LibertyOne makes a move on China
- 22 September, 1999 12:01
Internet company LibertyOne is aggressively moving into the Chinese market with the part acquisition of three Hong Kong-based Internet organisations.
It now has a 75 per cent stake in Web solutions company Net Power, a 25 per cent investment in online store Chinese Books Cyberspace (CBC) and an 8 per cent equity, with an option to extend that share to 51 per cent, in online property dealer HT Hypernet.
"There is a feeling that there is a lot of opportunity here but it is very difficult to move into the Chinese market; we needed partners to do it," said Warren Lee, LibertyOne's chief executive officer.
The process of uncovering and developing prospective relationships took nine months, according to Lee. The eventual partners were selected on their market strengths and growth ambitions. "Net Power wants to grow its Web solution business in Hong Kong.
This matches our own strategy," explained Lee.
CBC is in the same position, curr-ently focusing on retailing Chinese language books, music, videos, VCDs, DVDs and laser discs, but eventually intending to extend this to include other e-business and content operations, such as online auctions, entertainment and the selling of Chinese ethnic products.
"With a business model not unlike the one that has been so successful for Amazon, we're expecting chinesebooks.net and cbcmusic.net to experience some pretty phenomenal growth over the next few years," said Lee.
LibertyOne will take advantage of these plans, and hopes to expand its e-commerce and Web solutions operations, particularly in Hong Kong, as it positions itself as the technology centre of greater China.
"Going forward we see the LibertyOne Web solutions, e-commerce and content and portal businesses creating a virtual network allowing significant synergy and cross-selling opportunities," Lee said.
To facilitate the development of both its partners and its own Chinese presence, LibertyOne plans to "beef up some of our partners' systems and help them with their marketing strategies".
And with CBC's focus on the international Chinese community, LibertyOne plans to use its global ties to explore more far-reaching opportunities. "LibertyOne's international exposure and relationships with major Internet businesses will help CBC to grow faster and generate greater market awareness."
Apart from this involvement, LibertyOne will leave the Hong Kong-based organisations management and core competencies untouched.
Once established in China, Lee is predicting the river to run gold, relying not only on a sheer volume equation but also on the Chinese support of the Internet as a business tool.
"The Chinese are using the Internet to leapfrog the development stage; even the Government is interested in it as an economic tool," explained Lee.
And to achieve this relatively lucrative position LibertyOne is investing only a small portion of its overall resources in the project. "We needed to take advantage of this fast-moving environment but as a percentage of our operations it is not that great."
Lee hinted that LibertyOne would continue to expand its operations in both China and on a global basis, but was not forthcoming with more details.