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Legend, AOL ink deal
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TOP Chinese computer maker Legend Holdings on Monday unveiled a US$200 million joint venture with America Online Inc (AOL) to provide consumer interactive services in China.
The two companies said each company would contribute US$100 million over time, with Legend holding a 51 per cent stake and AOL 49 per cent. Initially, the two companies will invest US$25 million each.
“I believe this co-operation is a strategic move which will have a profound impact on China's Internet industry,” Legend Chairman Liu Chuanzhi said in a statement.
From modest beginnings, the number of Internet users in China has risen sharply, with about 22.5 million people logging on last year, a 153 per cent increase from 1999, according to government figures.
AOL contributions to the joint venture will include software and know-how, as well as operational and technical support and access to global marketing and advertising.
The joint venture will initially provide technical support and services for Legend FM, a subsidiary of Legend Holdings.
Legend is a majority State-owned company which is listed in Hong Kong and has 39 per cent of the market for consumer personal computers in China.
The company, which has produced its Legend brand computers since 1990, has long been seeking to expand its focus from being a hardware manufacturers to a provider of services.
The joint venture with AOL will help the company attain this goal by giving it capabilities it does not currently have, according to Legend executives.
“We have been looking for a partner because we lacked advanced technology and experience in interactive services,” Yang Yuanqing, chief executive of Legend Holdings, said at a press conference in Beijing.
For AOL Time Warner Inc, the parent of America Online, the joint venture is the latest development in the company's long history with the world's most populous country.
Time magazine founder Henry Luce was born in China over a century ago, and the Time and AOL executives first talked about a merger at a business conference in Shanghai in 1999, AOL Time Warner chief executive Gerald Levin said at the press conference.
“It's fitting, I think, for a company with its roots in China to now help fulfil all the tremendous potential of this nation's burgeoning digital economy,” he said.
The joint venture will engage in business that is “allowed under the regulations and government policies of China,” but it may expand its operations if possible after the country enters the World Trade Organization.(SD-Agencies)
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