America Online Inc has given Chinese leaders a US$100 million reason to rethink their opposition to letting foreigners own a stake in the country's floundering Internet industry.
Times are so bleak for China's Internet companies that they took AOL's announcement this week of a venture with the biggest Chinese maker of personal computers not as a competitive threat, but as a vote of faith in their future.
It didn't seem to matter than AOL's US$100 million investment doesn't actually buy it a place in China's Internet. Or that there's no firm date for any foreigners to be allowed in.
"It's a positive sign for the industry, for AOL to be endorsing getting into the China market," said Daniel Mao, CEO of Sina.com, one of China's biggest Internet companies.
AOL, a unit of AOL Time Warner, said its Hong Kong-registered venture with Legend Holdings Ltd would aim at replicating its Internet service in China. For now, though, its involvement will be limited to providing consulting to Legend's Internet portal, fm365.com. AOL will hold 49 percent of the venture with Legend, which will match AOL's investment but hold 51 percent.
Chinese dotcoms are eager for outside help. They suffer from the industrywide problems of feeble revenues and stock prices. Companies are laying off staff and dismissing executives.
"At this point, things aren't going to get any better in the next 24 months, not in an advertising-based market," said Steven Schwankert, senior editor of Internet World Magazine (Asia), based in Hong Kong.
Regulators at first tolerated efforts by foreign Internet firms seeking a toehold in China, but then shut them out by declaring that a ban on foreign investment in telecommunications applied to the Internet. China has promised to let foreigners own up to 50 percent of Internet firms and other service ventures after it joins the WTO.
The country has just one authorized foreign Internet investment -- a minority stake in a Shanghai venture. AT&T Corp. will work with two state-owned Chinese partners to provide broadband Internet service to Shanghai's new Pudong business district in a US$25 million venture announced in December.
The Ministry of Information Industry, which regulates the Internet and fought to keep foreigners out, apparently isn't being swayed by the interest displayed by AOL and the prospect of badly needed money from abroad.
It will stick with its ban on foreign ownership until China joins the WTO, the ministry said.
"Any plans to do so beforehand will break the government's promise," said ministry spokesman Wang Lijian.
Even after WTO entry, the government will still closely regulate Internet businesses. All online content must come from state-approved sources. Violators risk running afoul of anti-subversion laws that can carry lengthy prison terms.
"AOL will need substantial support from Legend to come to grips with the Chinese market," said Stephen Yap, director of marketing and communications at iamasia, a Hong Kong-based Internet research firm.
"Content is very heavily vetted and limited. This could be a major culture shock for AOL," he said.
AOL executives, in announcing the deal, acknowledged that uncertainty about operating in China made it hard to develop precise plans. Legend president Yang Yuanqing said the venture eventually envisioned a membership-based service like AOL's.
Beijing-based Legend has a 39 percent share of China's personal computer market. It offers Internet connections pre-installed on many of its computers.
The computer maker needs AOL's expertise to beef up fm365.com, which was ranked 11th largest in mainland China with 1.1 million daily home Internet users by iamasia.
So far, none of China's Internet service companies has managed to replicate AOL's comprehensive one-stop Web platform. But China lacks the attributes that contributed to AOL's American success -- a receptiveness to e-retailing, modern financial services and well-off users.
"The big problem for China is that the user base is not as large and not nearly as affluent. People don't want to spend money," Schwankert said.
So far, other foreign Internet companies have made limited headway in China.
Yahoo and Microsoft, whose portals are based outside mainland China, are ranked No. 5 and No. 6 in registered users, with 2.3 million and 2.1 million respectively.
That puts them well behind the more than 4 million claimed by each of the top three Chinese portals -- Sina.com, Sohu.com and Netease.
Still, industry experts said that once the industry is opened to foreigners, AOL's venture with Legend will give it a presence in China at a fraction of the cost of acquiring one of the larger portals.
"These are very strong brands in their respective markets. They have time to figure things out," Yap said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day