Chinese Tech Stock Weekly Summary

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

Internet

• According to a key official of Baidu (BIDU), the company is gearing to set up an R&D center in Shanghai. To prepare for the opening of the center, Baidu is reportedly organizing a massive recruitment involving 25 universities in 15 cities across the country. Industry sources also indicate that Baidu is preparing to set up an R&D center in Tokyo.

• Alibaba.com announced that it has opened its first European office in Geneva. Industry observers see Alibaba providing services to European SMEs from the strategic location in the Swiss capital. Founded in 1999, Alibaba.com, the flagship business of the Alibaba Group based in eastern China, has built a global community of more than 24 million members from over 200 countries and regions. SMEs are the leading economic engine across the globe, with some 19 million SMEs in Europe alone. European SME's make up 99.7 percent of the total number of companies, and are the principal source of employment and wealth in the European Union.

• Industry sources indicate that Tom Group has plans to focus on its online games as its strategy for growth and development. Sources said that Tom is planning to make an investment of 200 million yuan (US$26.6 million) in order to develop games.

• Alliance Data Systems Corporation (ADS), a provider of transaction services, credit services and marketing services, announced that the global operations of its Epsilon business, Epsilon International, has signed a multi-year agreement to provide permission-based email marketing solutions and services to online auctioneer EachNet in China. EachNet is a joint venture between eBay (EBAY) and TOM Online (TOMO). Under the terms of the agreement, EachNet will deploy Epsilon International's proprietary email communications and campaign management platform geared toward notifying consumers of goods for auction based on their preferences. Epsilon International will provide additional professional services to help EachNet manage and further develop its email account messaging. Epsilon is a provider of multi-channel, data-driven marketing technologies and services.

Media, Entertainment and Gaming

• CDC Games, a business unit of CDC Corp. (CHINA), announced that it has entered into an agreement with Sonokong, a leading South Korean toy and game entertainment company, to expand their business partnership. The expanded partnership includes the licensing, in China of a new game called Dragonsky and covers Sonokong’s commitment for the continued support of content updates for Shaiya Online. Under the agreement, CDC Games and Sonokong become partners in the distribution of Shaiya in Taiwan through MacroWell, a local publisher. Dragonsky is now under development by Sonov, a leading studio in South Korea. Dragonsky is an MMORPG (massive multiplayer online role-playing game) based on a Chinese martial arts theme set in medieval times. The game will be operated by the OPTIC division of CDC Games. Founded in 1999 as a PC game distributor, MacroWell established OMG entertainment portal in mid 2006 and became the thirdlargest online game company in Taiwan. Currently OMG has more than 1.5 million active users and plans to be listed on TAISDAQ in 2009.

• According industry sources, to Object Soft, an online game developer, will license its upcoming MMORPG to Tom Online for operation in China. Founded in 1995, Object Soft has developed and operated numerous MMORPGs in China. The sources explained that Object Soft’s alliance with Tom Online is meant to help Object Soft focus on development instead of game operations and management.

Mobile/Wireless

• ZTE announced that it has secured some 85 percent of new nodes for the seventh expansion of China Mobile's (CHL) Multimedia Messaging Service, with the company getting another 75 percent of new nodes when China Mobile goes into its WAP expansion. With the contract, ZTE is now one of the core partners of China Mobile on value-added services. Previously, ZTE also won the bidding of China Mobile's MMS web and related products.

• Bird, a Chinese mobile phone manufacturer, reported a massive loss its net profit in the first half of this year registering a decline of 859.2 percent, with a total loss of 237 million yuan (US$31.5 million) compared with that of the same period last year. The company ascribed the huge losses to many factors, including intense market competition and ongoing price wars. To cope with the loss and in an attempt to reduce costs, Bird said it will sell stakes in three of its affiliates. The sale will cover Ningbo Sagem Bird Development and Research Company, a joint venture company between Bird and French Sagem, in a deal valued at about 25 million yuan (US$3.3 million). Bird said it will transfer 24 percent of its stake at Chongqing Bird. The company said it will also sell 73 percent of the stake of Chongqing Bird Information to an unnamed individual in a deal placed at 3 million yuan (US$399,520).

• Qualcomm (QCOM) announced that it has granted TechFaith Wireless a worldwide license under Qualcomm's patent portfolio to develop, manufacture and sell subscriber units and modem cards implementing the WCDMA and TD-SCDMA standards. The license given to TechFaith Wireless, a wholly owned subsidiary of China TechFaith, carries royalties payable by TechFaith at Qualcomm’s standard worldwide rates.

Telecommunications

• China Netcom (CN) announced its entering an agreement with Australian telecom service provider Telstra (TLSYY.PK) on the transmission of telecommunications services between China and Australia for the 2008 Beijing Olympic Games. Under the cooperation agreement, the two companies will work together to provide services to Australian television Channel 7 and allow Olympics television signals to the Oceania region.

• PacificNet (PACT) announced that its subsidiary PacificNet Epro has been selected by Jiangsu Telecom, China Telecom's (CHA) local branch, to provide CRM and call center consulting services for China Telecom's 114 Information Directory. Under agreement, PacificNet Epro will be tasked with strengthening the CRM service level and telemarketing management capability of Jiangsu Telecom's Information Directory Service called 114 Information Directory Hotline.

Software

• Duty Free Americas Macau Limited [DFAM] announced that it has selected Samco Software Inc. to supply their IT needs, which include hardware, software, training and support for their new retail project in Macau, SAR China. Under the agreement, Samco is expected to deliver an integrated, end to end solution consisting of servers, workstations and POS terminals with the Samco Power accounting applications including purchasing, WMS, POS GL/accounting, e-mail and general office applications. Linux was selected for the OS for security and cost reasons.

Hardware

• Flash memory firm SanDisk Corporation (SNDK) has announced the opening of its production facility in Shanghai. The new plant will be producing System-in-a-Package, a flash memory-based chip package used in mobile phones. The facility called SanDisk Semiconductor (Shanghai) Company is seen as boosting SanDisk's worldwide operations as the plant will focus on the assembly and test of its advanced flash memory products for mobile and other consumers in markets worldwide. SanDisk's worldwide operations function will also reside at the Shanghai facility.

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