PCC, China Unicom Partner In Chinese Market
techweb.com
(09/29/00, 7:49 p.m. ET) By Kim Renay Anderson, TechWeb Finance
The partnership between Pacific Century Cyberworks and China Unicom will be watched closely by U.S. companies interested in the Asian markets, analysts said.
On Thursday, Pacific Century (stock: PCW), Hong Kong, said it has formed an alliance with China Unicom (stock: CHU) to expand the global Chinese online and physical yellow pages market.
Pacific Century is the largest provider of broadband and Internet services in China; China Unicom is a provider of telecommunications services in the country.
Under the agreement, Pacific Century will invest $25.6 million to acquire 37.65 percent of ChinaBiG, an online business directory and business information guide globally targeting persons interested in doing business with or in China.
In addition, Pacific Century will be a majority shareholder as well as having operational management of the yellow pages franchise, which will be in English and Chinese. China Unicom will own 31 percent of ChinaBiG.
This deal fits into Pacific Century's ongoing strategy to become a global broadband service provider, said Agatha Poon, analyst at the Yankee Group in Boston.
To date, Pacific Century has partnerships with companies like Sony PCL Inc. (stock: SNE) and Tomen Mediacom, the second-largest multiple system operator in Japan.
"As a result of this deal, Pacific Century gains a presence in mainland China and will develop a relationship with the China government," she said. "On the other hand, China Unicom gains an investment in the form of platforms or networks to deliver content."
However, she noted that this deal will not help Pacific Century's ailing stock. After the Internet giant reported a loss of $48 million for its first fiscal half on Thursday, it announced a merger with Cable & Wireless HKT (stock: CWP), Hong Kong 's largest telecom company.
But some said Pacific Century could still recoup. Poon said that if the company secures the proposed $3 billion Internet and mobile phone partnership with Telstra Corp. (stock: TLS), its stock would benefit.
Telstra is a telecommunications and information-services company that competes in all telecommunications markets throughout Australia.
"People have been anxious and talking about this deal," Poon said. "With the Telstar deal, people are keeping abreast of the political situation in Australia as well as speculating who might become the major shareholder should this deal come to fruition."
China Unicom could gain both a higher profile and real strength from the deal, said Brownlee Thomas, analyst at Giga Information Group in Cambridge, Mass. She noted that 90 percent of voice traffic to Hong Kong is from China.
"China Unicom is not a significant player," Thomas said. "They are interested in foreign investments. This deal gives them an opportunity to get into data and online services."
Pacific Century will use this alliance as a means to work with other Chinese companies, Thomas said. For this reason, it's important for Pacific Century to foster a relationship with a Chinese company to gain more access to business opportunities in China.
"If you interested in doing business in China, a directory is a key element," she said. "But the challenges of doing business in China does not go away because it is not an open market, especially to foreign governments." |
