Virtual China: Information Technology - Press Reviews, March 24, 1999

Weekly Press Review

March 24, 1999

On Tuesday March 23rd, the Hartcourt company (OTC:HRCT), announced it would be acquiring 90% of Chinese ISP and content service provider China Infohighway Communications Ltd. The Hartcourt news is being heralded as the first successful foreign entry into China's rapidly expanding ISP market. Perhaps more significant is that (assuming the deal is finalized) it provides China InfoHighway powerful access to capital via a publicly listed Western company.

Private ISPs in China struggle because of high leased line fees they must pay China Telecom and are rarely profitable. Hartcourt's market cap is listed as 9.9 million. The stock closed on Tuesday, March 23rd, at $0.50 a share, down 6 cents with a 52 week high of $1.93. According to company press release, "Hartcourt intends to finalize the financing and close the acquisition on or before this coming June."

That this deal has been announced prior to Zhu Rongji's US trip for WTO discussions appears to set the stage for the Internet to be a prime topic of discussion when he visits Washington in early April. Last Thursday, U.S. Trade Representative, Ambassador Charlene Barshefsky, called for China to meet four IT-related conditions that China must meet before the US will approve its entry into the WTO:

1) agreement to open the telecommunications market for enhanced and basic services, and adherence to the principles of WTOs’ Basic Telecommunications Agreement;
2) agreement to open and liberalize the value-added services market, within a timeframe not to exceed five years;
3) agreement to continue to permit the provision of IT services without restriction by foreign firms and under an expanded definition;
4) and agreement to adhere to other IT-related WTO commitments.

In other news, ChinaNet and NTT Worldwide Telecommunications have announced they will open a new 2M connection between Shanghai and Tokyo at the end of this month. Previously, the fastest connection between China and Japan was 256K.

This week it was announced that the April 15 85th China Export Commodities Fair in Guangzhou will open virtually as well, at http://www.cecf-gz.com. The site is currently in test mode.

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