Sino-i.com, IBM Think Small for Chinese E-Commerce

As a host of Asian and Western companies tell the world how they can ace the Chinese e-commerce opportunity, IBM Corp. and Hong Kong-based Sino-i.com Ltd. today unveiled a strategy that may hit the sweet spot of the market: small and medium-sized businesses trading with each other.

A joint venture between the two companies will bring the marketing and transaction capabilities of IBM's e-MarketPlace technology to small and medium businesses in Greater China through Sino-i.com's existing ChinaEnterprise.com portal. The services are intended to give these businesses greater reach as well as a more convenient way to do business with partners.

Executives of both companies said today at a press conference here that thinking small may be the best way to win big, at least for now.

"If you look at the drivers of business in Greater China, small and medium enterprises are the biggest driver," said Henry Chow, chairman and CEO of IBM Greater China Group.

With the implementation of e-MarketPlace tools, ChinaEnterprise.com's members will be able to find customers and suppliers, negotiate, carry out transactions and ensure fulfillment of those deals, according to IBM and Sino-i.com.

ChinaEnterprise.com currently offers a catalog of available goods with contact information so companies can make business-to-business deals on their own, according to Sino-i.com.

The system will also draw on procurement software developed at IBM's China Procurement Center in Shenzhen.

Small and medium enterprises will be able to buy into these capabilities without a major capital outlay, through purchasing a membership in the service starting at approximately 3,000 renminbi (US$362) per year, company officials said. Members will be able to have the services customized for an extra charge, officials said.

IBM and Sino-i.com are also examining another innovative way to charge for their services: collecting between 0.5 percent and 3 percent of the value of each transaction.

The companies plan to launch the service platform in both traditional and simplified Chinese by fall of this year. It will be localized to match the policies and business practices of particular countries throughout the region, the executives said.

Officials of both companies declined to estimate the size of the opportunity among small and medium businesses in Mainland China, where much of the regional interest in e-commerce is focused. However, they expressed enthusiasm for that market in particular.

"We know it's big, and we know it's growing, both in domestic business and in international business," said Leo Lim, manager of business development at Sino-i.com.

How well that market will embrace the ChinaEnterprise.com eMarketPlace solution will depend on small businesses' openness to change -- something IBM's Chow is willing to bet on.

"The crucial factor in whether this will be successful is whether people can change their traditional practices," Chow said.

Fortunately, he said, the impact of economic liberalization on the mainland is felt first in small and medium-sized enterprises.

The deal, which is not exclusive, brings together the e-commerce expertise of IBM with Sino-i.com's knowledge of Greater China and its brand recognition there, the executives said.

Sino-i.com is an online content provider that aims to serve the whole Asian market. Its subsidiaries include Dadi Broadband (China) Ltd., a developer of network technology for mainland China, and The Net Paper Ltd., which will publish an Internet newspaper for Chinese around the world, beginning in North America.

IBM is based in Armonk, New York, and can be reached on the Web at http://www.ibm.com. Sino-i.com is based in Hong Kong and can be reached at http://www.sino-i.com.

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