Chinese Tech Stock Weekly Summary

by: IRG Ltd

The following is excerpted from IRG's weekly stock report:


• After experiencing setbacks in China, eBay (NASDAQ:EBAY) disclosed that it will make a re-entry into the country’s online auction business. The company set its comeback this summer and announced it will work through a third party escrow service of Tom eBay, a joint venture company it set up with Tom Online (NASDAQ:TOMO) in 2006. Before this, eBay carried out business in China through eBay Eachnet, which saw declining market share with the rise of local auction website Responding to this, eBay went on to form Tom eBay. Industry sources said Tom eBay will use an escrow service, where payments will be held until buyers are satisfied with their purchases.

Media, Entertainment and Gaming

• Ultizen Games Ltd., a game development and outsourcing company, announced that it has raised US$1.5 million in its first institutional round of funding from Dragonvest Partners. The company said the Series A funding will be used to widen the company's international operations and Shanghai game development studio. Shanghai-based Ultizen Games is one of the top ten game outsourcing companies in China. The company provides high quality game development outsourcing services to North American, European and Japanese clients for traditional console game platforms, as well as the newest platforms from Microsoft, Sony and Nintendo. Ultizen Games' 150-person studio provides game development services including game design, porting, programming and testing, art and sound effects, localization, and background environment development. The company was founded in 2005 by a group of industry experts from Ubi Soft China, Shanda and The 9. Based in Shanghai and with offices in Beijing and the U.S., Dragonvest Venture Partners is a venture capital firm focused on investing in emerging fabless chip design, digital media and medical device companies based in China that address the domestic and global markets.


• Analysys reported that the third-party payment market of China in the first quarter of this year has registered 14.3 billion yuan (US$1.9 billion), out of which 13.9 billion yuan (US$1.8 billion) was attributed to the online payment sector. The report indicated that, for the first quarter of 2007, payment conducted through mobile phones and telephones hit 321 million yuan (US$42.1 million) and 740,000 yuan (US$97,000), respectively. Analysys noted that online payments remained the main means of payment of the third-party payment market, with Alipay accounting for 50.3 percent of the total market shares. Chinapay and Tenpay completed the top three third-party payment firms. The report forecast that the overall market scale will go beyond 100 billion yuan (US$13.1 billion) in 2008 and 280 billion yuan (US$36.7 billion) in 2010.

• Linktone (NASDAQ:LTON), a mobile value-added service company, announced its forming of a joint venture with Greatdreams Cartoon Industry to provide animated cartoon wireless value-added services. The "Greatdreams Cartoon Club" program is aired for 22 minutes everyday across 500 television stations in China. The CEO of Linktone described the joint venture as an example of the company’s cross media strategy. The company said it is aiming at the development of new and traditional media channels while using core wireless platform to reach a broader audience. The joint venture will focus exclusively on cartoon content and channel resources to develop and operate wireless value added services. Greatdreams Cartoon Industry Limited Company is a large, professional high-tech company that focuses on the research on computer animation software, the production of cartoon programs, and development of cartoon derivative products. It was formed in June 2004 with registered capital of 60 million yuan (US$7.8 million), which was increased to 300 million yuan (US$39.4 million) in just one year.

• KongZhong Corporation (KONG), one of China's leading providers of wireless value-added services [WVAS] and a wireless media company providing news, content and mobile advertising services through its wireless Internet sites, announced that it has entered into an agreement to work with MSN Network Communications Technology Company Limited (MSN China), a Microsoft (NASDAQ:MSFT) joint venture in China, on Mobile Messenger 3.0. Under the agreement, KongZhong will be the sole content provider in China for the information channel and mobile games channel of Mobile Messenger 3.0, which is being officially launched in China in the month of June. Mobile Messenger 3.0 is the mobile phone version of Microsoft's popular instant-messaging application, Windows Live Messenger. The agreement stipulates that KongZhong will pay MSN China a fixed fee per channel, with the cooperation period set for one year.

• ALONG Mobile Technologies Inc. (OTC:AGMB), a leading provider of wireless interactive entertainment products and services to customers in China, announced that it has entered into an agreement with Beijing You Jie Le Communication Technologies Co., Ltd to develop and launch a series of Hello Kitty mobile games. Under the agreement, Beijing You Jie Le Communication Technologies Co., Ltd will provide the legal copyright and publishing rights in China for the mobile phone game. The new mobile game is based on the highly successful and widely popular cartoon character - Hello Kitty. The mobile game will allow fans of the cartoon and casual gamers the chance to experience a real sports meeting with the Hello Kitty and three other athletes. The mobile games will be available as a download at the Treasury Box of the Mobile Network of mobile phones, with the game scheduled for release from the middle to the end of July 2007. Beijing You Jie Le Communication Technologies Co. Ltd is a company mainly engaged in developing GPRS-based applications and service for China Mobile subscribers. ALONG Mobile Technologies Inc. is a public U.S. corporation, registered in Nevada State with headquarters in Xi'an, and a leading mobile valueadded services provider of award winning mobile technology, content, games and applications in China.


• Oracle (NASDAQ:ORCL) announced that operations have been initiated in its Global Support Center and subsidiary in Dalian Software Park. The Dalian Global Support Center is expected to work closely with the Dalian government and local clients and partners to build relationships. As one of the 18 Global Support Centers of Oracle, it is also seen as providing Oracle's relevant products and high-end technical services to clients in East Asia in the local language.


• PacificNet (PINK:PACT-OLD), which provides outsourcing and services such as e-commerce and telemarketing, announced its plan to sell the TiVo (NASDAQ:TIVO) digital video recorder and services in major Chinese cities. Under the agreement, TiVo products and services would be distributed in Beijing, Shanghai, Guangzhou, and other major cities through PacificNet's subsidiary iMobile, which operates its ecommerce business via two Internet portals. A third portal is meant for web browsing on mobile phones. TiVo Greater China [TGV], a close partner of TiVo in California, holds the exclusive rights to provide TiVo products and services in the China and Singapore region. Under the agreement, PacificNet said it plans to sell TiVo through online sales and through what it has dubbed "user trial activities." As its response to growing competition, TiVo has been tying its DVR to the Internet. TiVo also has made it possible for subscribers to share personal videos online. PacificNet is incorporated in the U.S. and trades on the NASDAQ.

• In cooperation with 13 channel operators, Intel (NASDAQ:INTC) announced its launch of a joint maintenance program called "Mei Lian Deng" to provide better maintenance for PC consumers across China. The 13 channel operators are Shenzhen Jumper Computer, Chengdu Doyen, Daqing Tonqin, Shenyang Lianfang, Yunan Jinli, Zhejiang IETO, Chongqing Bada, Xi'an Haixing Tianhui, Beijing Heyuan Muze, Shanxi Tongzhou, Zhengzhou Zhongcheng, Tianjin Enbo'er and Wuhan Lanxing. These operators are major PC brands in the cities where they are operating. Under the alliance, Intel and the 13 channel operators will pool their expertise to provide maintenance services for each other's brands. Analysts indicate these local PC brands are popular and that the move of Intel to support them is a way to expand its own market share.


• Following Best Buy’s (NYSE:BBY) expressed agreement to acquire a majority interest in Jiangsu Five Star, media sources are saying that Best Buy may be on the way to fully taking over the fourth largest appliance and consumer electronics retailer in China. The CEO of Best Buy was quoted as saying that there will not be any change in the name and logo of the over 140 Five Star stores across China. As a stakeholder of Five Star, Best Buy said it would maintain double brand operation pattern. As one of the largest home appliance retailers in the world, Best Buy owns more than 1150 stores around the globe. Best Buy also disclosed its plans to open two more stores in Shanghai before March 2008, with the decision to increase its number of stores in the coming 18 months.

• Industry sources announced the full linking up of the enterprise resource planning system of Gome and Yongle, a development that marks the successful completion of the business integration between the two sides after their merger. According to the CEO of Gome, the parties' ERP integration is fast, efficient and ensures that the integration can reach its maximum scale. Gome acquired Yongle in July 2006.

Information Technology

• PacificNet, Inc. a leading provider of gaming technology, e-commerce, and Customer Relationship Management [CRM] services in China announced that it is about to open a joint venture with Bellsystem24, Japan's largest telemarketing call center services provider, in Shanghai. Bellsystem24 is Japan's largest telemarketing, call center and CRM Service Company, providing a variety of services for pursuing one-to-one marketing, such as call center, marketing solutions and media entertainment solutions, as well as pharmaceutical and medical support services. Bellsystem24 has over 5,000 clients, 27,348 communication service representatives and 33 offices throughout Japan. Under the joint venture agreement, it is indicated that PacificNet will own a 40 percent equity stake and Bellsystem24 a 60 percent stake of the new joint venture company to be named BELL-PACT Consulting Limited. The joint venture will principally offer CRM call center consulting and training services, technical and business consulting services, network product sales, software development, system integration, as well as value-added services and other relevant services.

Disclaimer: IRG is not responsible for the accuracy of the news compiled within this article, which is based on publicly available information.