AOL, Legend Complete $200 Million Joint Venture

As widely predicted last week, AOL Time Warner and China’s largest computer maker, Legend Holdings, are forming a $200 million joint venture to provide Internet services in mainland China. Because of Chinese government restrictions on foreign ownership, Legend will control 51 percent of the joint venture. Each company will contribute approximately $100 million over time, although the initial investment by each company will be $25 million.

America Online, Inc., the wholly-owned subsidiary of AOL Time Warner, will provide technical support and services for Legend’s portal, Legend introduced its first generation Internet-enabled computers in 1999, collaborating with China Telecom to provide the “one-touch-to-the-net” online services to home users in a user-friendly manner. In addition, offers Internet users in China a variety of online information. As of May, Legend had 1.7 million interactive services users, 2.9 million registered e-mail users and the daily page views of reached 34 million.

Legend Holdings Ltd. is the largest IT corporation in China. Being the largest PC manufacturer in the Asia Pacific region, the Legend brand personal computers accounted for a market share of 10.4 percent in the Asia Pacific region (excluding Japan) during 2000. The major businesses of Legend also include the provision of information services, as well as the manufacturing and sale of handheld access devices, motherboards and printed circuit boards.

“The joint venture will be engaged in the scope of activities that are allowed under the regulations and government policies in China. It will provide interactive services consultation and technical support in the near term. As China accesses to WTO, we are confident of China’s market development potential and environment. The joint venture will also gradually expand its scope of activities,” said Yang Yuanging, president and chief executive officer (CEO) of Legend.

the Dulles, Va.-based AOL, which has 29 million subscribers in 17 countries but has been lagging in the Asia Pacific market, has sought to gain traction in that market through alliances with leading local partners, including NTT DoCoMo, a world leader in mobile Internet services with more than 24 million subscribers to its i-mode service in Japan, and AAPT Ltd., Australia’s third largest telecommunications company.

“Our announcement today in China is a major step toward fulfilling the promise of the Internet around the world. Supporting China in achieving its aspirations to provide its people with the benefits of the online medium is an important part of realizing that promise. This joint venture is a concrete demonstration of our strategic commitment to work with China to fully develop this exciting medium,” said Gerald M. Levin, chief executive officer of AOL Time Warner.

Added Michael Lynton, president of AOL International, “This joint venture represents an extraordinary opportunity for both of our companies to make the most of the incredible potential of the Chinese Internet market. AOL is known around the world for the hallmark ease-of-use and convenience that has made AOL the world’s most popular online service. The number of Internet consumers in China is poised to expand at a rapid pace, and Legend’s shared focus on meeting the needs of consumers, along with its leadership in the Chinese market, brand awareness and management expertise, make it the ideal partner for us to work with in realizing the interactive medium’s enormous potential in this market.”

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