HK Online Bookstore Courts Worldwide Audience

HONG KONG (05/16/2000) - Chinese Books CyberStore Ltd., a Hong Kong-based Internet retailer, says it's shelving plans to follow in the footsteps of, whose business model it had initially emulated. Instead, it will take a different route and venture into business-to-business e-commerce.

According to Philip Leung, Chinese Books' chief executive officer, the company has parlayed its business into an institutional book distribution business, "which Amazon isn't doing."

"We've won tenders to supply books to the Hong Kong government, libraries and schools," said Leung. He added that the company hopes to extend business-to-business e-commerce to China and Taiwan as well.

But this wasn't the game plan when opened its online store in June 1997. "With over 100,000 Chinese book titles, we went very much along the lines of Amazon, except with a focus on the Chinese community," Leung said.

Chinese Books extended its books-only business to include music and entertainment products, gifts, high-tech items, and arts and crafts when it found that there is a market for Chinese goods.

"Our goal is much more than just (to be) an online bookseller," said Leung.

"Our vision is to be a leading e-commerce destination for Chinese products and services worldwide."

According to Leung, the North American market generates a majority of Chinese Books' worldwide sales, constituting more than 50 percent of the firm's revenue.

"In the short term, within the next few months to a year, the North American portion of our business would increase in percentage, because of Internet use there," Leung said.

Leung explained that the sizable Chinese population in the U.S. and high Internet penetration are contributing factors to Chinese Books' increasing business from North America.

"They also have high per-capita income and are Internet savvy, relative to Hong Kong, where Internet penetration is about 15 percent, even though it's growing," he said.

Leung added that although Greater China still lags behind in terms of online sales, he is hopeful that business will increase as the market matures.

"(Online transactions in) Greater China will rise very rapidly because of the penetration of Wireless Application Protocol (WAP) phones, personal digital assistants (PDAs) and other devices, other than PCs, which allow people to do e-commerce," Leung said.

Keeping up with the wireless trend, Chinese Books plans to offer WAP access by mid-May, he said.

Leung added that another strategy is to create a clicks-and-bricks business by teaming up with more than 100 convenience stores, which will operate as pick-up points in Hong Kong in June this year. Leung said that physical stores would also be opened in Taiwan and the Mainland.

According to Leung, physical stores are necessary within many cities in Asia.

"The density of the population makes it a lot easier for physical stores to be the dominant way of shopping, which is a great social pastime and enjoyable activity," Leung said.

"In order to encourage people to shop online, we have offer the availability of a clicks-and-bricks model." will expand more rapidly in Mainland China after China's expected entry into the World Trade Organization (WTO), said Leung. Joining WTO will partially resolve serious roadblocks for e-commerce in the PRC, improving opportunities for online businesses.

Chinese Books recorded an eightfold increase in revenue within the last calendar year, with revenues reaching HK$20 million (US$2.56 million), according to Leung.

Looking ahead, the company plans to open an office in the U.S. to cater to its customers in North America.

Although the company hasn't made any formal announcement of its plans to go public, Leung said that an initial public offering is likely within the next 12 months.

To date, the company has received HK$20 million in its first round of venture-capital funding. Last year, Australia's Liberty One injected an additional US$10 million into the online bookstore, Leung said. The next round of funding, he said, is expected within the next few months.

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