As China's internet market sizzles - 94 million Chinese now go online, second only to the U.S. - many of its Web companies have rocketed from startup obscurity to stock-market fame.

Shanghai gaming innovator Shanda Interactive Entertainment Ltd. last year raised $100 million in an initial public offering and now stands 249% above its launch price. Ctrip.com, which provides online travel reservations, raised $40 million in an initial public offering in December, 2003, and its shares have since more than doubled. Tencent, which operates China's top instant-messaging service, pulled in $200 million in its Hong Kong IPO last June and has seen its shares rise by 30%.

Now, Net giants from the U.S. want a piece of that China magic. On May 11, Microsoft Corp. said its MSN portal had formed a joint venture with a Shanghai company to operate a Chinese-language version of MSN. Later in the month, Google Inc. opened a small office in Shanghai, following a February deal with Tencent to provide search services for the Chinese company. And Yahoo!, Amazon.com, eBay, and Expedia have been on the prowl in China, too. "The sense of urgency among big players has accelerated," says Safa Rashtchy, an analyst with Piper Jaffray & Co. in Menlo Park, Calif. "If you don't have a major stake in China, you could be left out."

It helps that U.S. Net outfits have an easier time getting into China these days. In the past, foreign companies that wanted to invest in Chinese dot-coms had to grapple with restrictions limiting their access to the market. Typically, the Americans would invest in an offshore company that had a contract to provide content to the Chinese company but had no stake in China itself. In late 2003, Beijing eased those restrictions as part of commitments it made in joining the World Trade Organization. Foreigners can now directly own 50% of Chinese Net companies, though getting approvals can still be slow.

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