Wednesday, August 31, 2005

Chinese Researcher Warns of a New Threat to Public Health - Naked Internet Chatting

From TheBostonChannel: Don't Chat Online Naked, Researcher Warns

"A Chinese researcher has warned of a new threat to public health and morality -- naked Internet chatting. Up to 20,000 Chinese log on to chatrooms each night in which users in various states of undress talk to each other with the help of Web cams, the Shanghai Daily newspaper said Tuesday."

""At first, we thought if was merely a game for a few mentally abnormal people," the paper quoted China Youth Association researcher Liu Gang as saying. "But as our research continued, we found the problem was much larger than expected."
Participants download chat software and attach video cameras to their computers. They then "talk with others while exposing themselves and performing provocative poses," the paper said.""

China Net Investor: No Comment.

Internet Drives Growth at China Telecom

From Internet drives growth at China Telecom

"China Telecom, the country’s largest fixed-line operator, posted a first-half net profit of Rmb11.29bn ($1.39bn), an 8 per cent increase from a year ago.
Company executives said revenue growth this year had in large part been driven by strong demand for broadband internet and value-added services, reflecting a gradual diversification of its business."

"China Telecom, and its main rival China Netcom, have been looking ahead to the government’s allocation of third-generation mobile phone licences. When the licences are handed out, Mr Wang (chairman and chief executive) said his company was likely to focus on providing 3G services in more developed eastern and southern Chinese cities in the initial stages."

Tuesday, August 30, 2005

Haier Leads FT Ranking of Chinese Brands

From Haier tops China brand survey

"Haier, the maker of refrigerators, washing machines and other home appliances, has the strongest corporate brand of any Chinese company, according to a worldwide survey of Financial Times readers."

"The Qingdao-based company was voted top in all the categories in the survey, which measured perceptions of quality, trustworthiness, innovation and management, as well as branding. Lenovo, the company that this year acquired the personal computer business of International Business Machines, came second."

"Tsingtao Brewery, another consumer brand with an international presence, was in fourth place. But Huawei, the telecommunications equipment manufacturer, only managed ninth."

"Readers were also asked to rate the companies on brand awareness and to estimate their prospects for becoming leading global brands within 10 years. Haier came tenth in current awareness, but was ranked second for future potential behind Lenovo, whose acquisition of IBM's personal computer division brought it the rights to the Think trademark."

(China Net Investor: The third-ranked brand on the list: China Mobile)

China's Cellphone War Pushes Top Players into Red

From Reuters: China's cellphone war pushes top players into red

"China's top two cellphone makers reported steep quarterly losses on Tuesday, as the pair and their peers faced stiff competition on their home turf from global giants Motorola and Nokia."

"Ningbo Bird Co., China's biggest cellphone maker, plunged into the red in the second quarter, posting a loss of 133.25 million yuan ($16.45 million) after making a small profit in the first quarter, according to Reuters' calculations from interim results.
Bird's biggest domestic rival, TCL Communication Technology Holdings Ltd., also reported a second quarter loss -- its third consecutive -- of HK$467 million, compared with a HK$96 million profit in the same period a year ago, according to Reuters calculations."

"The pair are among a group of homegrown Chinese firms that had steadily grabbed market share in the early part of the decade, taking about half of the market from a sector previously dominated by foreign companies. But their collective share has dropped steadily since 2003 to less than 40 percent, with analysts blaming their limited ability to quickly develop new models in an industry where product lifecycles are becoming shorter and shorter."

Read more:
Alarm Bells Ring for Chinese Cellphone Makers
China's Biggest Cellphone Maker, Ningbo Bird, Plunges into Red
UTstarcom Gets Licence to Make and Sell GSM and CDMA Handsets in China

Google Loosing Ground in China

From BBC News: Google loses China market share

"Google, the most used search engine, is under pressure in China and losing market share to its biggest local rival, a survey has found. According to the China Internet Network Information Center (CNNIC), Baidu is making gains in the main cities of Beijing, Shanghai and Guangzhou. The company has increased its slice of the market in the three towns by at least 10% in the past six months."

"According to CNNIC, Baidu now has 52% of the search engine market share in Beijing, compared with Google's 33%.
In Shanghai it has a 44% slice and in Guangzhou it is 48%, compared with Google's 38% and 29% respectively."

"The rest of the market was split between Yahoo!, Sina and"

Monday, August 29, 2005

Lenovo Sees Itself as No.1 PC Maker in Five Years

From cnet news: Lenovo plans to dominate PC market by 2010

"Chinese personal computer maker Lenovo Group will start to sell its namesake PCs outside China in the first quarter of 2006 as part of its long-term plan to build the world's leading PC brand, its chief executive told Reuters."

"Lenovo's PC shipments in China were three times those of its closest rival in the second quarter, but it has only recently broken into the international market in a big way, with its $1.25 billion acquisition of International Business Machines Corp.'s PC unit.
Lenovo will make IBM's flagship Thinkpad laptops available in Lenovo stores shortly. The acquisition has made it the third-biggest global PC vendor behind Dell and Hewlett-Packard."

"We want to grow Lenovo into a worldwide brand," CEO Steve Ward said. "In five years, we will have a strong chance to be the leading brand in PC."

Read more:
Lenovo Launches First ThinkPad Laptop
China Goes for Supercomputing Crown
Lenovo wrestles back top spot in Asia's PC market
Lenovo Moves Into Global PC Top Ranks

China Eyes 'Creative' Industries in IP Push

From EETimes: China Eyes 'Creative' Industries in IP Push

"Critics call China's policy of promoting industrial revitalization and scientific and technological innovation "technonationalism"; others see the sparks of the next Asian Miracle. Either way, expect to see "Designed in China" labels replacing the more prosaic "Made in" variety that has been migrating from nation to nation in Asia since the end of World War II."

""We will see China in a few years going from being a follower to being a leader in defining consumer electronics trends," Philips Semiconductors executive vice president Leon Husson said in a recently published interview."

"Indeed, Internet and digital media are on a fast ramp in China, which has more than 100 million Internet users, about 71 percent of whom are less than 30 years old. In recent interviews following its first VC placements, Intel Capital's president, Arvind Sodhani, was unequivocal about China's enormous potential. "China is a force for technology innovation in the worldwide marketplace," he said."

"Intel's $200 million China fund is the tip of the iceberg. In the first seven months of 2005, foreign direct investment in China reached $33.2 billion, according to the country's commerce ministry. A recent addition to that large and growing pool is Accel Partners, which last month announced the formation of a $250 million China Growth Fund with IDG Technology Venture Investment. The fund is focused primarily on IT and consumer technologies."

Sunday, August 28, 2005

China's IM King Tencent Underestimated and Undervalued?

From The Standard: Winning streak for online game firms

"In this week's earnings reports, China's instant messaging leader, Hong Kong-listed Tencent, posted strong growth in online advertising and online gaming (...). Tencent Tuesday reported 11 percent revenue growth on US$40.3 million in revenues for the second quarter. Net income grew 93 percent quarter on quarter to US$22.6 million."

"Tencent's US$22 million in net income was higher than that for Sina, Sohu and Baidu combined in the second quarter. It could be argued that Tencent is relatively undervalued at roughly US$1.7 billion compared to its Nasdaq-listed cousins. Sina is valued at around US$1.5 billion while Baidu's market capitalization is more than US$2.5 billion."

"Tencent generates revenues from advertisements on its instant messaging service QQ and its Internet portal Despite the high growth, revenues from online advertising account for less than 10 percent of total revenues. The bulk of Tencent's revenues come from wireless value-added services (41 percent of total revenues) and Internet value-added services including Tencent's casual games platform (50 percent of total revenues)."

"The company's casual games platform hit 1.44 million peak concurrent users, making it China's leading casual game portal. Tencent pushed back the target release date for its first massive online role playing game to the fourth quarter of 2005."

"Tencent also plans to continue with its plans to launch its own online consumer-to-consumer marketplace."

Read more:
Tencent Prepares to Take on eBay, Alibaba, in China
Chinese Instant Messaging (IM) Market Undergoing Big Shakeup
DBS Vickers on Tencent: Tencent - a major game player in the making

Friday, August 26, 2005

PCCW to Acquire Stake in China Netcom Broadband

From The Standard: PCCW to expand in China with broadband joint venture

"PCCW said it will pay 318 million yuan ($ 39 million) for half of an Internet broadband venture from China Network Communications Group as part of their joint expansion plans on the mainland.
PCCW said in a statement on Friday that it has signed the agreement with China Netcom to buy a 50 percent stake in China Netcom Broadband Corporation. China Netcom, which owns 81.6 percent of China Netcom Broadband, will buy the rest of the shares from several minority stakeholders to complete the transaction with PCCW. The deal is expected to reach completion before the end of this year."

"China Netcom Broadband, founded in 2001, mainly provides broadband access and value-added services in the cities of Hangzhou and Ningbo, covering 300,000 households. (...) The two cities are located in Zhejiang province near Shanghai and have a combined population of 12 million."

"PCCW is hoping to improve its earnings by expansion in China and other countries as revenue from Hong Kong has been eroded by fierce competition. Its cooperation with China Netcom came after selling a 20 percent stake to the mainland fixed-line operator early this year for US$1 billion."

Read more:
IPTV in China: PCCW’s "Now TV" has over 440,000 Subscribers
China Net Investor: PCCW partners with China Netcom
China Network to Buy 20 percent Stake in PCCW for $1 Billion

Nokia Sees 200M New China Mobile Users in 3 Yrs

From ExtremeTech: Nokia Sees 200M New China Mobile Users in 3 Yrs

"Top mobile handset maker Nokia expects 200 million new subscribers to sign up for mobile phone services in the rapidly growing Chinese market in the next three years, the company said on Thursday."

"The Finnish group expects huge growth in mobile use in the Asia-Pacific (APAC) region but fierce price competition will limit revenue growth there over the next few years, its Networks division head Simon Beresford-Wylie said."

"In the second quarter of this year, Nokia said it had a mobile phone market share of 32 percent in China, while in the Asia-Pacific region as a whole its share was 30 percent.
There were some 400 million subscribers in China at the end of last year."

Read more:
Alarm Bells Ring for Chinese Cellphone Makers
China's Biggest Cellphone Maker, Ningbo Bird, Plunges into Red
UTstarcom Gets Licence to Make and Sell GSM and CDMA Handsets in China

Tencent Prepares to Take on eBay, Alibaba, in China

From AsiaMedia: Tencent seeks to cash in on boom

"Tencent Holdings, which operates the mainland's largest instant messenger service QQ, plans to launch an online auction service by the end of this year, according to chairman Pony Ma.
"We have our 400 million registered user base to boost the traffic of our e-commerce service," Mr Ma said yesterday."

(China Net Investor: Blog reader Shak noticed that this number must be wrong [Translation error or exaggeration?]. Total number of internet users in China: about 100 million. Total number of mobile phone users: about 400 million)

"Tencent's strategy is that QQ users can search for their shopping items online through the website, and use QQ to chat with the sellers to increase the traffic of its instant messenger service. Tencent also charges sellers a listing fee when they sell products on the platform. But due to fierce competition, it will not charge a commission for each transaction."

"In China, online auctioning or e-commerce is booming. Consumer auction websites such as's subsidiary and eBay China both have more than a million registered users."

New CEO for EBay EachNet

From ChinaKnowledge: EBay EachNet Appoints New CEO

"Ebay EachNet, the company’s auction site in China, has announced that the former Chief Marketing Officer of Microsoft Corp.’s Greater China Region, Wu Shixiong, would be the company’s new CEO. The position has been vacant since Shao Yibo, the former CEO of EBay EachNet, resigned in November last year.

After buying into two Internet media firms, Yahoo China and, is turning its attention to EBay EachNet, viewing the company as a strong competitor in the Chinese consumer market. EBay EachNet’s appointment of a new CEO indicates the company’s intention to intensify its position in China’s highly competitive e-commerce environment."

Read more:
A Critical View on the Yahoo-Alibaba Deal
Why eBay Must Win In China
Is eBay Dead in China?

Fact Sheet on the Alibaba-Yahoo deal

Thursday, August 25, 2005

China to Limit Online Game Time

From Chinese internet gamers face time limits

"Chinese online gaming addicts will shortly find their playing time curbed by a government-led scheme that will restrict players from playing more than three hours at a time, according to Interfax China. (...) The move is in response to concerns that some players are becoming so immersed in the online fantasy games that it is affecting their day-to-day lives."

"The agency reports that the system should be ready for internal testing by October, and will then operate on a trial basis on several games, including “The Legend of Mir II” and “World of Warcraft”. The system is expected to become compulsory for all online role-playing games in China by early next year."

Wednesday, August 24, 2005

China IPTV Leader by 2010

From CommsDesign: IPTV will grow 1000% by 2010

"The number of IPTV subscribers will jump tenfold by 2010, according to a new report published by Informa Telecoms & Media.

The report covered 50 countries and found that although there are only 2.5 million subscribers globally today, there will be 25 million subscribers by the end of 2010. Hong Kong is currently the leading market with 475,000 subscribers, but it will drop to eighth position by 2010. At that time, China is estimated to take over the lead spot with 4.9 million subscribers. The U.S. will be in second place with 3.9 million."

Read more:
IPTV in China: PCCW’s "Now TV" has over 440,000 Subscribers
China Telecom And China Netcom To Begin IPTV Trials
China Awards First IPTV Licence to Shanghai Media Group
Asia Leading Global IPTV Revolution
UTStarcom's 3G and IPTV Plans

Tuesday, August 23, 2005

Baidu's Way from Unknown to No.1 Search Engine in China

From Los Angeles Times: Went From Unknown to No.1 Search Engine in China

"(...) Later that year (2002), the Chinese government blocked Google's search engine in China for about two weeks, funneling Internet users to Chinese search sites, mainly Baidu. (China Net Investor: Earlier in that year Baidu itself was required to shut down its server for a week because their search results contained certain content that the public security authorities considered socially harmful). That decision played an important role in boosting Baidu's name, says Hong Bo, an Internet industry analyst in Beijing who edits the research website At that time, Google was the search site of choice in China and Baidu was relatively unknown to many Chinese Internet users."

"Oliver Liu, general counsel at Chinadotcom Corp. in Beijing, a major Chinese portal, attributes Baidu's rise to the strong entrepreneurial spirit within the company as well as its connections with state-owned China Telecom, the nation's largest telecom operator."

"But Liu and others say that Baidu employees would use Google's search engine to look for sexual content and other sensitive materials, then report the findings to China Telecom, which would be involved in blocking the offensive websites or restricting access to Google. Users in China have long complained that Google's search engine breaks down often and that has caused them to switch to Baidu and other Chinese search services."

"Baidu also offers something that Google doesn't: MP3 searches, which are extremely popular with the growing number of young Chinese who are joining the ranks of Internet users. Surveys indicate that Chinese search engine users look for entertainment data considerably more than news or information for work, study or personal reasons. MP3 searches account for about one-fifth of the traffic at Baidu. Although other Chinese Internet search companies offer such services, there may be growing pressure for them to stop because of concerns about copyright piracy."

Read more:
Quotes on the Baidu (BIDU) IPO
Fact Sheet on the Chinese Search Leader

A Critical View on the Yahoo-Alibaba Deal

From ChinaTechNews: Hold The Applause: Limits To Online Auctions In China

"Yahoo! says they are now a full-fledged media company, right? If we view the online media property through the eyes of an offline magazine publisher, this is how the business deal would work:

1) Yahoo! wants to build a Chinese version of its website.
2) It seeks potential partners in China to deal with the Chinese localization, regulatory environment, management, and advertising sales.
3) Once it finds a Chinese partner, the partner pays Yahoo! a fee of some sort to buy the rights to Yahoo!'s brand for a certain number of years.

So, with this traditional publishing and media business model, which is also used for many websites, why is Yahoo! paying Alibaba? Shouldn't Alibaba pay Yahoo!? I'm sure there are many companies in China that would gladly pay Yahoo! to run its services. The biggest reason I can see for Yahoo! to pay others is that the Yahoo! brand, counter to the company's own statements that it is one of China's top sites, in China is suffering and a potential liability. Is this so? The high hopes that Yahoo! has for Alibaba are as fantastic as the stories in "A Thousand and One Nights"."

Read more:
Why eBay Must Win In China
Is eBay Dead in China?
China's New Internet King: Alibaba CEO Jack MaYahoo!

Fact Sheet on the Alibaba-Yahoo deal

Monday, August 22, 2005

Why eBay Must Win In China

From Time Asia Magazine: Why eBay Must Win In China

"Whitman (CEO of eBay), in an e-mail interview with Time, says, "China is unique. It is growing rapidly, and it has a tremendous amount of potential, which is why we have made it a priority for the company."
Yet her Shanghai sojourn is not business as usual to anyone who is anyone in the booming e-commerce market in China. That includes the CEO of the local company giving eBay fits there, Jack Ma of Alibaba-Taobao. On Aug. 8, the Alibaba-eBay competition ceased being a David vs. Goliath battle. Ma announced he was selling a 40% stake in his company to Yahoo! for $1 billion."

"Meg made a big mistake coming here," he [Jack Ma] says with a smile. "I respect her for doing so, but the chief commander shouldn't be at the front line with the troops. It just causes confusion and panic."

Nice try, Jack. Whitman is in China because she knows the cost of failure could be astronomical. In 1999, technical problems delayed eBay's roll-out in Japan. That allowed Yahoo! to get a jump on the online shopping business in what has become the second largest e-commerce market in the world—a lead it has never relinquished. eBay pulled out of the market entirely in 2002, a move Whitman has rued ever since. She is not about to let the Japan debacle be repeated anywhere else, especially China (...) "

Read more:
Is eBay Dead in China?
China's New Internet King: Alibaba CEO Jack Ma
Yahoo! Positioned to be one of the Major Internet Entities in China
Fact Sheet on the Alibaba-Yahoo deal

Sunday, August 21, 2005

IPTV in China: PCCW’s "Now TV" has over 440,000 Subscribers

From TelecomWeb: PCCW Soars On IPTV Growth

"Hong Kong telco PCCW profits soared by over 40 percent, and the net was up by 25 percent, in half-year results closely watched globally because of the carriers’ leading edge deployment of IPTV. The profits also reflected success by PCCW in largely stemming market share erosion in its fixed line business, after three years of seeing competitors grab large chunks of its business."

"At the end of June, PCCW’s now TV had over 440,000 subscribers, up 22 percent from 361,000 at the end of last year. It competes in the Hong Kong pay-TV market against operators such as i-Cable Communications, the leading cable operator in Hong Kong. Its success in the IPTV arena has shown the way for telcos worldwide as they begin deploying IPTV services and competing against satellite and cable pay-TV alternatives. The company believes its latest long-term exclusive agreements with HBO, STAR and Mei Ah Entertainment will give it an edge in it movie offerings."

Read more:
China Telecom And China Netcom To Begin IPTV Trials
China Awards First IPTV Licence to Shanghai Media Group
Asia Leading Global IPTV Revolution

China to Supply 50 per cent of World’s Digital Set-Top Boxes by 2010

From Indiantelevision: China to supply 50 per cent of world’s digital STBs by 2010

"China supplied 35 per cent of the worldwide digital set-top box market (including the Chinese market) in 2004, and more than 50 per cent of all worldwide digital set-top boxes are forecast to be produced in China by 2010.
This data is contained in a new report from IMS Research called "The Chinese Market for Digital Set-Top Boxes".

This study reveals that China produced more than 17 million digital set-top boxes in 2004, which accounted for around 35% of the total worldwide market (including China). This figure has already made China the largest digital set-top box production base in the world. The production volume of digital set-top boxes in China is forecast to grow at a 21 per cent CAGR over the next five years to reach 56 million units in 2010. This means that over 56 per cent of the worldwide digital set-top box supply in 2010 is envisioned to come from China."

Internet as a Competitive Tool: China vs. Europe

From The China Herald: Internet as a competitive tool
(Weblog of Shanghai-based journalist Fons Tuinstra)

"When China started to enter the internet age, now a decade ago, reactions were skeptical. The leading forces in the central government saw the internet as an indispensable tool in opening up the country economically. But observers saw many financial, political and ideological bears on that way to connectivity. Now, ten years and over 100 million subscribers to the internet later many of those early doubts have disappeared."

"A decade ago the US served as an example for China, not Europe. Now, ten years later China has not only delivered much of its promises, traveling in Europe I’m shocked to see how poorly developed the internet is in Europe, compared to China."

"In my Hamburg hotel the staff is already getting used when I rush from one place to the other to use the expensive internet connection I had to purchase. Parking lots and toilets are for free and always available, but getting a internet connection is a challenge in this five-star hotel. So, I move from my room, to the lounge, the toilets and the bar, desperately trying to find a working wifi-signal. Staff reacts with compassion when they note my addiction: next week they will get somebody to look into the problem."

"There are rather obvious reasons why the online activities and connectivity is lagging behind in Europe, compared to China and also the US. The continent is divided in smaller language groups and people tend to concentrate themselves to their own culture even when they use a global instrument like the internet. But even then, a coherent push by the government to get the cities online very fast has put China is a much better position to compete that lagging Europe."

Internet as a competitive tool – the WTO-column
(later also at

Friday, August 19, 2005

ZTE Wins Deals in South America

From Light Reading: ZTE Wins Telefónica, Telemar Deals

"ZTE Corporation, China’s largest listed telecommunications manufacturer and leading wireless solutions provider, has signed a contract with Telefonica, the world’s third largest operator and the largest fixed line operator in Latin-America, to provide DSL CPE to Telefonica Brazil.
The contract win accounts for approximately 50% of the contracts awarded by Telefonica Brazil, and follows the success of DSL modems in Telefonica Peru and Telefonica Argentina earlier this year, as well as recent strategic partnerships with Greece Telecom, Portugal Telecom and France Telecom."

"ZTE Corporation, (...), has been selected by Telemar, Brazil’s largest fixed line operator, to provide IP-based DSLAM terminals and ATM DSLAM for its DSL infrastructure.
Under the terms of the contract, ZTE will deliver its IP-based DSLAM terminals and ATM DSLAM to Telenor for use in its DSL network in Rio de Janeiro – Brazil’s second largest city with over 12 million people."

Read more:
China’s 3G attack, via Europe - ZTE, Huawei clinching important deals in Europe
ZTE Corp. Ramping up Efforts in Emerging WiMax Sector
China's Largest Telecommunications Manufacturer ZTE Reaches Top Five As Global DSLAM Equipment Supplier
Growing Global Importance of China's Network Industry

Thursday, August 18, 2005

Is eBay Dead in China?

From The Motley Fool: Is eBay Dead in China?

"Earlier this month, when Yahoo! announced that it was making a $1 billion investment to obtain a 40% stake in Chinese auctioneer, even some of the most ardent eBay bulls probably got nervous (China Net Investor: Alibaba operates the consumer-to-consumer auction site It wasn't so long ago that Yahoo! had hooked up with Softbank to squash eBay in Japan."

"It's not going to play out quite that way this time."

  • "As a free site, TaoBao suffers from many of the same shortcomings that Yahoo! Auctions does domestically. Because it costs nothing to list an item, it's a haven for spam and unrealistic starting bid prices, just as eBay's own American site becomes a clutter of noise when it rolls out the occasional free-listing day. That just proves that the quality of traffic is just as important as the quantity."
  • "Earlier this year, TaoBao's grasp on the market was at 41% to eBay's 53%. They are both strong. History dictates that just one consumer auction site will reign supreme in any given country, but history can be a schmuck sometimes. China's Internet boom is in its infancy, with 1.2 billion of the country's 1.3 billion residents still not connected. Why can't there be two dominant players in a country that is many times larger than most nations?"
  • "One of the grandest misconceptions out there is that eBay failed in Japan. A more accurate description would be that eBay never had a chance to get started. Yahoo! had teamed up with Softbank in 1999 to launch its auction site well before eBay had even stepped foot on the rich country's soil. When eBay gingerly tried to enter the market, it got nothing but jet lag. It was toast.
    That's not the case in China. TaoBao wasn't even around when eBay had acquired its first stake in EachNet three years ago and swallowed it whole in 2003. This isn't eBay's battle to win. It's eBay's battle to lose."
  • "If TaoBao succeeds, it won't be because it toppled eBay. It will be because it found a way to coexist. The pressure now rests on TaoBao and the strategy it takes in the future. The company has mentioned that it may start charging for auctions as early as next year, but I'm not entirely convinced that it will happen."
  • "China's potential is huge. It's why eBay can't afford to lose."

Read more:

China's New Internet King: Alibaba CEO Jack Ma

Yahoo! Positioned to be one of the Major Internet Entities in China

Fact Sheet on the Alibaba-Yahoo deal

China Ramps up Factory Capacity in Tech-Intensive Industries

From BusinessWeek: China Ramps Up

"For years, China has been the cheap assembly shop for the world's shoes, clothing, and microwave ovens. Now, it is laying the groundwork to become a global power in much more sophisticated, technology-intensive industries that also demand tons of capital. Billions of dollars are flowing into auto, steel, chemical, and high-tech electronics plants. Driving this massive spending push is voracious domestic demand for all manner of goods as well as a big shift by multinationals to manufacture in China. As a result, China is rapidly becoming more self-sufficient in key materials and components, and setting the stage to be a major exporter of high-end products."

"SEMICONDUCTORS China's chip industry is still in its infancy, but it is expanding rapidly. Consumer-electronics and telecom-equipment manufacturers are major buyers. Some 22 new silicon wafer fabrication plants are expected to be built by 2008. Fueled by this expansion, China's chip-design industry has grown nearly fivefold, to 450 companies, during the past five years. While China's fabs are still a generation or two behind those in the U.S., Taiwan, Japan, and Europe, they're good enough for chips in appliances and other consumer gear."

"DIGITAL ELECTRONICS By any measure, China is a consumer-electronics giant. It's the leading producer of color TVs, cell phones, desktop PCs, and DVD players. Now the industry also is poised to dominate in high-end products. That means China also may emerge as a global innovator. The country boasts more than 350 million mobile-phone users -- the most in the world -- and will likely overtake the U.S. in broadband households this year. Beijing also aims to convert to digital TV faster than in the U.S. and Europe. This makes China a crucial test market for new electronics technologies and products of the future, and it means China will help shape global standards as well."

Wednesday, August 17, 2005

Lenovo Launches First ThinkPad Laptop - ThinkPad X41T

From People's Daily Online: Lenovo launches first ThinkPad laptop

"Three months after acquisition of IBM PC, Lenovo launched its first ThinkPad product, the ThinkPad X41T laptop on Aug 16, 2005.
As the newest member in the ThinkPad X series, the ThinkPad X41T inherits the consistent style of the Think series. The retail price of ThinkPad X41T is over 20, 000 yuan ($ 2 470), suggesting Lenovo will stick to the high-end route for the ThinkPad series."

From Globetechnology: HP bigger threat than Lenovo, Dell says

"Kevin Rollins, president and chief executive officer of Dell Inc., says Hewlett-Packard Co. remains the Round Rock, Tex., company's strongest rival, even as Chinese electronics giant Lenovo Group Ltd. reported turning around International Business Machines Corp.'s money-losing PC business just three months after buying it.
Hong Kong-based Lenovo paid IBM $1.25-billion (U.S.) in May for its ThinkPad and other PC operations, transforming itself into the world's third-largest personal computer maker, behind only Dell and California-based HP.
"The jury is still out on how successful . . . Lenovo will be on the global stage. They are doing quite well in China, but they have a little bit of a home field advantage there. Our business in China does very, very well," Mr. Rollins told reporters in Toronto yesterday. "I still think . . . HP is the most sizable competitor that we have. There are many other smaller competitors who are emerging in the market that could be more challenging than Lenovo."

Read more:
From BusinessWeek: Lenovo's Long March - Interview with Lenovo's CFO Mary Ma

China Goes for Supercomputing Crown
Lenovo wrestles back top spot in Asia's PC market
Lenovo Moves Into Global PC Top Ranks

Tuesday, August 16, 2005

Chinese IT Companies Join Wave of Chinese Nationalism

From Interfax China: Lenovo, SINA, and other Chinese IT companies join wave of Chinese nationalism

"On the anniversary of Japan's surrender in World War II, more than 100 Chinese IT companies, including Lenovo and SINA, formed an alliance to encourage domestic consumers to buy Chinese-developed IT products instead of foreign goods.

It was no coincidence that the new "V815 National Enterprise Alliance" was officially established on August 15, a day commemorated in China and other Asian countries as the anniversary of victory over Japan. The "V815" in the name of the new alliance is short for "Victory August 15."
"On this special day, the history of the war against Japan reminds us of a profound lesson that 'a country will be bullied if it is not strong,'" SINA CEO Wang Yan said in Beijing at the founding of the new alliance. "[China's] domestic IT enterprises should contribute to the development of our country."

Members of the "V815 National Enterprise Alliance" include Lenovo, SINA, Ufida Software, Vimicro, Censoft, Kaicheng High Definition, BOE, Founder, Tsinghua UniSplendour, and Huaqi Information Digital Technology. These companies will add the "V815" name to self-developed high-end IT products. Huaqi, for example, has already launched a new digital camera named the "Aigo V815," while Censoft has added "V815" to the name of a newly developed ERP software product."

Netease Drops Music Search Service To Cut Piracy

From Financial Times (via BillboardPostPlay): Netease drops music service to cut piracy

"Chinese portal player Netease has suspended its online music search service over concerns about copyright piracy, a move that could create pressure on others such as newly listed to follow suit. Music companies have complained that MP3 search services offered by Chinese portals and search websites promote the distribution of unlicensed content (...) ."

"Baidu declined to comment on Tuesday on Netease's move or its plans for its own music search platform. Google does not offer a dedicated MP3 search service in China. Such services are offered by a range of other companies, however, including Sina, China's biggest portal."

"Music search services form one part of a debate over how to manage digital copyright, with some observers arguing that online search engines should not be held responsible for content accessed through their services."

Monday, August 15, 2005

China's New Internet King: Alibaba CEO Jack Ma

Fons Tuinstra from the China Herald points me at this article from the International Herald Tribune: The improbable saga of Ma, China's new Internet king

"Yahoo's huge deal with him Thursday has turned his company,, into the biggest Internet operation in China, where Internet use is growing at an explosive pace."

"Jack Ma is only 40, and he started out teaching English. But he is now called the "grandfather of the Internet in China," even though he claims not to know much more about computers than how to send and receive e-mail."

"His move into the online world was not just accidental; it was, by his telling, bizarre. "It's a Hollywood story why I went into the Internet," he said.
In 1995, he said, he traveled to the United States to help a Chinese company recover money owed by a joint-venture partner, an American businessman. Ma said he went to the businessman's Malibu mansion, only to discover that he had no intention of repaying his debts.
The man displayed a gun, Ma said, and then locked him in the house for two days. Ma recalled talking his way out of the situation by agreeing to become the man's Chinese partner. He promised to start an Internet company in China, even though he had no idea how the Internet worked.
"It was a terrible experience," he said. "Every time I think of L.A., I have a nightmare. And today, my luggage is still in Malibu." He has had no further contact."

Read more:
Yahoo! Positioned to be one of the Major Internet Entities in China
Fact Sheet on the Alibaba-Yahoo deal

Piracy Prevents Microsoft from Generating Substantial Software Sales in China

From TheStreet: Microsoft Putting All Its Chi in China

"Piracy has prevented the tech behemoth from generating substantial software sales in China, and the theft does not appear to be abating anytime soon. (...) About 90% of software on (Chinese) PCs is pirated. (By comparison, the U.S. market is estimated to have a piracy rate of about 22%, according to a study by the Business Software Association of Australia.)"

"In China alone, the second-largest PC market in the world, a country that will care about intellectual property for its own future development, piracy is well, well, well above 90%," Microsoft CEO Steve Ballmer said at the company's recent analyst day. "There are billions of dollars of growth opportunity merely by selling the value of legitimate software."

"In 2004, the software piracy rate in China fell minimally - to 90% from 92% a year earlier, according to the Business Software Alliance. IDC estimated software piracy losses of $3.57 billion in 2004 in China, which has the third-highest piracy rate."

"Despite pressure from the U.S., more protection of IP by the Chinese government is a long way off. "There is a movement toward more and more protection of intellectual property," Rashtchy says. But he figures it will take about 10 years for the amount of protection to be significant."

Intel Invests in 3 Chinese Companies

From Electronic News: Intel Invests in 3 Chinese Companies

"Marking the first distribution from Intel Corp.’s recently-created $200 million Intel Capital China Technology Fund, the company reported today three investments, of undisclosed amounts, in Chinese companies have been completed."

"Intel Capital provided funds to Chipsbrand Microelectronics (H.K.) Co. Ltd., a fabless semiconductor design company; Onewave Technologies Inc., a broadband entertainment technology solutions provider; and Verisilicon Holdings Co. Ltd., an application specific integrated circuit (ASIC) design foundry."

"Intel Capital said it has invested in China for more than seven years and provided capital to approximately 50 companies in mainland China and Hong Kong.
The China Technology Fund was created by Intel two months ago, to leverage the rapid growth of the local technology industry and the high quality of local entrepreneurs and innovation in China, the company concluded."

Piper Jaffray: Yahoo! Positioned to be one of the Major Internet Entities in China

From Forbes: Yahoo! Edges Out Competition In China

"Piper Jaffray, ...(is) saying the $1 billion deal is a "strong strategic move" that puts Yahoo! ahead of the competition in China."

"The research firm said Yahoo! is positioned to be one of the major Internet entities in China and possibly one of the three or so "axes" that are developing to dominate the Chinese Internet market. Yahoo! has gained competitively over eBay, Microsoft unit MSN and Google, having established a platform for a large Internet operation in China, according to the research firm."

Read more:
Interview - Jerry Yang Explains Yahoo's China Gambit
Yahoo Is Paying $1 Billion for 40% Stake in Alibaba

Saturday, August 13, 2005

Interview - Jerry Yang Explains Yahoo's China Gambit

From Business Week: Inside Yahoo's China Gambit

"Q: Why did you choose to partner with Alibaba rather than build up the business in China on your own?

A: We've been doing a lot of everything in China. We've been building, partnering, and buying. We purchased a company a year and a half ago called 3721 that is the basis for our search business in China.

But this Alibaba arrangement is a unique model of partnership for us. We believe that to be successful in China, we absolutely have to have strong local management, and [Alibaba CEO] Jack Ma and his team are the best-of-breed Internet management team inside China.

[Alibaba and Yahoo China are] probably the most unique basket of assets assembled together. We are combining our strong No. 2 search and mail businesses with Alibaba's first-place consumer auction platform, their leading business-to-business franchise, and their AliPay, which is their payment platform.

It's the only company in China that has commerce, search, communications, and a very, very strong local management team. This is going to be a very valuable franchise going forward."

Thursday, August 11, 2005

Yahoo Is Paying $1 Billion for 40% Stake in Alibaba

From Reuters: Yahoo takes 40 pct stake in China's Alibaba

"Yahoo Inc. will pay $1 billion in cash for 40 percent of China Internet auctioneer, taking on eBay and Web search firm as it extends its reach in the world's second-largest Internet market.
Under the much-anticipated deal, the largest to date for an online asset in China, Yahoo would fold its entire Chinese search and other operations into Alibaba, China's second-largest Internet auctioneer, which runs business-to-business and consumer auction sites."

Press Release: Yahoo! and Form Strategic Partnership in China

Yahoo's online assets in China:
Yahoo China: Yahoo China's main site; Portal Search engine Search technology provider
Share of China's search market (all three combined): 22.7 percent
Source: Shanghai iResearch

Alibaba's operations: Business-to-business e-commerce site; handled $4.5B in transactions in 2004 Online auction site; eBay's main competitor in China
Alipay: Online payment system; more than 2 million users; competes against eBay's PayPal

Comments and opinions on the deal:
"Yahoo!'s investment underscores our long-term commitment to the Chinese market. We believe the combination of Yahoo! and Alibaba is the best approach for Yahoo! to win in this region. Together, we will create one of the largest Internet companies in China, and our combined assets will make us the only company that has a leading position in all the key sectors that are driving explosive Internet growth in China such as search, commerce and communications." Terry Semel, chairman and chief executive officer of Yahoo!

"Teaming up with Yahoo! will allow us to deliver an unmatched range of e-commerce services to businesses and consumers in China. With the addition of Yahoo! China to's business, we're expanding our services to provide a leading search offering to China's Internet users. In China, is winning in B2B, winning in C2C, winning in online payments and now we're going to win in search." Jack Ma, chairman and chief executive officer of

"I think it's too low, that's why we're not selling (our entire stake)... That's a signal of our confidence that this company will grow much more." Masayoshi Son, CEO Softbank, disagreeing with some comments that the $4 billion valuation of the new company was too high

"No question this creates a monster in the China Internet. It will have a powerful combination of search, communications, commerce and auctions. All they need is a game component and they could have a shot at becoming number one. This also may be the only real choice Yahoo had, even though they end up with a minority share in China, as they did in Japan, something they have said publicly and privately they regret."
Bill Bishop, CEO, Red Mushroom; Co-founder CBS MarketWatch

"If you look at what happened to (eBay) in Japan, it was Yahoo that beat them in Japan, look at what happened to them in Taiwan, Yahoo beat them in Taiwan, and now it's Taobao and Yahoo (who are) going to beat them in China."
Porter Erisman, Spokesman, on the competition with eBay

Tuesday, August 09, 2005

Kai Fu Lee Follows His Heart to Googles Research Labs in China

From ZDNetblog: Kai Fu Lee: I need to follow my heart

"In the letter, which appeared on a Web site he uses to stay in touch with his students, Lee explains his reasons for making the switch from Microsoft to Google, a company that Bill Gates and team view as major threat. It's clear from his writing that Google's next-generation technology, research culture, and notion of doing good in the world attracted the Lee, who is best know for his work on speech recognition and directing research labs.
He doesn't explicitly say it, but he is divorcing Microsoft–the older, slower, more bureaucratic company–and following his heart, which led him to a new, younger company that is one of the leaders in delivering the new technology experience, unburdened by the past and hidden agendas.
Lee writes, "Microsoft is an outstanding company, and there are many things we can learn from it. But Google is a company that makes feel a shock. The reason Google gives me a shock is the passion for creating a new generation of technology. I found treasures in Google everywhere. The technology and products are way beyond just the search."
At the end of the letter, Lee gives his formula for why Google is his choice:youth + freedom + transparency + new model + the general public’s benefit + belief in trust = The Miracle of Google"

Read more:
Google Gets New China Chief And R&D Center
Microsoft Sues Over Google's Hiring of a Former Executive
Google Steps up Fight for the China Market
Microsoft Prepares to Launch MSN China

Monday, August 08, 2005

China's Huawei in Talks to Buy Marconi

From Huawei in talks to buy British partner Marconi

"Huawei Technologies Co., China's biggest maker of telecommunications equipment, is considering buying Britain's Marconi Corp. PLC in the latest foreign takeover bid by a Chinese company, news reports said.
The deal could be worth 560 million British pounds, or $1 billion, the Sunday Times of London reported. The talks also were reported by the Financial Times, which said analysts don't believe Marconi can survive as an independent company."

"The company effectively put itself up for sale in May after losing out on a 10 billion pound ($5.7 billion) contract to build a new network for British Telecom, its biggest customer, according to the Financial Times. Huawei was one of eight companies selected by BT on the network contract, according to the Financial Times.

Marconi and Huawei signed a partnership deal in May under which the British firm will market Huawei's network technology in Europe while the Chinese company sells Marconi's wireless equipment in Asia, according to the Sunday Times."

Read more:
Chinese Equipment Vendor Huawei on a Roll - Deepens DSLAM Penetration
Huawei Technologies Has Yet to Win Much U.S. Business
China’s 3G attack, via Europe - ZTE, Huawei clinching important deals in Europe
Huawei Forecasts Triple Europe Sales
Chinese Equipment Vendor Huawei on a Roll - Deepens DSLAM Penetration
Huawai gaining attention of North American carriers
Huawei Unveils God Box

Sunday, August 07, 2005

Yahoo May Buy 35% of China’s Biggest Home-grown e-Commerce Company for $1 Billion

From Forbes: Yahoo! in Talks on Record China Investment

Web media company Yahoo! is in advanced talks to purchase an approximately 35% stake in China’s biggest home-grown e-commerce company for almost $1 billion, in what would be the biggest investment by a foreign company in China’s Internet industry to date, sources close to the negotiations said."

"Yahoo! would be gaining one of China’s most coveted Internet partners. is led by Jack Ma, a one-time English teacher whose unpretentious style and quick wit have made him one of China’s most revered entrepreneurs. Alibaba operates two online business sites, an online auction site, and, an online trading site. Both were ranked among the world’s top 40 websites on Sunday by the Alexa, the Internet monitoring service."

"An agreement between Yahoo and Alibaba would be a setback for eBay which has been expanding its investments in China’s online auction business and had been seen as interested in partnering with Alibaba. The U.S. company purchased locally owned Eachnet, then China’s biggest online auction site, in two stages for $180 million in 2002 and 2003. For Alibaba, a hook-up with Yahoo! rather than eBay might make more sense because there is less overlap with its core online auction business. It would also bring Alibaba the chance to tap into Yahoo!’s search expertise."

Read more:
TaoBao's Q2 Transaction Volume Tops 200 Mln Usd
PayPal China Country Head Jeff Liao Not Worried about Competitor Alipay
The Taobao Offensive
eBay's Whitman Concentrates on China this Summer - PayPal Launch Planned
China Auction Wars Episode III Part 6 - Revenge of the Taobao
eBay Targets China as its Biggest Market Within a Decade
Putting a value on China's Alibaba
Ebay Aims to Conquer China but Homegrown Rival Taobao Tries to Repel the Invasion
China's Online Auction War Rages On: 1pai General Manager Zhen Zhaodong Resigns

Saturday, August 06, 2005

Quotes on the Baidu (BIDU) IPO

"Even with increased revenue and net income results for Q2 (around $8 million), this deal has got to have Benjamin Grahm rolling in his grave. Consider that CBS Marketwatch cited a IDC report as saying the entire China online ad market was $130 million in 2004. Now I think Baidu may surpass a $1.3 billion market cap by the end of first day of trading (China Net Investor: Baidu now has a market capitalization of $3.92 billion!), and if that happens, then I must say that I don't know of that many other companies that trade at 10x INDUSTRY revenues, even if the industry happens to be growing real fast."
Philip Lin, former executive at private equity firm, Kluge & Company; entrepreneur-in-residence at Kleiner Perkins

"You want me to talk about OK. The stock, which climbed $95, or 354%, to $123.06 on its first day of trading Friday, trades at 1,000 times earnings. It trades at 128 times sales. You know what to do - SellSellSell!"
Jim Cramer on his "Mad Money" show

"This one is the return to the Internet bubble"
John Fitzgibbon, analyst in New York with

"'s P-E ratio is sick"
Enzio Von Pfeil, chief executive of Commercial Economics Asia Ltd., who stressed he was speaking for himself and not his company.

"This is a `son-of-Google' investor mentality. Everyone remembers they could have had Google at $85 and don't want to let it happen again."
David Menlow, president of IPO Financial

"For the investor who thinks that Google or Yahoo are at a premium, how can you justify Baidu at even five times greater valuation than Google or Yahoo when it's only a China play?"
Martin Pyykkonen, managing director at money management firm Hoefer & Arnett

"It's a tsunami of retail interest. The guys doing the pricing priced it for the fund market and they didn't realize the huge wave of retail interest. And the retail investors don't have a clue about the valuation. (...) The whole online e-commerce market in China last year was $130 million. "So, ['s market cap] is approaching 30 times the entire market in 2004. And it's just a regional market. Chinese is not the international language. People are buying the story that it's the second largest web site in China's growing market. But they forget it's very much a one-country wonder."
Francis Gaskin, editor of Los Angeles research firm

"I think the stock's rise is outrageous. This is another one of those bubbles. At the $27 offer price it was trading at 64 times sales. Even though its sales tripled last year, that doesn't justify a 64 price-to-sales ratio."
Fariborz Ghadar, director of the Center for Global Business Studies at Penn State University

"It's a speculative fever right now. It doesn't make any sense. But as we saw in previous bubbles, that doesn't mean it can't keep going and make people money in the short term as they profit off of the greater fool. But if you're a long-term trader looking for valuation and the worth of the business based on its general future profits and cash flows, this is a ridiculous price."
Raymond Lin, portfolio manager with Tricera Capital, a San Francisco hedge fund specializing in Asian markets

"Congrats to Baidu and their investors. But if I am Baidu, I am seriously pissed at my bankers. They left almost USD $100m of Baidu company money on the table. Either they were really incompetent in gauging investor demand, they decided rewarding their institutional accounts with an Internet bubble throwback freebie was more important, or they figured they needed to keep the raise relatively low to encourage future fundraising business by Baidu. The approximately USD $100m Baidu raised is chump change when you are competing in this market sector against Google, Yahoo and Microsoft."
Bill Bishop, CEO, Red Mushroom; Co-founder CBS MarketWatch

Novell Claims Linux Lead in China

From LinuxBusinessNews: Linux in China: Novell Has One-Third of the Entire Chinese Linux Server Market

"According to IDC's recent study "China Linux Market Analysis, 1H2005," Novell has garnered the largest market share in China's Linux Server Operating Environment for the first half of 2005. The report shows that Novell leads the industry by revenue with 32.9% market share and in unit shipments with 30%."

"Over the past year Novell has executed an aggressive growth strategy in China, and has bolstered operations in the region by appointing several new Linux experts, including Chang, who was previously IBM's director of Linux in the Greater China region. As part of its investment strategy, Novell has established partnerships with some of China's top IT companies, including CS2C, Huawei, Neusoft, AsiaInfo, and Skybility."

Read more:
TurboLinux Ranks #1 In China Linux Market
Linux in China: Red Flag Pins Hopes on Asianux 2.0
Microsoft's Red Menace: IBM-Lenovo Deal Could Threaten Bill Gate's Empire
China's Greatest Tech Myths - IBM-Lenovo deal, Linux, Piracy

Interview: CEO Robin Li Talks about the IPO of China's Leading Search Engine (Video)

From's IPO Bonanza CEO Robin Li talks about the IPO of China's #1 search engine, and comparisons to Google. Video

Facts and numbers: Baidu (BIDU) IPO - Fact Sheet

Friday, August 05, 2005

Internet Search Engine Baidu Demonstrates Growing Global Economic Significance of China

From AlwaysOn: Gotta have growth

"Fear is a powerful motivator. And investors may fear that demand will only get stronger and that Friday's price will soon look like a bargain, much as Google's $300 price today makes its $85 IPO price tag back in August 2004 look cheap.

Already, based on multiples of expected sales, it appears that investors are assigning more value to Baidu than they were to Google (GOOG) - which, it should be noted, itself holds a 2.6% stake in Baidu -- as it went public last year."

"I'm 99% certain that Baidu, unlike Google, won't be valued at $90 billion in a year. But Baidu is a lot like Google in that it represents one of the very few hyper-growth opportunities in the most lucrative and fast-growing online business we've witnessed: paid search.
Moreover, it's paid search in a country that's just turning the corner toward becoming a consumption machine -- of both goods and ads.Let's face it: There haven't been many exciting growth opportunities in the U.S. of late. In fact, the dearth of good growth stories is probably why Google's market cap is nearing $100 billion. Where else can you find revenue and profit more than doubling consistently?"

"Now, whether Baidu -- a company that's expected to post $12 million in cash flow on $30 million in sales -- is worth a billion dollars is another story. When Google went public last year, it had a market valuation in the $30 billion range and had net income of $143 million on sales of $1.35 billion in the first half of 2004."

"How Baidu trades, however, may not be as relevant to historians as what this tiny company signifies: China's power and influence. Here's a young 5-year-old overseas company that generated $5 million in sales during the first three months of this year. Yet it's making one of biggest splashes in the U.S. market this year. When a tiny company can whip Americans investors into a frenzy, and be assigned a higher debut value than Google was, one has to wonder what happens when China sneezes."

Baidu Shares Nearly Triple in Debut - Market Cap Almost $2.5 B

From CNN: Baidu shares nearly triple in debut

"The shares of China's largest Web search company, Inc., almost tripled in their market debut Friday after pricing above their expected range in a hot initial public offering.
When trading began around 11:30 a.m. ET, shares surged about 195 percent, to about $78, from their initial public offering price of $27 per American depositary share -- which was $2 above the top of an already raised price range. "

Facts and numbers: Baidu (BIDU) IPO - Fact Sheet

Thursday, August 04, 2005, China's Google, Raises $109 Mln in IPO

From Red Herring: Baidu Raises $109M in IPO

China’s answer to Google starts trading Friday after a higher-than-expected IPO.

"With investors salivating over China’s answer to Google, Chinese search engine raised $109 million in its initial public offering and faced heavy demand in its Nasdaq debut on Friday.

The company priced its American depositary shares (ADS) at $27, about 540 times the company's earnings of $0.05 per share.

The valuation was stunning. Just earlier in the day, Baidu announced in an Securities and Exchange Commission filing it intended to offer its shares in a range of $23 to $25; it previously indicated it would seek $19 to $21.
In other words, demand for the shares is so strong that their price rose by about a third before the offering even reached the market.

The company also increased the number of shares offered to 4.04 million from 3.7 million. The offering values the company at $872 million, only about one-hundredth the worth of Google, but with an opportunity to claim a giant portion of China's just-emerging web marketplace.

Demand for the ADS is so strong that the issue is expected to jump another 30 percent or more as investors bid for one of the year's hottest IPOs.
“Investors may put blinders on and not think about risks and just think about upside,” said Tom Forte, an analyst with Morningstar."

Facts and numbers: Baidu (BIDU) IPO - Fact Sheet

Read more: (BIDU) Raises IPO Price Range to $23-$25
China's Baidu (Ticker Symbol: BIDU) Sued for Piracy ahead of IPO
IPO Candidate Baidu Needs to Find an Edge over Google
Google Interest In Baidu Buyout?

More on the Baidu IPO (Ticker: BIDU)

From Reuters: Baidu IPO banks on name as China search leader

"The Beijing-based firm (, whose name comes from an ancient Chinese poem about a man in search of love, is the clear leader in China, where the search market was worth an estimated $150 million last year, according to new media consultant Shanghai iResearch.
But its home turf, a tiny fraction of the the $8 billion global search market, is still up for grabs, making the valuation Baidu is seeking hard to justify in the run-up to its final pricing and Friday trading debut, analysts said."

"In addition to global leaders Yahoo, Google and Microsoft's MSN, Baidu also faces competition at home from search engines recently launched by two of the country's Internet veterans, Inc. and Sina Corp. ."

"The mid-point of the company's $23 to $25 indicative range -- which the company raised this week from a previous range of $19-$20 -- would give Baidu a price-to-earnings ratio of 67 for 2005, based on the estimates of one analyst.
The company's rivals command lower multiples for this year's forecast profits, led by Yahoo with a p/e ratio of 60, Google at 58, Sina at 35 and Sohu at a relative bargain of 24."

"The offering has drawn strong interest from hedge funds -- a sign that buyers are not necessarily lining up to purchase shares for their long-term growth potential, said one source."

Facts and numbers: Baidu (BIDU) IPO - Fact Sheet

Read more: (BIDU) Raises IPO Price Range to $23-$25
China's Baidu (Ticker Symbol: BIDU) Sued for Piracy ahead of IPO
IPO Candidate Baidu Needs to Find an Edge over Google
Google Interest In Baidu Buyout?
China's Sina Corp Officially Launches New Search Engine iAsk
SOHU.COM Announces Launch of Upgraded Search Engine SoGou 2.0

China's #1 Portal Sina Reports 45% Decline in Q2 Profit

From Forbes: China's Sina Q2 unaudited net profit 10 mln usd vs 18 mln usd

"Internet portal Sina Corp (NASDAQ SINA) said its unaudited net profit fell 45 pct year-on-year to 10 mln usd in the second quarter from 18 mln usd a year earlier, on declining revenues in some of its wireless value-added services (WVAS)."

"Advertising revenues reached 20.4 mln usd in the second quarter, a 31 pct increase from the same period last year, and a 22 pct quarter-on-quarter rise. The rise was attributed on seasonal variation and increased customer spending, the firm said."

"Operating expenses grew 27 pct year-on-year to 20.4 mln usd, driven by higher marketing costs for WVAS, instant messaging, Sina's game portal iGame, development costs for their new search engine launched in June, and fees related to mergers and acquisitions."

Read more:
China's Sina Corp Officially Launches New Search Engine iAsk

China Restricts MMORPG Play for Minors

From theinquirer: China says "No!" to PK'ing minors in MMORPGs

"China has launched a crackdown on massively multiplayer online game which have become extremely popular over there. According to Chinese publication Interfax, authorities unveiled new regulations that will prohibit minors under the age of 18 [as opposed to minors over the age of 18 -Ed] from playing violent online games that allow them to kill other players in what is known commonly as Player vs. Player (PvP) in the west, though Chinese authorities have termed it "Player Kills" (PK)."

"15.8% of the 103 million Chinese internet users are aged under 18, and nearly half of all China’s 20 million online videogamers prefer MMO games to any other type of online game."

Read more:
NetEase Profit Jumps on Robust Online Gaming
Gamania Brings Sony's "EverQuest II" Online Game to China
China Plans to Invest $1.8 Billion in Online Gaming
Paying Player Base for World of Warcraft (WoW) has Surpassed 1.5 Million in China
The Chinese MMORPG Market: Legend of Mir II vs. World of Warcraft

Wednesday, August 03, 2005 (BIDU) Raises IPO Price Range to $23-$25; expected IPO Date: Friday 08-05-2005

From Reuters: raises IPO terms to 4 mln ADS, $23-$25

" Inc., China's largest search engine, increased on Wednesday its initial public offering amount to 4 million American depositary shares (ADS) for between $23 and $25 per ADS.
The Beijing-based company previously planned 3.7 million ADSs in a price range between $19 and $21 per ADS for its IPO."

"According to an amended offering document filed with the U.S. Securities and Exchange Commission, plans to sell 3.2 million shares and selling shareholders will offer 831,706 shares."

Facts and numbers: Baidu (BIDU) IPO - Fact Sheet

Read more:
China's Baidu (Ticker Symbol: BIDU) Sued for Piracy ahead of IPO
IPO Candidate Baidu Needs to Find an Edge over Google
IPO by China Search Firm Baidu Called Likely to be Success
China's No. 1 Search Engine Baidu Holds Huge Growth Potential
Google Interest In Baidu Buyout?

NetEase Profit Jumps on Robust Online Gaming

From TheStreet: NetEase Soars on Earnings

"Chinese Web portal NetEase reported a 147% increase in second-quarter profit Tuesday, fueled by revenue growth in its online games.

The Beijing company earned $29.3 million, or 83 cents an American depositary share, in the quarter, compared with $11.9 million, or about 36 cents a share, last year. Revenue rose 90.2% from a year ago to $50.4 million. Analysts had been forecasting earnings of 66 cents an ADS on sales of $44.3 million."

"NetEase said revenue from online game services rose 146.5% from a year ago to $41.5 million, driven by solid growth in its Fantasy Westward Journey and Westward Journey Online II titles. Advertising revenue jumped 30.8% from a year ago to $6.5 million."

Read more:
Gamania Brings Sony's "EverQuest II" Online Game to China
China Plans to Invest $1.8 Billion in Online Gaming
Paying Player Base for World of Warcraft (WoW) has Surpassed 1.5 Million in China
The Chinese MMORPG Market: Legend of Mir II vs. World of Warcraft
Online Game Operator NetEase Prepares for "World of Warcraft'' Arrival

Gamania Brings Sony's "EverQuest II" Online Game to China

From EverQuest Goes to China

"It's awfully coincidental that Blizzard's found themselves bathing in unexpected World of Warcraft success in China and now Interfax is saying Sony Online Entertainment's sending EverQuest IIup to bat in the same country. Yes, yes, strangely unintentional..."

"Either way, beta testing of the Chinese version starts August 23 courtesy of Gamania Digital Entertainment. A complete rollout's not expected until October or November, though. Current bets place EverQuest II at 100,000 players simultaneously, but Gamania wouldn't comment on total accounts - World of WarCraft, however, already has a 1.5 million."

Tuesday, August 02, 2005

China Plans to Invest $1.8 Billion in Online Gaming

From GameDAILYbiz: Chinese Government Investing $1.8 Billion in Online Gaming

"Some struggling game developers in America or Europe might be wishing that their governments took a more hands-on role in business, after China announced recently a plan to spend $1.8 billion to help expedite the development of as many as 100 different kinds of online PC games over the next five years."

"The Shanghai Youth recently reported that the 15 billion Yuan would be spent to speed up video game development centers in the cities of Beijing, Shanghai and Guangzhou, as well as in the Sichaun province. Deputy Director with the Press and Publication Administration of China (PPAC) Yu Yongzhan believes this initiative will lead to 10-30 online game companies launching within the next three years."

"Explosive Gaming GrowthOf China's 1.3 billion citizens, over 500 million live in cities, which allows them cheap online access via Internet cafes. Of those 500 million, only an estimated 22.8 million played an MMOG (massively multiplayer online game) in 2004, indicating significant room for growth. Those 22.8 million spent over $500 million on online games that year, which indicates how incredibly large the market is likely to become, as more Chinese enter the online arena."

Read more:
Paying Player Base for World of Warcraft (WoW) has Surpassed 1.5 Million in China
The Chinese MMORPG Market: Legend of Mir II vs. World of Warcraft
The9 commits $74m for WoW

UTStarcom Reports Net Loss Amid Restructuring

From Forbes: UTStarcom forecasts large 3Q loss

"UTStarcom Inc., (...) posted a narrower-than-expected second-quarter loss on Tuesday, but predicted a third-quarter loss significantly larger than Wall Street expects."

"UTStarcom moved to a loss of $74.7 million, or 65 cents per share, from a year-ago profit of 43.9 million, or 33 cents per share. Excluding restructuring charges of $20.7 million, or 16 cents per share, and other non-operating items, UTStarcom said its loss would have been about 45 cents per share. Revenue rose 5 percent to $723 million from $689.6 million."

"Looking to the third quarter, UTStarcom said it expects to post a loss of 35 cents to 40 cents per share, including restructuring charges of $5 million to $10 million. Revenue will range from $660 million to $680 million, the company said. Analysts expect a third-quarter loss of about $11.8 million, or 8 cents per share, on higher sales of $778.4 million. Analyst estimates usually exclude items such as restructuring costs."

Watch: UTStarcom's CTO Bill Huang opines on fixed/mobile convergence, cable's plight in Asia, his company's restructuring, and much more 256k 512k 768k
(From Light Reading)

Read more:
Yahoo! BB Broadband (Japan) Focuses On UTStarcom's mVision IPTV Solution
UTStarcom's 3G and IPTV Plans
UTStarcom/Cisco Announce Triple Play Partnership
UTStarcom Signs Contract With Tiscali Italy to Expand its Broadband Network

China's Baidu (Ticker Symbol: BIDU) Sued for Piracy ahead of IPO

From China's Baidu, Held by Google, Is Sued for Piracy

" Inc., China's biggest Internet search engine and part-owned by Google Inc., is being sued by two local companies over alleged copyright infringement, ahead of its planned first-time share sale in the U.S."

"Beijing New Picture Film Co., copyright owner of "House of Flying Daggers,'' filed suit last month against Baidu for allowing users to download the movie for a fee, (...). The Chinese-language film was released overseas by Sony Corp."

"Shanghai Busheng Music Culture Media Co. in June also sued Baidu for allowing unauthorized downloads of 53 songs, according to share sale documents released by Beijing-based Baidu ahead of its planned offer of stock on the Nasdaq market in the U.S."

"The copyright issue has cast great uncertainty over Baidu's future business models and revenue,'' said Gu Feng, a technology analyst at Shenyin Wanguo Securities Co. in Shanghai. "This is something investors should take into account.''"

China Net Investor: Google holds a 2.6 pct minority stake in Baidu.

Facts and numbers: Baidu (BIDU) IPO - Fact Sheet

Read more:
IPO Candidate Baidu Needs to Find an Edge over Google
IPO by China Search Firm Baidu Called Likely to be Success
China's No. 1 Search Engine Baidu Holds Huge Growth Potential
Google Steps up Fight for the China Market
Google Interest In Baidu Buyout?

China's Top 3 Server Firms Market Share Falls

From Forbes: China's top 3 server firms Q2 market share falls amid competition

"China's top three server makers -- Langchao Group, Lenovo Group Ltd and Dawning Computer Corp -- saw their combined domestic market share shrink to 22.7 pct in the second quarter from 25 pct a year earlier, Beijing-based consulting firm Analysys International said. (...) The shrinking market share by domestic server makers was due to intensified competition by foreign penetration into the country's low-end product market, Analysys explained."

Market Shares (source: Analysiys International):
Dell Inc 21.9 pct share
IBM Corp 20.1 pct share
Hewlett-Packard Co 20 pct share
Langchao 8.5 pct share (down from 8.9 pct)
Lenovo 8.1 pct share (down from 9.6 pct)
Dawning 6.1 pct share (down from 6.5 pct)

Read more:
China Goes for Supercomputing Crown
Lenovo wrestles back top spot in Asia's PC market
Lenovo Moves Into Global PC Top Ranks
Microsoft's Red Menace: IBM-Lenovo Deal Could Threaten Bill Gate's Empire

Monday, August 01, 2005

Baidu IPO - Fact Sheet on the Chinese Search Leader

BAIDU.COM, INC. (Ticker Symbol: BIDU)

Headquarter: Beijing
12/F, Ideal International Plaza, 58 North Fourth Ring West, Haidian
District 100080
Tel: (86-10)8262-1188
Fax: (86-10)8260-7007/9
Company Web Site (English): Baidu

Chief Executive Officer (Co-founder): Robin Li
Chief Strategy Officer (Co-founder): Eric Xu
Chief Operating Officer: David Zhu

Total number of employees: 750

Financial Data:
Q1, 2005:
Net income $303,000
Net revenues $5.2 million
Cash and equivalents: $23.5 million (Balance sheet as of 03-31, 2005)

Q2, 2005: ("preliminary unaudited financial results")
Net income US$1.5 million (+ 384.0%)
Total revenues approx. US$8.4 million (+52.5%)

Total net revenues 2004: $13.4 million
For more financial details read the
SEC form F-1 IPO registration statement.

Traffic statistics:
Global Traffic Rank for 6 (Source:
Second most visited website and most visited search engine in China in 2004 (Source: iResearch/

IPO Details:
Ticker Symbol: BIDU
Date: (correction!) expected: Friday 2005-08-05
Underwriters: Goldman Sachs, Credit Suisse First Boston, Piper Jaffray & Co.
Initial public offering price: between US$19.00 and US$21.00 per ADS
Initial public offering price raised to $23 and $25 (Wed Aug 3, 2005)

First day of Trading:
Last Trade: $122.54 (+353.85% from its IPO price of $27)
Day's Range: $60.00 - $151.21
Market capitalization: $3.92 billion
Biggest first-day gain from an IPO in five years
Second-best foreign IPO ever
One of the top-20 IPOs of all time (Source: Thomson Financial)

Chinese Search Market:
China's online search market ( including advertising, paid listings and real name searches) was worth an estimated $ 151 M last year, up 81 percent from 2003, according to Shanghai iResearch. China’s Internet search market is still at an early stage of development but is evolving rapidly. iResearch expects the number of Chinese Internet search users to grow at a compound annual growth rate of 27.5% from 2005 to 2007 (Estimatet Search Users in millions: 2005: 115; 2006: 149; 2007: 187).

Market Shares:
Baidu 36.3 percent
Yahoo 22.7 percent (Yisou, Yahoo! China, and
Google 21.2 percent

Other competitors: (China's top internet portal):