China's VanceInfo Technologies Tries To Outdo Indian Outsourcers

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Ron Gluckman, 10.26.11, 06:00 PM EDT Forbes Asia Magazine dated November 07, 2011

Two tech guys named Chen are trying to answer the question: Can China do IT outsourcing like India?

When David Chen met his future business partner, Chris Chen, in 1992, David was a Chinese student struggling to make ends meet in Southern California and Chris was working at a Great Wall computer store. Happy to find a fellow mainlander behind the counter, David put in an order for one of the cheap knockoffs the company sold. "It was all I could afford," he says.

Over the years, whether to fix a mafunctioning keyboard or brainstorm big ideas, they kept in touch. Today the pair, who aren't related, run one of China's fast-growing info-tech outsourcing businesses, VanceInfo Technologies. It's a long way from playing in the same league as the Indian giants--Tata Consultancy Services, Wipro, Infosys and HCL Technologies--but it does list blue chips such as Microsoft, 3M, IBM, Citibank and AirAsia among its customers. VanceInfo collected $212 million in revenue last year and turned in a $30 million net profit. This year consensus estimates call for $276 million in revenue and a $40 million profit. Analysts say revenue could jump to $345 million next year.

Typically, big companies turn to outsourcers such as VanceInfo to handle some part of their operation. The outsourcer supplies the office space, employees and the ability to scale up quickly to fill a need. Last year Hong Kong's Cathay Pacific Airways delegated some of its growing IT and software development workload to VanceInfo, which set up an office across the border in Shenzhen. Cathay's chief information officer, Tomasz Smaczny, says outsourcing an IT operation pays better dividends than buying individual IT services or hiring more staff: "We didn't do this so much for cost savings as for effectiveness and increasing our capabilities. Outsourcing allows us to dial up or dial down as needed."

VanceInfo runs such offices around the country and works with some 25 universities to provide and train staff. Many of the offices are scattered around a huge new computer park on the outskirts of Beijing, though there's no way to tell from the outside--they often sport only the customers' sign. There's a big office for Microsoft, a customer since 1997, where VanceInfo worked on Windows 7.

VanceInfo also keeps its headquarters here. Despite the marquee clients, and stakes that make them both well off--Chris' 8.6% stake is worth $37 million, David's 0.7% stake $3 million--each Chen drives his own car, unusual for Beijing executives, and works out of a nondescript office when he's not traveling. David, 43, the company vice chairman and president, has files piled to the rafters in his. Chris, 48, the chairman and chief executive, sits in the next one, which does boast a window but it looks out at the wall of another IT office. "It's our style to be frugal," he says. "We're in an industry where there aren't big margins. What impresses our customers is good service at good prices."

The austerity is certainly part of the company culture. One example cited by Alicia Yip, a former Citigroup analyst who followed VanceInfo, involves the chief financial officer, who found that his flight to the U.S. had been booked in business class. "He quickly went online and changed the ticket to economy," she says. Another time, at a conference, she remembers that VanceInfo executives checked out of the pricey conference hotel and moved to a nearby budget inn.

Chris Chen grew up in Wuning, a remote village in remote Jiangxi Province that had scant electricity. His mother is illiterate. "She cannot even write her name," he says. Nonetheless, he scored high on the national college test and won a place at Tsinghua University, considered the MIT of China, and graduated in 1986. He didn't know anything about information technology then, so when he started working for Great Wall, then China's biggest computer company, "Some people thought I was useless," he says. "My major was mechanical engineering."



Chris' skills were more suited to an entrepreneurial age that hadn't yet dawned in China. He spent six years with Great Wall and was posted to California, partly to scout new technology. In addition to selling computers to walk-in customers such as David, he was always on the alert for opportunities. One arose when IBM asked Great Wall to translate its operating system software into Chinese. The profit margin didn't interest Great Wall. Chris pounced.

Raising money from friends and relatives, Chris started a business. That morphed into a company called Worksoft, which later changed its name to VanceInfo (see box, p. 38). It quickly enjoyed success in localizing software for China and helping foreign IT firms operate there. "We had no concept of outsourcing," says Chris. "We just did projects, focusing on opportunities to make money. If I knew anything about outsourcing then, we'd be much, much bigger now."

David brings a dab more international expertise to VanceInfo. From Fujian Province, he went to the University of California, Irvine, earning a computer engineering master's in 1994. He moved to Silicon Valley, where he worked as a software engineer at Oracle and a consultant at KPMG. After a decade in the U.S. he returned to China in 2001 and joined Chris. With his Silicon Valley background, David comfortably courts new customers and oversees operations. Chris is more of the strategist, as well as the closer. "Chris has great people skills, and is a good storyteller," says David.

But can the Chens propel VanceInfo out of the crowded ranks of midsize Chinese outsourcers and into the global big leagues? It's probably one of the three or four biggest outsourcers now. (Comparisons are tricky--larger companies, such as Insigma, Neusoft and DHC, get some of their revenue from software and product sales and other sources.) Analysts also see VanceInfo as one of the two or three best run and most reputable. Frances Karamouzis, an analyst for Gartner and the coauthor of a report last year on the Chinese outsourcing sector, praises VanceInfo's adoption of Western-style accounting, which led to a New York Stock Exchange listing in 2007; most competitors opt to trade in China.

The comparisons with India are inevitable. Outsourcing has mushroomed into a $70-billion-a-year business in India, while some analysts value the Chinese sector at $20 billion; CLSA predicts that it will reach $30 billion in 2014. "China is almost exactly where India was a decade or so ago," says Pierre Samec, former chief technology officer of U.S. Internet travel company Expedia. "I think it will follow the same rapid growth curve." VanceInfo set up an outsourcing operation for Expedia in Shenzhen.

But times are different, and China is a different country--it may never produce another Infosys. Just as the Chinese industry is today, the Indian industry was once very fragmented, with dozens of small companies vying for business. The industry underwent a rapid consolidation, but in China, where analysts have been predicting the same trend for five years, it's been slow in coming. Karamouzis says that when it does arrive, the key for VanceInfo will be how well it handles the numerous deals and the integration of thousands of added employees. It's done four deals this year, spending almost $9 million to buy three Chinese outsourcers and one in Australia.

A hiccup for VanceInfo over the past six months was the drastic drop in its share price after an accounting scandal at rival Chinese outsourcer Longtop erupted in May (see box, p. 36). With consolidation a key to growth, the lower share price leaves VanceInfo with a weaker currency for buying other companies. Indeed, of its four deals this year, it did the two before May with cash and stock while the two since May were cash only. But David says: "We are actually in good shape. We have a lot of cash on hand ($130 million as of June 30), and are still looking at acquisitions." He added that a lower share price could be an advantage in buying companies, giving the sellers more potential upside.

Another difference from India is that most of the Chinese outsourcing business is in Greater China--with Chinese companies or multinationals operating in China. Indian companies exported most of their work to the West (and have never been able to make many in-roads in China). VanceInfo's headcount numbered 12,542 at the end of the second quarter--up by 25% from a year earlier--but only 200 of those were outside Greater China. The company does seek to grow in Europe and North America by moving into consulting and business solutions, allowing it to travel up the value chain by taking on more lucrative projects.

But despite VanceInfo's digital culture, change can be slow. In fact much of the industry looks inward, because business has been so abundant in China. "This is a very Chinese company," says Samec, noting that there has been much talk of adding foreign expertise to help the company grow and especially to expand overseas, but little action. Says David Chen: "This is something we have talked about and agreed upon, but we have been slow to implement. We really need to step up."

Punished for a Rival's Misdeeds
 
VanceInfo began the year tipped as one of the world's hottest stocks. Then in May a scandal erupted at rival Chinese outsourcer Longtop Financial Technologies, hitting the shares of the entire sector. From around $32 a share, VanceInfo's stock fell to almost $5 early last month before beginning to rebound to around $11. And it didn't help that VanceInfo Chief Financial Officer Sidney Huang served as CFO of Longtop in 2005–06; he has not been connected to the scandal.

Investors were giving the sector's wave of listings increased scrutiny, albeit a bit late. Both Longtop and VanceInfo went public on the New York Stock Exchange in 2007. Choosing the U.S. over markets in China opened the vaults to bigger investments, at the price of more regulation and paperwork. The scandal came to light when its auditor for several years, Deloitte Shanghai, resigned, alleging that financial information had been falsified.

By the time trading in Longtop was halted in August, over $1 billion in value had evaporated. Scores of lawsuits are pending and a U.S. Securities and Exchange Commission investigation guarantees that the matter will remain in the news. "It will take some time to recover," says VanceInfo's David Chen. Yet he downplays any long-term impact. Rising costs and the yuan's continuing strength, he maintains, are bigger concerns that also contributed to the stock drop. Now, with a chance for the sector to feast on Longtop's clients, analysts see VanceInfo becoming a hot stock again, climbing to a $16 to $20 range. --R.G.

The Name Remains The Same
 
VanceInfo's first name was Worksoft, but the company later discovered a U.S. company called Worksoft. When it changed its English name to VanceInfo, it decided it didn't need to change the Chinese name. The first character denotes literature or culture, and the second, contemplation and thinking. In Chinese they sound similar to "vance," so the company chose VanceInfo for the English name. It's a play on "advancing information," says President David Chen. "It is really what we are about, to advance your potential." --R.G.

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Related articles

• VanceInfo Technologies Shares Popped: What You Need to Know (fool.com)
• China's IT Outsourcing Firms Aim to Move up the Value Chain (pcworld.com)
• 2 Positive Signs for VanceInfo (dailyfinance.com)

Investing during turbulent times

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Tips on how to invest during turbulent times

STOCK markets around the world lately gave investors that sinking feeling again, weighed down by deepening woes of Europe's sovereign debts, an anemic US economy and new fears of a sharp economic slowdown in China.

Many investors sold shares to hold more cash, despite cash earning very little interest. In Singapore for example, six months USD fixed deposits of less than US$1mil earns zero interest in some banks.

In the United States, 10-year Treasury bonds are yielding 2.1% per annum; despite misery returns, many investors prefer the safety of US Treasuries during crisis times, while waiting for policymakers to act boldly and markets to stabilise.

At the same time, we see many economists and other pundits offer a whole host of predictions about today's global financial predicaments. The many predictions range from the slightly hopeful to the pessimistic, right down to the disastrous and absurd.

Does it sound familiar? Did we not hear many such predictions during the 2008/2009 global financial crisis? Who should we listen to? What should one do?

No doubt in hindsight, a few forecasts will be correct; and as the dust settles, many extreme predictions will also likely be forgotten. Yet for investors today, separating much of the “noise” from facts is one of the more tricky parts of steering through these very challenging times.



Fundamentals and valuation takes a back seat during a crisis

Volatile stock markets today are driven by latest positive or negative news flow affecting sentiment. Uncertainties during a crisis causes investment risks to spike, stock investors tend to sell first and ask questions later; fundamentals and stock valuation typically takes a back seat in the short term.

No doubt many investors worry about negative impact to a company's fundamentals in difficult times. For example, a manufacturing company's stock with a present price earning (PE) multiple of six times can change drastically to 60 times PE if earnings were to collapse 90% because of a global financial crisis.

Similarly, a property company's price to book value discount of 60% can easily drop to 30% if asset value is marked down by half in troubled times. Monitoring, reassessments and analysis of a company's financial progress is obviously important during tumultuous times.

Share prices of companies (even those with good fundamentals) may continue to fall indiscriminately, due to many reasons such as panic selling, fund redemption and repatriation. Investors should tread cautiously, even if stock prices may appear to be at very attractive levels.

I relate a challenging experience from the last global stock market plunge. In 2008, I invested in the largest luxury watch distributor and retailer in China (at that time 210 stores and sales amounting to 5.5 billion yuan a year or about 30% market share).

This Hong Kong listed Chinese company sells luxury watches (such as Omega, Longines, Bvlgari) from global brand owners Swatch group of Switzerland and LVMH of France (both by the way are also 9.1% and 6.3% shareholders of this Chinese company respectively).

As the US sub-prime mortgage crisis deepens by end-July 2008, many stocks around the world plunged. This company's shares similarly dropped from HK$2 to HK$1.50 in a matter of weeks.

We vigorously reassessed the company's fundamentals, including visits to retail outlets in China and Hong Kong. The result was an affirmation of our conviction to invest in the company for the long-term, despite short-term price weakness.

By late September 2008, we decided to purchase more shares when valuation proved so attractive at HK$1.15 per share (at a PE multiple of eight times).

Unfortunately, as the global financial crisis worsened, the company's shares continued to plunge and bottomed to a low of HK$0.51 by Nov 26, 2008.

This stock eventually recovered back to HK$2 per share (by June 1, 2009) and went on to exceed HK$5 per share by late 2010. The company's share prices recovered partly because Asian equities rebounded quickly in 2009, but also reached new highs because the company's fundamentals continue to improve with strong sales (+49%), profitability (+26%) and expansions (+140 stores to 350 stores) from 2008 to 2010.

A lesson if you will that during a crisis, one should be prepared for short-term (weeks and months) stock market volatility.

It is essential for bargain hunters to have long-term holding power, good understanding of company fundamentals and strong conviction on a company's prospect. In the long-term, we know fundamentals and valuation does matter.

How does one invest during a time of crisis?

My approaches to investing in turbulent times are:

• Search for and invest (when valuations are attractive) in well managed companies that will not only survive but emerge stronger from crisis times;

• Be prepared to stomach stock market volatility in the months ahead;

• Have a longer term investment horizon (perhaps two to three years); once this crisis dissipates, reap the rewards as stock markets recover.

In Asia, macroeconomic fundamentals likely will remain resilient as many Asian economies have strong foreign currency reserves, coupled with more fiscal and monetary policy options to support growth.

China is also likely to withstand any fallout from Europe better than most would think. China's economy is still growing at a strong 9.1% gross domestic product growth for the third quarter of 2011; speculations about China's economy crashing may be somewhat premature at this stage.

Similarly, I think many established Asian companies have sufficient resources be it cash, borrowing powers or human capital, to emerge out of these turbulent times faster and stronger than before.

I believe with increasingly attractive valuation, the investing risk-reward equation (potential downside risk versus long term return prospects) favors Asian equities in the long run. I have confidence investing in Asia's fundamentals and Asian companies for many more years ahead.

Teoh Kok Lin is the founder and chief investment officer of Singular Asset Management Sdn Bhd

Insomnia could moderately raise your heart attack risk

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Having trouble sleeping? If so, you could have a moderately higher risk of having a heart attack, according to research reported in Circulation: Journal of the American Heart Association.

In a recent study, the risk of heart attack in people with insomnia ranged from 27 percent to 45 percent greater than for people who rarely experienced trouble sleeping.

Researchers related heart attack risks to three major insomnia symptoms. Compared to people who reported never or almost never having these problems, people who:

• had trouble falling asleep almost daily in the last month had a 45 percent higher heart attack risk;
• had problems staying asleep almost every night in the last month had a 30 percent higher heart attack risk; and
• didn't wake up feeling refreshed in the morning more than once a week had a 27 percent higher heart attack risk.

"Sleep problems are common and fairly easy to treat," said Lars Erik Laugsand, M.D., lead researcher and internist from the Norwegian University of Science and Technology Department of Public Health in Trondheim. "So it's important that people are aware of this connection between insomnia and heart attack and talk to their doctor if they're having symptoms." Heart attack risk also increases with each additional insomnia symptom, researchers said.

The study was based on 52,610 Norwegian adults who answered questions about insomnia as part of a national health survey in 1995-97.



Researchers examined hospital records and Norway's National Cause of Death Registry to identify 2,368 people who had first-time heart attacks during the following 11 years.

The researchers used survival analysis to adjust for factors that could influence the results such as age, sex, marital status, education level, blood pressure, cholesterol, diabetes, weight, exercise and shift work. They also considered depression and anxiety, both of which can cause insomnia.

Up to 33 percent of people in the general population experience at least one insomnia symptom, according to researchers. Previous smaller studies have linked insomnia to heart disease, including high blood pressure and heart attacks.

Every year, about 785,000 Americans have a first-time heart attack. It's unclear why insomnia is linked to higher heart attack risk. Some suggest sleep problems affect heart attack risk factors such as high blood pressure and inflammation.

Researchers didn't adjust for obstructive sleep apnea, and results may not apply to Americans because their daylight hours and sleep patterns differ from Norwegians, said Laugsand, noting that further study is needed.

Provided by American Heart Association (news : web)

Six Heart Treatment Hoaxes You Must Know!



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M'sia Govt Dept paid RM11,800 for RM3,400 laptop and printer!

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PETALING JAYA: The Marine Parks Department (JTLM) overpaid between 177% and 2,805% for equipment on a new boat and was not even supplied some items, the Auditor-General's Report stated.

It said JTLM did not conduct market research when it agreed to the price listed in the contract for these items, resulting in an additional cost of RM172,501.

The glaring differences included paying 2,805% more or RM56,350 for a night vision marine binoculars although the estimated market rate for the item was RM1,940.

However, what was supplied was not the RM56,350 binoculars but a non-night vision marine binoculars worth RM1,069.

Other price differences of equipment included a night vision Bushnell binoculars for RM56,350 which was a 1,893% increase from the market price of RM2,827; RM16,100 for a LCD television and DVD player which was 638% more than the market rate of RM2,182; and RM11,845 or 246% more for a laptop and a colour printer although their market price was RM3,428.

However, the audit found that the DVD player that was supplied was only worth RM195 and the laptop and colour printer that were supplied was only worth RM2,137.



Other items that were quoted beyond the estimated market price was for a colour marine radar for RM47,725 or 478% more compared to RM8,255 and a hand-held portable VHF transceiver for RM4,324 or 177% more compared to RM1,561.

JTLM had signed a RM7.51mil 12-month contract with a company to design, build, install, test and deliver an all-weather aluminium enforcement boat by July last year.

“There was no evidence that JTLM had conducted the necessary market research.

“The procurement management needs to be handled in a more organised manner by officers who have the expertise and experience in handling Government procurement.

“Contract terms on the design and quality testing were not followed and the equipment was not supplied according to specification.

“Yet payment was fully made without any price adjustments,” the report said.

The Treasury replied that the estimates for the contract were based on a verbal market research with experts from the Fisheries and Marine Department as well as reference to previous tenders from the Marine Department.

It added that there was a one-year gap between the tender offer date and the supply of items resulting in some items being supplied that were not according to specifications.

However, JTLM said the change in brands did not affect the quality, function and specification of the items.

The Star

Malaysia's public debt rises to RM407bil

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By EUGENE MAHALINGAM eugenicz@thestar.com.my

PETALING JAYA: Malaysia's public debt level rose 12.3% to RM407.11bil in 2010 from RM362.39bil a year earlier, according to the Auditor-General's Report 2010.

National debt grew 12% to RM390.36bil in 2010 from RM348.60bil a year earlier while foreign debt grew 21.5% to RM16.75bil from RM13.79bil in the previous corresponding period, said the report released yesterday.

In 2010, unresolved public debt both at the national and foreign level grew by RM41.76bil and RM2.96bil respectively compared with 2009.

“The national debt level totalling RM390.36bil accounts for 95.9% of the Federal Government's total debt,” auditor-general Tan Sri Ambrin Buang said in the report.

He pointed out that the ratio of the Federal Government's debt to gross domestic product at the end of 2010 was 53.1%, which was over 50% for the second year in a row.

The national debt level is governed by various laws that impose a debt ceiling for the Government. Under Act 637 of the Loan (Local) Act 1959, and Act 275 of the Government Investment Act 1983, it is stated that the combined loans raised domestically should not exceed a ceiling of 55% of the nation's GDP.

Meanwhile, Act 403 of the External Loans Act 1963 limits external loan exposure to RM35bil.

The report also revealed that in 2010, the Government received revenue totalling RM159.65bil, which was an increase of RM1.01bil (0.6%) compared with RM158.64bil in 2009.

Accounts receivable for 2010 stood at RM20.37bil while the Government approved allocation amounting to RM149.06bil for operating expenditure. “However, the said allocation was insufficient to cover the expenses amounting to RM151.63bil,” said the report.



The report also revealed the implementation of a rating system based on an accountability index.

“Through this rating system, marks will be given for the compliance if regulations of six main elements in financial management, namely management controls, budgetary controls, receipt controls, expenditure controls, management of trust funds and deposits as well as management of assets and stores.

“The federal ministries and departments rated as excellent become a role model and this would motivate others to diligently improve and enhance their financial management,” it said.

Genius kid’s fast-track education sparks debate

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Made In China By CHOW HOW BAN

ZHANG Xinyang has been in the limelight since he was 10. Then he became the youngest person in China to study at a university.

At 13, he continued his master’s degree at Beijing University of Technology. Yet again the now 16-year-old genius made history when he was accepted by Beihang University in Beijing last month to study doctorate in mathematics.

Zhang’s fast-track education has sparked a debate over whether it is against the law of nature or whether it is the right thing for China to do to encourage young children to jump classes and grow to become adults though in reality they are not ready or mature.

In his recent interview with China Central Television (CCTV), Zhang showed his childishness and unreasonable thinking by saying that he had on several occasions threatened to stop his studies if his parents refused to buy an apartment for him in Beijing.

Genius or rebel?: A photo of Zhang grabbed from the Insight programme broadcast on China Central Television recently.

His remarks have caused a stir on the Internet, with many netizens saying that he should not pressure his parents who obviously cannot bear the exorbitant house prices and he should earn his own money to buy the apartment instead.

“What a selfish boy! What use to receive so much education?” said a netizen. Another commented that Zhang should be labelled as an “abnormal kid” instead of genius.

Others said that if Zhang were not China’s youngest doctorate student, his words would not have weighed so much.

“It was we who had different thoughts on an ordinary 16-year-old kid because of his reputation. He is only a rebellious boy like many at that age,” they said.

Zhang was raised by an ordinary middle-income family from Liaoning province. His father Huixiang, who works as a civil servant, discovered that he was smarter than his peers when he was very young.

Since then, Huixiang has educated his son to be an active learner and encouraged him to think and question.

The boy would speak about serious topics from the Iraq war to city image. Sometimes he would argue with his father when they have different views on certain subjects.



Fun it might seem for Zhang to bury in his books, walk into the examination hall together with his older classmates and skip so many levels of education. But, he revealed, in the interview, that it was not enjoyable after all.

When Zhang started to distract from his studies and play with computer games, his father scolded him. At the heat of the argument, his angry father walked out of Zhang’s hostel and walked 50km home in Langfang, Hebei province that night.

“He wanted to punish me but in reality, he was actually punishing himself,” Zhang said of his father’s reaction during the incident.

He said his father would certainly suffer from a more painful heartache than other parents of normal children if he failed to do well in his studies, because of the way his father had groomed him.

“He wished he could feed me with milk forever but it would not happen.

“The later he loosens his grip and let me go, the greater the repercussion would be,” he said.

With tremendous pressure from his parents and high expectations he had on himself, Zhang failed some subjects during his master’s degree and faced the danger of not able to complete his studies. He even thought of killing himself.

In the interview with CCTV, Huixiang said he could not make a difference throughout his life and all he could do was to cultivate his son hoping that he could spread his wings in future.

Huixiang has come out with a book titled The Miracle of Learning.

The book relates how he and his wife raised their son – they had never watched television nor muted TV programmes when their son was around.

When his son threatened him to buy an apartment, Huixiang and his wife had no choice but rented an apartment near his son’s university to persuade him to finish his studies.

Zhang said he started to think about having their own house in the Chinese capital after studying at university and being influenced by the media and the materialistic world.

He claimed that it was his parents who wanted him to pursue his studies in Beijing and realise a dream that they could not fulfil themselves.

“I am not sure if they impose their thoughts or dream on me or not, but I am inheriting my father’s dream. They wanted me to stay in Beijing so they should work hard for it,” he said.

Huixiang said his son changed after coming to Beijing and being exposed to the pomps and vanities of city life.

“He is after only money. He came into contact with such things too early and thought it would be hard to survive without money or even if he has knowledge and ability,” he added.

Zhang was quoted by Beijing Evening News as saying that he had reasoned to his parents, when they were staying in Tianjin, that if they did not buy an apartment then it would be too late as house prices would continue to increase.

He said he was aware of the debate on the Internet over what he said but added that it would impossible for everyone to understand him.

“I would rather maintain a positive thinking. Now I just want to forget about the episode, remain low-key and continue with my studies,” he added.

Web porn stops men from performing

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Research: Web porn stops men from performing

by Chris Matyszczy

Men in their 20s have a lot to worry about.

Will they ever get a job? Will they ever keep that job for more than a few months? Will they ever have enough money to pay their student loans and still be able to spend $100 a week on pot? Will they ever put their pants on the right way round at the first attempt?

Now it seems that something they do for recreation, in order to take their mind off their worries, is having increasingly worrying effects.

My hard-core reading of Psychology Today caused me to come across a pained and painful piece called "Porn-Induced Sexual Dysfunction is a Growing Problem."

The thesis behind this frightful news--supported by research performed in Italy and elsewhere--is that Internet porn desensitizes young men to such a degree that, when actually faced with a real human from their target sex group, they are entirely unable to participate as they should.

No, no. Not a good idea.

(Credit: CC AmusingThailand/Flickr)

Indeed, research from the University of Padua in Italy suggested that erectile dysfunction due to excessive Web porn begins for many men in their teens. 70 percent of those young men who came to seek help for performance issues said they were Web porn habitues.

The weary and wise might offer that this problem must be psychological. Yet the researchers declare: "Hold on there, big brains."

For their belief is that Web porn simply numbs men's pleasure receptacles, desensitizing responses to the neurochemical dopamine. This is a chemical associated with reward and, in young men, researchers believe that gorging on Internet porn simply shuts down the physiological sense of reward from sex.



Because the Web allows for so many different--and, if the user so chooses--ever more intense stimulations, the mind-body continuum begins to feel nothing at all. Yes, it's a little like 15 minutes of "Keeping Up With the Kardashians."

It seems that when these young men are suddenly confronted with a real sexual encounter, the idea of coupling with a real human being feels suddenly numbing--and therefore frightening.

You might wonder what happens when young men try to wean themselves off their Web porn habits. Studies show that they experience all sorts of withdrawal pains, including insomnia and catchall flulike symptoms.

I know that the Web is supposed to be the repository of all that is open and shared and loving. It seems possible, though, that its very ease offers so much of a good thing that the put-upon males of Generation Y just can't cope, poor dears.

Perhaps all porn Web sites should exclude anyone under 35. For public health reasons, you understand.

Chris Matyszczyk

Chris Matyszczyk is an award-winning creative director who advises major corporations on content creation and marketing. He brings an irreverent, sarcastic, and sometimes ironic voice to the tech world. He is a member of the CNET Blog Network and is not an employee of CNET.

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