According to CNNIC, China will easily surpass the U.S. in terms of the numbers of web users by early 2008. At the end of 2007, China had an online population of 210 million, compared to 215 million for United States. In 2007, online users in China increased by a mind-blogging 128%.
Given that, I thought it would be noteworthy to see which of our C.O.P. companies have significant online assets and present an interesting internet play. To me, the more compelling ones are as follows:
1) Mystaru.com [MYST.OB] - MyStarU.com has many areas of internet presence, but none more so exciting than its subsidiary Subaye.com, which currently ranks as the ~6,400th most popular site in China. Subaye.com provides B2B video-based e-commerce and advertising solutions to online merchants, and is partnered up with China Netcom (NYSEARCA:CN) and Alibaba.com. According to the company's 10K released Wednesday, Subaye provided MYST with $4.3m in sales in 2007, or 20% of overall revenues. MYST also has SkyeStar.com, a next-generation community website that will start providing members with IPTV interactivity come 2009.
2) China Education Alliance (CEUA.OB) - China Education Alliance's principal business is the distribution of educational resources through its website Edu-Chn.com. These resources include test preparation solutions, VOD and a database that contains a multitude of course-ware for secondary and elementary schools. Edu-Chn.com currently ranks as the ~8.700th most popular website in China.
3) Universal Travel Group (UTVG.OB) - Universal Travel Group has cnutg.com and cba-hotel.com, the latter as a result of its acquisition of Shanghai Lanbao. CBA Hotel and CNUTG.com currently rank, respectively, as the ~25,000th and ~45,000th most trafficked websites in China. I think as UTVG rolls out its footprint across China, the network effect is going to multiply and its online business could really take off.
4) China 3C Group (OTC:CHCG-OLD) - China 3C Group is a retailer of electronic goods and is perfectly positioned for the online world. Already it is partnered up with website 3C800.com to push its goods electronically. While 3C800.com still has a long way to go, currently ranking as the ~38,000th most trafficked site in China, I think its potential is great.
5) Jingwei (NASDAQ:JNGW) - Jingwei is not ostensibly an internet play but its position becomes clear when you realize that its main business is data mining and is the leading provider of such services to Chinese telcos. It is currently under contract to China Mobile (NYSE:CHL) and China Unicom (NYSE:CHU), and has expanded its CRM solutions to include targeted marketing through mobile media and call centers. I think online CRM is the next frontier for this company.
With China soon to become the most wired nation on Earth, coupled with its phenomenal growth rate, these companies stand most to benefit.
My Position: Long CHCG.OB, UTVG.OB.