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.
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