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Japan

Investments/ Ventures

Citigroup Capital Partners Japan Ltd. entered into a tender offer agreement with an affiliate of Bain Capital under which it received cash consideration for its 93.5 percent stake in BELLSYSTEM24. The total transaction was valued at approximately 100 billion yen (US$1.1 billion), making it the largest buyout in Japan in nearly two years. Bain Capital has made investments in a variety of leading companies with principal or significant operations in Japan, including MEI Conlux, Sun Telephone, D&M Holdings, Toys "R" Us, and Burger King (BKC). The firm also has prior experience in the call center industry, having invested successfully in Stream International, a leading U.S. call center company.

Korea

Telecommunications

KT (KTC) plans to acquire a 25 percent stake in Omnitel China, a Chinese mobile phone content service provider. Omnitel China is the Chinese subsidiary of the South Korean telecom service company Omnitel. It provides services such as ring tones to about 12 million users in China via Chinese telecoms operators. The company's major partner is China Mobile (NYSE:CHL). Omnitel China also promotes research and development of new value-added services, including mobile phone games. KT has been supporting plans of its subsidiaries to enter the Chinese market to seek new business opportunities. Its acquisition of the 25 percent stake in Omnitel China is part of such a strategic move, as the group aims to generate addition revenue growth engines outside its mature home market.

KT Corp. has signed a deal with Philippine Multi-Media System Inc. to start satellite broadcast service in the Southeast Asian country. KT will rent equipment for satellite broadcasting starting next year. The service marks the first overseas satellite broadcast service via the South Korean satellite since it was placed into orbit in August, 2006. Mugunghwa helps relay high-definition digital images.

KT Corp. would lessen employees to cut costs, increase revenue and boost profit. 5,992 of its staff will leave the company this week through an early retirement program. The figure represents 16 percent of the company’s workforce. The retirement package was offered to those employees who had spent more than 15 years with the company and 65 percent of those leaving are in their fifties. The union has supported the deal because the terms are favourable.

Semiconductors

South Korea's semiconductor, steel, machinery and electronics industries are expected to see a boom in sales next year on the back of a rise in overseas shipments. The country's shipbuilding and construction sectors, however, is expected to continue to struggle as new orders are forecast to fall in 2010. Semiconductor exports are predicted to rise 24.4 percent from a year ago to US$38.5 billion next year, while the steel industry is expected to brush off this year's slump through an increase in demand. Rising demand in emerging markets, including China and the Middle East, is expected to give a boost to the machinery sector, while the electronics sector is forecast to see growing market share in Europe. The textile industry will see a rise in exports to China next year, though shipments to the U. S. and European countries will remain sluggish.

China

Internet

Hunan Satellite TV and Taobao.com merged and will have 49 percent and 51 percent equity interest. Taobao Senior Director Wang Yulei was assigned to be JV's General Manager and the newly established firm will engage in four businesses, namely TV shopping, online shopping-related film or TV production, Taobao TV and products popularized by celebrities. Taobao will release an independent site for the new company as well as open a "Happy Taobao" subchannel on its own site which will feature products from Taobao vendors and Hunan Satellite TV partners. Golden Eagle Broadcasting System's home shopping and e-commerce subsidiary Happigo was planning to establish a JV with Taobao.

The total amount of online shopping sales reached 250 billion yuan (US$36.6 billion) in mainland China in 2009, marking the third consecutive year of rapid growth. Online shopping had taken up 1.97 percent of the total amount of consumer retail sales in China. The number of online shoppers is expected to surpass 100 million as 28.2 percent of Chinese netizens. Taobao.com outperformed its rivals in 2009.

Baidu (NASDAQ:BIDU) has established a new department to conduct its large-scale online games operations business. The game business will be a major focus for Baidu in 2010 and the company aims to employ around 100 staff within the division. Baidu has no plans to engage in game development and that it is contacting major domestic game companies to discuss joint game operation. Baidu is co-operating four large-scale games in its game channel at present. Baidu will contract up to ten employees from game portal 178.com to take charge of operation and maintenance of Baidu's game channel, game.baidu.com.

Tudou.com has received fifth-round financing of US$40 million which it intends to use in acquiring rights to content. Tudou.com has started to delete pirated content. Prior to this latest investment, Tudou has received four rounds of funding, worth a total of US$85 million. Tudou.com’s competitor Youku.com is still negotiating for an additional US$40 million in its fifth-round investment after having already received US$40 million.

Alibaba.com (OTC:ALBCF) signed a share purchase contract with China Civilink (Cayman). This is one of the two phase contract with Alibaba.com acquiring 85 percent of HiChina, and the option to acquire another 14.67 percent equity interest from HiChina's founders pending HiChina reaching certain performance targets. The total consideration of 539.98 million yuan (US$79.08 million) in cash for both phases, brings four key assets to Alibaba.com, including a large customer base, value-added applications, advanced and automated website technology; and additional strength in HiChina's management and operating team.

iResearch Consulting Group said that China's online travel booking market will boost by 27.2 percent from a year earlier. iResearch points out that more Chinese are willing to go on journey this year, boosted by macroeconomic recovery, government subsidy, and promotions kicked off by travel service providers. Anticipating the online travel booking market in 2010, iResearch believes that the Shanghai World Expo and the Guangzhou Asian Games will both bolster up the market growth. Operating revenues from hotel room booking for 44.8 percent of the total, and the proportion was 2.3 percentage points lower than a year ago. Air ticket booking hit 44.1 percent of the total. Revenues from vacation products and other tourism forms was11.1 percent of the total. The rising ratio of vacation products in the gross revenues reflects the prosperity of the casual tourism market, which results from the change of living styles and stronger affordability of customers.

Mobile/Wireless

The sales of 3G mobile phones in China exceeded 1 million in November, with Samsung (OTC:SSNLF), Nokia (NYSE:NOK) and Coupe taking a cumulative market share of more than 60 percent. Sales of 3G phones surges by 35.9 percent on year to 1.176 million units in November, which is 310,00 units more than that of October. Among all 3G phones, TD-SCDMA saw the largest increase of 74.7 percent in sales, and sales of EVDO also boosted by 36.5 percent. Sales growth of WCDMA was relatively small in November. The cut in 3G pricing package and diversification of 3G services has laid good foundation for the rapid sales growth of 3G phones. The development of 3G market also promote shuffle of phone makers. Samsung takes the largest 3G market share in China, followed by Nokia and Coupe.

KongZhong (KONG) has entered into a definitive agreement to acquire Shanghai Dacheng Network Technology Co., Ltd. (Dacheng), a developer of 3D MMPORGs based in Beijing and Shanghai. Based on Dacheng's 2010 net profit after tax, as calculated under US GAAP, the Company would pay up to US$80.0 million, in a mix of cash and the Company's ordinary shares, to Dacheng's shareholders. The transaction has been approved by the Company's Board of Directors. The Company expects that the transaction will close in the first quarter of 2010.

NetMovie Co. Ltd. and Chunghwa Telecom Co. Ltd. (NYSE:CHT) will cooperate to provide Internet TV service in mainland China and Taiwan, according to NetMovie's chief executive officer. The new service will enable Internet users to watch TV on their computers using a remote control after installing a NetMovie-developed USB device. Per the two parties' agreement, NetMovie will provide digital content such as films and TV shows while Chunghwa Telecom will be responsible for setting up the Internet TV infrastructure. Chunghwa Telecom will spend about 1 billion yuan (US$146.37 million) to purchase digital content for broadcast on the Internet TV. NetMovie will spend about 500 million yuan (US$73.19 million) to purchase new digital content. Chunghwa Telecom is keen to partner with mainland Chinese companies in areas of multimedia on-demand and Internet Protocol Television.

Information Technology

The e-book market draws attention of domestic IT product manufacturers like Lenovo Group Limited (OTCPK:LNVGY) and Tsinghua Tongfang Co., Ltd. Lenovo is making preparations to commence e-book product research and development. Lenovo has always been interested in fast-growing emerging products. Following on the heels of Amazon (NASDAQ:AMZN), more and more Chinese companies also choose to make inroads into the e-book market. Hanwang branded e-book products are available in the market in the first half of 2009 and many other brands have appeared in the market by the end of the year. There will be 50 brands in the domestic e-book market in middle 2010, forecasted Liu Yingjian, board chairman of Beijing Hanwang Science and Technology Co., Ltd.

The business sentiments of information technology (IT) industry's mergers and acquisition (M&A) brightened considerably in November, with the value and case amounts setting an annual high. China's IT industry disclosed eight corporate M&A cases, booming well beyond the one which was seen in October, closely following the energy industry. The industry's M&A value recorded 240 million US dollars, boosted 327.86 times month on month and averaging 30.01 million dollars per case, boosted 40.11 times. The specific sectors exhibiting M&A were software, digital television, and IT services. Venture capital investment value sank 70.0 percent on month and 46.7 percent on year to 13.76 million dollars in November, with five cases of investment, flat with figures in October. The respective sectors receiving venture capital investment cover semiconductors, optoelectronics technology, software, and IT services.

The mainland's banking sector, emerging mostly unscathed from the economic crisis, is expected to accelerate spending on information technology over the next two years. These investments in computer hardware, software and services are forecast to rise to US$11.34 billion in 2011 from an estimated US$10.71 billion next year and US$9.56 billion this year. The impact of the financial crisis was minimal on banks' information technology-related spending as strategic financial reforms, stimulus measures and new industry trends helped drive adoption of key systems. Beijing also encouraged a US$1.3 trillion credit boom in the first 10 months of the year to aid the country's economic stimulus efforts.

Telecommunications

China Mobile launched a business-to-business (B2B) e-commerce site b2bjoy.com. The site provides enterprises with a number of services including online bidding and auctions, consignment purchasing, hotel reservations, airline ticket reservations and the publishing of enterprises' purchase requirements. In the short time since the site was launched, it has established cooperation with over 300 enterprises. It has seen online bids reach a total value of over 75 billion yuan (US$10.98 billion) and carried out 230 online auctions valued at over 17 billion yuan (US$2.49 billion), Liu added. Furthermore, the site has signed agreements with over 2,000 hotels in nearly 300 cities in China for reservation services.

China's Ministry of Industry and Information Technology (MIIT) has set cross-network settlement fees between China Mobile's TD-SCDMA network and other operator's networks. China Mobile will pay 0.012 yuan (US$.0017) per minute to China Unicom (NYSE:CHU) or China Telecom (NYSE:CHA) for calls from the TD-SCDMA network to either of the operators networks. The settlement rate for non-TD-SCDMA users making cross-network calls will remain at 0.06 yuan (US$0.009) per minute.

ZTE Corp. (OTCPK:ZTCOF) was approved by its shareholders to provide its subsidiary ZTE Info Edge India Ltd. with at most US$33 million worth of guarantees. ZTE India has been ordered to co-build a telecoms network in India for Unitech Wireless, a joint venture between the local real estate developer Unitech Ltd. and the Norwegian telecoms operator Telenor ASA (OTCPK:TELNY). Worth US$30 million, one of the ZTE guarantees will be valid during ZTE India's performance of the contracts. ZTE is set to offer not more than US$3 million worth of guarantees to some India-based banks for their provision of performance bonds to ZTE India, and this transaction is also about the Unitech Wireless project.

China Mobile Ltd., had its board will meet to consider removing Vice Chairman Zhang Chunjiang because of his suspected involvement in a serious economic issue. The parent has recommended its unit remove the executive. China Mobile shares have gained 4.4 percent since the company disclosed the investigation into Zhang. Zhang was chairman of China Netcom, the fixed-line carrier taken over by China Unicom (Hong Kong) Ltd. as part of the revamp. Inspectors uncovered 234.7 billion yuan (US$34.4 billion) of misused funds in government accounts. As many as 1,068 people were prosecuted, 67 of them senior officials.

China's integrated telecom tariff level will drop 9 percent in 2009 compared with that of the previous year. China has made steady progress in the structural reform of the telecommunication industry and the telecom infrastructure sharing has achieved positive results. The 3G network construction and business promotion have been in full swing after China issued 3G licenses. Investment in 3G mobile technology will reach 143.5 billion yuan (US$21 billion) in 2009, with 285,000 3G base stations built and more than 10 million of the nationwide number of 3G users. When mentioning about the development of the telecommunications industry in next year, Li said that the total telecom business will grow about 12 percent in 2010 and business revenue will increase about 4.5 percent, while the integrated telecom tariff level will drop about 9 percent. The software and IT services revenues will raise 20 percent. China's 3G spending has been led by its three major wireless carriers, China Mobile, China Unicom and China Telecom.

China Mobile is expected to be approved by the Taiwan authorities to invest in Taiwan Far EasTone Telecommunication at the beginning of next year. The mainland carrier has entered into an agreement to buy a 12 percent stake in Far EasTone for US$528 million. Taiwanese regulators will further loosen the restrictions on mainland investment, and industries, such as telecoms, steel and beverages, might be included in the second list of local industries allowed to accept investments from mainland. In June, the Taiwan authorities opened up the island to mainland investors with 100 categories of manufacturing, service and infrastructure sectors in the initial opening-up list.

Media, Entertainment and Gaming

· Shanda Games (NASDAQ:GAME) and Kingsoft Corp. Ltd. will merge and will focus on online gaming. Both companies would work together on the research and development and operation of online games. The two firms will explore overseas online gaming markets. Shanda Games and Kingsoft started their partnership at the beginning of the year, when Kingsoft moved three of its flagship games onto Shanda Game's operating platform.

· Shanda has won the operating license for Wemade's 2D fantasy-themed MMORPG Legend of Mir 3. Shanda received Chinese governmental approval to operate the game on December 4. The previous operator of Legend of Mir 3, CDC Corporation's online game subsidiary CDC Games plans to shut down servers for the game, as its license for the game had expired. Shanda would replace CDC Games as the mainland operator of Legend of Mir 3.

· Shanda Interactive Entertainment (NASDAQ:SNDA) had the appointment of Dr. Jing Zhu as the Chief Technology Officer. Dr. Zhu joins Shanda Online from Yahoo! Inc. (NASDAQ:YHOO) where he served as a Senior Director from 2001 to 2009. In his most recent post, he was in charge of Yahoo!'s next generation contextual ad-matching technology platform from 2007 to 2009. The team took a research prototype and, in less than one year, launched a successful product that serves hundreds of millions of ad calls daily. From 2001 to 2006, he was in charge of the engineering team for Yahoo! Mail, Yahoo! Address Book and Yahoo! Calendar. Yahoo! Mail had seen significant market share and user growth both in the US and worldwide.

Software

China's software outsourcing businesses will revenues of roughly 200 billion yuan (US$29.2 billion) in 2009. In the first three quarters of this year, the industry brought in revenues of 146.36 billion yuan (US$21.4 billion), boosted 24.5 percent year-on-year.

China National Software & Service Company Ltd. plans to acquire Great Wall Computer Software and Systems for 130 million yuan (US$19 million). CS&S will acquire a 100 percent stake in Great Wall Software from Great Wall Technology, China Great Wall Computer Shenzhen, Great Wall Information Industry, and deputy general manager of Great Wall Software, Jiang Bo, respectively. Great Wall Technology, China Great Wall Computer Shenzhen, and Great Wall Information Industry are all direct and indirect subsidiaries of CS&S. With this transaction, Great Wall Software will also become a subsidiary of CS&S, so as to completely solve the horizontal competition problems between CS&S and Great Wall Software.

Alternative Energy

Sopray Solar established Suori New Energy and launched its new energy industry base in Fengjing Industrial Park. The company's total investment in Shanghai Suori New Energy will reach 500 million yuan (US$73.2 million) and the subsidiary is expected to record annual sales revenue of 2.25 billion yuan (US$329 million).

Disclosure: Director

Source: Asian Tech Stock Weekly Review (December 28, 2009 - January 3, 2010)