A week in tech

China

Internet
• A8.com, a China-based online music service platform, has announced in Shenzhen the formation of copyright-protected music download website alliance. The alliance has about 3,000 member websites. The alliance said it will provide more than 100,000 copyrighted songs for its users through the 3,000 online platforms. A8.com disclosed that already Sony/BMG, Warner, UMG and Rock have signed cooperation agreements with it.

• Baihe.com, China’s leading matchmaking web site, announced that it has secured a venture capital of $9 million from venture capital firms National Enterprise Associations and Northern Light. If one considers the account investments of $2 million from Mayfield Fund and GSR Ventures that Baihe has also secured, the matchmaking web site can count $11 million in total from venture capital firms. Two other matchmaking web sites, marry5.com and 96333.com also reported receiving venture capital investments of $12.5 million and $5 million respectively. Industry insiders note that matchmaking web sites are increasingly becoming a new investment area for China’s Internet industry. A study from iResearch shows that the matchmaking market in the country can be valued at around 653 million yuan ($81.4 million) by 2008.

Mobile/Wireless
• China Mobile (Hong Kong) announced the completion of its acquisition of China Resources Peoples Telephone. Following the acquisition, Peoples Telephone will become an indirect wholly-owned subsidiary of China Mobile (Hong Kong). In October last year, China Mobile (Hong Kong) paid HK$2.2 billion ($283.5 million) for 66.5 percent of Peoples Telephone.

• Nokia announced that it would introduce to the Chinese market low-cost handsets as cheap as $5. The company said it is targeting first-time mobile users on the mainland, particularly those from rural areas. Nokia points to the source of its growth as coming from low-income earners with monthly salaries of $50 to $100. As part of this programme, Nokia’s decision to lower the total cost of owning a mobile phone for each Chinese user to just $5 per month is a marketing decision that is seen as having an impact on local handset makers such as TCL, Haier and Konka, which in recent years have had their market-leading positions dislodged by vendors such as Motorola and Nokia. The company forecast the number of mobile phone users to jump from 2 billion in September to 3 billion by 2008 globally, with half of this growth coming from Asia-Pacific including China and India, Nokia's second-biggest market in Asia. Nokia said about 11 percent of the group’s total net sales of $41.3 billion is attributed to the China market.

Media, Entertainment and Gaming
• The annual sales revenue from China’s newspapers and magazines went beyond Rmb30 billion($3.7 billion), according to the Newspaper and Magazine Division of General Administration of Press and Publication. There are presently 9,500 magazine titles and 1,900 newspaper titles in China, with the newspaper and magazine industries transformed now into one of the fastest growing industries in China. Out of the 1900 titles, about 50 percent, or some 1,000 of them are dailies, representing a 210-percent rise from the 20 percent in 1990. According to statistics from World Association of Newspapers, there were 6,580 daily newspaper titles in the word in 2004. Of these, the Chinese daily newspaper titles make up 14.5 percent, and thus make the country the No. 1 among all countries.

• Warner Brothers Consumer Products Ltd. announced its plans to open about 200 retail outlets in China in coming years along with partner Hutchison Whampoa Ltd. The announcement came after Warner Brothers opened its first China store in Shanghai. The company said more stores openings are to follow in mainland China, Hong Kong and Macau. Warner Brothers will first set up in Shanghai's commercial centers before moving on to other cities such as Beijing and southern China's Guangzhou and Shenzhen. The move by Warner Brothers to open the stores comes as demand for branded merchandise in China increases. The company sees the demand for their merchandise increasing as more licensed products become available in China.

• Industry sources indicated that the online advertising market in China has exhibited rapid growth in 2005 as it posted a 77-percent rise in its total revenue to Rmb3.1 billion ($386.6 million). The proportion of online ads out of the total ads in the market registered a rise from 0.5 percent in 2001 to 2.3 percent in 2005. Search engine ads revenue contributed Rmb1 billion ($124.7 million), an amount that if added would make the total revenue from the online market reach Rmb4.1 billion ($511.4 million). The report noted that Sina and Sohu appeared to be no longer the dominant players in the market, with Baidu and Google taking in more ads. The real estate, IT and online services industries were the top three providers of clients. In terms of companies, Samsung was No. 1 with online ad spending reaching Rmb60.3 million ($7.5 million), followed by China Mobile, with Rmb41.1 million yuan ($5.1 million) and NetEase with Rmb39.1 million ($4.8 million).

Software
• SAP AG, the world’s top business software maker, announced the opening of a new research center in Shanghai. The move is seen as significantly increasing the number of research employees in China to 1,800 in 2008. The Shanghai research center is presently one of SAP's top five research hubs globally along with those in Australia, Japan, South Korea and India. SAP China reported a 70-percent increase in its revenue annually on average in the past nine years. SAP said it looks to a continuous and rapid growth in China by way of the research center in Shanghai. The center, according to the company, will see an expansion in 2008.

Telecommunications
• Some strong 150 mainland firms are expected to lead the Chinese contingent at Telecom World, the triennial industry gathering organized by the International Telecommunication Union (ITU), in Hong Kong this December. The group includes China Telecom, China Netcom, China Mobile, China Unicom, China Tietong, Huawei Technologies, ZTE, China Potevio, Datang Telecom, FiberHome Technologies, Guangzhou Jinpeng and the TD-SCDMA industry alliance. Given the bulk of the participation, the gross area occupied by Chinese companies now totals 16,000 square meters. The participation of a number of these mainland firms at Telecom World was one of the factors that helped the Hong Kong government win the ITU's competitive bidding in 2003 to stage the event. About 900 exhibitors and 60,000 visitors are forecast to attend the event and generate about HK$900 million ($116 million) for the tourism and business sectors.

• In preparation for the launching of 3G in the Mainland, China Unicom disclosed that it is considering taking on a strategic partner in the form of a pure investor or a telecom operator. The company said it is drafting transition strategies, even as nothing is determined yet whether a license for three different 3G standards would be given. China Unicom remains as the operator using both CDMA and GSM networks. The company lost Rmb200 million ($25 million) on its CDMA business last year. Its GSM business, however, made a profit of Rmb7.2 billion ($898.1 million). The search for a partner has a precedent for China Unicom: its parent China United Telecommunications Corp forged a joint venture with SK Telecom of South Korea for the development of interactive games for CDMA. In a separate report, China Unicom Ltd. announced a 9.7-percent rise in its net profit for the year 2005 to Rmb4.9 billion ($611.2 million).

• The country’s Ministry of Information Industry (MII) announced that the government plans to install telephone lines in 10,600 administrative villages in China this year. When completed, the move is expected to boost the rural areas’ telephone penetration ratio up to 98.6 percent. According to MII, six State-owned telecom service providers – China Telecom, China Netcom, China Mobile, China Unicom, China Satcom and China Tietong – will be tasked with the installation of telephone lines in their respective areas. The project carries an investment of Rmb15.9 billion ($2 billion), aimed at bringing telephones to rural villages.

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