Virtual China: Information Technology - Press Reviews, June 21, 1999

Weekly Press Review

June 21, 1999

Ongoing corporate restructuring at China.com may end up delaying its planned Nasdaq IPO.

Last week Bloomberg reported China.com could issue shares worth US$ 50 million on the NASDAQ stock exchange any day. As of last Friday, however, the company had not made the necessary SEC filings required before an actual IPO, while company spokesperson Ellen O'Gorman told news site IT Daily rumors of an immanent listing were unfounded.

Ownership of China.com is being restructured as the company works to disassociate itself from its former parent, the China Internet Corporation (CIC) and Xinhua news agency.

As part of the restructuring, the largest percentage of shares, 20%, is now owned by New World Infrastructure (NWI), a Hong Kong based bridge and road builder. America Online, which has an existing agreement with CIC to launch AOL Hong Kong, announced it would be purchasing a 10 per cent stake in China.com. Xinhua's stake was not disclosed.

China.com spokespersons neglect to provide traffic figures for the site, but claim a total user registration of 400,000 and $10 million dollars in 1998 revenues. It is not clear whether these revenues were largely from the China.com web site or from its subsidiaries, online ad company 24/7 Asia and web developer Web Connection.

Despite the growing attention on Wall Street, China.com is barely on the radar screen of mainland web surfers. Three sites, Sina.com, NetEase, and Sohu are forging the real battle to be China's dominant online brand. Sina.com, which has attracted 25 million in investment from investors including Goldman Sachs and Flatiron Partners, is perhaps the best positioned Chinese content and service company today. Sina.com leads in international Chinese traffic but is fighting a neck and neck battle with Netease on the mainland. NetEase has become extremely popular by offering a community-focused portal with free web pages, chat, and e-mail. NetEase founder Ding Lei has an IPO is "only a matter of time." Sohu, the Yahoo-like directory service with investment and support from support from digerati dean Nicholas Negroponte, seems to be licking its wounds after the recent exodus of key staff members.

In other news, China Unicom officially launched trial operation of a new Internet protocol (IP) telephone network with services in 12 Chinese cities. The network, which allows domestic and long distance calling for a fraction of fixed line fees, is expected to be rolled out in 90 cities by the end of the year. IP telephone services have generated strong consumer interest. Hundreds of IP Phone cards were sold in just a few days last month when China Telecom and Ji Tong Communications Corp opened their trial networks.

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