Meng Xuan occasionally breaks into laughter - when she reads something "cute" - as she furiously taps away on her keyboard.

The 21-year-old university student is chatting with her friends online.

"I like to share my happiness and sadness with friends online, using QQ, although some of them never give me their real names," she said.

"That's OK. I never tell them who I am!"

QQ is an instant messaging (IM) service offered by Shenzhen-based Tencent Technology Ltd.

QQ IM service, which allows subscribers to write to each other on PCs and mobile phones, has become extremely popular.

Tencent says it has more than 200 million QQ subscribers.

"The instant messaging market is booming in China, given the massive subscriber base," said Wang Jing, an analyst with Analysys Consulting.

Tencent has about 30 million QQ subscribers, not 200 million as it claims, because there are numerous invalid accounts, Wang said.

However, that's still a great number, he noted.

"The value of China's IM market will reach 1.2 billion yuan (US$144 million)," Wang told China Business Weekly.

The IM market will maintain its rapid growth in the years to come, given surging demand for real-time communications, the analyst added.

Currently, Tencent, Microsoft, Yahoo!, Chinese-language Web portal NetEase.com and 51UC offer IM services in China. QQ, however, is the most popular.

Tencent charges 2 yuan (24 US cents) per QQ subscription, which allows the subscriber unlimited use of the service.

The firm also profits from mobile QQ, an IM service specially designed for mobile phones.

The mobile phone QQ service costs 10 yuan (US$1.20) per month.

Subscribers can use their mobile phones to receive and send messages in the SMS (short messaging service) form from/to PCs.

Tencent has about 8 million mobile QQ users, Wang estimated.

For the six months to September 2003, Tencent posted an operating profit of US$21 million, on revenues of US$36 million.

The booming IM market has prompted Tencent to consider listing this year on the NASDAQ. The firm reportedly hopes to raise US$100-200 million.

"Tencent's NASDAQ listing would be attractive to foreign investors, as the firm has developed a very successful business model," He Wei, an analyst with consultancy BDA China Ltd, told China Business Weekly.

NetEase.com on January 1 began charging its IM subscribers 6 yuan (72 US cents) per month.

Analysts expect numerous new features and personalized services developed by providers will make instant messaging more attractive.

For example, many have begun providing audio and video online chatting services.

The booming market is already attracting new market entrants.

Fixed-line carrier China Telecom has developed a software, called Vnet Messager (VIM), and is expected to launch its IM service soon.

Alibaba.com, a Chinese e-commerce firm, has begun offering a self-developed IM service to its clients.

Most of the new mobile phones, especially those produced by major manufacturers, have the IM function.

"IM will become a standard function for the new phones," He said.

Eyeing the convenience of instant messaging, some corporations are also adopting the service, which makes it easy for their employees in different offices and/or cities to stay in touch.

However, it will take a while for the IM market for corporate users to mature and translate into great revenues for service providers, said Sophy Zhang, a telecoms analyst with IDC (China).

"Unlike individual users, corporations have greater demands for IM security and system stability," Zhang told China Business Weekly.

IM service providers should enhance the security and stability of their IM platforms, she said.

Several incidents of QQ account theft have already been reported.

Despite the boom, China's IM market remains unorganized, Zhang said.

The increasingly popular IM has resulted in online prostitution and one-night stands, which have led to various moral and legal issues.

Some observers worry a crackdown by the government might stifle the IM industry, as was the case with cybercafes.

"The government should set up a body to regulate the IM industry properly," Zhang said.

(Business Weekly 01/13/2004 page1)