Twenty-seven domestic internet companies in mainland China are set to receive "trial" online advertising licenses from the Beijing government.

Only locally funded and registered companies were considered for the pilot program – effectively a testbed for China’s advertising regulator, the State Administration of Industry and Commerce. Selected companies were invited to help the SAIC draw up a more permanent licensing mechanism, but the latest move allows those not in the trial group to sell online ad space.

The right to sell online ads is crucial to China's infant internet industry (online retail transactions totaled less than $7m million last year) and Chinese online companies depend on ad revenues to fund new growth and attract overseas investors.

Enthuses Oliver Kwan, senior v-p at US-owned, a trial licensee via its affiliate Beijing Guangyitong Advertising Co: "This is a right step in the right direction." Previously, government policy regarding online advertising "hasn't been that clear," Kwan added.

News source: Wall Street Journal