Virtual China: Information Technology - Press Reviews, May 10, 1999

Weekly Press Review

May 10, 1999

Internet events over the past week have been overshadowed by the NATO bombing of the Chinese embassy in Belgrade and subsequent nationwide demonstrations in China. Late Sunday, the US State Department issued a traveler's advisory against Americans travelling to China. Current events could have a significant impact on the upcoming China Internet conference to be held in Beijing on May 18th to the 20th. The China Matrix will continue to monitor the situation and will provide conference updates as we get them on the web site.

Recent confusion over a US based publicly listed company investment in a well known Chinese ISP highlight the uncertainties in this fast growing but poorly understood market. Last March, the US based Hartcourt company announced it would be acquiring 90% of China Infohighway, a company it said was China's exclusive commercial Internet services provider. The announcement was carried widely by wire services and Internet news organizations including The China Matrix and caused considerable confusion within industry circles in the days following. Sources within Beijing could not confirm the announcement from Infohighway officials and speculation grew that Hartcourt had signed a deal with some "other" Infohighway. Adding to suspicions was the fact that Infohighway, though well-known throughout China's Internet industry, is not and never has been China's exclusive Internet services provider.

In a May 2nd report in the China Daily's weekly business review section, Infohighway affirmed that it was seeking foreign cash but claimed the March Hartcourt announcement had no basis in fact. "It's groundless and we have never reached such an accord," said Infohighway's GM Yu Gan. In an interview with China Online news editor Doug McGill, Hartcourt's chairman Dr. Alan V. Phan insisted that Hartcourt did sign an agreement with Infohighway but that changes in management at the Chinese ISP soured them on the deal. In the same interview, Phan affirmed that Hartcourt is a shell company whose only assets are 10 million dollars in marketable securities and an investment in a Chinese pen factory. According to Phan the Hartcourt acquisition of Infohighway was intended to provide a short-term windfall to its investors: "We created an internet company to satisfy short-term shareholder demand. Upon completion of such merger, present board members will resign, shareholders will reap a short-term windfall, and the mission is accomplished." For further details on the Hartcourt announcement, see the complete investigative report at ChinaOnline.com.

In other news, Ho-Yeh Investment, the investment arm of Taiwanese KOOS Group, has entered into a joint venture with Singaporean provider of e-commerce solutions to form a business-to-business e-commerce hub called UBEX. The site will offer a secure online channel for companies to sell, market, source, invoice and purchase products and services within the Greater China Community. Payment and clearing services for the venture are being provided by Chinatrust Commercial Bank, one of Taiwan's largest commercial Chinese banks.

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