Overseas Firms Welcomed to Bid Chinese Website

Overseas investors will soon have the chance to explore China's Internet sector.

An auction gala will be organized for the bulk of Chinese Internet websites who want to sell their assets.

Organizers promise that foreign investors will be able to bid on an equal footing with domestic buyers, for anything from domain names, Internet technologies, web content to whole dotcom companies.

The auction, the first of its kind in China, is to be held in Beijing at the end of this month and is being promoted by the China International Trade Promotion Committee, a body affiliated to the foreign trade ministry.

An estimated 200 Internet companies will be involved in the auction.

Since registration for the auction began a week ago, around 10 websites have been handing in their applications for sale every day and 20 have already applied to buy, organizers said.

A number of foreign-funded companies have already expressed their intention to take part in the bidding.

"The auction will reallocate the resources of the Internet industry in China through open and fair trade," said Lu Benfu, director of the Internet Research Centre of the Chinese Academy of Social Sciences, an active organizer of the auction and a member of the experts panel that will evaluate the Internet websites that are to be sold.

"Foreign investors are especially welcome to take part in the bid," he said.

Although the government has set strict rules on ISPs (Internet service providers), such as a 49 per cent ceiling for foreign stakes in ISP companies, the overall policy environment is relaxed towards the overseas acquisition of and mergers with dotcom companies, experts said.

Foreign access to the sector will be further expanded after China joins the World Trade Organization.

To ensure the smooth process of bidding and buying for foreign participants, the organizing committee will provide comprehensive legal consultation to overseas investors on the legal procedure of purchase and the sector's policy environment.

The organizing committee has also drawn up rules that require participants to disclose certain pieces of information to guarantee the quality of the auction.

Most of the websites expected to be sold are e-commerce service providers and Internet content providers.

Besides Internet companies, potential buyers also include those involved in traditional industries, such as finance, insurance, commerce and medicine.

Compared to other forms of trading, auctions facilitate an open and fair environment and are higher efficient.

The activity will also provide a much wider range of choices for potential buyers.

"The auction will help rescue those dotcom companies that are not doing well," said Zhang Lei, president of the SinoBIT.com, a website that helps find venture capital for domestic enterprises.

China's fast-growing dotcom companies are facing a period of reorganization, analysts said. Mergers and acquisitions have grown in number recently, and there are more to come.

This reshuffle is allowing for the combination of capital and technology, which will better allocate resources and develop the industry in line with global trends, Zhang said.

Foreign investors, from venture capital, media, computer to property companies, have pivotal roles in the shake-up.

Reports said that they have invested some US$1 billion in Chinese dotcom start-ups over the past two years.



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