HONG KONG (01/28/2000) - Timeless Software Ltd. has signed a joint-venture agreement with two Chinese government-owned companies to develop a Chinese-language operating system and a standard Internet platform for the Mainland market.
"There is a substantial demand for the Internet and e-commerce in China," said Danny Cheng, the chief operating officer of Timeless. "Rather than sticking up contracts one by one, the most ideal scenario [for us] is to tap the mass market."
Cheng added that the deal, into which Timeless will pump "millions of U.S. dollars," will earn the company an equity share in the project. He did not disclose the percentage Timeless would receive, stating that the agreement is still "in the final touches." The two Chinese partners, China Electronics Corp. (CEC) and the State Development and Investment Corp. (SDIC), are both owned by the Ministry of Information Industry (MII).
MII will take care of the marketing and resources side of the project, while Timeless will concentrate on "injecting its technology into Chinese processing and Internet computing," Cheng said.
He added that Timeless sees this agreement as an opportunity to seize the Mainland's Internet market, which he said is still underdeveloped. "There is still a lack of localized applications on the Net, which is certainly a part [where] we can add value."
"The cultural barrier also impedes [Internet] growth," he said. "Most of the people there don't speak, read or write English. And for those who speak Chinese, there is only a limited number who are familiar with the Chinese character input and output system there are very few people who can make best use of and master the Internet."
As a result, Timeless plans to introduce a standard Internet platform and a Chinese-language operating system that will be easily accessible to the majority of China's population.
"Internet-centered applications are very difficult to develop, because it has to be from a pure component ties approach. Nothing monolithic can live on the Internet," Cheng said.
Cheng added that for Timeless to be successful in its attempt to introduce a Chinese Internet standard, it had to seek the blessing and participation of the central government. "There are a lot of issues to consider, such as market coverage, the (intellectual property) issue, and also for the government to endorse the standard," he said.
According to Cheng, the latest agreement is an extension of a contract signed in 1998 between Timeless and Zhuhai Southern Software Park.
"The Chinese OS and the standard Internet platform have been the key areas [for development], and it's the most natural way for us to inject our capital into the park," Cheng said. "We already had a (joint venture) to operate the park, in which we are also an equity partner, but this time, we will be the actual equity partner of the park itself, which is a national asset."
The OS and Internet projects will be developed in phases, with the earliest offering scheduled for mid-2000.
"We will start with something comparatively simplistic, mainly the interface of the Internet and the Chinese OS," Cheng said.
As for e-commerce applications already under development, Cheng said that Timeless would have to wait for the "readiness of the communications and the logistic systems" before it can release the products. "We are ahead of the market, so we still cannot put it into the market [because it's not ready]," he said.
Uptake of e-commerce in the Mainland, Cheng added, will eventually be comparable to uptake in the U.S.
"E-commerce has a market [in the Mainland] because of the vastness of the area," he said. "Unlike Hong Kong, which already has a very mature and established consumer pattern, China's still needs time to develop."
To support the company's efforts in the Mainland, Timeless will double the size of its operations in Guangzhou and plans to open offices in Shanghai and Beijing later this year, Cheng noted.
Timeless, in Hong Kong, can be reached online at http://www.timeless.com.hk.