Acer, Consortium Form Internet Security Company

HONG KONG (04/19/2000) - A consortium of U.S. and Hong Kong companies, including Verisign Inc., yesterday teamed up with Acer Inc.-backed Taiwanese Internet security vendor HiTrust.com Inc. to extend the company's certificate authority business to China and southeast Asia, HiTrust announced.

The companies will join HiTrust's existing investors, led by Taiwan-based hardware maker Acer, to form a new holding company, HiTrust.com Inc. In addition to Verisign, the new consortium includes Hongkong and Shanghai Banking Corp., U.S. insurer American International Group, and Hong Kong telecommunications carrier New World Cyberbase Ltd. The new company will leverage the partners' resources to help HiTrust reach a broader market, a HiTrust statement said.

HiTrust also announced that it has acquired the rights to be Verisign's sole certification authority affiliate in Hong Kong. HiTrust's Hong Kong center will provide certification services to both Hong Kong and mainland China.

The company's capitalization today is approximately US$100 million and is expected to grow to US$150 million by year's end, HiTrust said in a statement.

HiTrust was formed two years ago by Acer, along with Taiwanese firms Ha Hsin Group, Yulon Group, and Taishin Group. It provides certification authority and e-commerce services in Taiwan.

Scores of established companies and start-ups recently have raced into e-commerce in Asia, where the market is believed to have huge growth ahead of it, particularly in China. Analysts anticipate a large e-commerce industry growing up in China, but the Chinese mainland currently lacks much of the required infrastructure, they say.

However, HiTrust's bid to provide online security in China may face an uphill battle in the current regulatory environment, according to Joe Sweeney, an analyst at Gartner Group, Inc. in Hong Kong. A government agency earlier this year announced a set of edicts that outlaw the use of security technology not developed in China.

Even though the government has partly backtracked on those rules, Sweeney believes local companies may have a significant edge over outside competitors such as HiTrust.

"The market for security services in China will be tricky, given what the government is saying," Sweeney said.

"If there's a local competitor, then the political current will definitely be there," he said.

HiTrust can be reached at +886-2-2696-8111 or online at http://www.hitrust.com/.

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