Although Applied Theory says it didn't gain any net profit from the program--which charged about $10,000 per person for all training and expenses--the company hopes it has opened more doors to doing business with the Chinese. "It's good relationship-marketing in a culture where relationships and education are very important," Applied Theory CEO Richard Mandelbaum says.

The faculty included two Chinese and four non-Chinese instructors; most of the students had at least functional knowledge of the English language. Weihua Qian, marketing manager for Applied Theory's Shanghai division, says many of the students knew how to surf the Internet, but few had used it to purchase products.

Mandelbaum believes the program was successful, but acknowledges that there are obstacles to applying the course material to real-life experiences in Shanghai. For one, the largest retailers in China are just starting to consider E-commerce. And while there are many good online business models from other countries to study, any Internet strategy needs to overlay the cultural issues unique to China, such as hundreds of language dialects. "Availability of the technology doesn't necessarily translate to a workable solution," says Mandelbaum. He adds that he worked to develop creative thinking among students--because the best CIOs are able to offer multiple technology solutions to CEOs who face considerable business challenges.

Still, China's nickname as the "sleeping tiger" is particularly relevant in the emerging era of E-business. Although the government controls industry in China, it's also capable of initiating swift changes that affect industry.

Consider that Shanghai, which is grooming itself for business and technological dominance in China, had virtually no cable television connections two years ago. Within 18 months, 3.5 million homes have been connected to cable. According to Mandelbaum, the number of people using the Internet in China grew from 1.5 million in 1998 to 4 million last year. Drew Ianni, a senior analyst at Jupiter Communications, projects that more than 33 million Chinese residents will use the Internet by 2003. Such opportunity is ushering in a new wave of entrepreneurship. "China has said it wants to spin off 20,000 new businesses over the next 10 years," Mandelbaum says.

However, U.S. businesses looking to participate in the dawning of China's information age will have to take baby steps and maintain reasonable expectations. Many companies have worked diligently over the years to gain access to the potentially huge market, only to see their contacts fall out of favor or be replaced because of changes in policy or political office.

And while there is a concerted effort to woo companies that can help China build its telephone, data, and Internet infrastructure, the government remains wary of outside allies. Witness the State Encryption Management Commission, which has decreed that all foreign software companies register and divulge their encryption codes and replace them with Chinese-developed codes--purportedly to prevent state secrets from being leaked out of the country.

Still, programs such as Applied Theory's CIO training can only foster guanxi, says Sadowsky, who adds that organizers hope to eventually offer the CIO training program four times a year. "There's a need for thousands, if not tens of thousands, of CIO-trained information workers in China."

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