and video sharing -- many armed with big bucks and support from venture capital firms.

The fast changing landscape means it is now harder to enter the market given the intense competition and pattern of bigger firms copying lucrative ideas, said founders of several start-ups at one of China's top Internet shows in Beijing.

Halls of the conference this week were crowded with ranks of entrepreneurs eagerly handing out business cards, each hoping to imitate the success of such industry icons as Baidu founder Robin Li or Alibaba founder Jack Ma.

Most of the biggest online categories, such as search, retail and auctions, are already dominated by the biggest names, while niche areas are also crowded with players looking for the next big thing, said Edward Liu, chief executive of Beijing Fastweb, a start-up that provides fast data transfer over the Internet.

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