Virtual China: Information Technology - Press Reviews, July 12, 1999

Weekly Press Review

July 12, 1999

The big internet news from China last week continued to be China.com, the Hong Kong company that's had a patchy business record (see "China.com in a Nutshell") yet hopes to raise millions by selling shares for between $14 and $16 on the NASDAQ exchange in New York this week.

After months of speculation, the company's IPO prospectus was finally released to the public (see www.etrade.com), proclaiming the company's goal to become the #1 China internet portal site.

While China.com has consistently ranked far lower in popularity than other would-be Chinese mega-portal sites (such as sina, sohu, and netease), the fact that it's the first company with the words "China" and "dot.com" in its web address has got investors excited, analysts told reporters.

"The company has a great name," Kaushik Shridharani, a media analyst at Salomon Smith Barney in Hong Kong, told The New York Times. "That will drive investor enthusiasm for the stock, because most investors don't delve into the details."

In addition, with Chinese internet companies now proliferating madly, all eyes are on the China.com offering as a bellwether of Western investor interest in the sector. "If they do well, all of us will do well. If they do bad, all of us will do bad," Hanson Cheah, executive director of Asia Tech Ventures Ltd., told Asia Internet News.

Matel Mihalca, a Merrill Lynch internet analyst in Hong Kong, told Reuters he expects five China internet portal companies will attempt to sell public shares via NASDAQ by the end of this year. In addition to China.com, those companies were Sina, Sohu, Netease, and Zhaodaola.

In telecom IPO news, China Unicom, the fledgling mainland telco created to give the state-owned behemoth, China Telecom, some competition, announced last week that the U.S. investment bank Morgan Stanley would underwrite a public share offering that it hoped would raise US$1 billion.

The listing might be on both U.S. and Hong Kong stock markets, unnamed sources told the South China Morning Post. The Laodang Daily reported that China Unicom would likely use the proceeds from a listing to build a nationwide mobile telephone network.

Meanwhile, China's first online auctions were announced last week, with the disclosure by the Great Wall Group and Netease that they had started an auction website at www.netease.com and were planning to auction off 100 Great Wall computers on the site, according to the South China Morning Post. Bids between RMB 3,800 and RMB 16,000 (US$459 to US$1,934) would be considered valid, the companies said.

A U.S. auction company, Greg Manning Auctions, also announced last week its intention to establish a subsidiary in Beijing to offer online auctions to Chinese. Manning told CNET he planned to run the company's first online auction in China within six months. The sale would be of postage stamps, which is an enormously popular hobby in China.

Two joint ventures in Chinese language input technologies were also announced last week. In one, the Canadian company Zi Corporation said it would establish a joint venture with China Huayu (Hong Kong), a subsidiary of China's Ministry of Education, to promote the use of Zi's text input system in Chinese education, and for use accessing the internet.

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